Global Marketing and World Trade

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C H A P T E R T H R E E
THE CHANGING MARKETING ENVIRONMENT
Irwin/McGraw-Hill
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Understand how environmental scanning provides
  information about social, economic,
  technological, competitive, and regulatory
  forces.
• Explain how social forces such as demographics
  and culture and economic forces such as
  macroeconomic conditions and consumer income
  affect marketing.

(continued)
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Describe how technological changes can affect
  marketing.
• Understand the forms of competition that exist in
  a market, key components of competition, and the
  impact of competition on corporate structures.
• Explain the major legislation that ensures
  competition and regulates the elements of the
  marketing mix.

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PP3-AA The Digital Revolution

• The Digital Revolution one of the biggest
  changes in
• the world of marketing. Changes in technology
  are
• transforming the ways we
• communicate,
• buy,
• sell,
• learn, and
• work.

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PP3-BB The Net Generation

• 80 million people under the age of 22 who have
  grown up with the new technologies, becoming
  authorities in their use.
• As the Internet has become the focus of the
  digital age, the Net Generation has become the
  first group to use it consistently for
• - entertainment - communication
• - education - shopping

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PP3-1 Environmental forces affecting the
organization, as well as its suppliers and
customers
Organization
Customers
Suppliers

• Marketing department
• Other departments
• Employees

Environmental forces
Competitive
Economic
Regulatory
Social
Technological

• Demographicshifts
• Culturalchanges

• Macroeconimicconditions
• Consumerincome

• Changingtechnology
• Ecologicalimpact oftechnology

• Alternativeforms ofcompetition
• Componentsof competition
• Increasingforeigncompetition

• Laws protectingcompetition
• Laws affectingmarketing mixactions
• Self-regulation
• Consumerism

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PP3-2a An Environmental Scan of the United
States Social
Trends

• move toward natural and healthful products and
  lifestyles
• growing number and importance of older Americans
• population shifts to remote suburbs and small
  towns
• greater desire for product simplicity and honesty
  in advertising

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PP3-2b An Environmental Scan of the United
States Economic Trends

• dramatic growth of electronic commerce
• increase in per-capita income and standard of
  living
• U.S. firms adjust to crises in international
  markets
• economic growth reduces concern about inflation
  and budget deficit

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PP3-2c An Environmental Scan of the United
States Technological Trends

• increased use of information and communication
  technology
• growing focus on the internet as consumers and
  businesses go online
• expanded computer power and growth of smart
  products
• growing use of electronic money or
  e-cash

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PP3-2d An Environmental Scan of the United
States Competitive Trends

• new flexible employment agreements and growth of
  telecommuting
• the emergence of fast, responsive network
  corporations
• mergers reduce costs through economies of scale
• more international competition from emerging
  countries

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PP3-2e An Environmental Scan of the United
States Regulatory Trends

• increasing emphasis on free trade and
  deregulation
• greater concern for pollution and global warming
• new legislation related to information collection
  and privacy
• new legislation to encourage consumer savings

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PP3-CC Definition of Demographics
Demographics is . . . .
describing the population according to selected
characteristics such as their age, sex,
ethnicity, income, and occupation.
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PP3-DD The Population Trend

• 1999 U.S. Population estimated at 272 million
• number of people ages 20-34 has declined since
  1990 and the number over 65 has increased
• mature households (age 50) represent the fastest
  growing age segment and possess 75 of the net
  worth of U.S. households

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PP3-3 The Changing Distribution of the Over-65
Population of the United States
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PP3-EE Major Population Segments

• Baby Boomers generation of 78 million born
  between 1946 and 1965, accounts for 56-58 percent
  of purchases of most consumer product and service
  categories.
• Generation X 17 of the U.S. population born
  between 1965 and 1976. Consumers who are
  self-reliant, entrepreneurial, supportive of
  diversity better educated than previous
  generations not prone to extravagance and likely
  to prefer lifestyles, products, and services that
  are very different from baby boomers.
• Baby Boomlet Americans born after 1976 also
  described as Generation Y or the Net Generation.

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PP3-FF Changes in the American Family

• 30 years ago 40 of all households consisted of
  married couples with children this number has
  declined to 25.
• 25 of all households consist of people who live
  alone
• 28 of married households are without children
• the fastest growing types of households are those
  with
• single parents
• other family members
• unrelated persons

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PP3-GG Population Shifts in the U.S.

• In the 1980s and 1990s the U.S. population has
  shifted toward Western and Sunbelt states.
• Through 2025 three states--California, Texas, and
  Florida--will account for 45 percent of the net
  population change in the U.S.
• From the 1930s to 1980s the population shifted
  from cities to suburbs.
• 1990s the population is shifting again from
  suburbs to more remote suburbs called exurbs and
  to smaller towns called penturbia.

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PP3-HH Racial and Ethnic Diversity

• Slightly more than one in four U.S. residents is
  African-American, Hispanic, Asian, or a
  representative of another racial or ethnic group.
• The racial and ethnic composition of the U.S.
  population is expected to change even more by
  2010, as since 1990
• Hispanic population growth 35
• Asian population growth 35
• African-American population growth 11
• white population growth 3.6

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PP3-4 Racial and Ethnic Composition and Trends
in the United States
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PP3-II Definition of Regional Marketing
Regional marketing is . . . .
focuses not only on the shifting of consumers
geographically but also on the differences in
their product preferences based on where they
live. Regional marketing involves developing
marketing plans to reflect specific area
differences in taste preferences, perceived
needs, or interests.
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PP3-JJ Definition of Culture
Culture is . . . .
incorporates the set of values, ideas, and
attitudes of a homogenous group of people that
are transmitted from one generation to the next.
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PP3-KK The Changing Role of Women

• The percentage of women in the work force rose
  from 46 to 60 percent between 1975 and 1998.
• Women account for 11 of the officers and
  directors of the 500 largest corporations in the
  U.S.
• Women account for more than half of all
• financial managers
• accountants and auditors
• technical writers
• economists
• public relations specialists
• authors

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PP3-LL Definition of Value Consciousness
Value consciousness is . . . .
is the concern for obtaining the best quality,
features and performance of a product or service
for a given price.
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PP3-MM Concept Check

• 1. Explain the term regional marketing.
• 2. What are the marketing
• implications of blended families?
• 3. The work ethic of today may best be stated as
  I work __________.

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PP3-NN Definition of the Economy
The economy . . . .
pertains to the income, expenditures, and
resources that affect the cost of running a
business and household.
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PP3-OO Consumer Expectations

• Consumer expectations of an inflationary or
  recessionary U.S. economy is an important element
  of environmental scanning. Consumer spending,
  which accounts for two-thirds of U.S. economic
  activity, is affected by expectations of the
  future.

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PP3-5 University of Michigan Consumer Sentiment
Index and Automobile Sales
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PP3-PP Consumer Income

• A consumers ability to buy is related to income,
  which consists of
• gross income the total amount of money made in
  one year by a person, household, or family unit
• disposable income the money a consumer has left
  after paying taxes, to use for food, shelter and
  clothing
• discretionary income the money that remains
  after paying for taxes and necessities.

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PP3-B Average Annual Household Spending by
Category
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PP3-6 Income distribution of U.S. households PP
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PP3-QQ Technological Forces

• Technology is a major environmental force and
  refers to inventions or innovations from applied
  science or engineering research.
• Some of the most dramatic technological changes
  occurring now are
• the declining cost and size, and increasing
  power, of microprocessors
• the convergence of television, personal computer,
  and telephone technologies
• the pervasive trend toward connectedness
  through the World Wide Web
• the emergence of biotechnology as a key component
  of the economy.

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PP3-RR Information Technology

• One of the most important developments for
  marketers may be related to information
  technology via improved methods of collecting,
  storing, analyzing, and distributing information,
  with the ultimate goal of better understanding
  and serving customers.

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PP3C Continuum of competition
Number of sellers
Many
One
BASIS OFCOMPARISON
PURECOMPETITION
MONOPOLISTICCOMPETITION
OLIGOPOLY
MONOPOLY

• Number ofsellers
• Productdifferences
• Importance ofmarket mix

• Large numberof sellers
• Similar products
• Distribution isimportant

• Large numberof sellers
• Unique butsubstitutable
• Pricing isimportant

• A few largecompetitors
• Similarproducts
• Promotion iskey to achieveperceivedproductdiff
  erences

• Singleproducer
• Unique andunsubstitutable
• Unimportant

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PP3-SS Components of Competition

• Entry (barriers)
• Power of Buyers and Suppliers
• Existing Competitors and Substitutes

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PP3-TT Competing on the Internet

• The Internet is changing customers expectations
  about convenience, price, quality, and service.
• As a result a new model--the network
  organization or e-corporation--is evolving as
  a new form of competition.
• These firms combine computer, the Web, and
  software to change everything about they way they
  operate.

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PP3-E American Airlines Website Advertisement
Courtesy AMR Corporation/American Airlines
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PP3-UU Concept Check

• 1. What is the difference between a
• consumers disposable and
• discretionary income?
• 2. In pure competition there are _______
• number of sellers.
• 3. What is a network organization?

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PP3-VV Legislation Protecting Competition

• Major legislation has been passed to encourage
  competition, which is deemed desirable because it
  permits the consumer to determine which
  competitors will succeed or fail. Relevant
  legislation includes
• Sherman Antitrust Act (1890)
• Clayton Act (1914)
• Robinson-Patman Act (1936)

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PP3-WW Other Legislation

• Other Federal legislation is aimed at
• products
• companies
• consumers (consumerism)
• both company and consumer
• pricing (fixing/unfair/discriminatory)
• distribution (exclusive dealing, requirement
  contracts, exclusive territorial
  distributorships, and typing arrangements)
• Advertising and promotion controls
• self-regulation

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PP3-A American Plastics Advertisement
Courtesy American Plastics Council
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PP3-XX Concept Check

• 1. The __________ Act was punitive
• toward monopolies, whereas the
• __________ Act was preventive.
• 2. Describe some of the recent changes
• in trademark law.
• 3. How does the Better Business Bureau
• encourage companies to follow its
• standards for commerce?