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of MARKETING Chapter 2 The Environment for Marketing Decisions Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Objectives 1. Identify the environmental factors that affect marketing decisions. 2. Identify three categories of competition faced by marketers, and outline the issues to consider in developing a competitive strategy. 3. Illustrate the association between marketing plans and the technological environment. 4. Demonstrate how the sociocultural environment influences marketing decisions. 5. Show how the economic environment has a bearing on marketing planning. 6. Explain the major legislative framework that regulates marketing activities. 2-1 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Environmental Planning • Process by which the marketing manager gathers and sorts information about the marketing environment. 2-2 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Figure 2.1 Components of the Marketing Environment Economic Conditions The Marketing Plan Sociocultural environment Competition Political-legal climate Customers Technology 2-3 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Competitive Environment • The interactive process that occurs in the marketplace in which different organizations seek to satisfy similar markets. 2-4 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Types of Competition • Inter-product or direct • Product-substitute or indirect • Alternative-gratification 2-5 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Technological Environment • The applications of knowledge based on scientific discoveries, inventions, and innovations. 2-6 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Key Factors of the Technological Environment • Computer technology • Internet 2-7 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Sociocultural Environment • The mosaic of societal and cultural components that are relevant to the organization’s business decisions. 2-8 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Key Factors of the Sociocultural Environment • General readiness of society to accept a marketing idea • Trust and confidence in business • Mixed society • Towns and rural communities • Gender • Consumerism 2-9 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Economic Environment • Factors in a region or country that affect the production, distribution, and consumption of its wealth. • Key elements are monetary resources, inflation, employment, and productive capacity. 2-10 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Stages of the Business Cycle • • • • Recession Depression Recovery Prosperity 2-11 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Inflation and Stagflation Inflation • Rising price level resulting in reduced purchasing power for the consumer. Stagflation • High unemployment and a rising price level at the same time. 2-12 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Fiscal and Monetary Policy Fiscal Policy • Receipts and expenditures of government. Monetary Policy • Manipulation of the money supply and market rates of interest. 2-13 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Demarketing • The process of cutting consumer demand for a product, because the demand exceeds the level that can reasonably be supplied by the firm or because doing so will create a more favourable corporate image. 2-14 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Political - Legal Environment • The laws and interpretation of laws that require firms to operate under competitive conditions and to protect consumer rights. 2-15 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 Key Factors in Political - Legal Environment • Free-enterprise society • Competition Act 2-16 Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions Chapter 2 The Competition Act prohibits: • Combinations that lessen competition. • Mergers or monopolies detrimental to the public. • Deceptive trade practices. 2-17 Copyright © 2003 by Nelson, a division of Thomson Canada Limited.