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Introduction
to Business MGT 211
VU
LESSON
23
THE
MARKETING ENVIRONMENT
The
powerful forces of the
external marketing environment
heavily influence
marketing
programs
by posing opportunities and
threats.
a.
Political
and legal environment:
From taxes to regulations to
laws, the political
and
legal
environment has a profound
impact on marketing. This is
especially true for
certain
industries, such as telecommunications,
automobiles, and
tobacco.
b.
Social
and cultural environment:
Trends in this arena,
present enormous
opportunities
for companies that are
both farsighted and
flexible. Issues and
changes
include
increasing diversity in the
U.S., more single-parent
families, a rapidly
growing
senior
population, etc.
c.
Technological
environment: New
technologies create new
goods and services,
but
also
make some existing products
obsolete (witness the
growing dominance of
DVDs
at
Blockbuster). In recent years,
the emergence of the
Internet has had the
greatest
impact
on marketing.
d.
Economic
environment: Inflation,
interest rates, recession,
and recovery-both in
the
U.S.
and (to an increasing
extent) abroad-have a dramatic
influence on every
element
of
the marketing mix.
e.
Competitive
environment: Creating a
competitive advantage is a fundamental
goal
of
marketing that can only be
accomplished by carefully and
continually monitoring
every
element of the competitive
environment.
f.
The
competitive
environment drives
many marketing decisions. By
studying the
competition,
marketers determine how best
to position their own
products. Knowing
the
alternatives available to your
customers, who your
competitors are and what
they
offer
is as vital to success as watching
for the next big
food or fashion craze
or
technological
innovation.
There
are three specific types of
competition:
Substitute
product competition: Products
that are dissimilar from
those of competitors, but
can
fulfill the same need
(e.g. television and computer
games are very different
from one
another,
but both fulfill the
need for
entertainment).
Brand
competition: Occurs
between similar products
(e.g. Zest bar soap and
Irish Spring bar
soap).
International
competition: matches
the products of domestic
marketers against those of
foreign
competitors (e.g. Neutrogena
skin care products vs.
L'Oreal skin care products,
or
Heineken
vs. Budweiser).
THE
MARKETING MIX
A
firm's marketing
mix (often
called the four Ps)
consists of product,
place
(or
distribution),
price,
and promotion.
Product:
The good, service, or idea
that is marketed to fill
consumer wants and
needs.
Improving
existing products and
developing new products are
among the marketer's
most
important
tasks.
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Introduction
to Business MGT 211
VU
Product
differentiation: Creation of a
product or product image
that differs enough
from
existing
products to attract consumers.
Differentiation is a source of
competitive advantage.
Combinations
of physical goods and
services can also be sources
of differentiation.
Pricing:
Selecting the most
appropriate price at which to
sell a product. Lower
prices
generally
lead to higher sales volume,
while higher prices
generally lead to higher
profits per
unit.
Prices must support a
variety of costs, such as
the organization's
operating,
administrative,
and research costs, and
marketing cost like
advertising and sales
salaries
Place
(distribution):
Determining the most
effective and efficient way
to get products from
producers
to consumers. Distribution also
involves choosing which
channels of distribution
are
most appropriate.
Promotion:
All of the activities a firm
undertakes to communicate and
promote its products
to
the
target market. This is
clearly the most visible
element of the marketing
mix.
Target
Marketing and Market
Segmentation
A
market contains all the
customers or businesses who
might be interested in a product
and
can
pay for it.
a.
Identifying
Market Segments: Companies
subdivide the market into
market
segments,
homogeneous groups of customers
within a market that
are
significantly
different from one another.
The goal of the market
segmentation
process
is to group customers with
similar characteristics, behavior
and needs.
These
target
markets can then
be offered products that are
priced, distributed,
and
promoted differently. Four
factors marketers frequently
use to identify
market
segments are:
Geographic
segmentation
divides markets into certain
areas such as regions,
cities, counties,
or
neighborhoods to customize and
sell products that meet
the needs of specific
markets.
i.
Demographics
uses
statistical analysis to subdivide
the population
according
to characteristics such as age,
gender, income, race,
occupation,
and ethnic group.
ii.
Psychographics
is the
analysis of people by psychological
makeup,
including
activities, interests, opinions,
and lifestyles (e.g.
fashion-
consciousness,
thrill-seeking).
iii.
Behavioral
segmentation
divides markets according to
customers'
knowledge
of, attitude toward, use
of, or response to products or
their
characteristics.
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