1. SCANNING THE MARKETING ENVIRONMENT
CHAPTER
SCANNING THE MARKETING ENVIRONMENT

2. External Marketing Environment
Demographics
Social
Change
Economic
Conditions
Political &
Legal Factors
Technology
Competition
Environmental
Scanning
Target Market
Product
Distribution
Promotion
Price
External Environment is not controllable
Ever-Changing
Marketplace
Notes:
This slide (exhibit 2.4) demonstrates the continuous evolution in the external marketing environment. The external environmental factors include demographics, social change, economic conditions, political and legal factors, technology, and competition. The external environment can not be controlled by management. However, the marketing mix (the Four Ps) can be controlled and reshaped to influence the target market.
The target market is a defined group that is most likely to buy a firm’s products.
Discussion/Team Activity:
Discuss the evolution and changes in the computer industry during the last twenty years. How has the external environment changed? How has the target market and marketing mix changed? What external environmental conditions are challenging the computer industry today? What reshaping would you recommend to enhance the drop in computer sales?

3. An environmental scan of today’s marketplace

4. Social Forces- The Poverty of Time
A lack of time to do anything but work, commute to work, handle family situations, do housework, shop, eat, sleep...
Notes:
Consumers place value on nonmaterial accomplishments, such as having control of their lives and taking time off work. This was clearly demonstrated after the September 11 terrorist attack.
A poverty of time means that people will decrease the amount of time spent doing things they dislike. This includes performing less housework and home maintenance, and dining out more. The purchase of brand names makes buying decisions quicker and easier. Small shops are favored over large ones, and technology is used to reduce transaction times.
Discussion/Team Activity:
What businesses and services provide helpful solutions to the poverty of time issue?

5. SOCIAL FORCES- Demographics
The World Population at a Glance – 6.4 billion
Growth in developing nations
Shift of age structure of populations
Rising income levels and living standards
Implications?

6. Social Forces - Demographics
The U.S. Population – 297 Million
Growth by immigration = niche markets
Generational Cohorts
Baby Boomers-‘46-’64
Generation X-’65-’76
Generation Y-’77-’94
- (Millennials) techno-savvy, live for today
-Increased earnings-seek youth
-Well educated, more tolerant, practical

7. SOCIAL FORCES Demographics
Population Shifts toward West & South – Why?
Metropolitan Statistical Area – %
50,000- urban center; suburban collar up to 2.5M
Ex-Chicago
Micropolitan Statistical Area %
10,000-50,000 urban center; large suburb collar
Ex-Carbondale

8. Macroeconomic Conditions
ECONOMIC FORCES
-Economy
Macroeconomic Conditions
Inflation-rise in prices without rise in wages
Recession-drop in income, production and employment
Microeconomic Conditions
Consumer Income
Gross Income – 100% of earnings
Disposable Income-85% of earnings
Discretionary Income-15% of earnings

9. ECONOMIC FORCES
Disposable vs Discretionary income
Implications?

10. Income Distribution of U. S. Households

11. Technological Factors
New technology is a weapon against inflation and recession
U.S. excels at basic research
Japan excels at applied research
Information technology and the Internet have increased productivity

12. COMPETITIVE FORCES
-Competition

13. Protecting Competition
REGULATORY FORCES
Protecting Competition
Sherman Antitrust Act (1890) – no monopolies
Clayton Act (1914)- no monopoly activity
Robinson-Patman Act (1936)-
no differential pricing to undercut “little” guy

14. Product-Related Regulation
REGULATORY FORCES
Product-Related Regulation
Company Protection
Patent Law
-for ideas and inventions
Copyright Law
-for written works
Digital Millennium Copyright Act (1998)
-for DVD’s, MP3’s & software

15. Product-Related Regulation
REGULATORY FORCES
Product-Related Regulation
Consumer Protection
Nutritional Labeling & Education Act (1990)
Consumer Product Safety Act (1972)
Consumer Product Safety Commission
The above and other laws came about
due to cultural shift towards Consumerism

16. Advertising and Promotion-Related Legislation
REGULATORY FORCES
Advertising and Promotion-Related Legislation
FTC Act of 1914-no deceptive ads or practices
Penalties are:
Cease and Desist Order
Corrective Advertising
Do Not Call Registry
Children’s online privacy Protection Act 1998
CAN-SPAM Act (2004)

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

18. Demographics
Demographics describes a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.

19. Baby Boomers
Baby boomers is the generation of children born between 1946 and 1964.

20. Generation X
Generation X includes the 15% of the U.S. population born between 1965 and 1976.

21. Generation Y
Generation Y includes the 72 million Americans born between 1977 and 1994.

22. Culture
Culture incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group.

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

24. Technology
Technology refers to inventions from basic engineering research or innovations from applied science research.

25. Competition
Competition refers to the alternative firms that could provide a product to satisfy a specific market’s need.

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