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Lamb, Hair, McDaniel
2011-2012
CHAPTER 4
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
1
© Mark Herreid/Shutterstock.com
The Marketing Environment
The External
Marketing Environment
Discuss the external
environment of marketing,
and explain how it affects a
firm
LO1
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
2
Target Market
A defined group most likely to buy a product
• Changes as consumers age
• External elements change consumers’
desires
LO1
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
3
The External Environment
• Unless marketing managers understand the
external environment, the firm cannot
intelligently plan for the future.
Environmental Management
is…
when a company implements strategies
that attempt to shape the external
environment within which it operates.
LO1
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
4
Social Factors
Describe the social factors
that affect marketing
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
5
Social Factors
Attitudes
Values
Lifestyle
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
6
Social Factors
Social Factors Influence:
Products purchased
Prices paid for products
Effectiveness of promotions
How, where, and when people purchase
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
7
American Values
Core American
Values
Emerging Trends
Self-Sufficiency
Getting off the grid
Upward Mobility
Meaningful green
Work Ethic
EcoTechMed
Conformity
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
8
The Influence of
Values on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
9
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.
Today’s consumers want multifunctional products
•No longer defined only by occupation
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
10
Role of Families and
Working Women
• Growth of dual-income families results in
increased purchasing power
• Approximately 59 percent of work-age
females are in the workforce
• Working wives bring in 45 percent of the
total family earnings.
• The phenomenon of working women has
probably had a greater effect on marketing
LO2 than any other social change.
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
11
There Is Never Enough Time
• It is estimated that over 80 percent of the
working population is worried about
having too little time.
• About 40 percent of American adults get
less than 7 hours of sleep on weekdays.
• About 74 percent of working adults
engage in multitasking.
LO2
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
12
Demographic Factors
Explain the importance
to marketing managers of
current demographic trends
LO3
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
13
Demographic Factors
People are the basis for any market
• Demographic characteristics relate to buyer
behavior
• Demographic cohorts have their own
needs, values, and consumption patterns.
LO3
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
14
Tweens
 Pre- and early adolescents, age 8 to 12
 Population of 20 million
 Directly spend about $50 billion annually
 Parents spend $150 billion on tweens
annually
 View TV ads as “just advertising”
LO3
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
15
Teens
 Population of about 25 million
 Spend approximately 72 hours per week
tuned in electronically
 View shopping as a social sport
 58 percent shop online
LO3
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
16
Generation Y
 Born between 1979 and 1994
 Surpassed population of baby boomers in 2010
 Two Stages: 1) Those born in 1994 fit closer to
the Teen cohort. 2) Those born in 1979 have
established careers and started families.
 Purchasing power of $200 billion annually
 Researchers have found Gen Yers to be:
LO3
Chapter 4
–
–
–
–
Inquisitive
Opinionated
Diverse
Time managers
Quick shoppers
Want fulfillment
Multitaskers
Environmentally aware
Copyright ©2012 by Cengage Learning Inc. All rights reserved
17
Generation X
 Born between 1965 and 1978
 Population of 40 million
 Independent, resilient, adaptable,
cautious, and skeptical
 71 percent have children under age 18
 Home ownership is an important goal
 Avid buyers of the latest clothes,
technology, and recreational products
LO3
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
18
Baby Boomers
 Born between 1946 and 1964
 Population of 75 million
 Working longer to compensate for economic
downturn, which affected retirement savings
 The market of services directed at seniors is one of
the fastest growing business markets
LO3
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
19
Growing Ethnic Markets
Explain the importance to
marketing managers of
growing ethnic markets
LO4
Chapter 4
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20
Growing Ethnic Markets

Estimated purchasing power of ethnic
markets in 2013:
–
–
–
LO4
Chapter 4
Hispanics: $1.4
trillion
African Americans: $1.2 billion
Asian Americans: $752 billion

The minority population of the United States
in 2011 reached 110 million.

Companies are recognizing that diversity
can result in bottom-line benefits.
Copyright ©2012 by Cengage Learning Inc. All rights reserved
21
Marketing to
Hispanic Americans

The Hispanic population’s diversity creates
challenges for targeting this market.

Hispanics tend to be brand loyal, but are not
aware of many mainstream U.S. brands.
 68 percent of U.S. Hispanics have home
Internet access.
LO4
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
22
Marketing to
African Americans
 47 percent are between 18 and 49
years
 More firms are creating products
for the African American market.
 Promotional dollars and media
choices directed toward African
Americans continue to increase.
LO4
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
23
Marketing to
Asian Americans

Younger, better educated, and have highest
average income of all groups

Early adopters of latest digital gadgets.

Cultural diversity within the Asian American
market complicates promotional efforts.
LO4
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
24
Economic Factors
Identify consumer and
marketer reactions to the
state of the economy
LO5
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
25
Economic Factors
Consumers’
Income
Purchasing
Power
Inflation
Recession
LO5
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
26
Consumers’ Incomes
•
Median U.S. household income
in 2010 was approximately
$52,000.
•
Incomes have risen at a slow pace
in recent years.
•
Education is the primary
determinant of earning potential.
LO5
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
27
Purchasing Power
Purchasing Power is…
a comparison of income
versus the relative cost of a
set standard of goods and
services in different
geographic areas.
LO5
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
28
Inflation
Inflation is…
© iStockphoto.com/Valentin Mosichev
a measure of the decrease in
the value of money,
expressed as the percentage
reduction in value since the
previous year.
LO5
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
29
Recession
Recession is…
a period of economic activity
characterized by negative
growth, which reduces
demand for goods and
services.
LO5
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
30
Technological Factors
Identify the impact of
technology on a firm
LO6
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
31
Research
Basic Research
Applied Research
Pure research that aims to
confirm an existing theory or to
learn more about a concept
phenomenon.
An attempt to develop new or
improved products
LO6
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
32
Stimulating Innovation
Build scenarios
Enlist the Web
Talk to early adopters
Use marketing research
Create an innovative environment
Cater to entrepreneurs
LO6
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
33
Political and Legal Factors
Discuss the political and
legal environment
of marketing
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
34
Political and Legal Factors
Laws and Regulations Protect:




New technology
Society
Businesses
Consumers
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
35
Federal Legislation
Regulate
competitive
environment
Regulate
pricing
practices
Control
false
advertising
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Foreign Corrupt Practices Act
Robinson-Patman Act
Wheeler-Lea Act
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
36
State Laws
•
Legislation that affects marketing varies
state by state.
•
•
Oregon: limits utility advertising to 0.5 percent of
net income.
California: bans trans fats in restaurants and
bakeries.
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
37
Regulatory Agencies
Consumer
Product Safety
Commission
Protects consumer safety in
and around their homes
Federal Trade
Commission
Prevents unfair methods of
competition in commerce
Food & Drug
Administration
Enforces safety regulations for
food and drug products
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
38
Bureaus of the FTC
• Reviews mergers and acquisitions
Bureau of
Competition
• Challenges anti-competitive conduct
• Promotes competition
• Provides information
• Enforces federal laws that protect
Bureau of
Consumer
Protection
consumers
• Empowers consumers with information
• Communicates with consumers about
fraud and identity theft
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
39
Consumer Privacy
Government Actions
 CAN-SPAM Act
 Children’s Online Privacy Protection Act
Rule
LO7
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
40
Competitive Factors
Explain the basics
of foreign and domestic
competition
LO8
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
41
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
LO8
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
42
Competitive Factors
Competition for
Market Share
and Profits
• Firms must work
harder to maintain
profits and market
share.
Global
Competition
• More foreign firms
are entering U.S.
market.
• Foreign firms in
U.S. now compete
on product quality.
LO8
Chapter 4
Copyright ©2012 by Cengage Learning Inc. All rights reserved
43