LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO:
Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces.
Describe how social forces such as demographics and culture can havean impact on marketing strategy.
Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing.
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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces.LO1Describe how social forces such as demographics and culture can havean impact on marketing strategy.Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing.LO3LO2LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO:Describe how technological changes can affect marketing.Discuss the forms of competitionthat exist in a market and the key components of competition.LO5LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO:Explain the major legislation that ensures competition and regulates the elements of the marketing mix.LO6LO4WHAT IS THE WORLD’S THIRD LARGEST NATION?THE SOCIAL NATION CREATED BY FACEBOOK!Where Social Networking and Facebook are HeadedFacebook andthe Influence of Environmental ForcesFIGURE 3-1 Environmental forces affect the organization, its suppliers, and its customersENVIRONMENTAL SCANNINGLO1Environmental ScanningTracking Environmental TrendsExample: Coffee MarketersFIGURE 3-2 An environmental scan of today’s marketplace shows the many important trends that influence marketingIncreasing U.S.Population DiversityENVIRONMENTAL SCANNINGLO1An Environmental Scan ofToday’s MarketplaceGrowing Economic Impactof China and IndiaDemographicsSOCIAL FORCESDEMOGRAPHICS—POPULATIONLO2World PopulationU.S. PopulationSocial Forces Population ExplosionBaby Boomers: 1946 - 1964Generation X: 1965 - 1976Generation Y: 1977 - 1994Generational MarketingMillennials: 1995+SOCIAL FORCESDEMOGRAPHICS—GENERATIONAL COHORTSLO2MAKING RESPONSIBLE DECISIONSMillennials Are Going to Change the World— Through Environmental Sustainability!LO2Ameritrade, Samsung, and HTCWhich generational cohort is being reached?LO2Marital StatusCohabitationBlended FamilySOCIAL FORCESDEMOGRAPHICS—THE AMERICAN HOUSEHOLDLO2Regional Shifts in the U.S.: 2011SOCIAL FORCESDEMOGRAPHICS—POPULATION SHIFTSLO2Shifts Within StatesSOCIAL FORCESDEMOGRAPHICS—POPULATION SHIFTSLO2RuralSuburbsExurbsCitiesStatistical Areas (SA): Illinois SOCIAL FORCESDEMOGRAPHICS—POPULATION SHIFTSLO2Metropolitan Division: ChicagolandMicropolitan SA: Dixon, ILMetropolitan SA: St. Louis, MO & SW ILCombined SA: NE IllinoisCompositionTrendsSOCIAL FORCESDEMOGRAPHICS—RACIAL & ETHNIC DIVERSITYLO2African AmericansHispanicsAsian AmericansMulticultural MarketingFIGURE 3-3 Racial and ethnic groups (excluding whites) are concentrated in geographic regions of the United StatesToyotaWhy use ethic and regional marketing promotions?LO2SOCIAL FORCESCULTURELO2CultureThe Changing Attitudes andRoles of Men and WomenSOCIAL FORCESCULTURELO2ValueConsciousnessCultural ValuesECONOMIC FORCESMACROECONOMIC CONDITIONSLO3EconomyInflationRecessionFIGURE 3-4 The Index of Consumer Sentiment (ICS)ECONOMIC FORCESCONSUMER INCOMELO3Gross IncomeDisposable IncomeDiscretionary IncomeGOING ONLINEThere are 65 Types of Neighborhoods—Which Type is Yours?LO3TechnologyBiotechnologyNatural User Interfaces Green InfrastructureTECHNOLOGICAL FORCESTECHNOLOGY OF TOMORROWLO4Social NetworksTablet Devices, Etc.Production of Existing ProductsImpact on Customer ValuePlummeting CostsNew ProductsTECHNOLOGICAL FORCESIMPACT ON CUSTOMER VALUELO4 Recycling PrecyclingNew Yorker, GoToMeeting, and Spot ConnectWhat products might be replaced with these?LO4MarketspaceElectronicCommerceTECHNOLOGICAL FORCESELECTRONIC BUSINESS TECHNOLOGIESLO4IntranetExtranetsCOMPETITIVE FORCESALTERNATIVE FORMS OF COMPETITIONLO5CompetitionPure CompetitionOligopolyPure MonopolyMonopolistic CompetitionFIGURE 3-A Continuum of competitionEntryPower of Buyers and SuppliersCOMPETITIVE FORCESCOMPONENTS OF COMPETITIONLO5Existing Competitors and SubstitutesSmall Business as CompetitorsBarriers to EntryFIGURE 3-B Components of competitionRegulationProtecting CompetitionRobinson-Patman Act (1936)Sherman Antitrust Act (1890)Clayton Act (1914)REGULATORY FORCESFEDERAL LEGISLATIONLO6Product-Related LegislationDigital Millennium Copyright Act (1998)Patent LawCopyright LawREGULATORY FORCESFEDERAL LEGISLATIONLO6Nutritional LabelingConsumer Product Safety CommissionConsumer Product Safety Act (1972)ConsumerismREGULATORY FORCESFEDERAL LEGISLATIONLO6Product-Related LegislationTrademark Law Revision Act (1988)Landham Act (1946)Madrid Protocol (2003)Federal Dilution Act (1995)U.S. Supreme Court: Trademark ColorsDoppelgangersREGULATORY FORCESFEDERAL LEGISLATIONLO6Product-Related LegislationBand-Aid, ChapStick, Jell-O, Kleenex,Vaseline, Frisbee, and Q-TipsAre these brand names generic trademarks?LO6Pricing-Related LegislationPrice FixingPrice DiscountingREGULATORY FORCESFEDERAL LEGISLATIONLO6Exclusive DealingRequirement ContractsDistribution-Related LegislationExclusive Territorial DistributorshipsTying ArrangementREGULATORY FORCESFEDERAL LEGISLATIONLO6Control Through Self-RegulationREGULATORY FORCESFEDERAL LEGISLATIONLO6FTC Act of 1914Do Not Call RegistryAdvertising- and Promotion-Related LegislationCAN-SPAM Act (2004) Cease and Desist Order Corrective AdvertisingMARKETING MATTERSOnline Tracking: The FTCEncourages Self-RegulationLO6GEEK SQUAD: A NEW BUSINESSFOR A NEW ENVIRONMENTVIDEO CASE 3VIDEO CASE 3Geek Squad1. What are the key environmental forces that created an opportunity for Robert Stephens to start the Geek Squad?2. What changes in the purchasing patterns of (a) all consumers, and (b) women made the acquisition of Geek Squad particularly important for Best Buy?VIDEO CASE 3Geek Squad3. Based on the case information and what you know about consumer electronics, conduct an environmental scan for Geek Squad to identify key trends. For each of the five environmental forces (social, economic, technological, competitive, and regulatory), identify trends likely to influence Geek Squad in the near future.VIDEO CASE 3Geek Squad4. What promotional activities would you recommend to encourage consumers who use independent installers to switch to Geek Squad?VIDEO CASE 3Geek SquadEnvironmental ScanningEnvironmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.Social ForcesSocial forces are the demographic characteristics ofthe population and its values.DemographicsDemographics describe a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.Baby BoomersBaby boomers consist of thegeneration of children born between 1946 and 1964.Generation XGeneration X includes the 15 percent of the population born between 1965 and 1976. Also called baby bust.Generation YGeneration Y includes the 72 million Americans born between 1977 and 1994. Also calledecho-boom or baby boomlet.Blended FamilyA blended family is a family formed by merging two previously separated units into a single household.Multicultural MarketingMulticultural marketing consists of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races.CultureCulture consists of the set of values, ideas, and attitudes that are learned and shared amongthe members of a group.Value ConsciousnessValue consciousness is the concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior.EconomyThe economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.Gross IncomeGross income is the total amount of money made in one year by a person, household, or family unit. Also known as money income at the Census Bureau.Disposable IncomeDisposable income is the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation.Discretionary IncomeDiscretionary income is the money that remains after paying for taxes and necessities.TechnologyTechnology consists of the inventions or innovations from applied science or engineering research.MarketspaceMarketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.Electronic CommerceElectronic commerce is any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services.CompetitionCompetition consists of the alternative firms that could provide a product to satisfy a specific market’s needs.Barriers to EntryBarriers to entry are business practices or conditions that make it difficult for new firms to enterthe market.RegulationRegulation consists of the restrictions state and federal laws place on business with regard to the conduct of its activities.ConsumerismConsumerism is a grassroots movement started in the 1960sto increase the influence, power, and rights of consumers indealing with institutions.Self-RegulationSelf-regulation is an alternative to government control where an industry attempts to police itself.