kerinmarketing3

AFTER READING THIS CHAPTER

YOU SHOULD BE ABLE TO:

•Understand how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces

•

•Explain how social forces such as demographics and culture and economic forces such as macroeconomic conditions and consumer income affect marketing

•Describe how technological changes
can affect marketing

•

•Understand the forms of competition
that exist in a market, key components
of competition, and the impact of competition on corporate structures.

•Explain the major legislation that ensures competition and regulates the elements of the marketing mix.

SCANNING THE MARKETING ENVIRONMENT

HOW AN 18-YEAR-OLD
CHANGED THE WORLD
…WITH MUSIC!

ENVIRONMENTAL SCANNING IN THE NEW MILLENIUM

Tracking Environmental Trends

Environmental Scanning

The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning

FIGURE 3-1 Environmental forces affecting the organization, as well as its suppliers and customers

ENVIRONMENTAL SCANNING IN THE NEW MILLENIUM

•An Environmental Scan of the United States

FIGURE 3-2 An environmental scan of the United States

•Demographics

•The Population Trend

§Mature household

•The Baby Boom, Generation X,
and Generation Y

§Baby boomers

•The Baby Boom, Generation X,
and Generation Y (cont)

§Generation X
§Generation Y

•The American Family

§Blended family

•Population Shifts
•Racial and Ethnic Diversity

Regional Marketing

The social forces of the environment include the demographic characteristics of the population and its values.

Describing the population according to selected characteristics such as their age, gender, ethnicity, income, and occupation is referred to as demographics.

Mature Households

Mature households are headed by people over 50 years old and represent the fastest-growing age segment in the population.

The generation of children born between 1946 and 1964 is know as the baby boomers.

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

Generation Y refers to Americans born after 1976, the year that many baby boomers began having children.

A blended family is formed when divorced people remarry and merge into
a single household.

Regional Marketing

Regional marketing focuses on the differences in product preferences of consumers based on where they live.

FIGURE 3-3 The changing distribution of the over-65 population in the United States

FIGURE 3-4 Racial and Ethnic concentrations in
the United States

•Culture

•The Changing Attitudes and Roles of Women
•Changing Values
§Value consciousness

Culture incorporates the set of values, ideas, and attitudes of a homogenous group of people that are transmitted from one generation to the next.

Value Consciousness

Value consciousness is the concern for obtaining the best quality, features, and performance of a product for a given price.

1. Explain the term regional marketing.

A: A strategy of developing marketing plans to reflect specific preferences in taste, perceived needs, or interests.

2. What are the marketing implications of blended families?

A: Products may have to be redefined in areas such as building and design of housing.

3. How are important values such as “health and fitness” reflected in the marketplace today?

A: Concern for health and fitness is one reason 51 million people in the U.S. report that they are trying to control their weight. They are less likely to “diet” than to create a healthy and balanced lifestyle. Stouffer’s Lean Cuisine is a response to this trend. Other products related to it include vitamins, exercise equipment, fitness drinks, and magazines such are Fitness,
Runner’s World, and Walking.

•Macroeconomic Conditions
•Consumer Income

§Gross Income

§Disposable Income

§Discretionary Income

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

The total amount of money made in one year by a person, household, or family unit is referred to as gross income

Disposable Income

Disposable income is the money a consumer has left after paying taxes to use for food, shelter and clothing.

Discretionary Income

Discretionary income is the money that remains after paying for taxes and necessities.

FIGURE 3-5 University of Michigan consumer sentiment index and automobile sales: 1970-2000

FIGURE 3-6 Income distributions of U.S. households

Technological Forces

•Technology of Tomorrow

•Technology’s Impact on Customer Value

•Electronic Business Technologies

§Marketspace
§Electronic commerce
§Internet and Worldwide Web
§Commercial online services
§Intranet
§Extranets

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

Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.

Electronic Commerce

Any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services is often called electronic commerce

The Internet is an integrated global network of computers that gives users access to information and documents.

The World Wide Web is part of the Internet that supports a retrieval system that formats information and documents into Web pages.

Commercial Online Services

Commercial online services offer electronic information and marketing services to subscribers who are charged a monthly fee.

Extranets use Internet-based technologies to permit communication between a company and its suppliers, distributors, and partners.

An Intranet is an Internet/Web based network used within the boundaries of an organization.

Competitive Forces

•Alternate Forms of Competition

§Pure competition
§Monopolistic competition
§Oligopoly
§Monopoly

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

Competitive Forces

•Components of Competition

•Entry Barriers to Entry
•Power of Buyers and Suppliers
•Existing Competitors and Substitutes
•Start-Ups, Entrepreneurs, and Small
Business

•The New Look in American Corporations

Barriers to Entry

Barriers to entry are business practices or conditions that make it difficult for new firms to enter the market.

1. What is the difference between a consumer’s disposable and discretionary income?

A: Disposable income is the money a consumer has left after paying taxes to use for food, clothing, and shelter. Discretionary income is the money that remains after paying for taxes and necessities.

2. In pure competition there are
_______ number of sellers.

A: A large

3. What is a network organization?

A: A firm that uses the Web as a management tool, giving everyone in the organization the ability to access and process information at any time and from any location. Lotus Notes and other software helps people quickly spread knowledge and information across organizations.

•Protecting Competition

•Product-Related Legislation

•Company Protection
•Consumer Protection
§Consumerism
•Both Company and Consumer Protection

Regulation consists of restrictions state and federal laws place on business with regard to the conduct of its activities.

Consumerism is a movement to increase the influence, power, and rights of consumers in dealing with institutions.

Regulatory Forces

•Pricing Related Legislation
•Distribution-Related Legislation
•Advertising and Promotion-Related Legislation
•Control Through Self-Regulation

In self-regulation an industry attempts to police itself.

1. The __________________ Act was punitive toward monopolies, whereas the _______ Act was preventive.

A: Sherman Antitrust--- Clayton

2. Describe some of the recent changes in trademark law.

A: The Trademark Law Revision Act (1988) allows companies to secure rights to a name before actual use by declaring an intent to use the name.

3. How does the Better Business Bureau encourage companies to follow its standards for commerce?

A: Companies must agree to follow BBB standards before they are allowed to display the BBB logo.

Chapter 3 - Summary

The population of the United States is aging as the over-65 population grows. Baby boomers, Generation X, and Generation Y are important target markets with very different interests as consumers. The structure of American families is changing as blended families become more common. The population is shifting to western and sunbelt states and to remote suburbs and small towns.
Recognition of racial, ethnic, and geographical differences in product preferences has given rise to companies developing tailored marketing plans.
Culture incorporates values, ideas, and attitudes. Womens' attitudes about their roles and products are changing. Common values include family, honesty, self-esteem, and health.
Disposable income is the number of dollars left after taxes. Discretionary income is the money consumers have after purchasing their necessities. The median gross income (dollars before taxes) of U.S. households has been stable since 1970 in real income terms.
Technology increases customer value by reducing the cost of products, providing new products, and improving existing products. The most important new development for marketers may be advances in electronic business technologies that allow improved communication with customers, employees, and suppliers.
Competition has caused corporations to utilize the Web as a management tool and become "network organizations."
The Sherman Antitrust Act of 1890 made monopolies illegal, whereas the Clayton Act tried to outlaw actions believed to lead to monopolies.
A company's brand name or symbol can be protected under the Lanham Act, but if the name becomes generic, the company no longer has sole right to the trademark.
Price fixing has been viewed as illegal by the courts. However, price discounting is allowed to meet competition or to account for differences in the cost of manufacture or distribution.
There are four aspects of distribution reviewed by courts: exclusive dealing arrangements, requirement contracts, exclusive territorial distributorships, and tying arrangements.
The Federal Trade Commission monitors unfair business practices and deceptive advertising. Two methods used in enforcement are (a) cease and desist orders and (b) corrective advertising.
Self-regulation attempts are common to some industries and are facilitated by organizations such as the Better Business Bureau. However, the effectiveness of self-regulation is coming under greater scrutiny by the courts.

Chapter 3

Marketing: Scanning the Marketing Environment

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