Chapter 7: External Environment

Marketing Environment
A set of forces, some controllable and some uncontrollable, that influence the ability of a business to create value and attract and serve customers
Name the 5 Elements of the Environmental Framework
1) Political-Legal
2) Competitive
3) Social-Cultural
4) Economic
5) Technological
Internal Environment
All the activities that occur within the organizational functions in a business
Societal forces that are essentially uncontrollable and influence the microenvironment of a business
Forces close to a company, yet outside its internal environment that influence the ability of a business to serve its customers
The external environment is uncontrollable…
… so businesses must modify their marketing mix accordingly
SWOT Analysis
Help indicate what a company is good at and what it lacks in skills & resources; provides direction so that companies can assess external factors that might cause harm to the company
Competitive Environment
Nature, quantity, and potential actions of competitors
Direct Competition
Competitors with similar products (Different airlines)
Indirect Competition
Products that are easily substituted (Airline, taxi, train, etc.)
Political-Legal Environment
Component of the marketing environment consisting of laws and interpretations of laws that require firms to protect: Competition & Consumer Rights
Consumer Protection
Increased focus; implementing laws that protect consumers (i.e. Federal Food & Drug Act–> consider should restaurants provide nutrition info?)
Explain the cereal example used to explain the ways the FDA protects customers
Over the past few decades, the FDA has implemented laws that require cereal box companies to provide quickstop nutritional information to consumers right on the front of their boxes.
Economic Environment
Factors that influence consumer purchase ability and buying behavior (inflation, unemployment, income, etc)
Explain an observation of changes in business practices or consumer behavior during the recession?
Customers were less loyal to private brands and opted for the more generic companies; Customers continued to buy environmentally friendly products despite the extra cost
Technological Environment
The application of knowledge in science, inventions, and innovations to marketing
Social-Cultural Environment
The relationship between marketing and society and its culture; important cultural issues can help marketers get consumer’s attention and implement socially responsible efforts
Important cultural issues…
Can help marketers tap into new segments (i.e. Mike & Ike’s profits rose when they “split up”–> interpreted as a gay pride situation)
Explain Dove in terms of the social-cultural environment
Dove emphasizes natural beauty & photoshop-free magazines–> Evolution of beauty & Face sketch example; Helps Dove raise awareness about important issues while still promoting their brand
Secondary Data
Previously collected by someone else
Primary Data
Collected yourself for your own study
Advantages of Secondary Data
-saves time & money
-helps direct primary data collection
-pinpoints target market
-basis of comparison for other data
Disadvantages of Secondary Data
-may not be on target with the research problem
-quality and accuracy of data may pose a problem

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