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The External Environment

Basic Concepts
Environmental Scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends

Environmental Management involves managerial efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments.

Elements of the Marketing Mix within an Environmental Framework

The Competitive Environment

The interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another.

Pharma Companies have Temporary Monopolies

Types of Competition
Direct Competition
Competitors with similar products Who are the major pick-up truck players? How about this company?

Indirect Competition
Products that are easily substituted Who does Shell compete with?

Directly competitive products-services

Indirectly competitive products-services (SUBSTUTITIONS)

What type of products do competitors have? What superiorities do competitive products have ? Is it possible to add some specific superiorities (features or functions) on our product? What are 7P strategies of competitors ?

What type of products are available for substitution? What advantages / disadvantages do substitutive products have ? Is there / will be there / was there any marketing campaign designed by firms of substitutive products? What are 7P strategies of firms of substitutive products ?

Marketing Strategy
In developing a competitive strategy, we must ask ourselves.
Should we compete? If so, in what markets should we compete? How should we compete? What about our 7P strategies to compete ? What is the result of SWOT analysis ?

Political-Legal Environment
Component of the marketing environment consisting of laws and interpretations of laws that require firms to protect:
Competition and Consumer Rights

Laws Affecting Marketing

Regulations from government

Specific restrictions

Tax rates, Rules on employment Governmental supports and incentives for strategic activities Legal process for Export Duties on imported goods Regulations for Consumer Rights

Legal embargo on some product categories such as alcoholic products or drugs


Legal embargo on some type of advertisements including sexual messages, racial content, etc..

Protecting Competition

(governmental task)

Maintaining a Competitive Environment


Aimed at to maintaining a competitive environment by reducing the trend toward monopolies

Protecting Consumers (governmental task)


Protecting Consumers
Increased focus on consumer protection Key Laws (to protect Consumers)
Proposed legislation to require nutrition information, certificates, the process for returns, etc

Controlling the Political-Legal Environment


Do the right thing!! Public Relations Departments Companies fight unjust regulations
Garnering Consumer Support Campaign Funding Political lobbying Political action committees

Economic Environment

Factors that influence consumer buying power and marketing strategies

Economic Environment
Key economic factors to consider and monitor:
Inflation Deflation Unemployment Income level Gross Domestic Product (GDP) of the country (market) Development category of the country (market) such as developed country developing country undeveloped country

All the key economic factors influence consumer buying power consumption tendency general positive psychology economic dynamism

Technological Environment
The application of knowledge in science, inventions, and innovations to marketing. Whats the latest technology that has revolutionized the way we do business??

Technological Environment

The Toyota Prius: one of the First Hybrid Automobiles Available for U.S. Auto Buyers

Technological Environment

Tech developments can give us a distinct competitive advantage or can put us out of business

Social-Cultural Environment
The relationship between marketing and society and its culture What is the big trend in the US in regard to eating habits?

Social-Cultural Environment

Social-Cultural Environment
Important cultural issues can help marketers get consumers attention
Traditions Religion Society habits Important symbols General thinking way in the society on what is acceptable and unacceptable