1. Environmental Analysis
Marketing
Chapter 2
Environmental Analysis
Gilbert A. Churchill, Jr J. Paul Peter 1 1 1 1

2. Factors in the Environment
Slide
2-1
Factors in the Environment
Marketing
Mix
Ever-Changing
Marketplace
Social
Natural
Economic
Target
Market
Competition
Product
Place
Promotion
Price
Political &
Legal Factors
Technology
Environmental
Scanning

3. Environmental Scanning
Slide
2-2
Environmental Scanning
Opportunity
Threat
Personal Computer Industry
Technological Advances (Positive Change)
Typewriter Industry
Home Security Industry
Tourism Industry
Increase in Crime Rate (Negative Change)
The practice of tracking external changes that can affect markets, including demand for goods and services. 2 2 2 2

4. Economic Environment P P P P Economic Environment
Slide
2-3
Economic Environment
Economic Environment
Political and Legal Environment
Competitive Environment P P TM P P
Technological Environment
Social Environment
Natural Environment
The overall economy, including business cycles, consumer income and spending pattern. 3 3 3 3

5. Basic Pattern of a Business Cycle
Slide
2-4
Basic Pattern of a Business Cycle
Figure
2.2
Level of Business Activity
Prosperity
Prosperity
Recovery
Recession
Recession
Time
The pattern of the level of business activity 4 4 4 4

6. Consumer Factors Indicators Consumer Income Inflation Gross Income
Slide
2-5
Consumer Factors
Indicators
Consumer Income
Inflation
A rise in the overall price level.
Gross Income
The total amount of money earned in one year by an individual or household.
Disposable
Income
The money an individual or household has left after paying taxes.
Discretionary
Income
The money an individual or household has left after paying taxes and living expenses.

7. Political and Legal Environment
Slide
2-6
The Political and Legal Environment
Economic Environment
Political and Legal Environment
Competitive Environment P P TM P P
Technological Environment
Social Environment
Natural Environment
The laws, regulations and political pressures affecting marketers. 5 5 5 5

8. Political & Legal Factors
Slide
2-7
Political & Legal Factors
Legislation
Impact on Marketing
Sherman Act
(1890)
Prohibits combination, contracts, or conspiracies to trade or monopolization
Clayton Act
(1914)
Prohibits, price discrimination, tying clauses, and exclusive dealer arrangements
FTC Act
(1914)
Created the FTC and gave it investigatory power to deal with antitrust powers
Robinson-Patman Act
(1936)
Prohibits sellers from offering different deals to different customers for like grade & quantity

9. The Social Environment
Slide
2-8
The Social Environment
Economic Environment
Political and Legal Environment
Competitive Environment P P TM P P
Social Environment
Technological Environment
Natural Environment
The people in a society and their values, beliefs and behaviors. 6 6 6 6

10. Population Changes: 1990-2010 Alaska Percent gain 15.0 to 50.1 Hawaii
Slide
2-9
Population Changes:
Figure
2.4
Alaska
Percent gain
15.0 to 50.1
5.0 to 14.9
0 to 4.9
Loss
Hawaii
Source: U.S. Bureau of the Census, Current population Reports, Series P-25. No. 1053, Projections of the population of States by Age, Sex, and race: 10\990 7 7 7 7

11. Social Responsibility & Ethics
Slide
2-10
Social Responsibility & Ethics
Issues
Definition
Social Responsibility
Concern for the social consequences of a person’s or institution’s acts as they may affect the interests of others.
Ethics
The moral principles and values that govern the way an individual or group conducts its activities.
Marketing Ethics
The principles, values, and standards of conduct considered appropriate for marketers.
Morals Vs
Laws
Morals - rules people develop as a result of cultural values and norms.
Laws - values and standards enforced by the courts.

12. The Natural Environment
Slide
2-11
The Natural Environment
Economic Environment
Political and Legal Environment
Competitive Environment P P TM P P
Technological Environment
Social Environment
Natural Environment
The natural resources available to or affected by the organization. 8 8 8 8

13. Natural Environment Issues Definition Demarketing Green Marketing
Slide
2-12
Natural Environment
Issues
Definition
Demarketing
A marketing strategy used to decrease the consumption of a product (e.g., electricity).
Green Marketing
Marketing efforts designed to minimize negative effects on the physical environment or to improve its quality (e.g., Gillette, P & G, Post).
Cause-related Marketing
Marketing designed to promote a cause or an issue (e.g., Target).
Social Marketing
Firms attempt to encourage positive behavior (e.g., increase literacy, discourage drunk driving).

14. Technological Environment
Slide
2-13
The Technological Environment
Economic Environment
Political and Legal Environment
Competitive Environment P P TM P P
Technological Environment
Social Environment
Natural Environment
Scientific knowledge, innovations and inventions that result from research. 9 9 9 9

15. Technology Environment
Slide
2-14
Technology Environment
Issues
Definition
Internet
An international network of computers that provides people global communication and access to million of information resources.
HTML
Hyper Text Mark-up Language - the language used to design web pages.
World Wide Web
A hypertext system that allows users to receive text, graphics, video, and sound by clicking on particular words and images.
Browser
A software program that runs on a personal computer and provides graphical user interface to the WWW (e.g., Netscape Navigator, Microsoft Internet Explorer).

16. Where Are WWW Users Located?
Slide
2-15
Where Are WWW Users Located?
Oceania 4%
Other 2%
Asia 2%
Canada &
Mexico 8%
Europe 11%
United States 73%
Source: GVU’s Fifth WWW User Survey, 1996

17. Internet Security and Privacy Issues
Slide
2-16
Internet Security and Privacy Issues
Electronic Cash
Key
Security/Privacy
Internet
Considerations
Cookies
Firewalls
Spamming

18. Competitive Environment
Slide
2-17
Competitive Environment
Economic Environment
Political and Legal Environment
Competitive Environment P P TM P P
Technological Environment
Social Environment
Natural Environment
All the organizations that could potentially create value for the organization’s customers. 10 10 10 10

19. Competitive Factors Type Description Monopoly Monopolistic Competition
Slide
2-18
Competitive Factors
Type
Description
Monopoly
One Seller, No Close Substitutes
Monopolistic Competition
Large Number of Sellers, Products Distinguishable
Oligopoly
Few Sellers, High Barriers to Entry,
Seek Nonprice Advantage
Pure Competition
Many Sellers, Identical Products, Focus on Lower Product and Distribution Costs

20. Types of Competitive Forces
Slide
2-19
Types of Competitive Forces
Figure
2.5
Threat of New Entrants
Rivalry among Existing Competitors
Bargaining
Power of Suppliers
Bargaining
Power of Buyers
Threat of Substitute Products
Source: Adapted with permission from Michael F. Porter, “Industry Structure and Competitive Strategy: Keys to Productivity:, Financial Analysts Journal, July-August ©1980. The Financial Analysts Federation, Charlottesville, VA. All rights reserved. 5 11 11 11 11