Chapter 2: The External Marketing Environment Flashcards
(43 cards)
What do marketing managers must oversee?
The marketing mix of a company
What is a ‘marketing mix’?
Process that is designed, developed and maintained to appeal to the target market
What is a ‘target market’?
Group of potential customers for when a company’s product offers the greatest value
What is the key external force of the marketing environment?
Evolution of the target market
What do marketers need to do in order to meet the changing external environment?
Markets must shape and reshape the marketing mix to meet the ever-changing target market
Why is it important to understand the external environment?
To plan strategeically
What is CREST?
- C: Competitive
- R: Regulatory
- E: Economic
- S: Social
- T: Technological
What is ‘environmental scanning’?
Examining the internal and external environments to help guide future action
What is ‘PESTEL’?
- P: Political
- E: Economic
- S: Social
- T: Technological
- E: Environmental
- L: Legal
What are the ‘Political’ factors?
- **Government policies, trade regulations, political risk, and labour issues **
- Government policies vary based on party in power
- Trade regulations, subsides, and quotas, implemented to protect local industries and jobs
- Protectionist trade measure causes tension between countries
- Political risk, stemming from country’s instability, can disrupt supply chains and impact business + daily life
What are the ‘Economic’ factors?
- Consumers’ incomes, purchasing power, inflation, and recession
- Marketing managers must understand, forecast, and react to the economic environment
- Four key economic areas of concern: Consumers’ incomes, purchasing power, inflation, and recession
- Income plays crucial role in demographic targeting (i.e. high-priced products targeting high-class)
What is the primary determinant for earning potential?
Education
What is a key demographic variable marketers use to make target-market decisions?
Income
What is ‘disposable income’?
After-tax income. Amount of money people have to spend after taxes.
What is ‘purchasing power’?
Income-Cost of living = Purchasing power
- Comparison of income to the relative cost a standard set of goods and services in different areas
What is ‘discretionary income’?
Amount of money people have to spend on non-essential items. Income is higher than cost of living.
The higher the discretionary income, the higher the…. ______
Purchasing power
What is high purchasing power?
Affording to spend more money without jeopardizing budget for necessities and ability to buy luxury items
What is ‘inflation’?
Measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year
What impacts does inflation have on marketers?
- Inflation impacts consumer’s purchasing power if salary increases don’t keep up with inflation
- Inflation pressures consumers to make more-economical purchases to maintain their standard of living
- Marketers must develop strategies that acknowledge the impact of inflation but still compel consumers to buy
How can you overcome ‘inflation’?
A rise in gross income, as long as taxes and other government policies aren’t adjusted as well
What is a ‘recession’?
Period of economic activity characterized by negative growth
- Occurs when gross domestic product falls for two consecutive quarters
- Price value relationship becomes increasingly important when making purchases
- Can be provincial
What are the’ Social’ Factors?
Social factors (are influenced by)= demographics, values, lifestyles, and the needs being demanded
- Social factors influence what products people buy, prices they pay, and the effectiveness of promotions, and where and how they expect to make purchases
- Social change is challenging to forecast but plays a crucial role in the external marketing environment
What are ‘values’?
Strongly held beliefs that shape behaviour and are influenced by family, friends, influencers, and experiences
