2011.2.04 Marketing

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  • Chapter 4 The Marketing Environment Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: This slide 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 a decline in computer sales?
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: Social change is the most difficult external variable for marketing managers to forecast, influence, or integrate intomarketing plans. Social factors influence the products people buy, the price paid, the effectiveness of specific promotions, and how, where, and when people expect to purchase products.
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: A value is a strongly held and enduring belief. The four basic values shown influenced the attitudes and lifestyles during the first 200 years of the United States. They are: Self-sufficiency: Every person should stand on his or her own two feet. Upward mobility: Success comes with getting an education, working hard, and playing by the rules. Work ethic: Hard work, dedication to family and frugality. Conformity: No one should expect to be treated differently from everybody else. Values are formed through interaction with family, friends, and influencers such as teachers, religious leaders, and politicians. The environment can also play a role in shaping values. Discussion/Team Activity: What environmental influences have affected the values of Americans? Examples: Great Depression, Women’s Role in the Workplace, Hippie Revolution of 1960s, the September 11 terrorist attack.
  • Chapter 4 The Marketing Environment Notes: Values influence our buying habits. Consumers demand high-quality goods that save energy, time, and calories! Furthermore, the products must be durable and not break down. This slide shows the ranked characteristics of product quality that are important to consumers. Discussion/Team Activity: 1. Discuss products that demonstrate high quality standards in each of the ranking categories.
  • Chapter 4 The Marketing Environment Notes: A lifestyle is a mode of living. People are choosing products and services that meet diverse needs and interests rather than conforming to traditional stereotypes. The unique lifestyles of every consumer can require a different marketing mix.
  • Chapter 4 The Marketing Environment Notes: The phenomenon of working women has had a greater effect on marketing than has any other social change. Furthermore, the growth of dual-income families has resulted in increased purchasing power. As women’s earnings grow, so do their levels of expertise, experience, and authority. Women expect different things in life. Additionally, there is never enough time to do all they need to do. As a result, busy families are turning technology to their advantage and shopping more on the Internet.
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: The next uncontrollable variable in the external environment is demography: the study of people’s vital statistics, such as age, race and ethnicity, and location. Demographic characteristics are strongly related to consumer buyer behavior.
  • Chapter 4 The Marketing Environment Notes: Marketers refer to designated age-cohort groups by these name: tweens, Generation Y, Generation X, and baby boomers. Each cohort has its own needs, values, and consumption patterns.
  • Chapter 4 The Marketing Environment Discussion/Team Activity: Identify some mature brands favored by the baby boomers. Discuss how these brands might successfully be marked to Generation Y.
  • Chapter 4 The Marketing Environment Discussion/Team Activity: 1. Name some ways that companies have marketed successfully to Generation Xers.
  • Chapter 4 The Marketing Environment Notes: A recent lifestyle study divided this huge market into four segments: Looking for balance. Very active and saving time is important. Opportunities for travel-related businesses and food-service businesses. Confident and living well. Highest incomes of all segments and enjoy being the first to purchase a new product. Stylish and trendy. Opportunities for luxury goods and services. At ease boomers. Do not worry about future, job, or financial security. Home-centric and family-oriented. Opportunities for traditional household products. Brand names resonate strongly. Overwhelmed boomers. Lowest income of all segments and worry about the future. Health is a big concern. Below average on accepting technology and on using electronic, digital, and tech products.
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: In 2008, Hispanics wielded more than $1 trillion in spending power, African Americans spent over $921 billion, and Asian Americans spent $526 billion. This far outpaces total U.S. growth in buying power. Hispanics are America’s largest minority group with 12.5 percent of the population, followed by African Americans with 12.3 percent and Asian Americans with 3.6 percent.
  • Chapter 4 The Marketing Environment Notes : Nearly 60% of Hispanic Americans are of Mexican descent, Puerto Rican make up just under 10% of Hispanics, and others groups (Central Americans, Dominicans, South Americans, and Cubans) each account for less than 5 percent of all Hispanics Hispanics will choose brands that reflect their native values and culture.
  • Chapter 4 The Marketing Environment Notes : 1. An effective way to reach a specific segment of the African-American market is to create a nontraditional marketing campaign.
  • Chapter 4 The Marketing Environment Notes : Asian Americans represent only 4.2% of the U.S. population Have the highest average family income of all groups - $66,500 60% of all Asian Americans have at least a bachelor’s degree Key groups of Asian Americans are: Chinese Filipino Asian Indian Vietnamese Korean Japanese
  • Chapter 4 The Marketing Environment Notes : San Francisco County is the most diverse county in the nation
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: 1. The next external factor is the economic environment.
  • Chapter 4 The Marketing Environment Notes: The three economic areas of greatest concern to marketers are consumers’ incomes, inflation, and recession.
  • Chapter 4 The Marketing Environment Notes: U.S. incomes have continued to rise, but at a slower pace. Only 1 percent of those with a high-school education earn over $100,000 annually.
  • Chapter 4 The Marketing Environment Notes: Women are now the primary buyers in male-dominated categories: 68% of new cars 66% of computers 60% of home improvements 53% of investments 51% of consumer electronics
  • Chapter 4 The Marketing Environment Notes : Improve existing products and introduce new ones: The goal is to reduce production hours, waste, and the cost of materials. Maintain and expand customer services: In a recession, many organizations post-pone the purchase of new equipment and materials. Emphasize top-of-the-line products and promote product value: Customers with less to spend will seek demonstrated quality, durability, satisfaction, and capacity to save time and money.
  • Chapter 4 The Marketing Environment Using gambling parlance, Wal-Mart’s CMO (Chief Merchandising Officer) says the main thrust of the company’s strategy are its Win/Play/Draw categories: “ Win” categories include hot-selling items such as electronics that Wal-Mart is able to outmaneuver its rivals with lower prices. “ Play” categories apply to areas such as apparel where the company can be a “player” but is unlikely to achieve dominance. “ Show” categories are items that a customer can count on being there without having to make separate trips to other stores, such as Home Depot or Walgreens.
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: Business needs government regulations to protect new technology innovations, the interests of society, one business from another, and consumers. Government needs business for generation of taxes. The private sector serves as a counterweight to government. Every aspect of the marketing mix is subject to laws and restrictions. It is the responsibility of marketing managers to understand and conform to these laws, while creating new programs to accomplish marketing objectives.
  • Chapter 4 The Marketing Environment Notes: Exhibit 4.4 states the impact on marketing from each of these Federal acts.
  • Chapter 4 The Marketing Environment Notes: The regulatory agencies shown on this slide are the three federal agencies most directly and actively involved in marketing affairs.
  • Chapter 4 The Marketing Environment Notes: The FTC’s powers are described in Exhibit 4.6.
  • Chapter 4 The Marketing Environment Notes: The popularity of the Internet for collecting consumer data has alarmed privacy-minded consumers. While privacy policies for U.S. companies are largely voluntary, collecting consumer data outside the United States is a different matter. More than 50 nations have developed privacy legislation. Common privacy rules includes obtaining data fairly and lawfully and using the information only for the original specified purpose. Identity theft costs $55 billion per year. Three laws have been passed to protect consumers.
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment
  • Chapter 4 The Marketing Environment Notes: The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry. Management has little control over the competitive environment.
  • Chapter 4 The Marketing Environment Notes: Firms find they must work harder to maintain profits and market share regardless of the competitive environment. For example, after September 11, 2001, the airline industry imploded. United Airlines, Delta Airlines, and Northwest Airlines declared bankruptcy. American Airlines teetered on the brink of bankruptcy. Survival meant cutting costs and squeezing out revenue wherever possible. Yet Southwest Airlines turned a profit based on its efficient cost-saving strategies. Many foreign competitors are considering the U.S. to be a ripe target market. In the past, foreign firms penetrated U.S. markets on price. Today, they compete on product quality. Global competition is discussed in Chapter 5.
  • 2011.2.04 Marketing

    1. 1. Lamb, Hair, McDaniel CHAPTER 4 The Marketing Environment 2010-2011
    2. 2. LO 1 Discuss the external environment of marketing, and explain how it affects a firm LO 2 Describe the social factors that affect marketing LO 3 Explain the importance to marketing managers of current demographic trends LO 4 Explain the importance to marketing managers of multiculturalism and growing ethnic markets Learning Outcomes
    3. 3. LO 5 Identify consumer and marketer reactions to the state of the economy LO 6 Identify the impact of technology on a firm LO 7 Discuss the political and legal environment of marketing LO 8 Explain the basics of competition Learning Outcomes
    4. 4. The External Marketing Environment Discuss the external environment of marketing and explain how it affects a firm LO 1
    5. 5. Target Market <ul><li>Defined group most likely to buy a product </li></ul><ul><ul><li>Changes as consumers age </li></ul></ul><ul><ul><li>External elements change consumers’ desires </li></ul></ul>LO 1
    6. 6. External Marketing Environment LO 1 Demographics Social Change Economic Conditions Political & Legal Factors Technology Competition Environmental Scanning Target Market External Environment (uncontrollable) Ever-Changing Marketplace Product Distribution Promotion Price Internal (within the organization) Marketing mix
    7. 7. Understanding Competition <ul><li>TJ Maxx offers designer brands at discount prices </li></ul><ul><ul><ul><li>2009 campaign compares the stores prices to those at boutiques and department stores: </li></ul></ul></ul><ul><ul><ul><ul><li>http://www.metacafe.com/watch/2591384/tj_maxx_commercial_6/ </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Acknowledging budgetary restraints will drive budget conscious shoppers to the store </li></ul></ul></ul></ul>LO 1
    8. 8. Social Factors Describe the social factors that affect marketing LO 2
    9. 9. Social Factors LO 2 Values Attitudes Lifestyle
    10. 10. Social Factors LO 2 Social Factors Influence: Products purchased Prices paid for products Effectiveness of promotions How, where, and when people purchase
    11. 11. Social Factors Core American Values LO 2 Self-Sufficiency Upward Mobility Work Ethic Conformity
    12. 12. The Influence of Values on Buying Habits LO 2 Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price
    13. 13. 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. <ul><li>Today’s consumers want multifunctional products </li></ul><ul><ul><li>No longer defined only by occupation </li></ul></ul>LO 2
    14. 14. Role of Families and Working Women <ul><li>Growth of dual-income families results in increased purchasing power </li></ul><ul><li>Approximately 60% of work-age females are in the workforce </li></ul><ul><li>Women expect different things in life </li></ul><ul><ul><li>purchase bulk of technology products </li></ul></ul><ul><ul><li>second largest group of home buyers after couples </li></ul></ul><ul><li>Single households outnumber married households with kids </li></ul>LO 2
    15. 15. Demographic Factors Explain the importance to marketing managers of current demographic trends LO 3
    16. 16. Demographic Factors <ul><li>People are the basis for any market </li></ul><ul><ul><li>Demographic characteristics relate to buyer behavior </li></ul></ul><ul><ul><ul><li>Tailoring products to what customers value is key to sales </li></ul></ul></ul><ul><ul><ul><li>Demographic cohorts have their own needs, values, and consumption patterns. </li></ul></ul></ul>LO 3
    17. 17. Tweens <ul><li>Pre- and early adolescents, age 8 to 14 </li></ul><ul><li>Population of 29 million </li></ul><ul><li>Purchasing power of $39 billion annually </li></ul><ul><li>Parents spend $150 billion on tweens annually </li></ul><ul><li>View TV ads as “just advertising” </li></ul>LO 3
    18. 18. Generation Y <ul><li>Born between 1979 and 1994 </li></ul><ul><li>Population of 60 million </li></ul><ul><li>Purchasing power of $200 billion annually </li></ul><ul><li>Researchers have found Gen Yers to be: </li></ul><ul><ul><li>Impatient </li></ul></ul><ul><ul><li>Family-oriented </li></ul></ul><ul><ul><li>Inquisitive </li></ul></ul><ul><ul><li>Opinionated </li></ul></ul><ul><ul><li>Diverse </li></ul></ul><ul><ul><li>Time managers </li></ul></ul><ul><ul><li>“ Street Smart” </li></ul></ul><ul><ul><li>Connected </li></ul></ul>LO 3
    19. 19. Generation X <ul><li>Born between 1965 and 1978 </li></ul><ul><li>Population of 40 million </li></ul><ul><li>Savvy and cynical consumers </li></ul><ul><li>More protective and involved with their kids </li></ul><ul><li>Value the importance of education </li></ul><ul><li>Avid buyers of the latest clothes, technology, and recreational products </li></ul>LO 3
    20. 20. Baby Boomers <ul><li>Born between 1946 and 1964 </li></ul><ul><li>Population of 77 million— the largest demographic segment </li></ul><ul><li>Income will continue to grow as they keep working </li></ul><ul><li>Working longer to compensate for economic downturn, which affected retirement savings </li></ul><ul><li>May brand-hop more than younger consumers </li></ul>LO 3
    21. 21. Current Demographic Trends LO 3 Age Tweens 8 to 14 yrs 29 million Gen Y 1979-1994 60 million Gen X 1965-1978 40 million Baby Boom 1946-1964 77 million
    22. 22. Growing Ethnic Markets Explain the importance to marketing managers of multiculturalism and growing ethnic markets LO 4
    23. 23. Growing Ethnic Markets <ul><li>Spending power of ethnic markets in 2008: </li></ul><ul><ul><li>Hispanics: $1 trillion </li></ul></ul><ul><ul><li>African Americans: $921 billion </li></ul></ul><ul><ul><li>Asian Americans: $526 billion </li></ul></ul><ul><li>Diversity can result in bottom-line benefits to companies. </li></ul>LO 4
    24. 24. Marketing to Hispanic Americans <ul><li>The population’s diversity creates challenges for targeting this group. </li></ul><ul><li>Hispanics tend to be brand loyal, but are not aware of many U.S. brands. </li></ul><ul><li>68% of U.S. Hispanics have home Internet access. </li></ul><ul><ul><li>The NBA expands its appeal with pages appealing directly to the spanish-language market: </li></ul></ul><ul><ul><ul><ul><li>http://www.nba.com/enebea/ </li></ul></ul></ul></ul>LO 4
    25. 25. Marketing to African Americans <ul><li>Many firms are creating products for the African American market. </li></ul><ul><li>Promotional dollars and media choices directed toward African Americans continue to increase. </li></ul>LO 4
    26. 26. Marketing to Asian Americans <ul><li>Younger, better educated, and have highest average income of all groups </li></ul><ul><ul><li>Sometimes called a “marketer’s dream” </li></ul></ul><ul><li>Many products have been developed for Asian American market. </li></ul><ul><li>Cultural diversity within the Asian American market complicates promotional efforts. </li></ul>LO 4
    27. 27. Ethnic and Cultural Diversity <ul><li>Multiculturalism: occurs when all major ethnic groups in an area (city, county, or census tract) are roughly equally represented </li></ul><ul><li>U.S. trend is toward greater multiculturalism </li></ul><ul><li>America’s racial and ethnic patterns have taken on distinctly regional dimensions </li></ul>LO 4
    28. 28. Multiculturalism and Growing Ethnic Markets LO 4
    29. 29. <ul><li>“ [With ethnic marketing] you're going to get more share of the heart, more share of the mind, and ultimately, more share of the wallet.” </li></ul><ul><ul><li>About one in three U.S. residents is a minority, representing over 100.7 million people. </li></ul></ul><ul><ul><li>7 states more than tripled their Hispanic population between 1990 and 2000: Alabama, Arkansas, Georgia, North Carolina, South Carolina, Tennessee, and Nevada. </li></ul></ul><ul><ul><li>Twenty percent of babies born in the United States are Latino. </li></ul></ul>Why Multicultural Marketing? SOURCE: Mike Robinson, CEO LaVerdad Marketing & Media, http://www.laverdadmarketing.com/la_casa.htm ; Lisa Biank Fasig, &quot;An Expanding Business for an Expanding Market,&quot; Business Courier of Cincinnati , September 7, 2007 LO 4
    30. 30. Economic Factors Identify consumer and marketer reactions to the state of the economy LO 5
    31. 31. Economic Factors LO 5 Consumer ’ s Income Purchasing Power Inflation Recession
    32. 32. Consumers’ Incomes <ul><li>Median U.S. household income in 2008 was approximately $49,000. </li></ul><ul><li>Incomes have risen at a slow pace. </li></ul><ul><li>Education is the primary determinant of earning potential. </li></ul>LO 5
    33. 33. The Financial Power of Women <ul><li>Women bring in half or more of the household income </li></ul><ul><li>Women control 51.3 percent of the private wealth in the U.S. </li></ul><ul><li>Women control 80 percent of household spending </li></ul>LO 5 Beyond the Book
    34. 34. Recession Marketing Strategies <ul><li>Improve existing products and introduce new ones </li></ul><ul><li>Maintain and expand customer services </li></ul><ul><li>Emphasize top-of-the-line products and promote product value </li></ul>LO 5
    35. 35. Thriving in an Economic Downturn <ul><li>Wal-Mart saw double-digit profit growth during the recent economic downturn. How? A shift in strategy it calls Win/Play/Draw: </li></ul><ul><li>Win: Outmaneuver competitors with low prices on hot products (flat-screen TVs) </li></ul><ul><li>Play: Reduce range of offerings to feature “hot sellers” (its $20 L.e.i. jeans) </li></ul><ul><li>Draw: Keep a stock of one-stop-shopping essentials (hardware, pharmacy items) </li></ul>LO 5
    36. 36. Economic Factors LO 5
    37. 37. Technological Factors Identify the impact of technology on a firm LO 6
    38. 38. Research LO 6 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
    39. 39. RSS and Blogging <ul><li>RSS feeds deliver updated news content according to users interests </li></ul><ul><li>Blogs allow marketers a way to look into consumer opinions with a simple search </li></ul><ul><ul><ul><li>Many blogs devoted to discussing advertisements, here are 10 popular ones: </li></ul></ul></ul><ul><ul><ul><ul><li>http://www.blogs.com/topten/10-popular-advertising-blogs/ </li></ul></ul></ul></ul>LO 6
    40. 40. Political and Legal Factors Discuss the political and legal environment of marketing LO 7
    41. 41. Political and Legal Factors LO 7 <ul><li>New technology </li></ul><ul><li>Society </li></ul><ul><li>Businesses </li></ul><ul><li>Consumers </li></ul>Laws and Regulations Protect:
    42. 42. Federal Legislation LO 7 <ul><ul><li>Sherman Act </li></ul></ul><ul><ul><li>Clayton Act </li></ul></ul><ul><ul><li>Federal Trade Commission Act </li></ul></ul><ul><ul><li>Celler-Kefauver Antimerger Act </li></ul></ul><ul><ul><li>Hart-Scott-Rodino Act </li></ul></ul>Regulate competitive environment Robinson-Patman Act Regulate pricing practices Wheeler-Lea Act Control false advertising
    43. 43. Regulatory Agencies Consumer Product Safety Commission Federal Trade Commission Food & Drug Administration Protects consumer safety in and around their homes Prevents unfair methods of competition in commerce Enforces safety regulations for food and drug products LO 7
    44. 44. Powers of the FTC LO 7 Cease-and-Desist Order Consent Decree Affirmative Disclosure Corrective Advertising Restitution Counteradvertising
    45. 45. Consumer Privacy LO 7 <ul><li>Gramm-Leach-Bliley Act </li></ul><ul><li>Health Insurance Portability and Accountability Act (HIPPA) </li></ul><ul><li>California’s Notice of Security Breach Law </li></ul>Government Actions
    46. 46. Political and Legal Environment of Marketing LO 7
    47. 47. Competitive Factors Explain the basics of competition LO 8
    48. 48. Competitive Factors LO 8 <ul><li>How many competitors? </li></ul><ul><li>How big are competitors? </li></ul><ul><li>How interdependent is the industry? </li></ul>Control
    49. 49. Competitive Factors <ul><li>Competition for Market </li></ul><ul><li>Share and Profits </li></ul><ul><li>Firms must work harder to maintain profits and market share. </li></ul><ul><li>Global Competition </li></ul><ul><li>More foreign firms are entering U.S. market. </li></ul><ul><li>Foreign firms in U.S. now compete on product quality. </li></ul>LO 8

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