THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation

<< MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction

MARKET RESEARCH:Market information, Market Segmentation, Market Trends >>

Introduction to Business MGT 211

LESSON 23

THE MARKETING ENVIRONMENT

The powerful forces of the external marketing environment heavily influence marketing

programs by posing opportunities and threats.

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.

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.

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.

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.

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.

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.

Introduction to Business MGT 211

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.

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.

100

Table of Contents: