The External Environment

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The External Environment

• Jeremy Kees, Ph.D.

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Basic Concepts

• Environmental Scanning is the process of
  collecting information about the external
  marketing environment to identify and interpret
  potential trends
• Environmental Management involves marketers
  efforts toward achieving organizational
  objectives by predicting and influencing the
  competitive, political-legal, economic,
  technological, and social-cultural environments.

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Elements of the Marketing Mix within an
Environmental Framework
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The Competitive Environment

• Competitive Environment The interactive process
  that occurs in the marketplace among marketers of
  directly competitive products, marketers of
  products that can be substituted for one another,
  and marketers competing for the consumers
  purchasing power.
• As a result of the deregulation movement there
  has been a shift from Monopolies to Oligopolies
• Do true monopolies still exist today?

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Pharma Companies have Temporary Monopolies
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Types of Competition

• Direct Competition
• Competitors with similar products
• Who are the major pick-up truck players? How
  about this company?
• Indirect Competition
• Products that are easily substituted
• Who does Mountain Dew compete with?
• Can competition be defined even more broadly??

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Marketing Strategy

• In developing a competitive strategy, we must ask
  ourselves.
• Should we compete?
• If so, in what markets should we compete?
• How should we compete?

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Political-Legal Environment

• Component of the marketing environment consisting
  of laws and interpretations of laws that require
  firms to protect
• Competition and
• Consumer Rights

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Laws Affecting Marketing
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Laws Affecting Marketing
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Protecting Competition

• Maintaining a Competitive Environment
• Aimed at to maintaining a competitive environment
  by reducing the trend toward monopolies
• Key Laws
• Sherman Antitrust Act
• Clayton Act

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Regulating Competition

• Regulating Competition
• Meant to protect independent merchants against
  competition from larger chain stores
• Key Laws (to protect Competitors)
• Robinson-Patman Act

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Deregulation

• Deregulation
• Focused on deregulating specific industries
• Key Laws (to further encourage competition)
• Airline Deregulation Act
• Telecommunications Act

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Protecting Consumers

• Protecting Consumers
• Increased focus on consumer protection
• Key Laws (to protect Consumers)
• Federal Food Drug Act
• Proposed legislation to require nutrition
  information.

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Class Activity

• Think about the following food items and
  estimate
• Number of Calories
• Number of Total Fat Grams
• Note FDA recommends a diet consisting of 2,000
  calories and 65 fat grams per day

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Breakfast
Lunch
Late-Night Snack
Dinner
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Federal Regulatory Agencies

• Federal Trade Commission
• The FCC (telecommunications, radio, and
  television)
• The Food and Drug Administration
• Consumer Products Safety Commission
• Federal Power Commission
• Environmental Protection Agency
• Securities Exchange Commission

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Other Regulatory Forces

• Consumer interest groups
• National Coalition Against Misuse of Pesticides
• PETA
• One Million Moms
• Carls Jr. Example
• Special-interest groups
• American Association of Retired People (AARP)
• Self-regulatory groups
• Direct Marketing Association
• Better Business Bureau

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Controlling the Political-Legal Environment

• Do the right thing!!
• Public Relations Departments
• Companies fight unjust regulations
• Garnering Consumer Support
• Campaign Funding
• Political lobbying
• Political action committees

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Economic Environment

• Factors that influence consumer buying power and
  marketing strategies
• Stages in the business cycle
• Implications for marketers??

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Economic Environment

• Key economic factors to consider and monitor
• Inflation
• Deflation
• Unemployment
• Income
• More importantly, discretionary income
• Resource Availability

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Technological Environment

• The application of knowledge in science,
  inventions, and innovations to marketing.
• Whats the latest technology that has
  revolutionized the way we do business??

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Technological Environment
The Toyota Prius one of the First Hybrid
Automobiles Available for U.S. Auto Buyers
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Technological Environment

• Tech developments can give us a distinct
  competitive advantage or can put us out of
  business

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Social-Cultural Environment

• The relationship between marketing and society
  and its culture
• What is the big trend in the US in regard to
  eating habits?

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Social-Cultural Environment
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Social-Cultural Environment

• Important cultural issues can help marketers get
  consumers attention
• Terrorism as a platform to fight drug use
• Canadian pride as a platform to sell beer
• Hockey (pre-lockout)
• Hockey (post-lockout)

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Ethical Issues in Marketing

• Marketers standards of conduct and moral values

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Ethical Issues in Marketing

• Promotional Strategy
• Source of the majority of ethical issues
• Questionable advertising
• Distribution Strategy
• Make product available to all income groups?
• Pricing Strategy
• Most regulated
• Price fixing
• Product Strategy
• Product quality
• Product safety

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Social Responsibility

• Marketing philosophies, policies, procedures, and
  actions that have the enhancement of societys
  welfare as a primary objective
• Marketings Responsibilities
• Traditionally concerned managers relationships
  with customers, employees, and stockholders
• Extended to relations with government and the
  general public
• Today, corporate responsibility has expanded to
  cover the entire societal framework in the US and
  throughout the world

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Social Responsibility