Chapter 3

Environmental scanning

The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends

• Observation

• Secondary sources- business, trade, government, and Internet sources

• Marketing research

Environmental forces

Social

Economic

Technological

Competitive

Regulatory

Social environmental forces

Demographic shifts

Cultural changes

Economic environmental forces

Macroeconomic Conditions

Consumer income

Technological environmental forces

Changing technology

Technology’s impact on customer value

Technology enabled data analytics

Competitive environmental forces

Alternative forms of competition

Small businesses

Regulatory environmental forces

Laws protecting competition

Law affecting marketing mix actions

Social forces

Include the demographic characteristics of the population and its culture

Changes in a populations’ demographic characteristics

Determine what, where how, and when people buy products

Changes in a population’s demographic characteristics

Affects relationships and individual behavior

Lead to changes in how people live and ultimately in their consumption

Determine what, where, and how people buy products

Influences in a society and its culture(s) that bring about changes in attitudes, beliefs, norms, customs, and lifestyles

Demographics

Describes a population according to selected characteristics

Demographics examples

Age

Gender

Ethnicity

Income

Occupation

Baby Boomers

Receptive to products and services related to health, fitness, retirement housing, financial planning, and physical appearance

Generation X

Leads in online spending

Millennials

Interested in distinctive, memorable, and personal experiences

Generation Z

Broadest diversity, independent

Population shifts

Shifts to Southern and Western states

Declining population in IL

Growing population in TX

People moving from cities to suburbs

American household

Less people are getting married

More households have unmarried parents, same sex couples, blended families

Culture

Incorporates the set of values, ideas, and attitudes that are learned among the members of a group →Influences consumer-buying problems

Core societal values

Represent a commonly agreed-upon consensus about the most preferable ways of living within a society

Examples of core societal values

Individualism

Masculinity

Power distance

Uncertainty avoidance

Long-term orientation

Individualism

High score- society expects one to take responsibility for self and family

Low score- life intertwined with large cohesive group

Masculinity

High score- society values assertiveness and control

Low score- values, caring conciliation, and community

Power distance

High score- society values the division of authority and privilege

Low score- society blurs distinction among classes

Uncertainty avoidance

High score- society values clarity and familiarity and avoids risk

Low score- society values novelty, risk-taking

Long-term orientation

High score- society values future rewards over short term rewards

Low score- society oriented in the present

Economy

Income, expenditures, resources that affect costs of running business and households

Macroeconomics Vs Microeconomics

Macroeconomics

Performance of the economy

Ex. GDP, unemployment, inflation, deflation

Microeconomics

Consumer income

Macroeconomics Conditions

Companies monitor inflationary or recessionary economic states

Inflation

Recession

Recession

Periods of declining economy activity

Inflation

Production costs and price increase

Microeconomic trends

Gross income

Disposable income

Discretionary income

Buying power

Gross income

The total amount of money made in one year by a person, household, or family unit

Disposable income

Money a consumer has left after paying for taxes to use for necessities, such as food, housing, clothing, and transportation

Discretionary income

Money that remains after paying for taxes and necessities and is used for luxury item s, such as cruise expense

Buying power

Depends on economic conditions and the size of the reousrces that enable the individual to make purchases

Pure competition

large number of sellers selling similar products

place (distribution) is important

Monopolistic competition

large number of sellers selling unique but substitutable products

pricing is important

Oligopoly

A few large competitors selling similar products

Promotion is key to achieve perceived product differences

Monopoly

Single producer selling unique and not substitutable products

The marketing mix is unimportant