2 9 11 Chapter 4 Marketing Environment Target Market defined group most likely to buy a product o Changes as consumers age o External elements change consumers desires Marketing mix can be controlled however the external environment cannot be controlled Unless the external environment is understood then a firm cannot adequately plan for the future Product Place Price Promotion Elements of External Environment uncontrollable demographics social change economic conditions political legal factors technology and competition Environmental scanning the process of evaluating the external environment identifies future actions Social Factors self sufficiency upward mobility work ethic conformity Core American Values o Attitudes o Values o Lifestyles Component Lifestyles practice of choosing goods and services that meet one s divers needs and interest rather than conforming to a single traditional lifestyle o Today s consumers want multifunctional products o No longer defined by occupation or traditional roles Demographic factors o Characteristics relate to buyer behavior o Tailoring products to customers value is key to sales o Cohorts have their own needs values and consumptions patterns Social Factors influence o Products purchased o Prices paid for products o Effectiveness of promotions o How where and when people purchase Social Factors Core American Values o Self Sufficiency o Upward Mobility o Work Ethic o Conformity The influence of Values on Buying Habits o Ranked characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price 2 9 11 Component Lifestyles the practice of choosing goods and services that meet one s diverse needs and interests rather than conforming to a single traditional lifestyle o Today s consumers want multifunctional products No longer defined only by occupation Role of Families and Working Women o Growth in dual income families results in increased purchasing power o Approximately 63 of work age females are in the workforce o Women expect different things in life Purchase bulk of technology products Second largest group of home buyers after couples o Single households outnumber married households o Working women have had a bigger impact than any other social factor on the market Demographic Factors age race ethinicity location o People are the basis for any market o Demographic characteristics relate to buyer behavior Uncontrollable Defined characteristics define marketing direction Tweens growing market of societal demography o Pre and early adolescents age 9 14 o Population of 20 million o Purchasing power of 21 billion in 2008 HUGE purchasing power o View TV ads as just advertising 72 hrs per week tuned into advertising o Emerging as the richest generation and the most influential generation in history Generation Y o Born between 1979 and 1994 o Population of 73 million o Purchasing power of 200 billion annually o Researchers have found Gen Yers to be Impatient Family oriented Inquisitive Opinionated Diverse Time managers street smart Connected Generation X o Born between 1965 and 1978 o Population of 40 million o Savvy and cynical consumers o More protective and involved with their kids o Value the importance of education o Avid buyers of the latest clothes technology and recreational products 2 9 11 Baby Boomers largest demographic segment in US working the longest out of all generations o Born between 1946 and 1964 o Population of 77 million the largest demographic segment o 2 trillion in spending power a year o Income will continue to grow as they keep working o Four segments of baby boomers Looking for balance of all Boomers Looking for time saving products Confident and living well of all Boomers Enjoy high incomes and spend money on travel and luxury goods At ease 30 of Boomers have modest taste and are family oriented Overwhelmed less than 20 low incomes and concerned about well being Growing Ethnic Markets o Spending power of ethnic markets in 2008 Hispanics 1 trillion African Americans 921 billion Asian Americans 526 billion o Diversity can result in bottom line benefits to companies o By 2042 whites will account for less than half US population huge shift in workforce market Marketing to Hispanic Americans o The population s diversity creates challenges for targeting this group o Hispanics tend to be brand loyal but are not aware of many U S brands immigrants tend to prefer products from home countries o 68 of U S Hispanics have home Internet access The NBA expands its appeal with pages appealing directly to the Spanish language market Marketing to African Americans continue to increase ethnicities Marketing to Asian Americans o Many firms are creating products for the African American market o Promotional dollars and media choices directed toward African Americans o In general not a huge difference btwn marketing to African American and other o Younger better educated and have highest average income of all groups Sometimes called a marketer s dream o Many products have been developed for Asian American market o Cultural diversity within the Asian American market complicates promotional efforts Ethnic and Cultural Diversity San Francisco most diverse county in US o Multiculturalism occurs when all major ethnic groups in an area city county or census tract are roughly equally represented o U S trend is toward greater multiculturalism 2 9 11 o America s racial and ethnic patterns have taken on distinctly regional dimensions Why Multicultural Marketing o About 1 in 3 US residents is a minority representing over 100 7 million ppl o 7 states more than tripled their Hispanic population between 1990 and 2000 Alabama Arkansas Georgia North Carolina South Carolina Tennessee and Nevada o 20 percent of babies born in the US are Latino Economic Factors o Consumer s income o Purchasing Power o Inflation o Recession Consumers Incomes o Median US household income in 2008 was approximately 49 000 o Incomes have risen at a slow pace o Education is the primary determinant of earning potential Rising incomes do not necessarily mean a higher standard of living Customers with high purchasing power can spend more on products The Financial Power of Women o Women bring in half or more of the household income o Women control 51 3 percent of the private wealth in the US o Women control 80 of household spending Recession Marketing Strategies income and employment fall o Improve existing products and introduce new ones o