Chapter 4: The Marketing Environment
1
Chapter 4
The Marketing Environment
This chapter begins with the learning outcome summaries followed by a set of lesson plans for
instructors to use to deliver the content.
• Lecture (for large sections) on page 4
• Company Clips (video) on page 5
Review and Assignments begin on page 7
Review questions
Application questions
Application exercise
Ethics exercise
Video Assignment
Case assignment
Great Ideas for Teaching Marketing from faculty around the country begin on page 22
Chapter 4: The Marketing Environment
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Learning Outcomes
4-1 Discuss the external environment of marketing and explain how it affects a firm
Marketers generally cannot control the elements of the external environment. Instead, they must
4-2 Describe the social factors that affect marketing
Within the external environment, social factors are perhaps the most difficult for marketers to
4-3 Explain the importance to marketing managers of current demographic trends
Today, several basic demographic patterns are influencing marketing mixes. Because the U.S.
4-4 Explain the importance to marketing managers of growing ethnic markets
The minority population today is about 118 million. By 2050, around one in three U.S. residents
4-5 Identify consumer and marketer reactions to the state of the economy
Chapter 4: The Marketing Environment
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In recent years, U.S. incomes have risen at a slow pace. When income is high relative to the cost
4-6 Identify the impact of technology on a firm
Monitoring new technology is essential to keeping up with competitors in today’s marketing
4-7 Discuss the political and legal environment of marketing
All marketing activities are subject to state and federal laws and the rulings of regulatory
agencies. Marketers are responsible for remaining aware of and abiding by such regulations.
4-8 Explain the basics of foreign and domestic competition
The competitive environment encompasses the number of competitors a firm must face, the
relative size of the competitors, and the degree of interdependence within the industry. Declining
Key Terms
Applied research
Demography
Millennials
Baby boomers
Environmental management
Inflation
Basic research
Federal Trade Commission (FTC)
Purchasing power
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Component lifestyles
Food and Drug Administration
(FDA)
Recession
Consumer Product Safety
Commission (CPSC)
Generation X
Target market
Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
Learning Outcomes and Topics
PowerPoint Slides
LO1 Discuss the external environment of
marketing and explain how it affects a firm
4-1 The External Marketing Environment
1. The Marketing Environment
2. Learning Outcomes
3. Learning Outcomes (continued)
4. External Marketing Environment
5. Target Market
6. Understanding the External
Environment
LO2 Describe the social factors that affect
marketing
4-2 Social Factors
7. Social Factors
8. Social Factors
9. Core American Values
10. Component Lifestyles
11. Social Media
LO3 Explain the importance to marketing
managers of current demographic trends
4-3 Demographic Factors
12. Demographic Factors
13. Demographic Factors
14. Tweens
15. Teens
16. Millennials (Generation Y)
17. Millennials (Generation Y)
(continued)
18. Generation X
19. Generation X (continued)
20. Baby Boomers
LO4 Explain the importance to marketing
managers of growing ethnic markets
4-4 Growing Ethnic Markets
21. Growing Ethnic Markets
22. Hispanic Americans
23. African Americans
24. Asian Americans
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Learning Outcomes and Topics
PowerPoint Slides
LO5 Identify consumer and marketer reactions to
the state of the economy
4-5 Economic Factors
25. Economic Factors
26. Economic Factors
27. Consumers’ Incomes
28. Purchasing Power
29. Inflation
30. Recession
LO6 Identify the impact of technology on a firm
4-6 Technology and Innovation
31. Technological and Innovation
32. Technological and Innovation
33. Idea Factory
34. Research
35. Stimulating Innovation
36. Stimulating Innovation (continued)
LO7 Discuss the political and legal environment of
marketing
4-7 Political and Legal Factors
37. Political and Legal Factors
38. Political and Legal Factors
39. Federal and State Laws
40. Regulatory Agencies
41. Bureaus of the FTC
42. Bureaus of the FTC (continued)
43. Consumer Privacy
LO8 Explain the basics of foreign and domestic
competition
4-8 Competitive Factors
44. Competitive Factors
45. Competitive Factors
46. Key Terms
47. Summary
48. Summary
Suggested Homework
• The end of this chapter contains assignments on the GaGa’s Inc. video and the One
Direction case.
• This chapter’s online study tools include flashcards, visual summaries, practice quizzes,
and other resources that can be assigned or used as a basis for longer investigations into
marketing.
Lesson Plans for Video
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Company Clips
Segment Summary: GaGa’s Inc.
GaGa’s Inc. produces a frozen dessert called Sherbetter in a variety of flavors. GaGa’s is a very
small product line. Jim King, the founder and CEO, discusses the challenges his company faces
in their product category. He also reveals other environmental challenges to his product.
These teaching notes combine activities that you can assign students to prepare before class, that
you can do in class before or while watching the video, and that you can assign students to
complete on their own after watching the video.
During the viewing portion of the teaching notes, stop the video periodically when appropriate to
ask students the questions listed on the grid or perform the activities listed on the grid. You may
even want to give the students the questions before starting the video and have them think about
the answer while viewing the segment. That way, students will be engaged in active rather than
passive viewing.
Pre-Class Prep for Your Students
• Have students familiarize themselves
with the following terms and concepts:
competition, demography, and target
market.
Video Review Exercise
Activity
Teaching Method
Warm Up
Begin by asking students, “How do businesses go about
researching and determining a target market?”
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In-Class Preview
• Segue into a discussion of the external marketing environment
and social factors as variables that marketing managers must
integrate into their marketing plans.
• Review how elements in the external environment create
opportunities as well as threats to a firm’s marketing mix.
• Ask students to volunteer the seven classifications, or factors,
that marketing managers may attempt to manage or shape
within the external environment.
• Review the cohorts in the present-day demography. Ask
students the importance of understanding demographic
characteristics.
• Review the Company Clips questions with students. They
should be prepared to answer them after viewing the video.
Viewing
(solutions below)
1. Explain how GaGa’s Inc. has used environmental management
to help shape the external environment in which they sell
Sherbetter.
2. Values influence buying habits; in what way(s) does GaGa’s
recognize its customers’ values?
Follow-up
• Have students use the Internet or the Yellow Pages to identify
companies that pitch “sustainability” or other green marketing
practices. Students should then e-mail or call one of the
companies and ask the manager or sales personnel to describe
their clientele and the types of products they sell to them. Ask
students to be prepared to share their research at the next class
meeting.
Solutions for Viewing Activities
1. Explain how GaGa’s Inc. has used environmental management to help shape the
external environment in which they sell Sherbetter.
Students’ answers will vary. Some students may say that GaGa’s manages its environment
2. Values influence buying habits. In what way(s) does GaGa’s recognize its customers’
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values?
Students’ answers will vary, but it is important for them to understand that GaGa’s knows
Review and Assignments for Chapter 4
Review Questions
1. What is the purpose of environmental scanning? Give an example.
Although students’ answers will vary, they should address the following issue.
2. Give an example of component lifestyles based on someone you know.
Students’ answers will vary.
3. Explain how consumers’ buying habits may change during a recessionary period.
An economic recession is a phase when income, production, and employment fall and
together reduce the demand for goods and services. During a typical recession, consumer
4. Give three examples of how technology has benefited marketers. Also, give several
examples of how firms have been hurt because they did not keep up with the changes
in technology.
Students’ answers will vary widely. For example, they may mention that the new
Chapter 4: The Marketing Environment
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
technology in fake fats in foods has created a dramatic new market in foods. Another
example would be the technology of shelf-stable packaging. Examples of firms hurt by
technology would be the American steel industry (which is now catching up and investing
in the new technologies) or companies that elected to continue to manufacture typewriters
and not move into a new product market.
Application Questions
1. Form six teams. Each team is responsible for one of the uncontrollable elements in the
marketing environment. Your boss, the company president, has asked each team to
provide a one-year and a five-year forecast of what major trends the firm will face.
The firm is in the telecommunications equipment industry. It has no plans to become
a telecommunications service provider like, for example, Verizon and AT&T. Each
team should use the library, the Internet, and other data sources to make its forecasts.
Each team should examine a minimum of one data source. The team should then pool
its data and prepare its recommendation. A spokesperson for each team should
present the findings to class.
The results will vary by team.
2. Every country has a set of core values and beliefs. These values may vary somewhat
from region to region of the nation. Identify five core values for your area of the
country. Clip magazine advertisements that reflect these values and bring them to
class.
This will vary depending upon the part of the country students are from. For example,
3. Baby boomers in America are aging. Describe how this might affect the marketing
mix for the following:
• Bally’s Health Clubs
• McDonald’s
• Whirlpool Corporation
• The state of Florida
• Target Stores
• Bally’s Health Clubs: There may be increased demand as boomers try to avoid aging,
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
have small children in the household.
• Whirlpool Corporation: They might have lower demand because only a few families
in the part of the family life cycle buy appliances.
• The state of Florida: Buying property for eventual retirement may create a boom in
the state.
• Target Stores: It depends on their target market—an aging population usually spends
less on clothing and accessories.
4. You have been asked to address a local Chamber of Commerce on the subject of
millennial consumers. Prepare an outline for your talk.
Students’ answers will vary. The outline should include the following elements.
5. How should Ford Motor Company market differently to millennials, Generation X,
and baby boomers?
Students’ answers will vary.
Millennials: People who are part of Generation Y have grown up in a media-saturated,
brand-conscious world and love customized products. So, Ford should develop a car that is
just for this generation alone and provide customized features that reflect the personality of
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. Go to the library, and look up a minority market such as the Hispanic market. Write
a memo to your boss that details the many submarkets within this segment.
Students’ answers will vary. Students should be invited to look at Web sites as well as
traditional books or periodicals. The submarkets within these cultural groups will probably
7. Using the library and the Internet, find examples of large companies directing
marketing mixes to each major ethnic group.
Students’ answers will vary.
8. Periods of inflation require firms to alter their marketing mix. Suppose a recent
economic forecast expects inflation to be almost 10 percent during the next 18
months. Your company manufactures hand tools for the home gardener. Write a
memo to the company president explaining how the firm may have to alter its
marketing mix.
Students’ answers will vary. Inflation is a general rise in prices resulting in decreased
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9. The Federal Trade Commission and other governmental agencies have been both
praised and criticized for their regulation of marketing activities. To what degree do
you think the government should regulate marketing? Explain your position.
Students’ answers will vary. Governmental regulation that directly impacts marketing
10. Can you think of any other areas where consumer protection laws are needed?
Students’ answers will vary. (If you use this as an in-class discussion question, ask students
11. What topics are currently receiving attention in FDA News
(http://www.fdanews.com)? What effect has the attention had on market share?
Students’ answers will vary according to the current news topics.
Application Exercise
Demographic factors play a large role in shaping the external marketing environment. One of
those demographic factors is culture. The importance of cultural understanding cannot be
overstated, especially in today’s global marketplace and the multicultural nature of the United
States. In general, Americans tend to be ethnocentric; that is, they are quick to prejudge other
cultural norms as wrong (or of less significance) because they differ from American practices.
One way to be exposed to another culture is by examining the foods typical of that culture. In
this exercise, you will need to work in a team to create a guide to ethnic dining in your city or
area. The finished guide will be descriptive in nature; it is not meant to be a rating guide.
Activities
1. Identify ethnic dining categories for inclusion in your guide. Once you have identified
categories for your area, make a list of restaurants for each category.