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4 The Marketing
Environment
KEY TERMS KEY CONCEPTS
target market a defined Discuss the external environment of marketing and explain how
group most likely to buy a it affects a firm. The external marketing environment consists of social,
firm's product demographic, economic, technological, political and legal, and competitive
environmental management variables. Marketers generally cannot control the elements of the external environment.
when a company implements Instead, they must understand how the external environment is changing and the impact
strategies that attempt to shape the of that change on the target market. Then marketing managers can create a marketing mix
external environment within which it to effectively meet the needs of target customers.
operates
Describe the social factors that affect marketing. Within the external
component lifestyles
environment, social factors are perhaps the most difficult for marketers to
the practice of choosing
anticipate. Several major social trends are currently shaping marketing strategies.
goods and services
that meet one's diverse needs and First, people of all ages have a broader range of interests, defying traditional consumer
interests rather than conforming to a profiles. Second, changing gender roles are bringing more women into the workforce and
single, traditional lifestyle increasing the number of men who shop. Third, a greater number of dual-career families
has created demand for time-saving goods and services.
demography the study
of people's vital statistics, Explain the importance to marketing managers of current
such as age, race and
demographic trends. Today, several basic demographic patterns are
ethnicity, and location influencing marketing mixes. Because the U.S. population is growing at a slower
Generation Y people bom rate, marketers can no longer rely on profits from generally expanding markets. Marketers
between 1979 and 1994 are also faced with increasingly experienced consumers among the younger generations
Generation X people born such as tweens and teens. And because the population is also growing older, marketers are
between 1965 and 1978 offering more products that appeal to middle-aged and older consumers.
baby boomers people born
between 1946 and 1964
Explain the importance to marketing managers of growing ethnic
markets. Growing minority populations make the marketer's task more
purchasing power a challenging. Hispanics are the fastest growing segment of the population,
comparison of income followed by African Americans. Many companies are now creating departments and
versus the relative cost of a
product lines to effectively target multicultural market segments. Companies have quickly
set standard of goods and services in
found that ethnic markets are not homogeneous.
different geographic areas
inflation a measure of the decrease
in the value of money, expressed as Identify consumer and marketer reactions to the state of the
the percentage reduction in value economy. In recent years, U.S. incomes have risen at a slow pace. At the same
since the previous year time, the financial power of women has increased, and they are making the
recession a period of economic purchasing decisions for many products in traditionally male-dominated areas. During
activity characterized by negative a time of inflation, marketers generally attempt to maintain level pricing to avoid losing
growth, which reduces demand for customer brand loyalty. During times of recession, many marketers maintain or reduce
goods and services prices to counter the effects of decreased demand; they also concentrate on increasing
production efficiency and improving customer service.
basic research pure
research that aims to Identify the impact of technology on a firm. Monitoring new
confirm an existing theory
technology and encouraging research and development (R&D) of new
or to learn more about a concept or
technology is essential to keeping up with competitors in today's marketing
phenomenon
environment. Innovation through R&D needs to be stimulated by upper management
and fostered in creative environments. Innovation is increasingly becoming a global
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