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Chapter 5- Analyzing the Marketing Environment

by: Priscilla Muiuane

Chapter 5- Analyzing the Marketing Environment MKT 3013

Marketplace > University of Oklahoma > Business > MKT 3013 > Chapter 5 Analyzing the Marketing Environment
Priscilla Muiuane
Intro to Marketing

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Hello all! I have carefully created awesome study notes to help you guys study for the midterms. This is a condensed yet detailed set of notes that points out the important information from the cha...
Intro to Marketing
Class Notes
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This 9 page Class Notes was uploaded by Priscilla Muiuane on Tuesday September 22, 2015. The Class Notes belongs to MKT 3013 at University of Oklahoma taught by Kasulis in Fall 2015. Since its upload, it has received 68 views. For similar materials see Intro to Marketing in Business at University of Oklahoma.


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Date Created: 09/22/15
Chapter 5 Analyzing the Marketing Environment A Marketing Environment Analysis Framework Cultur Demographics Political Legal Social Technology Economic Consumers May be in uenced directly by the immediate actions of the focal company the company s competitors or corporate partners 0 Indirectly in uenced by the macroenvironment which includes various impacts of culture demographics and social technological economic and political legal factors Valuebased marketing aims to provide greater value to consumers than competitor offer because consumers are the center of all marketing efforts 0 Marketing firm must consider the entire business process from the consumer s point of view needs wants ability to purchase Macroenvironment 0 Monitor the macroenvironment to determine how such factors in uence consumers and how they should respond to them or even anticipate trends The immediate environment Company capabilities The first factor that affects the consumer is the firm itself Successful marketing firms focus on satisfying customer needs that match their core competencies Competitors Competition significantly affects consumers in the immediate environment thus critical that marketers understand their firms competitors strengths weaknesses and likely reactions to the marketing activities that their own firm undertakes Corporate Partners Few firms work in isolation thus parties that work with the focal firm are its corporate partners Macroenvironmental Factors Demographic Culture Political Legal Social Technology Economic CDSTEP Culture Demographics Social issues Technological advances Economic situation Political regulatory environment Culture defined as the shared meanings beliefs morals values and customs of a group of people Transmitted by words literature and institutions culture is passed down from generation to generation and learned over time The challenge for marketers is to have products or services identifiable by and relevant to a particular group of people Various cultures in uence what why how where we buy 2 dimensions of culture 1 Country Culture entails easytospot visible nuances that are particular to a country such as dress symbols ceremonies language colors and food preferences and more subtle aspects which are trickier to identify 2 Regional Culture the in uence of the area within a country in which people live Demographics defined as the information about characteristics of human populations and segments especially those used to identify consumer markets such as by age gender income and education Demographics provide an easily understood snapshot of the typical consumer in a specific target market Generational Cohorts a group of people of the same generation typically have similar purchase behaviors because they have shared experiences and are in the same stage of life Applying age as a basis to identify consumers is quite useful to marketers as long as it is used in conjunction with other consumer characteristics Generation Z Gen 2 Digital Natives people in this group were born into a world that was full of electronic gadgets and digital technologies eg the Internet and social networks gt These digital natives will be more globally connected than previous generations gt Might have a better appreciation for diverse cultures VVV gt gt Gen Z consumers were born into a world confronted by both national and international terrorism often facilitated by technology and widespread environmental concerns Being raised by and have a lot in common with their Generation X parents Generation Y generational cohort of people born between 1977 and 1995 biggest cohort since the original postwar baby boom Also known as Millennialsconsumers born between 1977 and 2000 and the children of the Baby Boomers gt gt Varies the most in age ranging from teenagers to adults who have their own families Puts a strong emphasis on balancing work and life these young adults want a good job but they also want to live in a location that supports their lifestyle They consider marriage secondary and not obviously necessary to being good parents themselves Technologically savvy thus they look and consume rather similarly across countries Generation X Gen X Generational cohort of people born between 1965 and 1976 gt V V V V VV The first generation of latchkey children those who grew up in homes which both parents worked 50 have divorced parents Act like helicopter parents with their own children working to shield their offspring from any threats or disappointment Possess considerable spending power because they tend to get married later and buy houses later in life Much less interested in shopping than their parents and far more cynical which tends to make them smart consumers They demand convenience and tend to be less likely to believe advertising claims or what salespeople tell them Grew up more knowledgeable about products and more risk averse than other generational cohorts Baby Boomers generational cohort of people born after WWII between 1946 and 1964 Will be the largest population of 50plus consumers the US has ever seen Heavy internet users Traits of baby boomers 1 They are individualistic 2 Leisure time represents a high priority to them 3 They believe that they will always be able to take care of themselves partly evinced by their feelings of economic security even though they are a little careless about the way they spend their money They have an obsession with maintaining their youth They will always love rock n roll 5 Income Income distribution in the US has grown more polarized The highest income groups are growing whereas many middle and lowerincome groups real purchasing power keeps declining The increase in wealthy families might be due to the maturing of the general population the increase in dualincome households and the higher overall level of education The broad range in incomes creates marketing opportunities at both the high and low ends of the market Although some marketers choose to target only af uent population segments others have had great success delivering value to middle and low income earners Education Higher levels of education lead to better jobs and higher incomes Employment that requires a college or secondary degree accounts for nearly half of all projected growth in the near future Average annual earnings are higher for those with degrees than those without Marketers can combine education level with other data such as occupation and income and obtain pretty accurate predictions of purchase behavior Gender Nowadays female male gender roles are not as clear Shift in attitude and behavior affects the way many firms design and promote their products and services More firms are careful about gender neutrality in positioning their products and attempt to transcend gender boundaries especially through increased interactions with their customers Ethnicity The US continues to grow more diverse Approximately 80 of all population growth in the next 20 years is expected to come from African American Hispanic and Asian communities Minorities now represent approximately onequarter of the population by 2050 they will represent about 50 and nearly 30 of the population will be Hispanic By 2015 a majority of the African American population will live in suburbs Thrift Asian Americans represent the fastest growing minority population tend to earn more have more schooling and be more likely to be professionally employed or own a business Social Trends American society has become a consumer society however with the economic impacts of the recession and housing crash have led people to embrace the idea of spending less as a virtuous pursuit Lipstick effect when some shoppers enjoy the thrill of treating themselves to small luxuries eg Channel lipstick but forgo larger luxury items such as a vacation There are special websites such as Groupon and LivingSocial targeting those consumers looking for a deal tailored to consumers preferences shopping habits and locations Consumers have become indifferent to bargains because of the mass emails they receive a day Consumer expectations of what constitutes a good deal have changed rapidly over the past several years which means marketers need some new ideas about how to appeal to them Health and Wellness Concerns Health concerns especially those pertaining to children are prevalent critical and widespread Diseases such as diabetes obesity are increasing at alarming rates is increasing in the US as well as other countries who adopt more Western diets New advertising guidelines require marketers to produce food in reasonably proportioned sizes food must provide basic nutrients have less than 30 of their total calories from fat and include no added sweetners Food advertising cannot be aired during children s programming and companies cannot link unhealthy foods with cartoon and celebrity figures Americans remain consistently on the lookout for exercise mechanisms that can help them shed pounds and match media images of athletic prowess Greener Consumers Green marketing involves a strategic effort by firms to supply customers with environmentally friendly merchandise Demand for greenoriented products has been a boon to the firms that supply them Greenwashing exploiting a consumer by disingenuously marketing products or services as environmentally friendly with the goal of gaining public approval and sales Privacy Concerns More and more consumers worldwide sense a loss of privacy At the same time the internet has created an explosion of accessibility to consumer information improvements in computer storage facilities and the manipulation of information have led to more and better security and credit check services Some observers suggest that hackers are getting more effective A Time Poor society Since 1973 the median number of hours that people say they work has jumped from 41 to 49 a week Leisure time has dropped 26 to 19 hours Younger consumers cope with less leisure time by multitasking eg watching television talking on the phone or listening to music at the same time Retailers are doing their part by making their products available to customers whenever and wherever they want Marketers often rely on technology macroenvironmental factor to find and develop methods to make life easier for consumers in the timepoor society Technological Advances Technological advances have improved the value of products and services Consumers have constant access to the internet everywhere through services such as WiFi 3G and 4G Advanced technology make consumers increasingly dependent on the help they can provide especially in terms of making decisions and communicating with others RFID Radio Frequency Identification Device gt RFID enables firms to track an item from the moment it was manufactured through the distribution system to the retail store and into the hands of the final consumer gt Because firms are able to determine exactly how much of each product is at a given point in the supply chain retailers can also communicate with their suppliers and collaboratively plan to meet their inventory needs Mobile devices enhance the customer s experience by making it easier to interact with the manufacturer or retailer or other customers and they add a new channel of access which makes customers more loyal and more likely to spend more with a particular retailer Note by 2015 people will access the web more often through smartphones than through laptops and desktops combined However mobile experiences cannot be identical to web experiences because the interface is different Economic Situation In ation the persistent increase in the prices of goods and services Foreign currency uctuations changes in the value of a country s currency relative to the currency of another country can in uence consumer spending Interest rates the cost of borrowing money gt The interest is the cost to the customers or the fee the bank charges those customers for borrowing the money gt Likewise if a customer opens a savings account at a bank the interest becomes the fee the consumer gets for loaning money to the bank gt If interest rates go up consumers have an incentive to save more because they will earn more for loaning their money to the bank gt If interest goes down consumers usually borrow more Political Regulatory Environment comprises political parties government organizations and legislation and laws Organizations must fully understand and comply with any legislation regarding fair competition consumer protection or industryspecific regulation Firm Protection Acts Fairplay 1890 Sherman Antitrust Act prohibits monopolies and other activities that would restrain trade or competition and makes fair trade within a free market a national goal 1914 Clayton Act supports the Sherman Act by prohibiting the combination of two or more competing corporations through pooling ownership of stock and restricting pricing policies eg price discrimination exclusive dealing and tying clauses to different buyers 1939 Robison Patman Act specifically outlaws price discrimination toward wholesalers retailers or other producers and requires sellers to make ancillary services or allowances available to all buyers on proportionately equal terms Consumer Protection Acts 1 regulations require marketers to abstain from false or misleading advertising practices that might mislead consumers Manufacturers are required to refrain from using any harmful or hazardous materials that might place a consumer at risk Organizations must adhere to fair and reasonable business practices when they communicate with consumers Consumer Protection legislation Probably not important but look over it anyway check pg 114 Exhibit 56 Environmental Concerns Many companies engage in tactics and marketing strategies that attempt to respond to multiple developments in the wider environment


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