Marketing Environment

What is the marketing environment?

The external forces that indirectly or directly influence an organization's acquisition of inputs and creation of outputs.

What are the five forces of the marketing environment?

Competitive, economic, political/legal/regulatory, technological, and sociocultural.

Why are environmental forces important to marketers?

They are always dynamic, and changes can create uncertainty, threats, and opportunities.

How do digital products affect the marketing environment?

They provide an efficient and effective way to reach global markets but also increase the number of potential competitors.

Why must marketers regularly monitor the marketing environment?

Because the marketing environment constantly fluctuates.

What is environmental scanning?

The process of collecting information about forces in the marketing environment.

What are three sources used for environmental scanning?

Observations, secondary sources, and marketing research.

Why is the internet a popular environmental scanning tool?

It makes data accessible and allows companies to gather needed information quickly.

What is environmental analysis?

The process of assessing and interpreting information gathered through environmental scanning.

What does environmental analysis do?

It evaluates information for accuracy, resolves inconsistencies, assigns significance to findings, and helps understand the current state.

What are the two general approaches to environmental forces?

Accepting them as uncontrollable or attempting to influence and shape them.

What is a reactive approach to the marketing environment?

Accepting environmental forces as uncontrollable and adjusting current marketing strategies to environmental changes.

What is a proactive approach to the marketing environment?

Attempting to influence and shape environmental forces using proactive skills to overcome obstacles and achieve desired results.

What are examples of ways marketers can attempt to influence the environment?

Political action and lobbying.

Are there limits to how much marketers can shape environmental forces?

Yes, there are limits to the degree to which environmental forces can be shaped.

What is competition?

Other firms that market products that are similar to or can be substituted for a firm's products in the same geographic area.

What should firms consider when analyzing competition?

Their target market, set of competitors, and the type of competitive structure in which they operate.

What are the four types of competitors?

Brand competitors, product competitors, generic competitors, and total budget competitors.

What are brand competitors?

Firms that market products with similar features and benefits to the same customers at similar prices.

What are product competitors?

Firms that offer products in the same product class but with different features, benefits, and prices.

What are generic competitors?

Firms offering different products that solve the same problem or satisfy the same basic customer need.

What are total budget competitors?

Firms that compete for the limited financial resources of the same customers.

Which type of competitor is most significant according to the notes?

Brand competitors, because buyers typically see their products as direct substitutes.

What are the four types of competitive structures?

Monopoly, oligopoly, monopolistic competition, and pure competition.

What is a monopoly?

A competitive structure with no close substitutes and a sole source of supply.

What can monopolies do to potential competition?

They can erect barriers to potential competition.

What prevents monopolies from forming?

Antitrust laws.

What is an oligopoly?

A competitive structure in which a few sellers control the supply of a large proportion of a product.

Can products in an oligopoly be homogeneous?

Yes.

What is monopolistic competition?

A structure in which a firm with many potential competitors attempts to develop a marketing strategy to differentiate its product.

What is pure competition?

A structure with a large number of sellers, such as an unregulated farmers' market.

What marketing strategy variable do most competitors monitor?

Price.

What are economic forces?

Forces that influence both marketers and customers.

What is buying power?

The amount of resources, such as money, goods, and services, available to make purchases.

What does buying power depend on?

General economic conditions and the amount of resources available to a person.

What is income?

The amount of money received through wages, rents, investments, pensions, and subsidy payments.

What type of income are marketers particularly interested in?

Money available after taxes, or disposable income.

What influences disposable income?

Wage levels, unemployment, interest rates, dividend rates, and taxes.

What is discretionary income?

Disposable income available for spending and saving after an individual has purchased basic necessities such as food, clothing, and shelter.

Why is credit important?

It enables people to spend future income now or in the near future.

How does credit affect buying power?

It increases current buying power at the expense of future buying power.

What influences the use of credit?

Interest rates and availability.

What is wealth?

The accumulation of past income and financial resources.

How can people use wealth?

To make current purchases, generate income, and acquire large amounts of credit.

What is the relationship between willingness to spend and ability to buy?

People are generally more willing to buy when they have buying power.

How can satisfaction with a product someone already owns affect purchasing?

It can influence the customer's desire to buy other products.

Which federal regulatory agency most influences marketing activities?

The Federal Trade Commission (FTC).

What does the Federal Trade Commission regulate?

False advertising, misleading pricing, and deceptive packaging and labeling.

What does the FDA regulate?

The sale and distribution of food and drug products.

What does the Consumer Product Safety Commission do?

It ensures compliance with the Consumer Product Safety Act.

What does the U.S. Foreign Corrupt Practices Act prevent?

It prevents American companies from making illicit payments to foreign officials to obtain or keep business.

What type of payments does the Foreign Corrupt Practices Act allow?

Small payments to expedite routine government transactions.

What is self-regulation?

Programs established by organizations or industries to stall or prevent the development of laws and governmental regulatory groups.

What can happen if trade associations' self-regulatory requirements are not followed?

Organizations may face censure or exclusion from the association.

What is the Better Business Bureau?

A local regulatory agency.

What is the National Advertising Division?

A division run by the Better Business Bureau.

What are advantages of self-regulation over government regulation?

Self-regulation is less expensive to establish and implement, its guidelines are more realistic, and it can reduce government bureaucracy.

What are limitations of self-regulation?

Many programs lack tools to enforce compliance, and their guidelines are less strict than those established by government agencies.

What is technology?

The application of knowledge and tools to solve problems and perform tasks more efficiently.

How does technology affect consumers?

It facilitates how consumers satisfy their physiological needs.

How does information technology affect business?

It changes consumers' lives globally and provides career and business opportunities while improving supply chain management.

What is the Internet of Things (IoT)?

The connection of household items to internet infrastructure.

What are sociocultural forces?

Influences in society and culture that change people's beliefs, attitudes, norms, customs, and lifestyles.

What are examples of demographic and diversity characteristics?

Age, gender, race/ethnicity, marital and parental status, income, and education.

What are some marketing implications of an aging population?

Increased demand for healthcare, recreation, tourism, retirement housing, and skincare products.

How can being unmarried affect consumer behavior according to the notes?

Unmarried people are less likely to own homes or buy furniture, spend more on convenience foods, and prefer smaller packages.

What demographic trends are identified in the notes?

Low fertility rates, an increasing number of immigrants, and increasing cultural diversification.

Why is cultural diversification important to marketers?

It creates a more diverse customer base.

How can changes in cultural values affect marketers?

They can help marketers predict changes in customers' needs in the future.

What health-related concerns are identified as sociocultural trends?

Concerns with health, nutrition, and exercise and openness to alternative medicines.

What is the family identified as?

A top source of meaning and fulfillment in life.

How have marketers responded to the importance of children?

By offering better baby gear, children's electronics, and family entertainment products.

How have changes in family lifestyles affected food products?

People spend less time in the kitchen and therefore demand more ready-to-cook or ready-to-serve meals.

What is social responsibility?

An organization's obligation to maximize its positive impact and minimize its negative impact on society.

What does social responsibility encompass in marketing?

The total effect on society of all marketing decisions.

What can happen when companies ignore stakeholders' demands for responsible marketing?

It can destroy customer trust and even prompt government regulations.

How can social responsibility benefit an organization?

It can improve employee performance and customer loyalty.

How has data privacy changed digital marketing practices?

Companies need explicit consent from consumers to collect their data and must implement cybersecurity measures.

What is marketing citizenship?

The adoption of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders.

What are the four dimensions of marketing citizenship?

Economic, legal, ethical, and philanthropic.

What is the economic dimension of social responsibility?

The responsibility to be profitable and compete fairly.

What is the legal dimension of social responsibility?

The responsibility to obey laws and regulations.

Why can legal cases involving marketing sometimes be complicated?

Laws can be ambiguous, and some legal cases are attempts to interpret the law.

How can organizations respond when new regulation is needed?

They can create new legislation to regulate behavior.

What are the most basic aspects of social responsibility?

Economic and legal responsibilities.

What is marketing ethics?

The ethical dimension of social responsibility that goes beyond basic economic and legal responsibilities.

How do ethical marketing decisions affect customer relationships?

They foster trust, which leads to long-term relationships.

What can happen when managers deviate from accepted ethical principles?

Continued marketing exchanges can become difficult or impossible.

When is the best time to address ethical problems?

During strategic planning.

What is an ethical issue?

A situation that results because a moral conflict must be addressed.

When might customers or marketing managers perceive an ethical issue?

Any time an activity causes them to feel manipulated or cheated.

What is the philanthropic dimension of social responsibility?

Going beyond marketing ethics through activities that are not required by the company.

What is cause-related marketing?

Linking products to a particular social cause.

What is strategic philanthropy?

The synergistic use of organizational core competencies and resources to address key stakeholders' interests and achieve both organizational and social benefits.

What are the two major categories of social responsibility?

Sustainability and consumerism.

What is sustainability?

Efforts to protect and preserve the environment.

What is green marketing?

Marketing focused on environmental sustainability.

What is consumerism?

Organized efforts by individuals, groups, and organizations seeking to protect consumers' rights.

What are the four consumer rights listed in the notes?

Right to safety, right to be informed, right to choose, and right to be heard.