Dr.

Maha Yusr
University Utara
Malaysia UUM
Marketing Principles 101

Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Marketing in the Twenty-First Century

Chapter 3: Analyzing Your Environment

3-2

Learning Objectives
LO 3-1

Differentiate between direct and indirect competition.

LO 3-2

Summarize the major external factors that influence the

marketing environment.

LO 3-3

Extend the analysis of the marketing environment beyond

the borders of the United States.

LO 3-4

Identify the major trade agreements, monetary unions, and

organizations that impact the global marketing environment.

LO 3-5

Describe the emerging factors influencing the nonprofit

marketing environment.

3-3

Executive Perspective
Erin Brewer
Managing Partner, RedPin Bowling Lounge and
The Basement Modern Diner

Worked ten years in non-profit before launching her small business.

Feels her success comes from her desire to learn all she can. Knowing more
than I need to know gives me an edge . . .
Advice to graduates: dont be afraid to apply for a job even if your experience isnt
an exact match. Tailor your resume to each job.
They have developed unique marketing strategies based on whats going on
around them -- seasonal promotions and special pricing.
Her personal brand: enjoy the moment, make decisions that leave no regret, treat
others with courtesy and respect, learn something new everyday and be
comfortable in her own skin.
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LO3-1

Competitive Environment
DIRECT
COMPETITIO
N
INDIRECT
COMPETITION

Substitute
Products
Alternate
Solutions

3-5

Marketing professionals at SiriusXM and every organization

must recognize the challenges both direct and indirect
competition present and develop strategies to protect and
expand their organization in light of those challenges.

3-6

The marketing department

at Wendys closely
monitors the products and
advertising of its direct
competitors, looking for
opportunities to better
serve customers of fast
food hamburger chains.

3-7

Firms that closely monitor indirect competition can take

steps to reduce its impact by expanding their offerings,
as Coca-Cola did in response to competition from firms
promoting healthy alternatives to soft drinks.

3-8

External
Marketing
LO3-2
Environment
Environmental scanning
External factors affecting the marketing environment

3-9

3-10

External Marketing Environment

Economic
Gross domestic product
Recession

Income Distribution
Inflation
Purchasing power

Consumer confidence

3-11

3-12

Though they pursued markedly different strategies,

both Louis Vuitton and Dollar General had success
marketing to a U.S. population characterized by
shifting income distribution.

3-13

Hyundais Buyer Assurance program, which focused

on addressing low consumer confidence due to a
weak economy, allowed the car company to increase
domestic sales, profits, and market share during an
economic recession.

3-14

External Marketing Environment

Demographics
Age
Baby boomers
Disposable income
Free time
Millennials
Greatest familiarity with digital communication

Gender
Education
Ethnicity

3-15

Marketing to Generation Y
Video

Click on the play button to watch

the video.

3-16

3-17

3-18

3-19

Changing
Ethnic
Breakdown
in the U.S.

3-20

External Marketing Environment

Sociocultural
Shift from single-income to two-income families

Political
Governmental policy affects how marketers position

products

Legal
To ensure businesses compete fairly (FTC)
To ensure businesses dont take advantage of

consumers

Technology
3-21

Oscar Mayers Lunchables, which typically include

crackers, cheese, and meat slices, not only appeal to
busier families looking for a convenient way to
prepare their childrens lunch, but also to the cultural
trend in the U.S. to eat healthier.

3-22

3-23

New technology, such as Disneys MagicBands, not only delivers convenience to consumers but also provides
marketers with valuable information about a customers purchasing patterns and habits.

3-24

Changes at Disney Marketing

Video

Click on the play button to watch

the video.

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3-26

LO3-3

Global Marketing Environment

Important global considerations

Currency Fluctuation
Currency exchange rate
Income Distribution
Major Trade Agreements and
Organizations
Tariffs
Technology
Cultural Fit
Consumer ethnocentrism

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3-28

LO3-4

Major Trade Agreements and

Organizations
North American Free Trade Agreement
(NAFTA)
Dominican RepublicCentral America Free
Trade Agreement (DR-CAFTA)
European Union (EU)
World Trade Organization (WTO)
International Monetary Fund (IMF)
3-29

Top 15
Buyers of
U.S.
Exports

3-30

3-31

Todays Professional
Halsey Ward
Sponsorship and Sales Executive
Australian National Basketball League

Developing brand and fighting for market share.

A detailed, focused goal ultimately helped her land the job.
Professional success has come from having confidence.
Advice to graduates: never let all the nos keep you from
going after that one crucial yes.
The international market still uses the four Ps.
Her personal brand: compete.

3-32

3-33

Nonprofit Marketing
LO3-5
Environment
Economic
Political
Legal
Technology

3-34

3-35

3-36

Many nonprofit organizations, such as Big

Brothers Big Sisters, use social media to
deepen engagement with stakeholders as part
of their marketing strategy.

3-37

Social Media Impact on Non-Profits

Video

Click on the play button to watch

the video.
3-38

Rolling with the Changes:

RedPin Bowling Lounge
Video

Click on the play button to watch

the video.
3-39

1. Consider your current university or college and develop a list of

the direct and indirect competitors it will face in the next decade.
2. Assume you are going to open a new pizza restaurant in the town
in which you live. What external factors will impact your business
decision? What types of technology would you use to market your
pizza business and how would you use them?
3. Assume you work in marketing for Dr Pepper and you are looking
to expand the brand internationally. Your final three choices are
Mexico, Australia, and India. Using the global environmental
factors discussed in this chapter currency fluctuations, income
distribution, cultural fit, and technology rank the countries based
on which would provide the best opportunity for Dr Peppers
expansion. Explain your ranking for each country.

3-40

4. Choose a firm that you are familiar with that is located in the
same state as your university. Next, decide if the North
American Free Trade Agreement (NAFTA) has been good or
bad for that business. Explain your answers. Has NAFTA been
good or bad for all that firms stakeholders (investors,
employees, communities, etc.) or has it been good for some
and bad for others? Explain your answer.
5. Choose a nonprofit organization that you think markets itself
effectively. Why did you pick that organization? What external
factors do you think the organization should be most concerned
about?

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1. What is the difference between direct and

indirect competition?

FORECAST

2. How do external factors impact my marketing

environment?
3. Why is it important to consider the global
marketing environment?
4. Why do international entities like the
European Union matter to marketers?
5. What additional factors impact the nonprofit
marketing environment?
3-42

Key Terms
Baby boomers
The generation born between 1946 and 1964.
Consumer confidence

Retur
n to
slide

A measure of the amount of goods and services that can

be purchased for a specific amount of money.
Retur
n to
Consumer ethnocentrism
slide
A belief by residents of a country that it is inappropriate or
immoral to purchase foreign-made goods and services.

Retur
n to
slide

3-43

Key Terms
Currency exchange rate
The price of one countrys currency in terms of another
Retur
countrys currency.
n to
Demographics
slide
The characteristics of human populations that can be used
to identify consumer markets.
Retur
n to
slide

3-44

Key Terms
Direct competition
A situation in which products that perform the same
function compete against one another.
Retur
n to
Disposable income
slide
The amount of spending money available to households
after paying taxes.
Retur
n to
DR-CAFTA
slide
An international agreement that eliminated tariffs, reduced
nontariff barriers, and facilitated investment among the
U.S., Costa Rica, El Salvador, Guatemala, Honduras,
Retur
Nicaragua, and the Dominican Republic.
n to
slide
3-45

Key Terms
Environmental scanning
The act of monitoring developments outside of the firms
control with the goal of detecting and responding to
threats and opportunities.
Retur
n to
European Union
slide
An economic, political, and monetary union among 27
European nations that created a single European market
by reducing barriers to the free trade of goods, services,
Retur
and finances.
n to
FTC
slide
The consumer protection agency for the United States.
Retur
n to
slide

3-46

Key Terms
Gross domestic product
A measure of the market value of all officially recognized final
goods and services produced within a country in a given period.
Retur
Indirect competition
n to
slide
A process in which products provide alternative solutions to the
same market.
Retur

Inflation
An increase in the general level of prices of products in
an economy over a period of time.

n to
slide
Retur
n to
slide

3-47

Key Terms
International monetary fund
An international organization that works to foster
international monetary cooperation, secure financial
stability, facilitate international trade, promote high
employment and sustainable economic growth, and
Retur
reduce poverty around the world.
n to
Millennials
slide
The generation born between 1978 and the late twentieth
Retur
century.
n to
NAFTA
slide
An international agreement that established a free trade
zone among the United States, Canada, and Mexico. Retur
n to
slide
3-48

Key Terms
Purchasing power
A measure of the amount of goods and services that can
be purchased for a specific amount of money.
Retur
n to
Recession
slide
A period of time during which gross domestic product
(GDP) declines for two or more consecutive quarters.Retur
n to
Sociocultural
slide
The combination of social and cultural factors that affect
Retur
individual development.
n to
.
slide

3-49

Key Terms
Substitute products
Goods and services that perform very similar functions and
can be used in place of one another.
Retur
n to
Tariffs
slide
Taxes on imports and exports between countries.
Retur
n to
World Trade Organization
slide
An international organization that regulates trade among
participating countries and helps importers and exporters
conduct their business
Retur
n to
slide

3-50