A study on Environmental Variables affecting Marketing

Introduction:A marketing plan is a powerful tool used by businesses who want to get ahead and plan for the future of their company. If a company is looking to manufacture and sell cellular phones then they would need a marketing plan to stay above the competition and other varying factors. There are several variables that go into creating a marketing plan. The main variables are economic, demographic, technological, political and cultural and they are to be included in the marketing plan. Successful companies both big and small most often have a marketing plan (Marketing plans, 2013). It starts out months in advance before being executed, typically. If I were to execute a marketing plan, I would definitely start out at least a month in advance. Even though some businesses are very private about their marketing plans for competitive reasons, it is important for every member of the firm to be able to view details of the marketing plan (Marketing plans, 2013).Internal and External environmental factorsThere are two different types of environmental factors and those are internal and external factors. The type of factor that a company has control over would be the internal factors, because those things are happening internally. What are internal environmental factors? They are: management, finance and accounting, research and development, manufacturing, purchasing, company image, and brand equity (ebstudies, 2012). The firm is responsible for their own management team as well as the financing and accounting departments. The research and development takes place within the firm and with everybody involved with the firm. The manufacturing and purchasing is all a product of what goes on inside of the firm.External FactorsSome external factors, factors that the firm doesn't necessarily have control over are the customers, the government, competitors, and the public. It would be difficult to keep track of each one of those things when drawing up a marketing plan. With the competition it is likely that they have their own marketing plan and want to keep that information away from the firm just as the firm wants to keep the information away from them. The external factors also include the macro and micro environment (ebstudies, 2012). The macro environment factors are very much uncontrollable.Macro environmental factorsThe macro environment factors are the demographics, economics, physical forces, technological factors, political and legal forces, and social and cultural forces (ebstudies, 2012). Marketers would be interested to know the demographics of the market that they're in. They can include it into the plan but have no control over the demographics of the environment. The economic factors relate to the production and manufacturing and could have an effect on both of those things (ebstudies, 2012). Physical forces refer to natural renewable resources and those things can also affect the production and manufacturing as well as the availability of such necessary resources (ebstudies, 2012). Technology affects a business because the machinery affects the production and manufacturing of products and materials (ebstudies, 2012). Marketing decisions, sound marketing decisions cannot be made without taking into account the political and legal forces in their environment which greatly shape the decision making (ebstudies, 2012). The social and cultural forces affect marketing because these forces demand that products be made available and benefit everybody in society (ebstudies, 2012).Social and Cultural environmental factorsThe most important environmental factors are the social and cultural factors. The social and cultural factors of the environment help to decide what type of customers there are going to be and the types of customers that need to be targeted (Linton, 2013). The culture of the customers also shapes their preference (Linton, 2013). If their preference is shaped by the environment than it would be good for marketers to look into what those preferences are. Certain cultural groups may prefer distinctive colors so it is important to remember those colors when it comes to packaging of the products that customers prefer (Linton, 2013).CompetitionCompetition is also another big influence and people might disagree that social and cultural factors are the most important for that reason. Competition sets the tone for whole environment. Competitors always want to have that competitive edge over the other firms in the environment. A marketer must always be aware of the factors that are present in another company that is competing with them. This way they can adjust their present plan accordingly and gain their competitive edge.The competition wouldn't matter at all if the competitor was well aware of the cultural and social factors surrounding them and this company wasn't. It is important for marketers to understand their target market as well as their preferences. These preferences are based on what the target market prefers as well as their culture. To better understand the culture of the environment it would be beneficial to observe what is necessary and what might be needed in the current environment that people are living. This would be the solution to discovering where the marketing plan should go.CompromiseCompromises are often feasible when drawing up a marketing plan and both factors could be taken into consideration when drawing up the marketing plan. To some degree both of the important outside factors go hand in hand. A competitor could have a vast knowledge of cultural and social standing of the world around them whereas a marketer within their own firm may not.

The environmental factors that are affecting marketing function can be classified into :

1)Internal environmentand

2)External environmentInternal Environment of Marketing :This refers to factors existing within a marketing firm. They are also called as controllable factors, because the company has control over these factors :

a) it can alter or modify factors as its personnel, physical facilities, organization and function means, such as marketing mix, to suit the environment.

There are many internal factors that influence the marketing function, they are :

Top Management: The organizational structure, Board of Director, professionalization of management..etc..Factors like the amount of support the top management enjoys from different levels of employees, shareholders and Board of Directors have important influence on the marketing decisions and their implementation.

Finance and Accounting: Accountingrefers to measure ofrevenue and costs to help the marketing and to know how well it is achieving its objectives.Finance refers to funding and using funds to carry out the marketing plan. Financial factors are financial polices, financial position and capital structure.

Research and Development: Research and Development refers to designing the product safe and attractive. They are technological capabilities, determine a company ability to innovate and compete.

Manufacturing: It is responsible for producing the desired quality and quantity of products.Factors which influence the competitiveness of a firm are production capacity technology and efficiency of the productive apparatus, distribution logistics etc.,

Purchasing: Purchasing refers to procurement of goods and services from some external agencies. It is the strategic activity of the business.

Company Image and Brand Equity: The image of the company refers in raising finance, forming joint ventures or other alliances soliciting marketing intermediaries, entering purchase or sales contract, launching new products etc.

In organization, the marketing resources like organization for marketing, quality of marketing, brand equity and distribution network have direct bearing on marketing efficiency. They are important for new product introduction and brand extension, etc..

External Environment of Marketing.External factors are beyond the control of a firm, its success depends to a large extent on its adaptability to the environment.The external marketing environment consists of :

a) Macro environment, and

b) Micro environment

a)Micro environment:The environmental factors that are in its proximity. The factors influence the companys non-capacity to produce and serve the market.The factors are :

1)Suppliers:The suppliers to a firm can also alter its competitive position and marketing capabilities. These are raw material suppliers, energy suppliers, suppliers of labor and capital.According to michael Porter, the relationship between suppliers and the firm epitomizes a power equation between them. This equation is based on the industry condition and the extent to which each of them is dependent on the other.

The bargaining power of the supplier gets maximized in the following situations:

a) The seller firm is a monopoly or an oligopoly firm.

b) The supplier is not obliged to contend with other substitute products for sale to the buyer group.

c) The buyer is not an important customer.

d) The suppliers product is an important input to the buyers business and finished product.

e) The supplier poses a real threat of forward integration.

2)Market Intermediaries :Every producer has to have a number of intermediaries for promoting, selling and distributing the goods and service to ultimate consumers. These intermediaries may be individual or business firms. These intermediaries are middleman (wholesalers, retailers, agents etc. ), distributing agency market service agencies and financial institutions.

3)Customers: The customers may be classified as :

1)Ultimate customers:These customers may be individual and householders.

2)Industrial customers:These customers are organization which buy goods and services for producing other goods and services for the purpose of other earning profits or fulfilling other objectives.

3)Resellers:They are the intermediaries who purchase goods with a view to resell them at a profit. They can be wholesalers, retailers, distributors, etc.

4)Government and other non-profit customers:These customers purchase goods and services to those for whom they are produced, for their consumption in most of the cases.

5)International customers:These customers are individual and organizations of other countries who buy goods and services either for consumption or for industrial use. Such buyers may be consumers, producers, resellers, and governments.

6 )Competitors:Competitors are those who sell the goods and services of the same and similar description, in the same market. Apart from competition on price, there are like product differentiation. Therefore, it is necessary to build an efficient system of marketing. This will bring confidence and better results.

7)Public:It is duty of the company to satisfy the people at large along with its competitors and the consumers. It is necessary for future growth.The action of the company do influence the other groups forming the general public for the company. A public is defined as any group that has an actual or potential interest in or impact on a companys ability to achieve its objective. Public relations are certainly a broad marketing operation which must be fully taken care of.

Macro Environment:

Macro environment factors act external to the company and are quite uncontrollable. These factors do not affect the marketing ability of the concern directly but indirectly the influence marketing decisions of the company.

These are the macro environmental factors that affect the companys marketing decisions :

a)Demographic Forces:Here, the marketer monitor the population because people forms markets. Marketers are keenly interested in the size and growth rate of population in different cities, regions, and nations ; age distribution and ethnic mix ; educational levels; households patterns; and regional characteristics and movements.

b)Economic Factors:The economic environment consists of macro-level factors related to means of production and distribution that have an impact on the business of an organization.

c)Physical Forces:Components of physical forces are earthsnatural renewal and non-renewal resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non- renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components quite often change the level and type of resources available to a marketer for his production.

d)Technological Factors:The technological environment consists of factors related to knowledge applied, and the materials and machines used in the production of goods and services that have an impact on the business of an organization.

e)Political and Legal Forces:Developments in political and legal field greatly affect the marketing decisions. sound marketing decision cannot be taken without taking into account, the government agencies, political party in power and in opposition their ideologies, pressuregroups, and laws of the land. These variables create tremendous pressures on marketing management. Laws affect production capacity, capability, product design, pricing and promotion. Government in almost all the country intervenes in marketing process irrespective of their political ideologies.

f)Social and Cultural Forces: This concept has crept into marketing literature as an alternative to the marketing concept. The social forces attempt to make the marketing socially responsible. It means that the business firms should take a lead in eliminating socially harmful products and produce only what is beneficial to the society. These are numbers of pressure groups in the society who impose restrictions on the marketing process.

Environments Affecting MarketingKey Terms: environmental threat, controllable and uncontrollable environments, demographics, geodemographics, six major macroenvironmental variables, price discrimination, Robinson-Patman Act, horizontal price fixing, vertical price fixing, predatory pricing, Federal Dilution Act, FDA, CPSC, FTC, Sherman Antitrust Act, Clayton Act, counterfeit goods, futuristics, cultural shift, and technological forecasting.Some of the environmental variables affecting a firm are controllable and some are uncontrollable. The 4Ps of marketing,i.e., the marketing mix, are controlled by the marketing manager. There are variables, however, that are uncontrollable and managers have to take them as givens. These include the followingsix major macroenvironmental variables:(1) demographic -- Demographics are characteristics of the population. Demographics includes gender, age, income, family size, occupation, ethnicity, etc. Marketers study demographic trends. A company, for example, that sells baby food would be very interested in forecasts of the number of babies that will be born. Colleges are interested in the number of teenagers who will be graduating high school. Check out the demographics of the zip code you live in at:http://zipskinny.com/A retailer who wants to open an upscale clothing store for children should study the demographics of the area where she wants to open her store. Who lives there? How many children? Median income? How many married couples? Marketers are very interested in zip codes -- this is part ofgeodemographics(geography + demographics). Marketers want to study the profiles of people who live in a certain area in order to sell them products.

The Census Bureau is the source of much of our demographic information. It announced on May 2011 that married couples are no longer a majority. Married couples are currently 48% of all households (down from 78% in 1950). Only about 20% of households are traditional nuclear families -- married couples with children. It is interesting that college-educated women are more likely to be married (and stay married) than women with only a high school diploma. Educated women marry later but are more likely to remain married. Uneducated women with only a high school diploma tend not to marry the father of their children. They feel that it is too difficult to support a husband (who tends to be unemployed because of the weak economy and lack of jobs for the uneducated) and children. It is clear that rising income inequality and employment instability are having a negative effect on marriage. The biggest change has been in the huge increase in households headed by women without husbands. Also, a large number of households consist of people who are not family.

(2) natural -- see below.(3) cultural (this includes social) -- This will be discussed in detail in a later chapter. What you have to understand about culture is that it is learned and it affects our core values, attitudes, behaviors, and morals. One simple example: There was a time when women would wear a fur coat; it was socially acceptable. Fur coats were advertised on television and sold in many department stores. Today, our culture is opposed to it. Women wearing fur coats risk being spat upon or having paint thrown on their coats. The attitude toward smoking cigarettes and cigars has also changed. I remember when you never saw a woman with a tattoo. In fact, very few men had tattoos. Listen to songs of the late 1950s and compare to songs of today you will see what is meant by a cultural shift. Better yet, look at an old film and compare with a film of today. In many European countries such as France, marriage --even between straight couples -- is disappearing and being replaced by civil unions (see:http://www.nytimes.com/2010/12/16/world/europe/16france.html).(4) economic -- The middle class seems to be shrinking in the United States. This will affect the market for many different products including automobiles and housing.(5) political (legal) -- We will see how various laws and government agencies affect the way a marketer conducts business.(6) technological -- Technology can have a great impact on marketing. Notice how the Internet has had a huge impact on so many industries ranging from banking to retailing. There was a time when education was almost exclusively in a traditional classroom.

Some books also add competitive environment (I would have a problem calling that a macroenvironmental variable), i.e., what the competition is doing. A good marketer scans these various environments for threats and/or opportunities.Environmental threatSometimes, there is something going on in the environment that can have an adverse effect on an organization if no action is taken. Consider the effect of electronic commerce on various businesses, e.g., the music industry and software retailing. Similarly, do you think there is a future for travel agents and video rental stores? Newspapers are now in trouble because on the new media. Young people get their news from the Internet and are generally not newspaper readers. Also, classified advertising has moved from newspapers to the Internet.

Big threat to the music industry: Consumers like to purchase individual songs on websites such as iTunes. Will this have an effect on sales of albums? Why buy an expensive CD consisting of many songs when all you want is one or two songs? Sales of albums have been dropping while sales of individual digital songs have been rising. In fact, catalog sales (this is what the music industry calls the sale of old releases) account for 50% to 66.67% of the sales of digital singles. Some companies are afraid that online sales of digital singles will hurt profits so they only sell songs in album form and do not allow downloads of digital singles (seeNY Times"When all the 'Greatest Hits' are too many to download." 2/2/2006 pp. 1, 6).

Natural Environment-- More and more people are concerned with the environment. Global warming is making many of us aware that we are heading for ecological disaster unless something is done -- and soon. Jared Diamond (NY Times, 1/2/2008,OP-ED, A17) is of the opinion that real problem facing humankind is overconsumption. Developed countries (US, Canada, Western Europe, Japan, and Australia) with a total population of about 1 billion consume 32 times more resources such as oil and plastic than do those in developing countries with a population of 5.5 billion. If the entire world were to consume as much as the developed countries do, this would be the same as if the world population increased to 72 billion.No one believes that the world can support this many people.The companies that pollute are being forced by new legislation to invest in pollution-control equipment. There are great opportunities for businesses that produce green products. A large number of people want to buy products that are friendly to the environment. This is why green business is definitely the way to go for all firms. Issues that companies must address: (1) raw materials such as oil, water, copper, gold, etc. are becoming scarcer. The price of these raw materials will continue to rise. We can no longer assume that there will be an endless supply of oil. Alternative energy such as wind, geothermal, solar, nuclear, etc. must be considered. (2) global warming. Firms have to come up with new and better ways to reduce the amount of carbon dioxide emissions. (3) Price of energy will continue to rise. Products that use less energy will be in demand. (4) Firms must continue to find new and better ways to reduce pollution. Dumping waste products into rivers is no longer allowed in much of the world. Pollution has wreaked havoc with most of the major rivers in China. In many cities, the air is so polluted that it is difficult to breathe.Legal/Political (Regulatory) Environment of Marketing:A. Pricing:Robinson-Patman Act(1936) prohibits price discrimination in interstate commerce unless based on a cost-difference or if the goods are not of "like grade and quality." This means that a company cannot charge different retailers (or wholesalers) different prices without justification. Very large retailers with their great buying power could demand huge price discounts which small retailers cannot.Vertical price fixingwhen a manufacturer controls the price charged by a retailer.

On June 28, 2007, the Supreme Court eliminated a ban on manufacturers and retailers getting together and establishing minimum prices for products; agreements on minimum prices are legal if they do not hurt competition. This means that manufacturers and retailers are now permitted to set a price floor for products and are not violating federal antitrust law. Why would manufacturers want to establish a price floor for a product? Supposedly, this will make it possible for retailers to offer better service. If prices go too low because of discounters, service may suffer. Is this true? I have no idea.Horizontal price fixing competitors at the same level of the channel of distribution (e.g., manufacturers or retailers) getting together to set prices. This is illegal and a violation of the Sherman Antitrust Act.Predatory pricing Pricing below cost in order to drive a competitor out of business. This is also illegal.B. Product:Pure Food and Drug Act(1906) prohibits adulteration and misbranding of foods in interstate commerce. The FDA is responsible for the safety of approximately 80% of the foods we eat (The Agriculture Dept. is responsible for some products, e.g., meat, poultry, and some eggs). Today the FDA (Food and Drug Administration) is concerned with misleading brand names and deceptive labels on food and drugs (e.g., the word "fresh"). Check out their web site at:http://www.fda.gov/Example:The FDA has been concerned with sunscreens. The FDA issued new rules for sunscreen products in 2011. (a) Sunscreens cannot be labeled "sunblocks" since this is deceptive; they do not block the sun. (b) Sunscreens must protect skin from both UVB (causes sunburn) and UVA (causes wrinkling of skin) ultraviolet rays if they wish to consider themselves "broad spectrum." (c) Sunscreens are not permitted to claim that they are "waterproof"; that is deceptive. What the product label should indicate is how long the sunscreen is water resistant (usually between 40 and 80 minutes). (d) Sunscreens that make the claim that they reduce risk of skin cancer, must have an SPF of at least 15. By the way, if you use sunscreens, get one that has an SPF of between 30 and 50. [Source: NY Times article June 15, 2011 -- "New Rules to Show the Extent of Sunscreen Protection"]

The FDA does not allow manufacturers of baby bottles and sippy cups to use plastic that contains BPA (bisphenol A). BPA is a chemical that mimics estrogen. If you see a 7 on the bottom of a plastic bottle, that means it contains BPA.

Each year, contaminated food will make one out of six Americans sick: 130,000 of them end up in the hospital and 3,000 die [NYT S. Strom FDA proposes new rules on food safety, Jan. 5, 2013, A1, A3]. The FDA proposed two new rules in 2013 to prevent contamination of food. One big problem has to do with the water used in irrigation. This water will now have to meet certain standards. Farm workers will need to have access to portable toilets (rather than urinating in fields of produce) and will have to wash hands. Manufacturers of processed foods will have to keep records subject to audits and will have to devise ways to reduce risk of contamination.

Consumer Product Safety Act(1972) Created the Consumer Product Safety Commission (CPSC), which establishes safety standards for products. Check out their web site at:http://www.cpsc.gov/If you purchase a bicycle, you might find the following statement on it: "This bicycle meets the requirements of the Consumer Product Safety Commission standards."Their research (performed by examining emergency room patients) found that two of the most dangerous products are bicycles and stairs/steps. The CPSC is also involved in removing dangerous products from the marketplace. The CPSC has recalled several dangerous products that were being sold to consumers. These include: disposable lighters that leaked and exploded, rayon skirts made abroad that ignited easily, child swings, foam cushions, etc. Many toys for infants have been found to be quite dangerous.On July 8, 2004 the CPSC announced the recall of the largest number of products ever--150 million pieces of toy jewelry. The jewelry is sold in vending machines and costs 25 to 75 cents. The problem with the toy jewelry (it is made in India) is that it has a very high lead content and children sometimes eat it. One boy, who swallowed a toy pendant purchased for a quarter, suffered from lead poisoning. If you have any toy metal jewelry, throw it away.

The CPSC is looking into the hanging cords and loops that one finds on window blinds. Approximately one child a month dies by being strangled on those cords. It is very easy to make cordless window blinds but they cost a lot -- possibly twice as much -- more than blinds with cords. Please note that there are more than one billion blinds in the United States (NY Times 4/21/2011, Andrew Martin, "A Debate Over Window Blinds").

There are still some dangerous products on store shelves. Recently (June 2011), several people were seriously burned while adding a gel fuel to ceramic fire pots. The fire pot exploded and they were covered with the gel fuel which burns like napalm. They did not realize that the fire pot was still burning; you are not supposed to add fuel unless the pot is cold. There was a warning on the wrapping but it is removed by the consumer. The product was sold by Bed, Bath, and Beyond and has been removed from the store shelves.

Lead poisoning has become a big issue in China. Children and adults living near factories making batteries and metal smelting companies have extremely high levels of lead in their blood. This is a problem in several provinces in mainland China. It led to a riot at the Zhejiang Haijiu Battery Factory; 200 people from the surrounding area stormed the factory and did a huge amount of damage. High level of lead in children's blood will have serious effects on their development. Economic growth is a big issue in China and local officials often ignore safety and environmental issues. If you want more information about this, go to the following website: http://www.nytimes.com/2011/06/15/world/asia/15lead.htmlTrademarks

This will be covered more thoroughly in a later chapter. You should know that a company can obtain legal protection for its brand name or symbol (e.g., Nike's swoosh). Even a color can be part of a trademark. Thus, no company is permitted to use the name Coke or Pepsi . The means that it is a registered trademark and no other company may use that name or even a similar name that might cause confusion e.g., Cooka Cola or Pepi's Cola. In fact, if a company tries to introduce a new soft drink called Cooka Cola, I can almost guarantee them a lawsuit. There is no way that Coca Cola will allow a firm to market another brand of soft drink with such a similar name. Indeed, the Lanham Act was enacted to prevent this kind of confusion among competing brands in the same product category.

The Federal Dilution Actgoes beyond the Lanham Act, and may allow a firm to prevent another company, even one in a non-competing business, from using a registered name. You can see why it is called dilution. Suppose I want to use the Rolex name which represents quality on a new brand of toilet paper, Rolex toilet paper. This might dilute the value of the Rolex name.C. PromotionFederal Trade CommissionAct(1914) unfair methods of business competition and deceptive acts and practices, e.g., bait and switch advertising.TheFTCis a powerful regulatory agency that can issue fines and cease and desist orders. One of their major functions today is to protect consumers from deceptive advertising and selling practices. Check out their Web site at:http://www.ftc.gov/One example of a power of the FTC is corrective advertising. The FTC has the power in certain situations to force a company to run new ads that correct a false impression made by previous ads. One famous example of the use of corrective advertising was when Warner Lambert was ordered to run ads that stated that Listerine will not prevent colds or lessen their severity. There were a large number of television commercials that suggested that Listerine would help prevent colds. Incidentally, if you have a cold and/or sore throat, no mouthwash can help. You might as well just Gargling with warm salt water.Bait-and-switch pricing is illegal and works as follows: A store runs an advertisement for a product at a very low price (the bait) and once the customers come to the store, salespeople try to "switch them," i.e., convince the to buy more expensive models or brands.Most of the time, companies do not want to go to court with the FTC and will agree to sign a consent order. This means that they waive all rights to seek a review and agree not to continue the questioned practice (e.g., running an ad the FTC claimed to be deceptive), but they do not have to admit that they did anything wrong. If a firm refuses to sign a consent decree, the FTC will issue a cease and desist order which is the first step in a process that leads to a trial before an administrative law judge.

The biggest settlement in FTC history is with Countrywide Home Loans. More than 450,000 consumers who dealt with Countrywide were charged excessive fees. This took place between 1/1/2005 and 7/1/2008. Jon Liebowitz, chairman of the FTC said regarding Countrywide's business model: "[It] was a business model based on deceit and and corruption, and the harm they caused to American consumers is absolutely massive and extraordinary." Anyone who went into default on their mortgage paid excessive and/or improper fees to Countrywide for default-related services. Countrywide was the largest mortgage lender and loan servicer in the US. Countrywide nearly went bankrupt because of the number of subprime mortgages they made. Bank of America took over the company in 2008. [Source: Gretchen Morgenson, New York Times July 21, 2011, pp. B1, B6]The FTC Web site that exposes popular Internet scams and informs consumers on how to avoid them is at:http://www.ftc.gov/dotconsCheck out the Top Ten Dot Cons.D. Place and CompetitionSherman AntitrustAct(1890) deals with activities that are in restraint of trade or tend to create a monopoly (e.g., price fixing, predatory pricing, bid rigging, market/territory allocation). The Sherman Antitrust Act was the first federal law that was passed-- note the year of 1890-- to encourage competition.Clayton Act(1914) Supplemented the Sherman Antitrust Act and also deals with exclusive dealing arrangements (which limit the sources of supplies available to consumers) and tying arrangements (the forced purchase by dealers of some products with others).If a manufacturer insists that wholesalers and other intermediaries only carry their brands and not the brands of competing companies, this would be an example ofexclusive dealing. It might be illegal under the Clayton Act if it can be shown that competition is being hurt by this practice.Suppose a company that manufactures printers forces intermediaries (wholesalers and/or retailers) that want its printers to also purchase fax machines, this is atying arrangement. It could be illegal under the Clayton Act if it can be shown that it hurts competition. Car manufacturers sometimes try to do this. A dealer wants small cars and is told that he also has to purchase some SUVs to get the small (and very popular) cars.Find online legal help and get free access to a vast collection of understandable legal information at:http://www.mycounsel.com/As far as self-regulation for businesses, i.e., businesses regulating themselves, the self-regulatory organization that is the best known is, of course, the Better Business Bureau(BBB). They have a website athttp://welcome.bbb.org/ You can use the BBB website to check out a charity or company and see whether a retailer has a satisfactory record. I checked out a store in my neighborhood and this is what I found:"Based on BBB files, this business has a satisfactory record with the Bureau. A satisfactory record means that a company has been in business for at least 12 months, and has properly addressed complaints referred to it by the Bureau. The business cannot have an unusual volume or pattern of complaints, or any government actions against it involving its marketplace conduct. The Bureau must understand and have no concerns about the businesss products, services and type of business."Counterfeit GoodsThe unauthorized copy of a product is known as a counterfeit good. It is against the law; the Federal Anti-Counterfeiting Law was passed in 1984. You can go to jail and pay a stiff fine for manufacturing counterfeit goods. It is a huge problem and has caused plane crashes (key engine components were found to be counterfeit) and faulty medical equipment (counterfeit batteries in pace-makers). At least 11% of the world's branded clothing (t-shirts, jeans, etc.) is fake. Many people think that buying a counterfeit handbag or t-shirt is a victimless crime. In fact, it is easy to pick up counterfeit goods on Canal Street in NYC and many flea markets. It is not a victimless crime. According to Magnus Ranstorp, an expert on terrorism, "Profits from counterfeiting are one of the three main sources of income supporting international terrorism." (quoted in NY Times, "Terror's Purse Strings" by Dana Thomas -- p. A23, 8/30/2007). Many counterfeit goods are manufactured in factories in China using child labor. According to Dana Thomas, The average American woman buys more than four handbags a year; the average brand name bag costs 10 to 12 times what it costs to manufacture it. Many women (even judges) will shop for counterfeit handbags with a designer label (e.g., Gucci bag) to save money. People are proud to tell others how much they saved by buying the fake bags. The phonies look exactly like the real thing. Quality is not that important since many women will buy a new hand bag every year as the fashion changes, even if the "old" hand bag is still in excellent shape. The next time you are thinking of buying a counterfeit good, remember that you might be supporting international terrorism, child labor, and/or organized crime. What do you think? Is it ethical to knowingly buy counterfeit goods?

Future Environment/Technological EnvironmentFuturisticsis the study of the future. A good marketer should have a future orientation and try to determine what lies ahead as far as technological, social, and cultural changes.Technological forecastingrefers to the prediction of future technology and inventions and is part of futuristics. Technology is not the only factor with which marketers have to be concerned. Marketers also have to be concerned withsocial/cultural shifts. A shift away from materialism and ostentatiousness towards simplicity, for example, could have a huge impact on the demand for super luxury products such as $10,000 watches, $2,000 pens, and $100,000 cars. The current financial meltdown has caused many Americans to become frugal and learning to tighten their belts. Showing off wealth is not cool, especially when millions of people are out of work. Several articles have been written about religion and spirituality in the workplace. Apparently, religion and spirituality are becoming more important to Americans. Americans are also concerned about the environment and green marketing is in.Many shopping malls were built assuming that women stay home and take care of the children. The percentage of women in the labor force with small children keeps growing. Today, working women do not go to malls on weekdays, they have to be at work. They prefer shopping from catalogs. In fact, there are several successful catalogs that specialize in clothing for working women. Electronic commerce will have a huge impact on catalogs and, in the future, it seems quite likely that people will prefer electronic catalogs (using the Web) to paper catalogs.It is only a matter of time before technology makes video rental stores obsolete. Consumers will be able to easily download (from a Web site) movies they wish to see ("video on demand"). The future of the music industry is also moving to the Web. Consumers are downloading the music they want and pay per individual song. The same is true of books. I believe that it is quite likely that in the future most books will be downloaded; you will print books on your own printer, rather than buying books at bookstores.Page 1:Introduction

Businesses have a number of objectives. Typical examples include:

winning the biggest share of the total market

increasing sales

satisfying customers

making profit for shareholders.

A business' ability to meet these objectives depends on two main groups of factors:

1. the internal strengths of the organisation for example being able to make the right products in an efficient way

2. being able to identify external influences in the business environment and on its consumers and adapt accordingly.

The external environment today is changing fast. The external environment consists of everything outside the business. This case study shows how McCain needs to identify changes in the external environment. It must then rise to the challenges posed by change.

McCain Foods

The McCain product most people recognise is Oven Chips. McCain is the world's largest producer of chips. McCain buys 12% of the British potato crop. McCain is also one of the world's largest frozen foods companies.

McCain is a privately owned company with a strong market focus. This means that it carries out research to find out what consumers want. It then uses this market information to create products that consumers want to buy.

McCain is the world's largest producer of chips. McCain buys 12% of the British potato crop. McCain's business is broader than just chips, with a range as wide as frozen potato specialities and frozen light meals. It provides consumers with a wide variety of cut and seasoned potato products through UK retailers, like supermarkets and restaurants. These include roast potatoes, potato wedges, hash browns, waffles and potato croquettes.

McCain produces more specific potato shapes like Potato Smiles, Crispy Bites and Sumthings (shaped as numbers) which appeal to younger consumers. McCain also makes pizzas.

Chips have come a long way since the potato was first brought to this country by Walter Raleigh in the 17th century. By the 1850s fish and chips were sold in the streets and alleys of London and in some of Britain's industrial towns. If asked to name a typically English dish, most people will say 'fish and chips'. Chips are produced in lots of different shapes and sizes, ranging from those deep-fried in fish and chip shops to McCain's 5% fat Oven Chips.

External challenges

One of the biggest environmental factors affecting McCain in 2005/6 was the growing concern about obesity, particularly in children. This case study shows how McCain has risen to the challenges of this debate and other external challenges.

McCain's view is that its chips can and do play a role in a healthy balanced diet and it is continually finding ways to ensure McCain products are as healthy as possible.

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In order to be able to understand its customers' requirements and respond to other changes, it is important for a company to analyse its environment. A SLEPT analysisis a tool that helps to analyse the environment.

To create a SLEPT analysis the company needs to examine the key environmental factors that affect its business. Having carried out the analysis it must then take action to respond to the important changes that have been identified. Of course, some of the factors in the SLEPT analysis can be placed under more than one of these headings.

The following analysis outlines SLEPT factors and indicates some of the changes that McCain has made and is making.

Social factors

Social trends are one of the key factors affecting a business. Consumer buying patterns are determined by trends. Just as the demand for some popular clothes are determined by fashion, demand for food products is determined by eating patterns. Eating habits are always changing. Currently one in four of all British potatoes consumed are eaten as chips.

Recently McCain and other food producers have seen a slow down in salesas a result of campaigns to encourage healthier eating such as that spearheaded by Jamie Oliver.

McCain has responded to this challenge in two main ways:

1. by reducing quantities of salt and oil throughout its potato products range. McCain argues that these figures are very low already. For example, McCain's Oven Chips contain only 5% fat, 0.8% saturated fat and 62mg of sodium in every 100g portion. They are made with only natural ingredients - specially selected potatoes and sunflower oil.

2. by seeking to get the message over that its chips are not unhealthy. The message that it communicates through public relations campaigns and advertising is that all McCain potato products are made from simple ingredients such as whole potatoes and sunflower oil.

A key way in which McCain has responded to changing customer tastes has been to improve the nutritional make-up of its products. All of McCain's potato products are now pre-cooked in sunflower oil instead of regular vegetable oil to reduce saturated fats. There is no added salt in oven chips and added salt has been reduced by up to 50% in other potato products.

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Page 3:Legal factorsResponsible businesses not only abide by the law, they seek to create standards above minimum requirements.

Food labelling

McCain has to be aware of a number of legal factors. The government's Food Standards Agency has recommended that firms put 'traffic light' labels on food to help people understand what they are buying and to help them make the right choices:

Red represents high levels of ingredients such as fats and salts.

Green represents low levels.

McCain has put 'traffic light' labels on its British products as a response to consumer concerns about healthy eating. All of McCain's potato products are able to display the green label for saturated fat and none of its products show a red label.

Also featured on the labels are Guideline Daily Amounts (GDAs) which show how much fat, saturated fat, sugar and salt each product contains. This helps the consumer to achieve a consistently balanced diet.

Advertising

In the UK, advertising of products is supervised by a voluntary body within the advertising industry. It is called the Advertising Standards Authority (ASA).

McCain makes sure that all its advertising sticks rigidly within the requirements of the ASA. The ASA sets out that all adverts must be:

legal

decent

honest and

truthful.

Legislation

McCain takes these responsibilities very seriously. It is important to build a reputation for honesty and fair play.

In addition McCain's products comply with a range of laws, including:

The Food Safety Act, covering the way in which food is prepared and served.

The Trades Descriptions Act, which states that goods and services must be exactly as described.

The Weights and Measures Act governing such aspects as giving the right weight on packs. For example, McCain's oven chips come in packs of 454g, 907g, 1kg, 1.5kg, and 1.8kg.

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Economic factors

Economic factors include changes in buying patterns as people's incomes rise. For example, as incomes go up people prefer to buy what they see as superior varieties of a product type. We see this with the development of ready prepared foods.

As people become cash-rich and time-poor they prefer to switch to ready meals and simple to prepare foodstuffs that they can quickly heat in an oven or microwave. Rather than buying potatoes and making chips at home or taking the time to go to a fish and chip shop, it may be seen as more desirable to buy oven chips. Of course, it may be cheaper to make your own chips by peeling and cutting up potatoes. However, with growing affluence people prefer ready prepared oven chips.

Responsible eating and healthy exercise encourages everyone's health and well-being. McCain has risen to this challenge by creating a range of varieties e.g. McCain's Straight Cut Oven Chips, Home Fries, roast potatoes and wedges, to appeal to a variety of customers.

Political factors

On political factors, the UK government has increased the pressure on food suppliers to come up with healthier foods. The government publicises and supports healthy eating by creating initiatives such as 'Healthy Schools'. This encourages pupils to think about the choices they make when choosing what to eat.

McCain supports the government's initiative. It believes that the foods that it provides, including potato based products, are nutritious provided that they are prepared in a healthy and simple way.

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Challenges of food technology

Food technology is one of the most dynamic technologies in the modern economy. Food technology involves researching and developing new techniques for making products as diverse as ice cream, probiotic yoghurt, frozen oven chips and muesli bars.

Each of these products involves finding technical solutions to problems such as how to:

freeze while retaining flavour

maximise natural nutritional characteristics

turn a frozen product into an oven heated product.

McCain is continually being faced by new challenges from technological factors. It should be no surprise therefore that McCain's food technologists were only too happy to rise to the challenge of making its potato products even healthier. McCain needed a solution that not only reduced fat and salt, but also kept the sort of flavour that would delight customers.

Solutions

The solution was to use sunflower oil which reduced saturated fats by 70% across the whole potato product range. Food technologists know that by working with real potatoes they are dealing with a product with a very strong nutritional pedigree.

For example, it is a little known fact that potatoes are a major source of vitamin C for the UK diet. As a product, potatoes are the second most important staple food in the world today (rice is the first), providing essential carbohydrates that help us to generate energy.

Potatoes also have tremendous future potential. In 1995 the potato became the first vegetable to be grown in space. NASA worked with top scientists to develop super-nutritious and versatile potatoes. These can be used to feed astronauts on long space voyages and NASA hopes one day that these will feed space colonies.

McCain Foods| How McCain responds to changes in the external environment

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Change comes from a number of sources Social, Legal, Economic, Political and Technological. Change is the one constant in the business environment.

This case study has illustrated how these changes have affected McCain, particularly in relation to its core products.

Because McCain is a market-focussed company, it recognises that it has to respond to what its consumers want. There are clear indicators that today's consumers want to live a healthier lifestyle.

Consumers are increasingly aware of food content and food issues. More and more people look at food labelling and read information in the press about what is good for them. They listen to people like Jamie Oliver and government spokespeople. They listen to advice from teachers and nutritionalists.

The challenge has been, and continues to be, to prepare chips and potato products in the healthiest way possible. Fortunately for McCain, it has market researchers and food technologists who enable the company to keep in tune with the changing environment.

McCain's advertising supports the company's message that chips are nutritionally acceptable provided they are made in the right way. The challenge now is to keep listening to consumers and to the external environment in order to continue to give those consumers the best value healthy chips and other food products.

Of course the choice rests with the consumer. What do you think? Is McCain doing the right thing?

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