The External Environment Jeremy Kees, Ph.D.

Basic Concepts Environmental _______________Environmental _______________ is the process of collecting information about the external marketing environment to identify and interpret potential trends Environmental _______________Environmental _______________ involves marketers’ efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments.

Elements of the Marketing Mix within an Environmental Framework

The Competitive Environment Competitive EnvironmentCompetitive Environment: The interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power. –As a result of the ____________ ____________ there has been a shift from Monopolies to Oligopolies –Do true monopolies still exist today?

Pharma Companies have Temporary Monopolies

Types of Competition __________ Competition –Competitors with similar products –Who are the major pick-up truck players? How about this company? How about this company? __________ Competition –Products that are easily substituted –Who does Mountain Dew compete with?Who does Mountain Dew compete with? Can competition be defined even more broadly??

Marketing Strategy In developing a ____________ _____________, we must ask ourselves…. –Should we compete? –If so, in what markets should we compete? –How should we compete?

Political-Legal Environment Component of the marketing environment consisting of laws and interpretations of laws that require firms to protect: – _________________ and –________________ _________

Laws Affecting Marketing

Protecting Competition Maintaining a Competitive Environment –Aimed at to maintaining a competitive environment by reducing the trend toward monopolies –Key Laws: _______________

Regulating Competition –Meant to protect independent merchants against competition from larger chain stores –Key Laws (to protect Competitors) _______________________

Deregulation –Focused on deregulating specific industries –Key Laws (to further encourage competition) _____________________

Protecting Consumers –Increased focus on consumer protection –Key Laws (to protect Consumers) ___________________ Proposed legislation to require nutrition information

Federal Regulatory Agencies Federal Trade Commission The FCC (telecommunications, radio, and television) The Food and Drug Administration Consumer Products Safety Commission Federal Power Commission Environmental Protection Agency Securities & Exchange Commission

Other Regulatory Forces –Consumer interest groups National Coalition Against Misuse of Pesticides PETA –Special-interest groups American Association of Retired People (AARP) –Self-regulatory groups Direct Marketing Association ___________ ____________ ________

Controlling the Political-Legal Environment –Do the right thing!! –Public Relations Departments –Companies fight unjust regulations Garnering Consumer Support Campaign Funding Political lobbying Political action committees

Economic Environment Factors that influence consumer buying power and marketing strategies Stages in the business cycle –Implications for marketers??Implications for marketers??

Economic Environment Key economic factors to consider and monitor: –Inflation –Deflation –Unemployment –Income More importantly, ____________ _____ –Resource Availability

Technological Environment The application of knowledge in _________, _________, and _________ to marketing. What’s the latest technology that has revolutionized the way we do business??What’s the latest technology that has revolutionized the way we do business??

Technological Environment The Toyota Prius: one of the First Hybrid Automobiles Available for U.S. Auto Buyers

Technological Environment Tech developments can give us a distinct competitive advantage or can put us out of business…

Social-Cultural Environment The relationship between marketing and society and its culture What is the big trend in the US in regard to eating habits?

Social-Cultural Environment

Important cultural issues can help marketers get consumers attention…Important cultural issues can help marketers get consumers attention…

Ethical Issues in Marketing Marketer’s standards of conduct and moral values

Ethical Issues in Marketing Product Strategy –Product qualityProduct quality –Product safety Distribution Strategy –Make product available to all income groups? Pricing Strategy –Most regulated –Price fixing… Promotional Strategy –Source of the majority of ethical issuesSource of the majority of ethical issues –Questionable advertising

Social Responsibility Marketing philosophies, policies, procedures, and actions that have the enhancement of _________ ________ as a primary objective Marketing’s ResponsibilitiesMarketing’s Responsibilities –Traditionally concerned managers’ relationships with customers, employees, and stockholders –Extended to relations with government and the general public –Today, corporate responsibility has expanded to cover the entire societal framework in the US and throughout the world

Social Responsibility