MKT 230 Ch 3 The Marketing EnvironmentExamining and Responding to the Marketing Environment- The marketing environment consists of external forces that directly or indirectly influence an organization’s acquisitions of inputs (human, financial, natural resources and raw materials, and information) and creation of outputs (goods, services, or ideas)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; and marketing research-Environmental analysis is the process of assessing and interpreting the information gathered through environmental scanning-evaluating this info should identify threats and opportunitiesResponding to Environmental Forces-Marketing managers take 2 general approaches to environmental forces: accepting them as uncontrollable or attempting to influence and shape them-Organizations that view environmental forces as uncontrollable remain passive andreactive toward the environment-Organizations that believe environmental forces can be shaped adopt a more proactive approachCompetitive ForcesTypes of Competitors-Competition – other organizations that market products that are similar to or can be substituted for a marketer’s products in the same geographic area- Competitors can be classified into 4 types:1. Brand Competitors- firms that market products with similar features and benefits to the same customers at similar prices2. Product Competitors- firms that compete in the same product class but market products with different features, benefits, and prices3. Generic Competitors- firms that provide very different products that solve the same problem or satisfy the same basic customer need4. Total budget Competitors- firms that compete for the limited financial resources of the same customersTypes of competitive structures-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, if it existed at all, would entail an extremely large number of sellers, none of which could significantly influence price or supplyEconomic ForcesEconomic ConditionsMKT 230 Ch 3 The Marketing Environment-Business Cycle is a pattern of fluctuations in the economy that have 4 stages: prosperity, recession, depression, and recovery-during prosperity, unemployment is low and total income is relatively high-consumers are generally willing to buy during a prosperity-during a recession, unemployment rises and buying power declines- a prolonged recession may become a depression, a period in which unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy-during recovery, the economy moves from recession or depression toward prosperityBuying Power-buying power – resources, such as money, goods, and services, that can be traded in an exchange-the major financial sources of buying power are income, credit, and wealth-Income is the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period-Disposable income is after-tax income-marketers most interested in this because it is the income that can be spent-Discretionary income is disposable income available for spending and saving afteran individual has purchased the basic necessities of food, clothing, and shelter-Wealth is the accumulation of past income, natural resources, and financial resourcesWillingness 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 more willing to buy if they have buying powerPolitical Forces- the political forces of the marketing environment have the potential to influence marketing decisions and strategiesLegal and Regulatory ForcesPrecompetitive Legislation-these are laws designed to preserve competition-ex; Sherman Antitrust Act in 1890 prohibits contracts, combinations, or conspiracies to restrain tradeConsumer Protection Legislation- these deal with consumer safety, such as the food and drug acts, and are designed to protect people from actual and potential physical harm caused by adulteration or mislabelingRegulatory Agencies-these bodies have the power to enforce specific laws, as well as some discretion in establishing operating rules and regulations to guide certain types of industry practices-Federal Trade Commission is an agency that regulates a variety of business practices and curbs false advertising, misleading pricing, and deceptive packaging and labelingMKT 230 Ch 3 The Marketing EnvironmentSelf-Regulatory Forces- some businesses try to regulate themselves to prevent government intervention-Better Business Bureau is a system of NGOs, independent, local regulatory agencies supported by local businesses that helps settle problems between customers and specific business firms-National Advertising Review Board considers cases in which an advertiser challenges issues raised by the national advertising division about an advertisementTechnological Forces- Technology is the application of knowledge and tools to solve problems and perform tasks more efficientlyImpact of Technology-technology determines how we satisfy our physiological needsSociocultural Forces-Sociocultural Forces are the influences in a society and its cultures that bring about changes in peoples attitudes, beliefs, norms, customs, and lifestylesDemographic and Diversity Characteristics- changes in a populations demographics have a significant bearing on relationships and individual behavior-There is an increasing proportion of older consumers- marketers can expect demand for health-care services, recreation, tourism, retirement house, and selected skin-care products to increase-Consumerism involves organized efforts by individuals, groups, and organizations to protect consumers’