in this lesson we will continue to study the concept of
market sensing. specifically we
will be looking at the economic, technological,
regulatory and natural environmental aspects
of the environmental analysis.
previously we talked about how our marketing
focuses on facilitating an exchange between a customer
and the organization's marketing mix so that we can create value
and meet customer needs. specifically we've already talked about the
competition aspect of environmental analysis
and today would like to move on and talk about the
economic, regulatory, technological
and natural environment aspects of environmental analysis.
let's start by looking
at a brief video about Cinnabon
that explains a little bit about
how Cinnabon has adjusted its marketing efforts
in this new economy. quickly was impacted
more than others great because of the recession.
can you tell me a little bit about that and how you
traffic circle bounce back later absolutely so Cinnabon is a business
I'm where the franchise division is based in high-traffic
captured traffic then use airports malls travel plazas
when the recession hit a course that affected everyone
but if you rely on traffic in an airport and no one's flying
you rely on traffic in a mall and no one shopping there are no humans
to buy your product so our goal was to drive traffic in two ways
one was to make the brand more relevant universally
so that Cinnabon was front of mind and people would consider us and think about
the venues where we were
to come and see us. the other traffic driving strategy was capture rate
of the people who are already there how can we visually compete
with what had become an explosion a snack competition the venues which still
exist today
so the first strategy was leverage our strategic partnerships and alliances to
tell the story of Cinnabon so we were relevant
universally the second strategy to improve capture rate was
brought in the perception a variety without moving too far away from the
core
we had a little bit of a relevant problem in some of our venues
people loved us but then they would say but I just can't
because they thought it was too big or too high calories and what we really had
to do was market what we already had
smaller cinnamon rolls other baked goods and
reenergize the blended beverage platform so that people would not only see there
was a variety
but that there was portable variety so they can snack on the go
which is critical in the venues where we do business. food companies today seem to
be really pushing
healthy trends cinnabun really seems to embrace
the fact that their product is an indulgence. why have you guys made that
decision and
what's the reaction you're getting from consumers. I think there's a
a few ways we approach it one is if you believe
that people will continue to seek to treat themselves which i think we can
all agree that they will
then you agree there's a market for indulgences but I think
what today's consumers looking for is not less indulgence
they're looking for higher quality they're looking for transparency and
what's in their food.
they're looking for authenticity of ingredients.
so for us since we have the quality it's made from scratch
it's rolled right in front of you in our bakeries we realize that it was okay
to stand in that space that market position
up quality indulgence and the way you do that as an insult to brands make sure
someone's going to give you the gift
of their discretionary calories and of course their discretionary income
you'd better make it so worth it or they will not come back literally and
in speeches that we give when I say Cinnabon cinnamon rolls
are not healthy they applaud they literally applaud and come up and say
it's so refreshing to hear someone say that I think they're not good for your
butt they're good for your soul
and so treat yourself once in a while see you your strategy has been
to offer variety rather than to go the low-fat
cal route on your products absolutely
our strategy has been to offer a variety and protect the quality
you know I think that we were too extreme if we said nope
we are one giant cinnamon roll 880 calories if you don't like it don't buy
it the reality would be over many years
fewer and fewer people would buy it and so not only is it the right thing to do
for communities
it's the smart business move to provide enough variety
while still staying true to who we are. which is what differentiates us
that allows us to enjoy growing success about the franchise business
and other branded categories
(large boxes products are customized these
on their users subscribers preferences
at). sorry about that -- a little added audio there at the end. so
I hope that through this Cinnabon
video you've been able to see how Cinnabon hasn't just
done what they want -- they've made strategic marketing decisions to respond
to the customer
and the economic environment
and their competitive environment. so i think you're
beginning to see how the marketing environment
definitely affects what marketers do.
so let's talk about these economic forces just a little bit more.
and I just -- first of all -- want to define what we mean by
an economic cycle. generally an economic comic cycle is a
pattern of fluctuations as measured by
gross national product and we'll talk about
GNP our GDP in a second in national economies.
and so economies in which
the market decides what is bought and sold
typically go through cycles where they
reach a peak -- the economy is at its high -- and then
something happens and the economy's
contracts or recesses and
when it hits its lowest point we call that a trough.
at some point the economy begins to recover --
we call that recovery -- and
in recovery then we actually expand again
into a peak. this is this concept of
economic or business cycles and so you might hear
for its like prosperity to refer to a peak
or a recession where there is
not economic growth in fact instead there's economic decline --
or even sometimes a very severe recession.
you might hear the word depression. so those are examples
the economy and the different economic cycles
in which businesses have to operate.
I want to direct you here to a couple of links that can provide additional
information.
first we're gonna go to the United States
Bureau of Labor Statistics and this tell us a little bit about the US economy
at a glance. you can look here at the unemployment rate and whether
more or fewer people are unemployed.
and there's even debate about whether
unemployment is the best thing to measure but will let it suffice to say
that
the more people that are employed
the more income they would have, and therefore the more
buying power they would have which would be better for products and services
marketed
at that time. just want to take you on a brief field trip to the US Bureau of
Labor Statistics.
another website that we're going to go to here
looks at
different economies and I think this this one is really interesting
because it measures GDP --
which is gross domestic product -- it's
the total value of all things produced by
an economy less some items. but basically it's
how much and economy is producing.
and it's interesting to note that in 2002
the United States still had the world's largest economy.
on this list the European Union is first but
the European Union is made up have many different country so if we separated
out Germany, France, United Kingdom
etc. from the European Union -- collectively those countries surpassed
the US GDP
but if you look at those countries separately they did not.
so the US still has a very large
GDP. but we hear a lot about China
and even now China is beyond behind the United States. So why do we hear so much
about the Chinese economy? that's because
if you look at the history of the Chinese economy you can see how they
have experienced
rapid rapid growth in recent history
while the US economy is growing much more slowly.
so if the Chinese economy continues to grow
at the pace at which it has, it will surpass the US
GDP or the US economy at some point
if we continue at the pace of economic growth that we are.
so the point that the slides is to just
show you a little bit about how the economy goes through cycles
and how that can affect the buying power
of consumers and their ability to purchase
products and services. let's talk about this concept
of consumer buying power a little bit. first of all,
a consumer who goes out and has a job and
makes money -- the amount that they make is called their gross
income. and of course they have to pay
income taxes in the US economy. so what is left
over after paying taxes that is used
for necessities -- things like
housing, basic food, clothing --
these are called disposable
income -- things that we truly
need ore bought with disposable
income. after we buy our necessities --
our true needs -- what is left over
is then what's called discretionary income.
so theoretically discretionary income
would be used to buy things that we
want but not necessarily things
that we need. now it's interesting that in
today's economy marketers have done an excellent job
of convincing you that many of the things that you simply
want you really need like
a cell phone for example. do you really need
a cell phone or a smartphone? or is it's just something
that you want? but disposable income is typically
used to buy what we would call basic
needs to sustain your life -- shelter,
food, basic clothing -- and discretionary income
then is what is left over that is used to buy your wants.
so my question to you now is which
are affected more by changes in the economy?
products that are purchased with disposable
income or products that are purchased
with discretionary income? and I'm going to give you a minute to think about that.
we know that
in A -- products that are purchased
with disposable income are things that supposedly
we what? "need" while
B products that are purchased with discretionary income
are supposedly products that we want.
so if the economy
changes a lot
either positively or negatively that means
that we can no longer buy things that we simply
want but we have to use that more
limited buying power to buy things that we need.
so the answer to the question would be that B --
items purchased with discretionary income --
are more affected by these
recessions and changes in the economic cycle.
having talked a little bit about
economic influences in the marketing environment,
let's move on and talk briefly about
technological influences in the marketing environment.
this first website that I'm going to
talks to you -- it's from advertising age --
about how US adults are now spending
more time on digital devices -- new technology --
than on watching television.
some might classify this as a social environmental changes well but
definitely this new technology
particularly all the --
technical
difficulties
here --
there's been
a surge in all this digital media has been
driven by mobile technology. so the point is you can see how new technology
affects what people are buying. the purchase
of things like smartphones, tablets and feature phones
is definitely growing while perhaps
the purchased of more traditional televisions
might decline because of this news technology.
let's look at how new technology has affected
the concept of a drive in movie. i don't
know if you've been to a drive in movie or not, but in 2013
drive-in theaters were forced to convert to digital production
because that's the way movies are being produced.
so because they were forced to
digital production that was very very expensive
for many movie operators.
so in this case
Honda -- something that doesn't really have
anything to do with drive-in movies other than the fact that people
use their cars and vehicles to go to drive in movies --
ran a contest to
see which drive-in theaters in the United States people
wanted saved and they gave the money to
update some of those mom-and-pop operations
to digital drive-in theaters.
again in this case Honda was responding
to changes in the technological
environment. I what you think about
technology beyond just things that deal
with electronics or the internet. even things like the footwear industry
are affected by technology and this particular article talks about
different alternatives to leather
as being ways that they could change the technology.
interestingly enough I think you have
seen different brands advertised where it emphasizes how particular brand might
help you to jump higher or be able to move side to side
or a more breathable fabric -- all examples of technology in shoes.
in addition to competitive, economic,
and technological forces happening in the marketing environment,
we have to also indicate we understand that
laws and regulations have great influence
on what marketers market and how they go about doing tha.
first of fall one form of regulation would simply be
self-regulation. if you can
I'm do a good job and respond to your customers
in ethical and customer-oriented ways,
perhaps there won't be any need for the government to regulate your industry.
so that's one way -- is to just self
regulate within a particular industry. many trade associations have standards
for their members.
and additionally there are many federal and state regulations that you
will study in a business law class.
Three areas have the greatest
impact on marketing and one of those
organizations is the Federal Trade Commission.
we talked about marketing being that concept of exchange
or trade and so the Federal Trade Commission is the main body
that regulates our marketing activities. and you can see that there are
all kinds of regulatory things in terms of
what marketers can or cannot do
in terms up legal requirements.
and one of the things that the Federal Trade Commission
tries to do is to protect competition.
competition between organizations or businesses
or marketers is generally good for our customers.
so the Federal Trade Commission has a lot of
laws and regulations that deal with protecting competition.
another big aspect of regulation
in marketing is handled by the US
patent and Trademark Office. and so
if you come up with a brand or
a trademark for your particular brand you have to protect your legal right to
use the that
trade mark or that brand name or even that patent.
here you could go to find all kinds of information about patents and
trademarks
and we're going to be discussing branding much later in this particular class
but you can use this particular website to search for
a variety of things that you might wonder about patent
and Trademark. one thing I'm going to search for is "how long does
a trademark last?" and it brings me to do it
an answer. and if you come down here
to how long does a trademark registration last --
which i think is kind of interesting -- it's valid
as long as you timely file
all registration maintenance documents so
if you get a trademark it's not good for ever...
you must file a declaration of use
between the 5th and six year following its registration
and you must file renewal
between the ninth and 10 years and every 10 years thereafter.
and so there are a lot of questions that you could get answered here
about registering your brand, having a registered trademark
for your particular brand us protected it so that other competitors
couldn't use that same brand.
for example, later this semester, you're going to be
marketing a backpack and you can't call North Face
because there's someone that already has
the exclusive legal rights to use that particular
brand name. lastly let's talk about things
in the natural environment that might affect marketing.
there's a big push now to do things that
appear to be good for the
natural environment. and in fact products and services
that are are marketed as being green -- in other words
good for the natural environment-- oftentimes
us have an advantage in the marketplace.
I've just gone to the US Small Business Administration where there's a
discussion of green marketing and how to go about
marketing your product in a green way
or what might be called sustainable
way. when we use the word the words
sustainable we mean that you are not
using resources from our natural environment
in your business or economic cycle
faster than they can be replaced so that the natural environment
will be sustained. if we're using resources
from the natural environment faster than they can be replaced
you are not using those resources in a sustainable way.
and so many times people will
practice green marketing in a positive way --
an ethical way -- where they show how what they are doing
is good for the natural environment. but sometimes
people practice green marketing and make it appear that they are doing things
that are good for their natural environment when in actuality
they aren't really. and we call this concept
greenwashing. and I want to just take you to an example.
apparently -- and I didn't know that that much about it -- there's a lot of
emphasis on
eating fish that are caught in a sustainable way.
so in other words when we are
catching fish or seafood
that we are not catching it in such
great amounts that it cannot be replaced
in our ecosystem. and so it talks about a major food chain
called whole fool foods where they
are marketing a product --
sea bass as being certified
sustainable -- and
we're not saying that whole foods are doing this but introduces
this concept of greenwashing --
which is a strategy that makes consumers think they are protecting the planet
when actually they aren't. so the product is marketed as
green when actually it's not
obtained sustainably. and so
am I would just encourage you to maybe review this
article in greater detail
so that you can look at it.
you know the majority of Americans
trust and would buy you food that
is caught in a sustainable fashion but the question is --
is it really or is are they green washing?
so I hope this has provided somewhat of an overview of
the importance of economic,
technological, legal and regulatory,
and natural environment influences
in the marketing environment -- as well as competitive
influences that we discussed in a previous lesson.