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O R G A N I C S C O M P A N Y
ExaminingandRespondingtotheMarketingEnvironment
» The marketing environment consists of external forces that directly and
indirectly influence an organization’s acquisition of inputs (human,
financial, natural resources, and raw materials and information) and
creation of outputs (goods, services, or ideas).
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3. BEST FOR You
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EnvironmentalScanning
» To monitor changes in the marketing environment,
marketers engage in environmental scanning and analysis.
» Environmental scanning is the process of collecting
information about forces in the marketing environment.
» Scanning involves observation; secondary sources such as
business, trade, government, and general-interest
publications; marketing research.
» Environmental scanning gives companies an edge over
competitors in allowing them to take advantage of current
trends.
» However, simply gathering information about competitors
and customers is not enough; companies must know how
to use that information in the strategic planning process.
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4. BEST FOR You
O R G A N I C S C O M P A N Y
EnvironmentalAnalysis
» Environmental Analysis is the process of assessing and interpreting the information
gathered through environmental scanning.
» In particular, environmental analysis can help marketing managers assess the
performance of current marketing efforts and develop future marketing strategies.
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6. BEST FOR You
O R G A N I C S C O M P A N Y
Competitive
Forces
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7. BEST FOR You
O R G A N I C S C O M P A N Y
CompetitiveForces
» Few firms, if any, operate free from
competition.
» In fact, for most goods and services
customers have many alternatives from
which to choose.
» Competition are other organizations that
market products that are similar to or can
be substituted for a marketer’s products in
the same geographic area.
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8. BEST FOR You
O R G A N I C S C O M P A N Y
CompetitiveForces
» Brand competition – markets products with similar features and benefits to the same
customers at similar prices.
» Product competitors – compete in the same product class but market products with
different features, benefits, and prices.
» Generic competitors – provide very different products that solve the same problem or
satisfy the same basic customer need.
» Total budget competitors – compete for the limited financial resources of the same
customer.
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9. BEST FOR You
O R G A N I C S C O M P A N Y
Typesof CompetitiveStructures
» Monopoly – exists when an organization offers a product that has no close substitutes,
making that organization the sole source of supply
» Oligopoly – exists when a few sellers control the supply of a large proportion of a
product
» Monopolistic competition – exists when a firm with many potential competitors
attempts to develop a marketing strategy to differentiate its product
» Pure competition – would entail an extremely large number of sellers, none of which
could significantly influence price of supply.
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10. BEST FOR You
O R G A N I C S C O M P A N Y
MonitoringCompetition
» Marketers need to monitor the actions of major competitors to determine what specific
strategies competitors are using and how those strategies affect their own.
» In monitoring competition, it is not enough to analyze available information; the firm
must develop a system for gathering ongoing information about competitors and
potential competitors.
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11. BEST FOR You
O R G A N I C S C O M P A N Y
Economic Forces
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12. BEST FOR You
O R G A N I C S C O M P A N Y
EconomicForces
» Economic Conditions
» The overall state of the economy fluctuates in all countries. Fluctuations in the economy
follow a general pattern, often referred to as the business cycle.
» It has four stages:
• Prosperity – stage characterized by low unemployment and relatively high total income,
which together ensure high buying power
• Recession – stage in which unemployment rises and total buying power declines, stifling both
consumer and business spending
• Depression – unemployment is extremely high, wages are very low, total disposable income is
at a minimum, and consumers lack confidence in the economy
• Recovery - economy moves from recession or depression toward prosperity
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O R G A N I C S C O M P A N Y
EconomicForces
» Buying Power
» The strength of a person’s buying power
depends on economic conditions and the size
of the resources – money, goods, services that
can be traded in an exchange – that enable the
individual to make purchases.
» The major financial sources of buying power
are income, credit, and wealth.
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14. BEST FOR You
O R G A N I C S C O M P A N Y
EconomicForces
» For an individual, income is the amount of money received through wages, rents,
investments, pensions, and subsidy payments for a given period, such as a month or a
year.
» Marketers are most interested in the amount of money left after payment of taxes
because this disposable income is used for spending or saving.
» Disposable income that is available for spending and saving after an individual
purchased basic necessities of food, clothing, and shelter is called discretionary income.
» Credit enables people to spend future income now or in the near future.
» Wealth is the accumulation of past income, natural resources, and financial resources. It
exist in many forms, including cash, securities, savings accounts, gold, jewelry, and real
estate.
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15. BEST FOR You
O R G A N I C S C O M P A N Y
EconomicForces
» Willingness to spend
» People’s willingness to spend – their inclination to buy because of expected satisfaction
from a product – is, to some degree related to their ability to buy.
» People are sometimes willing to buy if they have the buying power.
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O R G A N I C S C O M P A N Y
PoliticalForces
» Political, legal, and regulatory forces of
the marketing environment are closely
interrelated.
» Legislation is enacted, legal decisions are
interpreted by courts, and regulatory
agencies are created and operated, for
the most part, by elected or appointed
officials.
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17. BEST FOR You
O R G A N I C S C O M P A N Y
PoliticalForces
» Marketing organizations strive to maintain
good relations with elected and appointed
officials for several reasons. Political officials
well disposed toward particular firms or
industries are less likely to create or enforce
laws and regulations unfavorable to those
companies.
» Companies can also participate in the political
process by lobbying to persuade public and/or
government officials to favor a particular
position in decision making.
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18. BEST FOR You
O R G A N I C S C O M P A N Y
Legal and
Regulatory Forces
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19. BEST FOR You
O R G A N I C S C O M P A N Y
LegalandRegulatoryForces
» A number of laws influence marketing decisions and activities.
» Procompetitive Competition – laws designed to preserve competition.
» Consumer Protection Legislation – laws that prohibit adulteration of food and drugs,
consumer safety, information disclosure, product development and testing, packaging,
labeling, advertising, among others.
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20. BEST FOR You
O R G A N I C S C O M P A N Y
Technological
Forces
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21. BEST FOR You
O R G A N I C S C O M P A N Y
TechnologicalForces
» Technology is the application of knowledge
and tools to solve problems and perform
tasks more efficiently.
» Technology grows out of research
performed by businesses, universities,
government agencies, and non-profit
organizations.
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O R G A N I C S C O M P A N Y
Technology
» Technology determines how we, as members of society, satisfy our physiological needs.
» In various ways and in varying degrees, eating and drinking habits, sleeping patterns,
sexual activities, health care, and work performance are all influenced by both existing
technology and changes in technology.
• Technological revolution in communication
• cellphones / mobile devices
• Internet
» Negative – privacy, intellectual property, hacking, etc.
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O R G A N I C S C O M P A N Y
Technology
» Many companies lose their status as market leaders because they fail to keep up with
technological changes.
» It is important for firms to determine when a technology is changing the industry and to
define the strategic influence of the new technology.
» Through a procedure known as technological assessment, managers try to foresee the
effects of new products and processes on their firm’s operations, on other business
organizations, and on society in general.
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24. BEST FOR You
O R G A N I C S C O M P A N Y
Sociocultural
Forces
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25. BEST FOR You
O R G A N I C S C O M P A N Y
SocioculturalForces
» Sociocultural forces are the influences in
a society and its culture(s) that bring
about changes in people’s attitudes,
beliefs, norms, customs, and lifestyles.
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26. BEST FOR You
O R G A N I C S C O M P A N Y
SocioculturalForces
» Demographic and Diversity Characteristics
» Changes in a population’s demographic characteristics – age, gender, race, ethnicity,
marital and parental status, income, and education – have a significant bearing on
relationships and individual behavior.
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27. BEST FOR You
O R G A N I C S C O M P A N Y
SocioculturalForces
» CulturalValues
» Changes in cultural values have dramatically influenced people’s needs and desires for
products.
» Starting in the late 1980s, issues of health, nutrition, and exercise grew in importance.
Children and family values continue to be very important as well.
» Trends nowadays show green marketing helps establish long-term consumer
relationships by maintaining, supporting, and enhancing the natural environment.
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28. BEST FOR You
O R G A N I C S C O M P A N Y
SocioculturalForces
» Consumerism
» Consumerism involves organized efforts by individuals, groups, and organizations to
protect consumers’ rights.
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