LO1   Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces.

Many businesses operate in environments where important forces change. Environmental scanning is the process of acquiring information about these changes to allow marketers to identify and interpret trends. There are five environmental forces businesses must monitor: social, economic, technological, competitive, and regulatory. By identifying trends related to each of these forces, businesses can develop and maintain successful marketing programs. Several trends that most businesses are monitoring include the increasing diversity of the U.S. population, the growing economic impact of China and India, and the dramatic growth of customer-generated content.

LO2   Describe how social forces such as demographics and culture can have an impact on marketing strategy.

Demographic information describes the world population; the U.S. population; the generational cohorts such as baby boomers, Generation X, and Generation Y; the structure of the American household; the geographic shifts of the population; and the racial and ethnic diversity of the population that has led to multicultural marketing programs. Cultural factors include the trend toward fewer differences in male and female consumer behavior and the impact of values such as "health and fitness" on consumer preferences.

LO3   Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing.

Economic forces include the strong relationship between consumers' expectations about the economy and their spending. Gross income has remained stable for more than 30 years although the rate of saving has been declining.

LO4   Describe how technological changes can affect marketing.

Technological innovations can replace existing products and services.

Changes in technology can also have an impact on customer value by reducing the cost of products, improving the quality of products, and providing new products that were not previously feasible. Electronic commerce is transforming how companies do business.

LO5   Discuss the forms of competition that exist in a market and key components of competition.

There are four forms of competition: pure competition, monopolistic competition, oligopoly, and monopoly. The key components of competition include the likelihood of new competitors, the power of buyers and suppliers, and the presence of competitors and possible substitutes. While large companies are often used as examples of marketplace competitors, there are 23 million small businesses in the United States, which have a significant impact on the economy.

LO6   Explain the major legislation that ensures competition and regulates the elements of the marketing mix.

Regulation exists to protect companies and consumers. Legislation that ensures a competitive marketplace includes the Sherman Antitrust Act. Product-related legislation includes copyright and trademark laws that protect companies and packaging and labeling laws that protect consumers. Pricing- and distribution related laws are designed to create a competitive marketplace with fair prices and availability. Regulation related to promotion and advertising reduces deceptive practices and provides enforcement through the Federal Trade Commission. Self-regulation through organizations such as the Better Business Bureau provides an alternative to federal and state regulation.