Transcript here - Pearson Canada

Chapter 3
The Marketing
Environment
Copyright © 2008 Pearson Education Canada
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Describe the environmental forces that affect
the company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing
decisions
3. Identify the major trends in the firm’s natural
and technological environments
4. Explain the key changes in the political and
cultural environments
5. Discuss how companies can react to the
marketing environment
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Principles of Marketing, Seventh Canadian Edition
Case Study
McDonald’s
• Challenges
• Marketing Initiatives
– Shifting consumer
lifestyles
– Low ratings of food and
service quality
– Atmosphere not upscale
– Image of being unclassy,
uncultured and uncool to
younger target markets
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– Focus on core competency
of consistent products and
reliable service
– Upscale alternative
including McCafe and
Bistro Gourmet
– Healthier food options
with elimination of
“supersize” and
introduction of Go Active!
Adult Happy Meal
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Describe the environmental forces that affect
the company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing
decisions
3. Identify the major trends in the firm’s natural
and technological environments
4. Explain the key changes in the political and
cultural environments
5. Discuss how companies can react to the
marketing environment
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Marketing Environment
• Marketing Environment:
– The actors and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with target
customers
• Microenvironment
– Includes the actors close to the company
• Macroenvironment
– Involves larger societal forces
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Principles of Marketing, Seventh Canadian Edition
Microenvironment
The Company
• Marketing must consider other parts of
the organization, including finance, R&D,
purchasing, operations and accounting
• Marketing decisions
must relate to broader
company goals and
strategies
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Principles of Marketing, Seventh Canadian Edition
Microenvironment
Suppliers
• Marketers must watch supply availability
and pricing
• Effective partnership
relationship
management with
suppliers is essential
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Principles of Marketing, Seventh Canadian Edition
Microenvironment
Marketing Intermediaries
• Help to promote, sell and distribute goods to
final buyers
• Include resellers, physical distribution firms,
marketing services agencies and financial
intermediaries
• Companies must work
with their intermediaries
as partners rather than
simply as channels
through which they sell
their products.
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Principles of Marketing, Seventh Canadian Edition
Microenvironment
Customers
• The five types of customer markets
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Consumer
Business
Reseller
Government
International
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Principles of Marketing, Seventh Canadian Edition
Microenvironment
Competitors
• Conducting competitor analysis is critical
for success of the firm
• A marketer must monitor
its competitors’ offerings
to create strategic
advantage
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Principles of Marketing, Seventh Canadian Edition
Microenvironment
Publics
• Any group that has an actual or potential
interest in or impact on an organization
• Seven publics include:
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Financial
Media
Government
Citizen-action
Local
General
Internal
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Describe the environmental forces that affect
the company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing
decisions
3. Identify the major trends in the firm’s natural
and technological environments
4. Explain the key changes in the political and
cultural environments
5. Discuss how companies can react to the
marketing environment
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Demographic Environment:
– The study of human populations in terms of
size, density, location, age, gender, race,
occupation and other statistics
– World population will exceed 8.1 billion by
2030
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Canada: population is expected to exceed 33
million by 2011
• Changing age structure within Canada
• The Canadian population is getting older. The
median age is 37.6 years (2001 Census)
• The three largest age groups are: the baby
boomers, Generation X, and Generation Y.
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Principles of Marketing, Seventh Canadian Edition
Discussion Question
• How might changes
in consumer spending
patterns affect Master
Card?
• Changes in the age
and family structure?
• Increasing diversity?
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Key Generations
• Born between 1946 and
1964
• Baby boom in Canada
started and finished later
than U.S.
• Represent 30% of the
population, make up 40%
of the workforce and earn
more than 50% of all
personal income.
• Many mini-segments
exist within the boomer
group
• Entering peak earning
years as they mature
– Baby Boomers
– Generation X
– Generation Y
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Born between 1965 and
1976
• First generation of
latchkey children
• Maintain a cautious
economic outlook
• Respond to socially
responsible companies
• Skeptical, impatient, and
highly mobile,
• Primary market by 2010
• Key Generations
– Baby Boomers
– Generation X
– Generation Y
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Born between 1977 and
1994
• Children of the baby
boomers represent 20% of
the population
• Range in age from
preteens to mid-twenties.
• New products, services,
and media cater to GenY
• Attractive and
challenging target for
marketers
• Key Generations
– Baby Boomers
– Generation X
– Generation Y
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• The Changing Canadian Household
– The nuclear family has led to the “crowded nest”
with boomerang kids, and extended families
– Delayed marriages
– Common-law arrangements
– Fewer children
– High divorce rate
– Single-parent families
– Alternative arrangements
– Working women: 48% of work force
– More dual-income families
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Geographic Shifts in Population
– Growth in population is not uniform
– Continued movement from rural to urban
areas
– Interprovincial moves
– Growth of suburban areas
– People who “telecommute” has increased
creating a booming SOHO market
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Better Educated People
– Increase in post-secondary education
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Principles of Marketing, Seventh Canadian Edition
Demographic Environment
• Increasing diversity
– Canada is more of a cultural mosaic, than the melting
pot of the U.S.
– Ethnic markets are not easily targeted and served
– Diversity includes more than just ethnicity:
gay/lesbian population
– Respecting diversity may be the key to economic
survival for many companies
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Principles of Marketing, Seventh Canadian Edition
Economic Environment
• Factors that affect consumer buying power
and spending patterns
• Types of economy will influence resources
to work with
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Principles of Marketing, Seventh Canadian Edition
Economic Environment
• Changes in Income
• Marketers should pay attention to income
distribution as well as average income.
– Upper class, middle class, working class, and
underclass
• The distribution of income has created a
two-tiered market: the affluent and the
less affluent
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Principles of Marketing, Seventh Canadian Edition
Economic Environment
• Changing Consumer Spending Patterns
• Engel’s laws: amount spent on various
categories changes as income rises
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Describe the environmental forces that affect
the company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing
decisions
3. Identify the major trends in the firm’s natural
and technological environments
4. Explain the key changes in the political and
cultural environments
5. Discuss how companies can react to the
marketing environment
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Natural Environment
• Involves the natural resources that are needed as
inputs by marketers or that are affected by
marketing activities
• Trends
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Shortages of raw materials
Increased pollution
Increased government intervention
Canadian federal law: Environmental Protection Act
(1989)
– Green movement
– Focus on environmental sustainability strategies
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Principles of Marketing, Seventh Canadian Edition
Technological Environment
• The most dramatic force shaping our destiny
• Rapidly changing force which creates many new
marketing opportunities but also turns many
existing products extinct
• Research and development is a key element
– Canadian spending on R&D is low, ranked 15th in the
world
– Many government programs to encourage more R&D
spending
• Government agencies to regulate new product
safety
Copyright © 2008 Pearson Education Canada
3-28
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Describe the environmental forces that affect
the company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing
decisions
3. Identify the major trends in the firm’s natural
and technological environments
4. Explain the key changes in the political and
cultural environments
5. Discuss how companies can react to the
marketing environment
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Political Environment
• Consists of laws, government agencies, and
pressure groups that influence or limit various
organizations and individuals in a given society
– Legislation affecting businesses worldwide has
increased
– Laws protect companies, consumers and the interests
of society
– Increased emphasis on socially responsible actions
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Principles of Marketing, Seventh Canadian Edition
Cultural Environment
• Made up of institutions and other forces
that affect a society’s basic values,
perceptions, preferences and behaviors.
• Persistence of Cultural Values
• Secondary Cultural Values are more open
to change
– People’s views of themselves, others,
organizations, society, nature, and the
unniverse
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Principles of Marketing, Seventh Canadian Edition
Cultural Environment Includes
people’s views of…
• Themselves
• Society
– Identify with brands
for self-expression
– Patriotism on the rise
• Nature
• Others
– “lifestyles of health
and sustainability”
(LOHAS) consumer
segment
– Recent shift from
“me” to “we” society
• Organizations
• Universe
– Trend of decline in
trust and loyalty to
companies
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– Includes religion and
spirituality
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Describe the environmental forces that affect
the company’s ability to serve its customers
2. Explain how changes in the demographic and
economic environments affect marketing
decisions
3. Identify the major trends in the firm’s natural
and technological environments
4. Explain the key changes in the political and
cultural environments
5. Discuss how companies can react to the
marketing environment
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Responding to the
Marketing Environment
“There are three kinds of companies: those
who make things happen, those who watch
things happen, and those who wonder
what’s happened.”
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
• 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
Copyright © 2008 Pearson Education Canada
3-35
Principles of Marketing, Seventh Canadian Edition