Marketers must constantly respond to changes in the environment - new needs/wants, new laws, new competition, new segments (large enough to be profitable).

Enviromental scanning - process of keeping informed of events outside the organization which might impact the organization

ie. Kodak digital cameras/Cpt Kirk and Cpt Picard

Drastic (immediate reaction to an external issue)

ie. 2008 recession target needs low prices rather than quality - Salmonella in Peanut Butter. JIF runs ads to reassure customers JIF PB is safe.

Gradual due to demographic changes that can be somewhat predictable

ie. aging of baby boomers = products for old but still active

Uncontrollable

Social

Economic

Technology

Competitive

Regulatory

May accelerate or brake marketing, expanding/restricting marketing opportunities

Demographic characterists (age (aging), gender, ethnicity, income, and occupation) of a population (global and US growth) and its values

Developing countries of Africa, Asia, Latin America, China and India (largest target area)

shifting age structure (more older people living longer) saving less and spending money on travel, health and other retirement products and services.

Larger, older, more diverse w/Aging baby boomers=retirement products, health care, etc

More single parent households/both parents working=more money/less time=convience foods

1:4 meals are frozen foods served at home

53% suppers use stove increase hot entrees at supermarkets and pre-made salads 

Gen Y (babyboomers children) 1977-1994 diverse group in terms of age and life stages w/interests in health, wellness, and appearance. 

Gen X (baby bust) 1965-1976 self-reliant, racial/ethnical diverse, better educated. Travel casual, tech-friendly, 24 hr access to food and drinks

Market for different behaviors and values

Because Baby Boomers (Gen X) are moving to warmer areas (West/South) and the US becoming more diverse (Hispanic-American fastes growing)

Implications: gives marketers area segmentation (racial and ethnic) target opportunities for multicultural marketing programs and huge profitability.

Attitudes, ideas, beliefs of a group impact buying behavior

Male/female roles are changing/expanding, different thoughts about houses (what is important: bathroom vs big TV), males buying groceries (express lane), men taking care of kids (changing tables in mens bathrooms), health and fitness, organic food, environmentally aware (obvious to others) ie. Toyota Prius vs Honda hybrid

Economy is growing, slowing, recession, layoffs, or stock market, interest rates, or inflation is up or down all affect consumer spending habits. Retailers benefit most when stocks are down, go cheap buy at WalMart/Target.

If interest rates are down we borrow and spend more, Wealth Effect: stocks down, feel poorer/spend less, stocks up, feel richer/spend on our wants, if in a recession we focus on price and spend less.

Gross (total income before taxes)

 Disposable (after taxes to use for necessities: food, housing, clothing, transportation). Gas raises, spending adjustments are made in other areas. Recession spending, debt, use of credit decline. Discretionary and most important for marketeers (money left after paying for taxes and necessities) for luxury items. During a recession people stop spending.

WWW, computer technology that captures customer information (scanners, subscriptions, DMV, credit cards), and high tech products (IPad, Cloud, hydrogen/electric cars) are being used to form profiles. Implications: to gather information to target individuals or groups (segmentation) by key variables related to their buying behavior to create new products.

Impact: Marketers must respond to new technological developments that might impact them and risk losing their competitive advantage as technology keeps evolving and ever changing. ie. Land lines to cell phones, Itunes to CD sales

Pure

Monopolistic

Oligopoly

Pure Monopolies

Many sellers w/identical products w/no trade restrictions (wheat, rice, grains), downward price pressure

Want to lower costs, to lower price, for cheaper distribution for upper price pressure so you can charge more.

Not identical products, but similar (Coke/Pepsi)

Marketers want to move from Pure to Monopolistic. If marketers can differentiate product from competitors, upper price pressure they can charge more.

ie. Brand names (Dole)=perception of higher quality worth more to consumers

Few companies control most of the market and don't want to compete on price (price setting illegal) so they signal (ie. media) to raise prices. Both raises market shares stay the same, profits go up for both. 

If they both lower price, relative market shares stay the same, but profits go down.

Over time best strategy is for both to raise prices.

Only one controls the market (water, electricty, cable).

Sets price, but if too high, people will find substitutes (sugar to high, make corn syrup if profitable)

Marketers try to eliminate competition whereas government seeks to encourage it with regulation.

John Nash - Nash Equilibrium (Nobel Prize)

 2 firms co-operate better than competing.

 One raises and one doesn't the one that raises loses money.

Both raise, same level of sales, both profits

Both lower, same level of sales, profits decline

Nash, both rasie prices, both profit.

 (1936) served to amend the Clayton Act in response to growth of chain stores, w/power to drive small businesses under by price wars. Made it unlawful to charge different prices for the like grade and quality product to different customers to lessen competition.

Exception justified by quality or quantity, deterioraion of perishable goods, obsolescence of seasonal goods, distress sales, or sales in discontinuance of buisness in the goods concerned. 

(1906) in response to marketers selling impure products.

Exposed by Upton Sinclair's novel "The Jungle" unsanitary

Continuous inspection of all red meat and interstate distribution.

(1906) Colliers 10 part series about patent medicines "The Great American Fraud", led to Pure Food and Drug Act of 1906.

forbade interstate and foreign commerce in adulterated or misbranded food and drugs

Products seized, people fined and jailed.

(1938) From TN incident where children died from a drug with toxic chemical. Manufactures need to provide proof new products are safe prior to marketing. Added comsmetics and therapeutic devices. Provided authority to inspect factories. Federal court injuctions against violations of product seizure and criminal prosecution.

Acts passed because we are unable to regulate ourselves.

Marketers, when planning the product, must take these laws and others into account.

(1946) provides for registration of a trademark. Can lose if it becomes generic term.

ie. Asprin, Ping Pong, Xerox

(1995) can't use trademark on non-competing product McDonald's automobiles

2003 Madrid Protocol facilitates protection of US trademarks worldwide.

Important to know if someone else has a copyright, patent or trademark or get one to protect ourselves.

Could be long and costly legal battle if against a large firm.

Created the FTC, later, Wheeler-Lea amendment gave power to regulate advertising by stopping or correcting ads.

ie. campbell soup marbles on bottom so vegtibles floated to top and Listerine fewer mild colds.

Supplements are not covered and are the least regulated in industry.

Marketers must respond to environmental factors by scanning environmental factors w/conditions changing, laws changing that can have a serious effect on business (+ or -) to fill changing needs or react to changing competition or laws.