MKT 230 1st Edition Lecture 5Outline of Last Lecture I. Business Unit Strategya. Mission Statementsb. Corporate Strategyc. Business Unit Strategyd. Marketing Strategyi. SMART ObjectiveII. Marketing Plansa. Customer Relationship MarketingIII. Internal MarketingIV. Marketing ActivitiesOutline of Current Lecture I. The Marketing EnvironmentII. Competitiona. Competitive Forcesb. Competitive StructuresIII. Environmental Forcesa. Economic Forcesb. Political ForcesThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.c. Legal and Regulatory Forcesd. Sociocultural ForcesCurrent Lecture – January 28, 2015I. The Marketing Environmenta. Environmental Scanning: the process of collecting information about forces n the marketing environmentb. Environmental Analysis: the process of assessing and interpreting the information gathered through environmental scanning- How you deal with the information from scanning- You need to pay attention al all environmental forces, all 6 forces are very concerning- It is important to pay attention to all 6 forces or else 1 could blindside youo Example: Kodak, put out of business because their competition all transitioned to digital pictures and they failed toc. Responding to Environmental Forces:- Marketers can take 2 approaches towards environmental forces:o Passive: Accept them as uncontrollableo Proactive: Attempt to influence and shape forces- The best way to react?  There is no best way, but the company needs to be consciously taking one approach, at least acknowledging that they are there- Approach taken depends on different things, like the organization, the management, and the situationII. Competitiona. Competitive Forces – There are 4 types of competitive forces. Most firms have some type of competition. Looking at all 4 types using the examples of computers:- Brand Competitors: Firms that market products with similar features and benefits to the same customers at similar priceso Example: All PC’s, for the most part, are similar and the price ranges are similar regardless of the brand- Product Competitors: Firms that compete in the same product class but market products with different features, benefits, and prices.o Example: Apple vs. PC- Generic Competitors: firms that provide very different productbut that solve thesame problems or satisfy the same basic customer needo Example: Pen and paper vs. computers for taking notes in class- Total Budget Competitors: Firms that compete for the limited financial resourcesof the same customerso Example: other electronics or entertainmento If I don’t spend my money on a computer, what am I spending it on? The alternative would be the total budget competitorsb. Competitive Structures- Monopoly: an organization that offers a product that has no close substitute, making it the sole source of supplyo Example: Utilities- Oligopoly: When a few sellers control the supply of a large proportion of a producto Example: gas, cell phone providers- Monopolistic Competition: When an organization with many competitors develop a marketing strategy to differentiate its producto Example: Wal-Mart (market their low prices), McDonalds (markets to kids)- Pure Competition: Involves a large number of sellers, no one of which can influence the price or supplyo Example: flea markets, farmers marketso This does not exist in the real world, although some industries come closec. Monitoring Competition: Why?- Watch for mergers and acquisitions, development, pricing, etc.- This can help determine competitors strategies and their effect on the firms ownstrategies- It guides development of competitive advantages and helps the firm to adjust their strategies- Provides ongoing information about the competitors- Assists in maintaining a marketing orientationIII. Environmental Forcesa. Economic Forces- The Business Cycle: a pattern of economic fluctuations that has 4 stages, Prosperity  Recession  Depression  Recoveryo Prosperity: people spend money, low unemploymento Recession: unemployment increases, people spend less o Depression: very high unemployment, spending is very low because people only spend on necessitieso Recovery: unemployment drops and spending increases- Buying Power and Incomeo Buying Power: Resources such as money, goods and services that can be traded in an exchangea. This does not have to be just money- Income: Amount of money received through wages, rents, investments, pensions, and subsidy payments- Disposable Income: Money AFTER TAXESo About 59 cents for every dollar- Discretionary Income: Disposable income available for spending and saving afteran individual has purchased the basic necessities (food, water, shelter, etc.)o During a depression, this can come close to zero- Wealth: accumulation of past income, natural resources, and financial resourceso Who has it? Elderly people have a lot because they have been accumulatingito This can exist in many different forms (cash, securities, real estate, etc.)- Willingness to Spend: inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forceso A persons willingness to spend depends on many different factorsb. Political Forces- Enactment of legislation- Legal decisions interpreted by courts through civil and criminal cases- Influenced of regulatory agencies- Marketers: adjust to conditions, influence the process through contributions and lobbyingc. Legal and Regulatory Forces- Legislationso Procompetitive legislation: preserves competitiono Consumer Protection Legislation: protects consumers from harm and tries to make them awareo Sherman Antitrust Act (1890): prohibits monopolies, caused when Rockefeller starting buying companies and tearing up railroads to monopolize his industryo Fair Packaging and Labeling Act (1966): requires clear labeling be available to customer, selling by weight and not by appearance o Trademark Dilution (1995): keeps a product trademark protected- FTC and Self-Regulatory Forceso FTC (Federal Trade Commission): most heavily legislatedo Self Regulatory Forces: good and best choice for most companies because they are able to control themselvesd. Sociocultural Forces- Demographics: includes things like age, ethnicity, etc. This has a LARGE effect onwho your target market will beo Example: Walgreens has their products in their shops