Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 4 The Marketing Environment © Mark Herreid/Shutterstock.com 1 © iStokphoto.com/Siniša Botaš

Target Market A defined group most likely to buy a product Changes as consumers age External elements change consumers’ desires 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 1

The External Environment Unless marketing managers understand the external environment, the firm cannot intelligently plan for the future. when a company implements strategies that attempt to shape the external environment within which it operates. Environmental Management is… 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 1

Social Factors Values Attitudes Lifestyle 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

American Values Self-Sufficiency Upward Mobility Work Ethic Conformity Core American Values Getting off the grid Meaningful green EcoTechMed 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 2 Emerging Trends

The Influence of Values on Buying Habits Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price 6 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

Component Lifestyles The practice of choosing goods and services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle. Today’s consumers want multifunctional products No longer defined only by occupation 7 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

Role of Families and Working Women Growth of dual-income families results in increased purchasing power Approximately 59 percent of work-age females are in the workforce Working wives bring in 45 percent of the total family earnings. The phenomenon of working women has probably had a greater effect on marketing than any other social change. 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

Technology and Time Use Leisure time accounts for less than 6 hours a day About 40 percent of American adults check work on vacation Constant digital immersion can decrease a person’s attention span. 9 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

Demographic Factors People are the basis for any market Demographic characteristics relate to buyer behavior Demographic cohorts have their own needs, values, and consumption patterns. 10 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Tweens  Pre- and early adolescents, age 8 to 12  Population of 20 million  Directly spend about $50 billion annually  Parents spend $150 billion on tweens annually  View TV ads as “just advertising” 11 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Teens  Population of about 25 million  Spend approximately 72 hours per week tuned in electronically  View shopping as a social sport  50 million teens around the world are on Facebook 12 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Generation Y Born between 1979 and 1994 Surpassed population of baby boomers Two Stages: 1) Those born in 1994 fit closer to the Teen cohort. 2) Those born in 1979 have established careers and started families. Purchasing power of $200 billion annually 13 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Generation X Born between 1965 and 1978 Population of 40 million Independent, resilient, adaptable, cautious, and skeptical 71 percent have children under age 18 Home ownership is an important goal Avid buyers of the latest clothes, technology, and recreational products 14 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Baby Boomers Born between 1946 and 1964 Population of 75 million Working longer to compensate for economic downturn, which affected retirement savings The market of services directed at seniors is one of the fastest growing business markets 15 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Growing Ethnic Markets Estimated purchasing power of ethnic markets in 2013: Hispanics: $1.5 trillion African Americans: $1.2 billion Asian Americans: $775 billion The minority population of the United States in 2011 reached 110 million. 16 © 2013 by Cengage Learning Inc. All Rights Reserved. 4

Marketing to Hispanic Americans  The Hispanic population’s diversity creates challenges for targeting this market.  12 million Hispanics aged in the United States  94 percent of U.S. Hispanics have home Internet access.  Highly responsive to new media: mobile marketing and social media marketing 17 © 2013 by Cengage Learning Inc. All Rights Reserved. 4

Marketing to African Americans 47 percent are between 18 and 49 years old More firms are creating products for the African American market. Promotional dollars and media choices directed toward African Americans continue to increase. 18 © 2013 by Cengage Learning Inc. All Rights Reserved. 4

Marketing to Asian Americans Younger, better educated, and have highest average income of all groups Early adopters of latest digital gadgets. Cultural diversity within the Asian American market complicates promotional efforts. 19 © 2013 by Cengage Learning Inc. All Rights Reserved. 4

Economic Factors Purchasing Power Inflation Recession Consumers’ Income 20 © 2013 by Cengage Learning Inc. All Rights Reserved. 5

Consumers’ Incomes Median U.S. household income in 2010 was approximately $50,000. Incomes have risen at a slow pace in recent years. Education is the primary determinant of earning potential. 21 © 2013 by Cengage Learning Inc. All Rights Reserved. 5

a comparison of income versus the relative cost of a set standard of goods and services in different geographic areas. Purchasing Power is… 22 © 2013 by Cengage Learning Inc. All Rights Reserved. 5

a measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year. 23 © 2013 by Cengage Learning Inc. All Rights Reserved. 5 Inflation is…

a period of economic activity characterized by negative growth, which reduces demand for goods and services. 24 © 2013 by Cengage Learning Inc. All Rights Reserved. 5 Recession is…

Research Basic Research Applied Research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. An attempt to develop new or improved products 25 © 2013 by Cengage Learning Inc. All Rights Reserved. 6

Stimulating Innovation Build scenarios Enlist the Web Talk to early adopters Use marketing research Create an innovative environment Cater to entrepreneurs 26 © 2013 by Cengage Learning Inc. All Rights Reserved. 6

Discuss the political and legal environment of marketing 27 © 2013 by Cengage Learning Inc. All Rights Reserved. 7 Political and Legal Factors

 New technology  Society  Businesses  Consumers Laws and Regulations Protect: 28 © 2013 by Cengage Learning Inc. All Rights Reserved. 7

Federal Legislation Sherman Act Clayton Act Federal Trade Commission Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Foreign Corrupt Practices Act Sherman Act Clayton Act Federal Trade Commission Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Foreign Corrupt Practices Act Regulate competitive environment Robinson-Patman Act Regulate pricing practices Wheeler-Lea Act Control false advertising 29 © 2013 by Cengage Learning Inc. All Rights Reserved. 7

Consumer Privacy  CAN-SPAM Act  Children’s Online Privacy Protection Act Rule Government Actions 30 © 2013 by Cengage Learning Inc. All Rights Reserved. 7

Competitive Factors How many competitors? How big are competitors? How interdependent is the industry? Control 31 © 2013 by Cengage Learning Inc. All Rights Reserved. 8

Competitive Factors Competition for Market Share and Profits Firms must work harder to maintain profits and market share. Global Competition More foreign firms are entering U.S. market. Foreign firms in U.S. now compete on product quality. 32 © 2013 by Cengage Learning Inc. All Rights Reserved. 8