This week's focus was on chapter four of our textbook, The Marketing Environment. To me, the marketing environment is all about understanding how aspects outside of your company's control impact your ability to sell a product. The chapter begins by explaining what elements of an external environment a marketing manager has to understand in order to intelligently plan for the future. These elements include:
- Current Customers
- How customers make decisions.
- Who the most valuable customers to you are.
- Competition
I believe that if you can understand these four elements, and how they work, you will be successful in the business world.
The rest of the chapter discusses different factors that influence the external environment, mostly consumers. Deborah Baker from the Texas Christian University uses the image below to display these factors.
Social factors are the most difficult to predict, and include an individual's attitudes, values, and lifestyle. These things influence the product someone will buy, what they are willing to pay for that product, the effectiveness of a certain promotion, and so much more. Two types of social factors that are increasingly influencing consumers today are component lifestyles, or what I like to call "wearing many hats", and social media.
Demographic factors are aspects such as age, race, ethnicity, and location. What part of the population someone is in (GenX, Millenials, tweens, etc) and their ethnic background greatly influence the effect different marketing strategies will have on them. Economic factors include income, purchasing, power, inflation, and recession. The amount of money someone makes, the amount they have to spend, the cost of goods, and the relative growth or not of the market all influence the success of a marketing strategy.
Technological factors include basic research (expanding existing knowledge) and applied research (creating new or improved products). Technological factors influencing the external environment are summed up well in the image below by Jane Spark.
Political and legal factors involve the protection of innovators of new technology, the interests of society in general, one business from another, and consumers. This includes federal legislation such as Obamacare, State and Local laws such as those regarding fast food, and regulatory agencies such as the FDA. Finally, competitive factors are the organizations fighting for share and profits in the same market. As population and technology grow, it is harder for a company to maintain it's market share. With the increased globalization of the world, companies are now competing not only domestically, but with other organizations around the globe.
After our two classes this week, I realized how important this chapter would be to our smart projects. Without understanding of the environment our product is in, it could not be successful. For example, before we begin with designing and marketing the product, we have to understand who our customer will be and define our target market. Throughout the process it will be important for us to think about the factors that influence the external environment. For example, if we can think of a way to effectively use social media, like DiGiorno pizza did, we will be able to connect on a more personal level with consumers and "humanize" our brand.
During class this week, we watched a Shark Tank clip featuring DDPYoga. Their focus was on incorporating four different aspects of physical health into one workout.
When Barbara explained why she was out of the deal she said "I don't like investing in businesses that are based on trends. All the up and down just doesn't work for me." In the case of this type of yoga, I believe that Barbara is right. Often times people go on kicks when they are interested in alternative ways to get fit. However, if they don't work right away, if they are time consuming, or if they are too complicated, people will revert to more traditional fitness regimens.
I think Barbara saw that DDPYoga already had their big moment when Arthur's video went viral, but that the effect of that video would soon wear off. At the time the video first came out DDPYoga might have had a high demand because people saw the transformative power it had. However, once people knew the story, it's effectiveness to entice people to try the product would decrease. For these reasons, I believe that Barbara was right when she said that DDPYoga was a business based on a trend, and agree with her decision not to invest.
Looking forward to what we do next!
-Kristen
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