Instructor Manual
Lamb/Hair/McDaniel, MKTG 13E, ISBN 9780357127810; Chapter 4: The Marketing Environment
Table of Contents
Purpose and Perspective of the Chapter …………………………………………………………………………. 2
Cengage Supplements …………………………………………………………………………………………………… 2
Learning Outcomes ……………………………………………………………………………………………………….. 2
Complete List of Chapter Activities and Assessments ……………………………………………………… 3
Key Terms ……………………………………………………………………………………………………………………… 5
What’s New in This Chapter ……………………………………………………………………………………………. 5
Chapter Outline …………………………………………………………………………………………………………….. 6
Discussion Questions …………………………………………………………………………………………………… 18
Additional Activities and Assignments …………………………………………………………………………… 19
Additional Resources ……………………………………………………………………………………………………. 26
External Videos or Playlist ……………………………………………………………………………………………………….. 26
Appendix …………………………………………………………………………………………………………………….. 27
Generic Rubrics ……………………………………………………………………………………………………………………… 27
Standard Writing Rubric …………………………..……………………………………………………………………………… 27
Standard Discussion Rubric ……………………………………………………………………………………………………… 28
Purpose and Perspective of the Chapter
The purpose of this chapter is to learn about the external environmental factors that affect
marketing: social, demographic, economic, technological, political and legal, and
Cengage Supplements
The following product-level supplements provide additional information that may help you
in preparing your course. They are available in the Instructor Resource Center.
• Transition Guide (provides information about what’s new from edition to edition)
• Educator’s Guide (describes assets in the platform with a detailed breakdown of
activities by chapter with seat time)
Learning Outcomes
The following learning outcomes are addressed in this chapter:
4-1 Discuss the external environment of marketing and explain how it affects a firm.
4-2 Describe the social factors that affect marketing.
4-3 Explain the importance to marketing managers of current demographic trends.
Complete List of Chapter Activities and Assessments
For additional guidance refer to the Teaching Online Guide.
Chapter
Learning
Outcome
PPT slide
Activity/Assessment
Duration
Certification
Standard
N/A
MindTap: Why Does
Understanding How
Consumers Make
Decisions Matter to Me?
5 minutes
BUSPROG:
Reflective
Thinking
DISC: Customer
4-1
MindTap: Learn It 4-1:
The External Marketing
Environment
DISC: Strategy
4-2
MindTap: Learn It 4-1:
The External Marketing
Environment
5 minutes
BUSPROG:
Analytic
DISC: Strategy
4-3
MindTap: Learn It 4-3:
Demographic Factors
5 minutes
BUSPROG:
Analytic
5 minutes
BUSPROG:
Analytic
4-4
MindTap: Learn It 4-4:
Growing Ethnic Markets
5 minutes
BUSPROG:
Analytic
DISC: Customer
4-5
MindTap: Learn It 4-5:
Economic Factors
5 minutes
BUSPROG:
Analytic
DISC: Strategy
4-6
MindTap: Learn It 4-6:
Technology and
4-7
MindTap: Learn It 4-7:
Political and Legal
Factors
5 minutes
BUSPROG:
Analytic
DISC: Strategy
Analytic
5 minutes
BUSPROG:
Analytic
4-1
10
Knowledge Check 1
5 minutes
BUSPROG:
Analytic
Technology
Online/Computer
4-3
38
Group Activity 2 in PPT
20-25 minutes
BUSPROG:
Analytic
DISC: Research
4-4
49
Group Activity 3 in PPT
20-25 minutes
BUSPROG:
Technology
DISC:
Online/Computer
4-5
57
Group Activity 4 in PPT
20-25 minutes
BUSPROG:
Communication
DISC: Customer
Technology
Online/Computer
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DISC: Strategy
Key Terms
Applied research: research that attempts to develop new or improved products.
Baby boomers: people born between 1946 and 1964.
Basic research: pure research that aims to confirm an existing theory or to learn more
about a concept or phenomenon.
Federal Trade Commission (FTC): a federal agency empowered to prevent persons or
corporations from using unfair methods of competition in commerce.
Food and Drug Administration (FDA): a federal agency charged with enforcing
regulations against selling and distributing adulterated, misbranded, or hazardous food
and drug products.
Generation X: people born between 1965 and 1978.
Recession: a period of economic activity characterized by negative growth, which reduces
demand for goods and services.
Target market: a group of people or organizations for which an organization designs,
implements, and maintains a marketing mix intended to meet the needs of that group,
resulting in mutually satisfying exchanges.
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What’s New in This Chapter
The following elements are improvements in this chapter from the previous edition:
Instructor Manual: Lamb/Hair/McDaniel, MKTG 13E, ISBN 9780357127810; Chapter 4: The Marketing Environment
• New example of American Express and Mars Petcare use marketing research to
understand consumers’ needs and desires.
• New discussion of Americas’ changing consumer environment.
• New example of Airbnb development of “vacation mom” social media videos that
successfully drove sales and enhanced goodwill.
• New example of smartphone case manufacturer Peel use of social media videos to
sell its cases.
• New discussion of population shifts and the growth of the single population.
• New example of the impact of changing technology on old-line companies and how
they have adapted to survive. Example: Best Buy.
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Chapter Outline
In the outline below, each element includes references (in parentheses) to related content. “LO
CH–##” refers to the chapter learning outcome; “PPT Slide #” refers to the slide number in the
PowerPoint deck for this chapter (provided in the PowerPoints section of the Instructor Resource
1. The External Marketing Environment (LO 4-1, PPT Slide 3, DISC: Promotion)
a. Often the most important decisions a marketing manager must make relate to the
c. Understanding the External Environment: Environmental scanning is a process in
which a team of specialists continually collects and evaluates environmental
information in order to identify future market opportunities and threats. During this
process, information about customers and the competition should be collected.
d. Understand Current Customers and Desires of Potential Customers: A company
can use marketing research data to segment its markets and create personalized
new customers.
e. Understand How Consumer Decisions Are Made in a Rapidly Changing
Environment: A rapidly changing business environment and continually evolving
technology make understanding customer decision making critical to long-run
success. Individual wants and desires such as convenience, personalization,
f. Identify the Most Valuable Customers and Understand Their Needs: Often, 20
percent of a firm’s customers produce 80 percent of the firm’s revenue. An
organization must understand what drives that loyalty and then take steps to
ensure that those drivers are maintained and enhanced.
g. Understand the Competition: Competitors threaten a firm’s market share, its
2. Social Factors (LO 4-2, PPT Slide 11, DISC: Customer)
a. Social factors include our attitudes, values, and lifestyles. They influence:
• The products people buy
• The prices paid for products
• The effectiveness of specific promotions
• How, where, and when people expect to purchase products
b. American Values: America’s traditional core values have strongly influenced
Americans’ attitudes and lifestyles as well as their buying habits. Core values
include:
• Self-sufficiency: Every person should stand on his or her own two feet.
• Upward mobility: Success will come to anyone who gets an education, works
hard, and plays by the rules.
• The environment: The environment must be protected for future generations.
c. A person’s values are key determinants of:
• What is important and not important
• What actions to take or not to take
• How one behaves in social situations
d. The Growth of Component Lifestyles: With component lifestyles, people are
choosing goods and services that meet diverse needs and interests rather than
conforming to a single, traditional lifestyle. Component lifestyles increase the
complexity of consumers’ buying habits.
e. How Social Media Have Changed Our Behavior: Social media are web-based and
mobile technologies that allow the creation and exchange of user-generated
purchase items online.
f. How Firms Use Social Media: With social networking, consumers can reach many
people at once with their views—and can respond to brands and events in real time.
g. Videos posted on social media are becoming the new normal for marketing a
brand. Marketers know that four times as many consumers would prefer to watch a
video about a product than read about it. Over half of marketers worldwide say that
video content, compared to all other types of content, results in the best return on
investment (ROI).
Example: Today, more than 500 million hours of videos are watched on YouTube
each day, and nearly half of people watch an hour of video on Facebook or YouTube
3. Demographic Factors (LO 4-3, PPT Slide 23, DISC: Customer)
b. Population: People are directly or indirectly the basis of all markets, making
population the most basic statistic in marketing. There are more than 7.6 billion
people alive today. China has the largest population, with 1.4 billion persons; India is
second, with 1.36 billion. The U.S. population is slightly over 327 million. Age groups
offer opportunities for marketers to focus on a section of the population. However,
population is a broad statistic that is most useful to marketers when broken into
smaller, more specific increments.
• Growth of the Singles Population: Singles account for 45 percent of all U.S. adults.
group is attractive to many markets.
• Generation Z: The Generation Z population consists of people born between
1995 and 2010, so some members are in their teenage years while others are
children and young adults. This group consists of 67 million consumers, most of
whom have never known a world without social media or smartphones. Ninety-
• Generation X: Generation X are people born between 1965 and 1978.
Generation X consists of 65 million U.S. consumers. Generation Xers often spent
more time without adult support and guidance than any other age cohort,
making them independent, resilient, and adaptable. Generation Xers have
higher average incomes than their Millennial and Baby Boomer counterparts.
Saving money is a major priority for Generation Xers. They tend to be frugal and
seek value when making purchases and do a significant amount of research
beforehand.
• Baby Boomers: Baby Boomers are people born between 1946 and 1964. There
4. Growing Ethnic Markets (LO 4-4, PPT Slide 40, DISC: International Perspective)
a. The American demographic profile is rapidly changing as racial and ethnic groups
continue to grow. By 2045, non-Hispanic whites will make up less than 50 percent of
the population.
b. Marketing to Hispanic Americans: With a population of more than 58 million,
Hispanics make up the largest U.S. minority. Most Hispanics in the United States
today were born here. The average age of the U.S. Hispanic population is 28 years
c. Marketing to African Americans: African Americans make up around 13 percent
of the U.S. population. They are young—53 percent are under the age of 35. Almost
23 percent of African Americans age 25 or older hold a bachelor’s degree or higher.
The unemployment rate of African Americans has been steadily declining since
2010. The median household income for a black family is about $20,000 less than all
other families in America.
• Young African Americans have a strong influence on the latest trends, especially
with regard to music and pop culture. African Americans are voracious radio
listeners and heavy users of technology—83 percent own a smartphone. Fifty-
religious than whites and Hispanics by many measures of religious commitment.
d. Marketing to Asian Americans: The Asian American population reached more
than 22 million in 2019. While U.S. births have been the primary driving force behind
the increase in the Hispanic and African American populations, Asian American
population growth has been fueled primarily by immigration. Thirty-one percent of
Asian Americans were foreign-born.
• Asian Americans have the highest average family income of all groups. Fifty-two
percent of Asian Americans have a bachelor’s degree, compared to 35 percent of
5. Economic Factors (LO 4-5, PPT Slide 51, DISC: Strategy)
a. In addition to social and demographic factors, marketing managers must
understand and react to the economic environment. Three economic areas of
greatest concern to most marketers are:
b. Consumers’ Incomes: Since 2013, Hispanic household incomes have grown 21
percent. This is followed by African Americans at 8 percent, non-Hispanic whites at 7
c. Purchasing Power: Purchasing power is a comparison of income versus the relative
cost of a standard set of goods and services in different geographic areas. Another
way to think of purchasing power is income minus the cost of living (i.e., expenses).
In general, a cost–of-living index takes into account housing, food and groceries,
transportation, utilities, health care, and miscellaneous expenses such as clothing,
services, and entertainment. Increased standards of living are a function of
purchasing power.
• When income is high relative to the cost of living, people have more
discretionary income to spend on nonessential items (in other words, on wants
d. Inflation: Inflation is a measure of the decrease in the value of money, expressed as
the percentage reduction in value since the previous year. In simple terms, an
inflation rate of 5 percent means that you can expect that, on average, prices have
as long as is practical.
e. Recession: A recession is a period of economic activity characterized by negative
growth, which reduces demand for goods and services. More precisely, a recession
6. Technology and Innovation (LO 4-6, PPT Slide 60, DISC: Creativity)
a. Technological success is based on innovation, and innovation requires imagination
and risk taking. Bringing new technology to the marketplace requires a corporate
1. Stage One: This stage is called “Signals Amidst the Noise.” It occurs when a new
technology comes on the market but is yet to be disruptive. Most incumbent
it competes.
2. Stage Two: In stage two, “Change Takes Hold,” the core technology and
economic factors of the disruptive force are validated. This is the stage at which
old-line companies need to establish footholds in the new technology. At this
point, the disruptive technology still does not have a major impact on the
bottom line of the incumbent firms.
3. Stage Three: Stage three is called “The Inevitable Transformation.” If established
companies had the foresight to begin creating small new ventures in stage two,
4. Stage Four: “Adapting to the New Normal” is the last stage. At this stage, the
disruption has reached the point at which companies must accept the fact that
the industry has fundamentally changed. Firms that were slow to react must
either restructure, consolidate, or go bankrupt.
c. Research: Basic research, or pure research, aims to confirm an existing theory or
7. Political and Legal Factors (LO 4-7, PPT Slide 67, DISC: Marketing Plan)
a. Business needs government regulation to protect innovators of new technology, the
interests of society in general, one business from another, and consumers. In turn,
government needs business because the marketplace generates taxes that support
public efforts to educate our youth, pave our roads, protect our shores, and the like.
PRESENTATION VISUAL: Exhibit 4.1 Primary U.S. Laws That Affect Marketing
Legislation
Impact on Marketing
Sherman Act of 1890
Makes trusts and conspiracies in restraint
of trade illegal; makes monopolies and
ownership of stock.
Robinson-Patman Act of 1936
Prohibits charging different prices to