Chapter 4 The Marketing Environment Target market is a group of people or organizations for which an organization designs implements and maintains a marketing mix intended to meet the need of that group resulting in mutually satisfying exchanges Managers can control the marketing mix but they cannot control elements in the external environment that continually mold and reshape the target market Environmental scanning a team of specialists that continually collect and evaluate environmental information Environmental management when a company implements strategies that attempt to shape the external environment within which it operates Factors within the external environment that are important to marketing managers can be classified as social demographic economic technological political and legal competitive 4 2 Social Factors Social change is the most difficult external variable for marketing managers to forecast influence or integrate into marketing plans Social factors include our attitudes values and lifestyles A value is a strongly held and enduring belief o Self sufficiency every person should stand on his or her own two feet o Upward mobility success would come to anyone who got an education worked hard and played by the rules o Work ethic hard work dedication to family and frugality were moral o Conformity no one should expect to be treated differently from and right everybody else US consumers rank the characteristics of product quality as 1 reliable 2 durable 3 easy maintenance 4 easy of use 5 a trust brand name 6 a low price 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 4 3 Demographic Factors ethnicity and location Demography the study of people s vital statistics such as race race and Most basic statistic in marketing population Tweens 8 12 Teens Generation Y people born between 1979 and 1994 aka millennial generation Generation X people born between 1965 and 1978 Baby boomers people born between 1946 and 1964 4 4 Growing Ethnic Markets In 2015 it is estimated that Hispanics will wield 1 5 trillion in purchasing power Hispanics especially recent immigrants often prefer products from their native country African Americans have large families Asian Americans marketers dream high incomes educated 4 5 Economic Factors Consumer s income o Education primary determinant Purchasing power a comparison of income versus the relative cost of a standard set of goods and services in different geographic areas Inflation a measure of the decrease in the value of money expressed as the percentage reduction in value since the previous year Recession a period of economic activity characterized by negative growth which reduced demand for goods and services 4 6 Technological Factors The recent economic downturn and slow recovery have had an impact on research and development spending Basic research pure research that aims to confirm an existing theory or to learn more about a concept or phenomenon Applied research research that attempts to develop new or improved products Stimulate innovation by building scenarios enlisting the web talking to early adopters using marketing research creating an innovative environment and catering to entrepreneurs External technology is important for 2 reasons by acquiring technology a firm may be able to operate more efficiently or create a better product and new technology may render existing products obsolete 4 7 Political and Legal Factors Business needs government regulation to protect innovators or new technology the interests of society in general one business from another and consumers Legislation that affects marketing varies state by state Primary US laws that affect marketing o Sherman Act of 1890 makes trusts and conspiracies in restraint of trade illegal makes monopolies and attempts to monopolize misdemeanors o Clayton Act of 1914 outlaws discrimination in prices to different buyers o Federal Trade Commission Act of 1914 created the Federal Trade Commission to deal with antitrust matters o Robinson Patman Act of 1936 prohibits charging different prices to different buyers of merchandize of like grade and quantity sellers must make supplementary services available to all purchasers o Wheeler Lea Amendments to FTC Act of 1938 broadens the Federal Trade Commission s power to prohibit practices that might insure the public without affecting competition outlaws false and deceptive advertising o Lanham Act of 1946 establishes protection for trademarks o Celler Kefauver Antimerger Act of 1950 Strengthens the Clayton Act to prevent corporate acquisitions that reduce competition o Hart Scott Rodino Act of 1976 Requires large companies to notify the gov of their intent to merge o Foreign Corrupt Practices Act of 1977 prohibits bribery of foreign officials to obtain business Primary US Laws Protecting Consumers o Page 55 in book Consumer Product Safety Commission CPSC a federal agency established to protect the health and safety of consumers in and around their homes Food and Drug Administration FDA a federal agency charged with enforcing regulations against selling and distributing adulterated misbranded or hazardous food and drug products Federal Trade Commission FTC a federal agency empowered to prevent persons or corporations from using unfair methods of competition in commerce consist of 5 members each holding office for 7 years 4 8 Competitive Factors The competitive environment encompasses the number of competitors a firm must f ace the relative size of the competitors and the degree of interdependence within the industry
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