Affects Marketing? Marketing does not happen in a vacuum and is affected by many factors that can cause an organization
to adjust their marketing program numerous times before they get it right. In
the long run a marketing campaign can be affected by five factors; social, economics, technology, competition, regulations.
Social forces that affect marketing
includes population trends, which is the shift in the age of the general population.
Right now the baby boomers (those born from 1946 until 1964) exert the most influence over markets, attitudes and society,
but all that will change as the 21st century progresses.
the not to distant future the affect that Generation X (those born between 1965
and 1976) and Generation Y (those born after 1976) has on the purchasing and production of products and services will increase
as the baby boomers grow older.
also includes population shift, which is nothing more than movement of people into and out of one geographic location
or another. An example of this is the migration of northern retires to the southern
notable demographic trend is the changing racial and ethnic makeup of America such as the growing Hispanic population
and the declining Irish and German populations. With the changing cultural balance
comes all new influences on market and products.
a change in the racial and ethnic makeup of America will also come a change in culture as new values, ideas and attitudes
are learned and shared by the different social groups.
the last thirty years there has also been in the in the society over the last twenty or has come a change attitudes and
roles of men and women which has also created a different approach to marketing to men and women.
social factor that probably has had the most affect on marketing is the changing value system in America. Each generation has it’s own set of values. All age groups ran protection of the family and honesty
at the two most important values. While consumers under 20-value friendship as
the third most important value, people in the 21-29 and the 30-39-age range value rank heath and fitness and self esteem as
trend in marketing over the last few years has changed to reflect those values with many commercials showing families enjoying
life together and friends having a good time doing everything from mountain climbing to sitting in the local Starbucks laughing
and enjoying a cup of coffee together.
Economic factors that affect marketing
and Recession affect marketing because
they have an adverse affect on the consumer’s ability to purchase the goods or services that are being advertised.
inflationary periods the price of the materials to produce the good increases so the price the manufactured goods will
also increase. If the price of the product increases faster then the rate of
income of the consumer then the sales of the goods or services will decrease.
recessionary periods business decreases and with the decrease comes layoffs and job loss, which means there are more
people on unemployment with less money to spend.
Income is made up of two parts; the
gross income (money before taxes) and the disposable income (money left after taxes). If the rate of taxes increases faster the rate of income then consumers have less money to spend.
as the technology such as the internet, has changed the marketplace; good and services have become better with more
durable goods that use less energy and faster services which means spending less to get the job done, the consumer may find
that they have more disposable income left because they will not be paying out as much for necessary goods and services.
final component of consumer income is discretionary money, which is the money that is left over from the disposable
income that consumer use to buy non-necessary items, or luxury items. Discretionary
money is the target of marketing. If you can sway your customer’s emotions
to your product or service they will spend their money.
One thing that
the government can do to help in times of recession or inflation to help free up some discretionary funds is to reduce taxes
or increase tax refunds. This will give consumers more money to spend and will
stimulate the economy,
are four basic types of competition
Given time firms may move from 1
Examples of competition 1 to 4
Pure competition, many sellers with identical products
and Pop stores, family fishing boat
Monopolistic competition, many sellers with similar products
Oligopoly, a few companies control the industry
Monopoly, when one firm sells the product.
Each of the industries in the
table exhibits traits that either allow or inhibit new firms from entering their industry.
There are certain barriers that can be put into place that make it tougher for new competition from coming along especially
when it comes to the Oligopolies and Monopolies such as all existing companies banning together to force the new company out
An example of this would be back
in the 40’s when the Tucker Auto Company was put out of business because of pressure from the Big 3 (Chrysler, GM an
Ford which led to a Federal Investigation and the demise of the company)
Also as you reach the Oligopoly
and Monopoly level the higher the fixed costs, research requirements and knowledge it takes to run the firm so the less firms
there will be that can enter into competition with the existing firms.
Regulatory Forces that affect
Government regulations, which
are the restrictions federal, state and local officials place on business with regards to operations of that business affect
marketing because you must be aware of what you cannot do and say in a marketing campaign.
Government regulations are put
into place to protect both the business, by ensuring competition and fair business practices as well as the consumer by protecting
them from unfair trade and ensuring their safety.
Competition allows for marketing
of products and services while production of a safe product at a fair price insures customers will respond to marketing and
buy the product or ask for the service.
One important government agency
that must be recognized is the Federal Reserve. The Federal Reserve is
responsible for monitoring the state of the economy and adjusting interest rates accordingly.
During recessions the FED will lower the prime interest rate, which is the rate at which banks loan money to businesses,
in order to stimulate the economy. Lower interest rates also entice households
to make purchases of durable goods which will in turn help large firms to increase production and call back laid off workers.
The FED is also responsible for
open market operations, which essentially is the process if inflating or reducing the amount of money in circulation, which
helps to get households back to work and the unemployment rate down.
These are just some of the factors
that marketers must be aware in order to set a strategic view for their companies. One
way to compensate for any of these factors is to diversify a product mix in order to insure that the company is less susceptible
to economic and demographic fluctuations.