Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. LO1 Describe how social forces such as demographics and culture can have an impact on marketing strategy. Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing. LO3 LO2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO: 3-2

Describe how technological changes can affect marketing. Discuss the forms of competition that exist in a market. LO4 LO5 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO: Explain the major legislation that ensures competition and regulates the elements of the marketing mix. LO6 3-3

WHERE IN THE WORLD ARE YOU? IN THE MIDDLE OF THE GPS REVOLUTION! 3-4

FIGURE 3-1 FIGURE 3-1 Environmental forces affect the organization, its suppliers, and its customers 3-5

FIGURE 3-2 FIGURE 3-2 An environmental scan of today’s marketplace shows the many important trends that influence marketing 3-6

 Demographics Demographics SOCIAL FORCES DEMOGRAPHICS LO2 World Population U.S. Population  Social Forces Social Forces  Population Explosion 3-7

 Baby Boomers: Baby Boomers:  Generation X: Generation X:  Generation Y: Generation Y:  Generational Marketing SOCIAL FORCES DEMOGRAPHICS—GENERATIONAL COHORTS LO2  Millennials:

MAKING RESPONSIBLE DECISIONS Millennials are Going to Change the World— Through Environmental Sustainability! LO2 3-9

Olay, Hyatt, and Motorola Which generational cohort is being reached? LO2 3-10

 Regional Shifts in the U.S.: 2008 SOCIAL FORCES DEMOGRAPHICS—POPULATION SHIFTS LO2 3-11

 Statistical Areas (SA): Illinois SOCIAL FORCES DEMOGRAPHICS—POPULATION SHIFTS LO2 Metropolitan Division: Chicagoland Micropolitan SA: Dixon, IL Metropolitan SA: St. Louis, MO & SW IL Combined SA: NE Illinois 3-12

 Composition  Trends SOCIAL FORCES DEMOGRAPHICS—RACIAL & ETHNIC DIVERSITY LO2 African Americans Hispanics Asian Americans  Multicultural Marketing Multicultural Marketing 3-13

FIGURE 3-3 FIGURE 3-3 Racial and ethnic groups (excluding whites) are concentrated in geographic regions of the United States 3-14

 Culture Culture  Changing Values SOCIAL FORCES CULTURE LO2 3-15

ECONOMIC FORCES MACROECONOMIC CONDITIONS LO3  Economy Economy Inflation Recession 3-16

ECONOMIC FORCES CONSUMER INCOME LO3  Gross Income  Disposable Income  Discretionary Income 3-17

FIGURE 3-4 FIGURE 3-4 Distribution of U.S. household gross income:

 Technology Technology  Impact on Customer Value Plummeting Costs New Products TECHNOLOGICAL FORCES ITS FUTURE AND IMPACT ON CUSTOMER VALUE LO4 3-19

Samsung, GoToMeeting, and MySpace Music What products might be replaced with these? LO4 3-20

 Marketspace Marketspace  Electronic Commerce TECHNOLOGICAL FORCES ELECTRONIC BUSINESS TECHNOLOGIES LO4  Intranet  Extranets 3-21

COMPETITIVE FORCES ALTERNATIVE FORMS OF COMPETITION LO5  Competition Competition Pure Competition Oligopoly Pure Monopoly Monopolistic Competition 3-22

FIGURE 3-A FIGURE 3-A Continuum of competition 3-23

 Regulation Regulation  Protecting Competition Robinson-Patman Act (1936) Sherman Antitrust Act (1890) Clayton Act (1914) REGULATORY FORCES FEDERAL LEGISLATION LO6 3-24

 Product-Related Legislation Digital Millennium Copyright Act (1998) Patent Law Copyright Law REGULATORY FORCES FEDERAL LEGISLATION LO6 Nutritional Labeling 3-25

Consumer Product Safety Commission Consumer Product Safety Act (1972) Consumerism REGULATORY FORCES FEDERAL LEGISLATION LO6  Product-Related Legislation 3-26

Trademark Law Revision Act (1988) Landham Act (1946) Madrid Protocol (2003) Federal Dilution Act (1995) U.S. Supreme Court: Trademark Colors Doppelgangers REGULATORY FORCES FEDERAL LEGISLATION LO6  Product-Related Legislation 3-27

MARKETING MATTERS The Web Allows New Uses and Misuses of Trademarks LO6 3-28

Band-Aid, ChapStick, Jell-O, Kleenex, Vaseline, Frisbee, and Q-Tips Are these brand names generic trademarks? LO6 3-29

 Pricing-Related Legislation Price Fixing Price Discounting REGULATORY FORCES FEDERAL LEGISLATION LO6 3-30

Exclusive Dealing Requirement Contracts  Distribution (Place)-Related Legislation Exclusive Territorial Distributorships Tying Arrangement REGULATORY FORCES FEDERAL LEGISLATION LO6 3-31

 Control Through Self-Regulation Control Through Self-Regulation REGULATORY FORCES FEDERAL LEGISLATION LO6 FTC Act of 1914 Do Not Call Registry  Advertising- and Promotion-Related Legislation CAN-SPAM Act (2004)  Cease and Desist Order  Corrective Advertising 3-32

GEEK SQUAD: A NEW BUSINESS FOR A NEW ENVIRONMENT VIDEO CASE

VIDEO CASE 3 Geek Squad 1. What are the key environmental factors that created an opportunity for Robert Stephens to start the Geek Squad? 3-34

2. What changes in the purchasing patterns of (a) all consumers, and (b) women made the acquisition of Geek Squad particularly important for Best Buy? VIDEO CASE 3 Geek Squad 3-35

3. Based on the case information and what you know about consumer electronics, conduct an environmental scan for Geek Squad to identify key trends. For each of the five environmental forces (social, economic, technological, competitive, and regulatory), identify trends likely to influence Geek Squad in the near future. VIDEO CASE 3 Geek Squad 3-36

4. What promotional activities would you recommend to encourage consumers who use independent installers to switch to Geek Squad? VIDEO CASE 3 Geek Squad 3-37

Environmental Scanning Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends. 3-38

Social Forces Social forces are the demographic characteristics of the population and its values. 3-39

Demographics Demographics describe a population according to selected characteristics such as age, gender, ethnicity, income, and occupation. 3-40

Baby Boomers Baby boomers consist of the generation of children born between 1946 and

Generation X Generation X includes the 15 percent of the population born between 1965 and Also called baby bust. 3-42

Generation Y Generation Y includes the 72 million Americans born between 1977 and Also called echo-boom or baby boomlet. 3-43

Multicultural Marketing Multicultural marketing consists of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races. 3-44

Culture Culture consists of the set of values, ideas, and attitudes that are learned and shared among the members of a group. 3-45

Economy The economy pertains to the income, expenditures, and resources that affect the cost of running a business or household. 3-46

Technology Technology consists of the inventions or innovations from applied science or engineering research. 3-47

Marketspace Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings. 3-48

Competition Competition consists of the alternative firms that could provide a product to satisfy a specific market’s needs. 3-49

Regulation Regulation consists of the restrictions state and federal laws place on business with regard to the conduct of its activities. 3-50

Consumerism Consumerism is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions. 3-51

Self-Regulation Self-regulation is an alternative to government control, whereby an industry attempts to police itself. 3-52