DIRECTIONS: Please write your answer in your own understanding.

(minimum of 3 sentences each)

1. Discuss the external environment of marketing and explain how it affects a firm.

If there is one constant in the external environment (outside the firm) where firms work and
compete, it is that things are constantly changing. If the organization doesn’t understand or fails to react
to the changing world around it, it will soon be a follower rather than a leader. In the worst-case
scenario, the firm disappears from the marketplace.
Unless marketing managers understand the external environment, the firm cannot intelligently
plan for the future. Thus, many organizations assemble a team of specialists to continually collect and
evaluate environmental information, a process called environmental scanning. The goal in gathering the
environmental data is to identify future market opportunities and threats.

2. Explain the importance to marketing managers of current demographic trends.

The study of people’s vital statistics, such as their age, race and ethnicity, and location.
Demographics are significant because the basis for any market is people. Demographic characteristics
are strongly related to consumer buyer behavior in the marketplace. Multiculturalism occurs when all
major ethnic groups in an area—such as a city, county, or census tract—are roughly equally
represented. Because of its current demographic transition, the trend in the United States is toward
greater multiculturalism.

3. Identify the impact of technology on a firm.

Sometimes new technology is an effective weapon against inflation and recession. New
machines that reduce production costs can be one of a firm’s most valuable assets. The power of a
personal-computer microchip doubles about every 18 months. Our ability, as a nation, to maintain and
build wealth depends in large part on the speed and effectiveness with which we invent and adopt
machines that lift productivity. For example, coal mining is typically thought of as unskilled,
backbreaking labor. We have basic research, applied research and technological advances applying to
marketing mix.

4. Explain the basics of foreign and domestic competition.

The competitive environment encompasses the number of competitors a firm must face, the
relative size of the competitors, and the degree of interdependence within the industry. Management
has little control over the competitive environment confronting a firm.
Mature industries are capable of slow growth and no growth. And can only increase market
share by taking it from a competitor.