- Process of collecting information about the external marketing environment to identify and interpret potential trends.

• Example: Massive product recalls on American toys due to safety concerns on Chinese-made products.

- Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social- cultural environments.

• Firms often create strategic alliances to combine resources and  capital to compete more effectively.

- Interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power.

• Companies with a monopoly usually accept regulation in exchange for the exclusive right to serve a market segment.

• The deregulation movement of the past three decades has ended total monopoly protection for most utilities.

• Oligarchy / Oligopoly—Limited number of sellers in an industry with high start-up costs.

• Direct—among marketers of similar products. • Indirect—involves products that are easily substituted for each other.

• Competition among all firms that compete for consumers’ purchases.

• Should we compete?

• Depends on firm’s resources, objectives, and expected profit potential.

• If so, in what markets should we compete? • Allocate firm’s limited resources to the areas of greatest opportunity.

• How should we compete?

• Includes product, promotion, distribution, and pricing decisions that  maximize competitive advantage.

• Strategy of developing and distributing goods more quickly than competitors.

Component of the marketing environment consisting of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights.

• Antimonopoly period of the late 19th and early 20th centuries.

• Protecting competitors during the Great Depression of the 1930s.

• Consumer protection in past 40 years.

• Industry deregulation began in the late 1970s and continues today.

• Newest regulatory frontier is cyberspace.

• Privacy and child protection issues are another important—but difficult—enforcement challenge.

GOVERNMENT REGULATORY AGENCIES

• Federal Trade Commission (FTC) has broadest regulatory powers over marketing.

• Others include Consumer Product Safety Commission, the Federal Power Commission, the EPA, and FDA. OTHER

REGULATORY FORCES

• Consumer interest organizations.

• Self-regulatory groups.

• Example: National Advertising Division of the Council of the Better  Business Bureaus, which promotes truth and accuracy in advertising.

CONTROLLING THE POLITICAL-LEGAL ENVIRONMENT • Complying with laws and regulations serves customers and avoids legal problems.

• Influencing the outcome of legislation through lobbying or boycotts.

• Consumer spending accounts for 70 percent of the gross domestic product (GDP).

• Economic environment Factors that influence consumer buying power and marketing strategies, including stage of the business cycle, inflation and deflation, unemployment, income, and resource availability.

• Prosperity, recession, depression, and recovery.

INFLATION AND DEFLATION

• Inflation—Rising prices caused by some combination of excess demand and increases in the costs of one or more factors of production.

• Deflation—Falling prices.

• Can decrease profits, lower investment returns, and bring widespread job layoffs.

• Wealth effect - referring to an increase (decrease) in spending that accompanies an increase (decrease) in perceived wealth.

proportion of people actively seeking work who do not have jobs.

many marketers focus on discretionary income - the amount of money people have to spend after buying necessities.

shortages can result from lack of raw materials, component parts, and energy, or labor.

Process of reducing consumer demand for a good or service to a level that the firm can supply.

• Changes in consumer and business buying habits, in exchange rates, in labor costs, and other factors around the world influence the decisions marketers make.

• Global political changes affect international marketplace.

- Application to marketing of knowledge based on discoveries in science, inventions, and innovations.

•Example: RFID helps retailers, manufacturers, and others locate and track inventory without opening packages.

• Government and not-for-profits often contribute to research and development, which can be very costly.

• Example: Automobile airbags originated from Air Force ejection seats.

- Component of the marketing environment consisting of the relationship between the marketer, society, and culture. • Example: Aging of baby boom generation.

• Increasing importance of cultural diversity and submarkets with unique values, preferences, and behaviors.

• Example: Univision and Telemundo face growing competition in  Spanish-language television programming.

- Social force within the environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government.

• Basic consumer rights: to choose freely, to be informed, to be heard, and to be safe.

• Marketing is the interface between the firm and the external world.

• How marketing deals with external issues has a significant impact on the firm’s success.

• Marketing ethics Marketers’ standards of conduct and moral values.

• Many companies create ethics programs to train employees to act ethically.

• Employees’ personal values sometimes conflict with employers’ ethical standards.