Although core values are fairly persistent, cultural swings do take place. The advent in the 1960s of hippies, the Beatles, Elvis Presley, and other cultural phenomena had a major impact on young people's hairstyles, clothing, sexual norms, and life goals. Today's young people are influenced by new heroes and fads: Pearl Jam's Eddie Ved-der, Michael Jordan, and rollerblading.
Marketers have a keen interest in spotting cultural shifts that might bring new marketing opportunities or threats. Several firms offer social-cultural forecasts. The Yankelovich Monitor interviews 2,500 people each year and tracks 35 social trends, such as "antibigness," "mysticism," "living for today," "away from possessions," and "sensuousness." It describes the percentage of the population who share the attitude as well as the percentage who do not. For example, the percentage of people who value physical fitness and well-being has risen steadily over the years, especially in the under-30 group, the young women and upscale group, and people living in the West. Marketers of health foods and exercise equipment cater to this trend with appropriate products and communications. In 1995, Taco Bell unveiled a new lower-fat "Border Lights" menu. The Center for Science in the Public Interest, a consumer advocacy group in Washington, praised the new menu as being "more than a marketing gimmick."34
1. Successful companies realize that the marketing environment presents a never-ending series of opportunities and threats. The major responsibility for identifying significant changes in the macroenvironment falls to a company's marketers. More than any other group in the company, marketing managers must be the trend trackers and opportunity seekers.
2. Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and megatrends (major social, economic, political, and technological changes that have long-lasting influence).
3. Within the rapidly changing global picture, marketers must monitor six major environmental forces: demographic, economic, natural, technological, political-legal, and social-cultural.
4. In the demographic environment, marketers must be aware of worldwide population growth; changing mixes of age, ethnic composition, and educational levels; the rise of nontraditional families; large geographic shifts in population; and the move to micromarketing and away from mass marketing.
5. In the economic arena, marketers need to focus on income distribution and levels of savings, debt, and credit availability.
6. In the natural environment, marketers need to be aware of raw-materials shortages, increased energy costs and pollution levels, and the changing role of governments in environmental protection.
7. In the technological arena, marketers should take account of the accelerating pace of technological change, opportunities for innovation, varying R&D budgets, and the increased governmental regulation brought about by technological change.
8. In the political-legal environment, marketers must work within the many laws regulating business practices and with various special-interest groups.
9. In the social-cultural arena, marketers must understand people's views of themselves, others, organizations, society, nature, and the universe. They must market products that correspond to society's core and secondary values, and address the needs of different subcultures within a society.
1. One of the changes in the demographic environment is the increasing proportion of older adults, who comprise many markets for certain products. Discuss how this demographic trend could affect the product features and/or distribution arrangements of the following:
a. Minute Maid orange juice b. Mail-order businesses c. the Social Security office
2. You are a product manager at Minolta. Your boss has just received a copy of The Popcorn Report (see the Marketing Insight "Faith Popcorn Points to 16 Trends in the Economy"). Although her background is in engineering, your boss has always been interested in the sensory appeal of product features, and this book has aroused her curiosity about this phenomenon. Prepare a report summarizing the potential impact of each of Popcorn's 16 trends on Minolta's product (cameras). Specifically, how will each trend affect product development, features, and marketing?
3. Budweiser, Calvin Klein, McDonald's, Coca-Cola, and Chevrolet are examples of brands that have become cultural symbols for the United States. Name some brand names and products that are cultural symbols for the following countries: (a) Japan, (b) Germany, (c) Russia, (d) France, (e) Italy, (f) Ireland, (g) Colombia, (h) Mexico, (i) England, (j) Switzerland, (k) the Middle Eastern nations, (l) Australia.
1. Gene Del Vecchio, "Keeping It Timeless, Trendy," Advertising Age, March 23, 1998, p. 24.
2. Sue Shellenbarger, "'Child-Care Cams': Are They Good News for Working Parents?" Wall Street Journal, August 19, 1998, p. B1.
3. Kelly Shermach, "Niche Malls: Innovation for an Industry in Decline," Marketing News, February 26, l996, p. 1.
4. Gerald Celente, Trend Tracking (New York: Warner Books, 1991).
5. See Faith Popcorn, The Popcorn Report (New York: HarperBusiness, 1992).
6. John Naisbitt and Patricia Aburdene, Megatrends 2000 (New York: Avon Books, 1990).
7. Pam Weisz, "Border Crossings: Brands Unify Image to Counter Cult of Culture," Brandweek, October 31, 1994, pp. 24-28.
8. Much of the statistical data in this chapter is drawn from the World Almanac and Book of Facts, 1997 and the Statistical Abstract of the United States, 1997 (Washington, DC: U.S. Bureau of the Census, 1998).
9. Donella H. Meadows, Dennis L. Meadows, Jorgen Randers, and William W. Behrens III, The Limits to Growth (New York: New American Library, 1972), p. 41.
10. Philip Kotler and Eduardo Roberto, Social Marketing: Strategies for Changing Public Attitudes (New York: Free Press, 1989).
11. Sally D. Goll, "Marketing: China's (Only) Children Get the Royal Treatment," Wall Street Journal, February 8, 1995, p. B1.
12. Bill Stoneman, "Beyond Rocking the Ages: An Interview with J. Walker Smith," American Demographics, May 1998, pp. 45-49; Margot Hornblower, "Great X," Time, June 9, l997, pp. 58-59; Bruce Horowitz, "Gen X in a Class by Itself," USA Today, September 23, 1996, p. B1.
13. Steve Johnson, "Beer Ads for a New Generation of Guzzlers," Chicago Tribune, June 5, 1998, p. 1.
14. Jaine Lopiano-Misdom and Joanne de Luca, "Street Scene," Across the Board, March 1998, p. 14.
15. David Leonhardt, "Hey Kids, Buy This," Business Week, June 30, 1997, pp. 62-67; Lisa Krakowka, "In the Net," American Demographics, August 1998, p. 56.
16. J. Walker Smith and Ann Clurman, Rocking the Ages: The Yankelovich Report on Generational Marketing (New York: HarperBusiness, 1998).
17. For descriptions on the buying habits and marketing approaches to African Americans and Latinos, see Chester A. Swen-son, Selling to a Segmented Market: The Lifestyle Approach (Lincolnwood, IL: NTC Business Books, 1992).
18. Jacquelyn Lynn, "Tapping the Riches of Bilingual Markets," Management Review, March 1995, pp. 56-61.
19. Laura Koss-Feder, "Out and About," Marketing News, May 25, 1998, pp. 1, 20.
21. Dana Canedy, "As the Purchasing Power of Women Rises, Marketers Start to Pay More Attention to Them," New York Times, July 2, 1998, p. 6.
22. Michael Barrier, "The Language of Success," Nation's Business, August 1997, pp. 56-57.
23. Brad Edmondson, "A New Era for Rural Americans," American Demographics, September 1997, pp. 30-31. See also Kenneth M. Johnson and Calvin L. Beale, "The Rural Rebound," The Wilson Quarterly, Spring 1998, pp. 16-27.
24. Robert Kelly, "'It Felt Like Home': More Are Making Move to Small Towns," St. Louis Post-Dispatch, April 27, 1997, p. D6.
25. Lauri J. Flynn, "Not Just a Copy Shop Any Longer, Kinko's Pushes Its Computer Services," New York Times, July 6, 1998, p. D1.
26. David Leonhardt, "Two-Tier Marketing," Business Week, March 17, 1997, pp. 82-90.
27. Francoise L. Simon, "Marketing Green Products in the Triad," The Columbia Journal of World Business, Fall and Winter 1992, pp. 268-85; and Jacquelyn A. Ottman, Green Marketing: Responding to Environmental Consumer Demands (Lincolnwood, IL: NTC Business Books, 1993).
28. See "White House to Name 22 Technologies It Says Are Crucial to Prosperity, Security," Wall Street Journal, April 26, 1991, p. 2.
29. See "R&D Scoreboard: On a Clear Day You Can See Progress," Business Week, June 29, 1992, pp. 104-25.
30. See Dorothy Cohen, Legal Issues on Marketing Decision Making (Cincinnati: South-Western, 1995).
31. Rajiv Chandrasekaran, "AOL Settles Marketing Complaints," Washington Post, May 29, 1998, p. F1.
32. Arnold Mitchell of the Stanford Research Institute, private publication.
33. Laura Zinn, "Teens: Here Comes the Biggest Wave Yet," Business Week, April 11, 1994, pp. 76-86.
34. Glenn Collins, "From Taco Bell, a Healthier Option," New York Times, February 9, 1995, p. D4.
Once a company has carefully segmented the market, chosen Its target customers, Identified their needs, and determined its market positioning, it is better able to develop new products. Marketers play a key role in the new-product process, by identifying and evaluating new-product ideas and working with R&D and others in every stage of development.
Every company must develop new products. New-product development shapes the company's future. Replacement products must be created to maintain or build sales. Customers want new products, and competitors will do their best to supply them. Each year over 16,000 new products (including line extensions and new brands) are introduced into groceries and drugstores.
A company can add new products through acquisition or development. The acquisition route can take three forms. The company can buy other companies, it can acquire patents from other companies, or it can buy a license or franchise from another company. The development route can take two forms. The company can develop new products in its own laboratories. Or it can contract with independent researchers or new-product-development firms to develop specific new products.
Booz, Allen & Hamilton has identified six categories of new products:1
1. New-to-the-world products: New products that create an entirely new market.
2. New product lines: New products that allow a company to enter an established market for the first time.
3. Additions to existing product lines: New products that supplement a company's established product lines (package sizes, flavors, and so on).
4. Improvements and revisions of existing products: New products that provide improved performance or greater perceived value and replace existing products.
5. Repositionings: Existing products that are targeted to new markets or market segments.
6. Cost reductions: New products that provide similar performance at lower cost.
Less than 10 percent of all new products are truly innovative and new to the world. These products involve the greatest cost and risk because they are new to both the company and the marketplace. Most new-product activity is devoted to improving existing products. At Sony, over 80 percent of new-product activity is undertaken to modify and improve existing Sony products.
Companies that fail to develop new products are putting themselves at great risk. Their existing products are vulnerable to changing customer needs and tastes, new technologies, shortened product life cycles, and increased domestic and foreign competition.
At the same time, new-product development is risky. Texas Instruments lost $660 million before withdrawing from the home computer business, RCA lost $500 million on its videodisc players, Federal Express lost $340 million on its Zap mail, Ford lost $250 million on its Edsel, DuPont lost an estimated $100 million on a synthetic leather called Corfam, and the British-French Concorde aircraft will never recover its investment.2
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