Download What is Marketing?

Marketing: An Introduction
Second Canadian Edition
Armstrong, Kotler, Cunningham, Mitchell and Buchwitz
Chapter Four
The Marketing Environment
4-1
Copyright © 2007 Pearson Education Canada
Looking Ahead
• Describe the environmental forces that affect
the company’s ability to serve its customers.
• Explain how changes in the demographic and
economic environments affect marketing
decisions.
• Identify the major trends in the firm’s natural
and technological environments.
• Explain the key changes in the political and
cultural environments.
• Discuss how companies can react to the
marketing environment.
4-2
Copyright © 2007 Pearson Education Canada
Marketing Environment
Defined
• The factors and forces outside
marketing’s direct control that affect
marketing management’s ability to
develop and maintain successful
transactions with target customers.
4-3
Copyright © 2007 Pearson Education Canada
Marketing Environment
• Microenvironment.
– Actors close to the company that affect its
ability to serve its customers.
– Unique to the company.
• Macroenvironment.
– Larger societal forces that affect the
microenvironment.
– Considered to be beyond the control of the
organization.
4-4
Copyright © 2007 Pearson Education Canada
The Microenvironment
• Factors that are unique to the company
and that the company can influence.
– Company.
– Suppliers.
– Marketing intermediaries.
– Customers.
– Competitors.
– Publics.
4-5
Copyright © 2007 Pearson Education Canada
The Company
• Company’s internal environment.
– Areas inside a company.
– Affects the marketing department’s
planning strategies.
– All departments must “think consumer” and
work together to provide superior customer
value and satisfaction.
4-6
Copyright © 2007 Pearson Education Canada
Suppliers
• Provide resources needed to produce
goods and services.
• Important link in the “value delivery
system.”
• Most marketers treat suppliers like
partners.
4-7
Copyright © 2007 Pearson Education Canada
Marketing Intermediaries
• Help the company to promote, sell and
distribute its goods to final buyers.
– Resellers.
– Physical distribution firms.
– Marketing services agencies.
– Financial intermediaries.
4-8
Copyright © 2007 Pearson Education Canada
Customers
• Three types of customers.
– Consumers who buy for personal use.
– Business buyers who buy for the use of the
company.
– Government buyers who buy on behalf of
public services.
4-9
Copyright © 2007 Pearson Education Canada
Competitors
• Those who serve a target market with
products and services that are viewed by
consumers as being reasonable
substitutes.
• Company must gain strategic advantage
against these organizations.
• Company size and industry position
determines best competitive strategy.
4-10
Copyright © 2007 Pearson Education Canada
Publics
• Group that has an interest in or impact
on an organization's ability to achieve
its objectives.
– Financial publics.
– Media publics.
– Government publics.
– Citizen action publics.
4-11
– Local publics.
– General publics.
– Internal publics.
Copyright © 2007 Pearson Education Canada
The Macroenvironment
• Factors that all companies in the
industry experience in common and that
are difficult to influence.
– Demographic environment.
– Economic environment.
– Natural forces.
– Technological force.
– Political forces.
– Cultural forces.
4-12
Copyright © 2007 Pearson Education Canada
Demographics
• The study of human populations in
terms of size, density, location, age,
gender, race, occupation and other
statistics.
• Marketers track changing age and family
structures, geographic population shifts,
educational characteristics and
population diversity.
4-13
Copyright © 2007 Pearson Education Canada
Baby Boomers
•
•
•
•
•
9 million born between 1946 and 1964.
Account for one-third of population.
High amount of disposable income.
Now moving into middle-age.
Aging of boomers increases Canada’s
average age.
• Major influencer of demographic and
socioeconomic change.
• Prime target of consumer product
marketers.
4-14
Copyright © 2007 Pearson Education Canada
Changing Canadian Household
• Common-law and long-parent families
now 30% up from 26%.
• Number of divorced persons 13.5%
higher in 2004 than in 2001.
• As many households of one person as
four persons.
• Growth of same-sex couples – 34,000
in 2001 census.
4-15
Copyright © 2007 Pearson Education Canada
Population Shifts
• Canada’s growth rate only 3% from 2001
to 2204.
• Population of Saskatchewan and
Newfoundland declined in last five years.
• 33% of Canadians live in CMAs of
Toronto, Montreal and Vancouver.
• City to suburb migration continues.
• Increase in people who telecommute.
4-16
Copyright © 2007 Pearson Education Canada
Increasing Diversity
• Canada is a “salad bowl.”
– Various groups mixed together, each
retaining its ethnic and cultural differences.
– Diversity and multi-culturalism is valued.
• Increased marketing to:
– Gay and lesbian consumers.
– People with disabilities.
4-17
Copyright © 2007 Pearson Education Canada
Economic Environment
• All those factors that affect consumer
buying power and spending patterns.
– Income levels and distribution.
– The “necessity” of products.
– Changes in trends and consumer spending
patterns.
– Economies of different nations.
4-18
Copyright © 2007 Pearson Education Canada
Economic Changes
• Changes in income.
– 1980’s – consumption frenzy.
– 1990’s – “squeezed consumer.”
– 2000’s – value marketing.
• Income distribution
–
–
–
–
4-19
Upper class – major market for luxury goods.
Middle class – careful but has the good life.
Working class – sticks to the basics.
Underclass – counts every penny first.
Copyright © 2007 Pearson Education Canada
Changing Spending Patterns
• Food, clothing, housing and fuel
spending dropping as a percentage of
total spending.
• Increased spending in:
– Personal goods and services.
– Recreation, entertainment, education and
culture.
• Engel’s Law remains true.
4-20
Copyright © 2007 Pearson Education Canada
Natural Environment
• Involves the natural resources that are
needed as inputs by marketers or that
are affected by marketing activities.
4-21
Copyright © 2007 Pearson Education Canada
Natural Environment Trends
• Shortage of raw materials.
– Limited quantities of non-renewable resources.
• Increased pollution.
– Waste disposal, air/water pollutants.
• Increased government intervention.
– Kyoto and other initiatives.
• Environmentally sustainable strategies.
– G.R.E.E.N. movement.
4-22
Copyright © 2007 Pearson Education Canada
Technological Environment
• Most dramatic force now shaping our
destiny.
• Changes rapidly.
• Creates new markets and opportunities.
4-23
Copyright © 2007 Pearson Education Canada
Technological Environment
• Challenge is to make practical,
affordable products.
• Safety regulations result in higher
research costs and longer time between
conceptualization and introduction of
product.
4-24
Copyright © 2007 Pearson Education Canada
Political Environment
• Includes laws, government agencies
and pressure groups that influence or
limit various organizations and
individuals in a given society.
– Increasing legislation.
– Changing government agency
enforcement.
– More emphasis on ethics and socially
responsible actions.
4-25
Copyright © 2007 Pearson Education Canada
Key Political/Legal Issues
•
•
•
•
•
•
•
Fair competition.
Fair trade practices.
Environmental protection.
Product safety.
Truth in advertising.
Packaging and labelling.
Pricing.
4-26
Copyright © 2007 Pearson Education Canada
Key Canadian Legislation
• The Competition Act.
• National Trade Mark and True Labelling
Act.
• Motor Vehicle Safety Act.
• Food and Drug Act.
• Personal Information Protection and
Electronic Documents Act.
4-27
Copyright © 2007 Pearson Education Canada
Cultural Environment
• The institutions and other forces that
affect a society’s basic values,
perceptions, preference and behaviours.
• Cultural values are highly persistent.
• Learned from family and community.
4-28
Copyright © 2007 Pearson Education Canada
Cultural Environment
• Core beliefs and values are passed on
from parents to children and are
reinforced by schools, churches,
business and government.
• Secondary beliefs and values are more
open to change.
4-29
Copyright © 2007 Pearson Education Canada
Major Consumer Themes
• Yankelovich Monitor has identified
eight major consumer value themes:
1.
2.
3.
4.
5.
6.
7.
8.
4-30
Paradox.
Trust not.
Go it alone.
Smarts really count.
No sacrifices.
Stress hard to beat.
Reciprocity is the way to go.
Me 2.
Copyright © 2007 Pearson Education Canada
Cultural Environment
• Culture is expressed through people’s
views of:
– Themselves.
– Others.
– Organizations.
– Society.
– Nature.
– The Universe.
4-31
Copyright © 2007 Pearson Education Canada
Global Marketing Environment
• Trade restrictions.
– Tariffs.
– Embargos.
– Quotas.
– Exchange controls.
– Non-tariff barriers.
• World Trade Organization.
• Economic communities.
4-32
Copyright © 2007 Pearson Education Canada
World Trade Organization
• Voluntary trade association established
in 1995, 144 members doing 90% of
world trade.
• Objective is to promote international
trade by removing barriers through
negotiation.
4-33
Copyright © 2007 Pearson Education Canada
Economic Communities
• Groups of nations working toward
common goal.
• Regional free trade zones.
• European Economic Community (EEC);
adoption of common currency to
facilitate trade.
• North American Free Trade Agreement
(NAFTA) among Canada, U.S. Mexico.
4-34
Copyright © 2007 Pearson Education Canada
Managing Environments
• The passive approach.
– Monitor and analyze.
– Adapt strategies to avoid threats and take
advantage of opportunities.
• The environmental management
perspective.
– React aggressively to change forces.
– Lobbying, advertorials, lawsuits, complaints.
4-35
Copyright © 2007 Pearson Education Canada
Looking Back
• Describe the environmental forces that affect
the company’s ability to serve its customers.
• Explain how changes in the demographic and
economic environments affect marketing
decisions.
• Identify the major trends in the natural and
technological environments.
• Explain the key changes in the political and
cultural environments.
• Discuss how companies can react to the
marketing environment.
4-36
Copyright © 2007 Pearson Education Canada