Chapter 3 Scanning the Marketing Environment I Environmental Scanning a The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends i Requires data collection and ii Intelligent assessment and interpretation of info II Environmental Factors Affecting the Organization Economics factors are we in a recession Who knows But know what it will do to our company III Social Forces a Factors in a society that bring about changes in attitudes beliefs norms customs and lifestyles i These affect how people live and what where and how they buy example everyone has a cell but not a lot of people have land lines or even watches So we need to track these factors IV Demographics a social force a A population s characteristics such as age gender ethnicity income and occupation 28 i World POPClock http www census gov ipc www popclockworld html ii U S Population http www census gov population www popclockus html b Generational Cohorts from the text i Baby Boomers 1946 1964 1965 1976 ii Generation X 1977 1994 iii Generation Y 1995 iv Millennials v Generational Marketing V Social Forces a Marital Status changes what people buy and how much they buy b Cohabitation c Blended Family d All Brought together in The Lifestage Analytic Matrix http www lifestagemarketing com The Seven American Cohorts 29 Defining moments create cohort homogeneity that is missed when consumers are bundled into broader groups as in generational marketing Evoking strategic cohort words symbols and memories can bring substantial rewards for marketers Using sociological research and the significant historical and social events of the last century as our guide we have identified seven distinct American cohorts 1 Depression Cohort Aged 89 99 in 2010 Smaller servings in restaurants financial security 2 World War II Cohort Aged 83 88 in 2010 Team oriented romantic period patriotic lazyboy chairs 3 Post War Cohort Aged 65 82 in 2010 Post war grandparents are healthy active educated spend money on grandchildren 4 Leading Edge Baby Boomer Cohort Aged 54 64 in 2010 Loss of JFK Self assured self centered health concerned wellness Sure of being right Justified in being hedonistic and self indulgent 5 Trailing Edge Baby Boomer Cohort Aged 45 55 in 2010 Less optimistic about their financial future than leading edge i Engage Boomers 6 Generation X Cohort Aged 33 44 in 2010 Latch key children of the 80 s Seen first hand the trauma of dicorce Accepts cultural diversity Puts quality of personal life ahead of work life 7 The N Generation Cohort Gen Y Aged 16 32 in 2010 Internet savvy idealistic team oriented 30 Video Don Kosec The Impact of Generation Preferences and Technology AT T did not pay attention to the cable business Cable companies are taking residential phone business And today s customers don t even do with land lines 8 PLUS the newest cohort Generation Z Aged new born to 15 in 2010 silent generation instant minded Connected lifestyle Parents influence decisions soccer moms e Racial and Ethnic Diversity f Cultural Trends i Green Marketing ii iii iv v vi And Healthy living Do it yourself Adventures Cocooning stay at home more with creature comforts home networks home theaters VI Economic Forces a Economy i The factors relating to income expenditures and resources that affect the cost of running a business and a household b Macroeconomic Conditions c Consumer Income i Gross Income amount earned in a year ii Disposable Income after taxes iii Discretionary Income after necessities iv Marketing use of the data ESRI Communities http www esri com data community data index html d Audio Example The response of FORD to the economic slowdown Why does it take so long to respond to the change in the economy We did not appreciate the consumers move to smaller cars Ford will build 6 new small car models in the US by 2012 For is writing off 8B of inventory in trucks and SUVs But will Ford overreact to the change 31 Video Rob Felber Felber Felber s Response to Economic Forces a We have been through several of them b This one hit everywhere c We learn if it affects our clients in affects us so we need to find ways to help d And we need foresight for the next change to anticipate the change VII Technological Forces a Technology s Impact on Customer Choices and Their Views of Value i Reduced costs means customers focus on other attributes ii iii Changes to production e g increased use of recycling Introduction of new products b Time Warner Consistent Leader in Innovation DVR caller id on tv etc c Electronic Business Technology i Marketspace An information and communication based electronic exchange environment where physical boundaries no longer interfere with buy sell decisions In a marketspace information and or physical goods are exchanged and transactions take place through computers and networks ii Electronic Commerce iii Intranet network within your organization iv Extranets connect with outside organization Video Example An expert manager s reaction to the impact of technological changes on a traditional business 1 2 3 How have you adapted Recognize the problem factor and then IFNORE IT 4 Teaching Point exactly what some managers do VIII Competitive Forces a Competition Other firms organizations people that want to take your customers clients from you by providing better need satisfaction than you do can or care to NOTE YOUR success comes from finding a better way to satisfy customers i e from a competitive advantage NOT from your need to beat competition which is the wrong focus 32 b Alternative Forms of Competition i Pure Competition ex gasoline and produce 1 Large number of sellers 2 Similar Products 3 Distribution is very important ii Monopolistic Competition 1 Large number of sellers 2 Products are unique but substitution can occur 3 Pricing is important iii Oligopoly cars pepsi vs coke 1 A few large competitors 2 Products are relatively similar 3 Promotion is the key to demonstrate product differences iv Pure Monopoly power company us post office 1 A single producer 2 A unique and unsubstitutable product 3 The marketing mix is not an important factor c Types of Competition Consumers have limited buying power money Companies compete for those dollars i At the Brand level Brand Competition Selling the same type of product that you do Toyota or Ford ii At the Product level Substitute Product Competition Offers consumers a choice of how to spend their dollars within a