Transcript Chapter 2 The Changing Marketing Environment

CHAPTER 2
THE CHANGING MARKETING
ENVIRONMENT
Chapter Goals
To gain an understanding of:
 The concept of monitoring a firm’s environment
 How external forces influence a firm’s marketing
program:
 Demographics, economics, competition,
social/cultural milieu, technology, political/legal
systems
 How suppliers and intermediaries impact the
marketing program
 How nonmarketing resources within the firm influence
the way in which it practices marketing
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The External Macroenvironment
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the external environment is changing very rapidly,
with considerable implications for marketing
macro forces are factors over which the company has
no short-term control
micro forces are those that operate at the firm level
the external macroenvironment affects different firms
at a different pace and in different ways
the better we understand the changing marketing
environment and its effects, the better we can develop
effective marketing programs
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The Marketing
Program
Economic
conditions
Demographics
Competition
COMPANY’S
MARKETING
PROGRAM
Social
and cultural
forces
Technology
Political
and legal
forces
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Demographic Change
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refers to the changing nature of the population
most obvious change is the aging population
smaller families; more single-person households
smaller, non-traditional households
more part-time employment
more dual-income households
changing patterns of immigration; ethnic mix
must consider the implications of these changes
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The Importance of
Changing Demographics
Different age groups buy different products or
services. What are the implications of these
changes (1996-2006)?
 Under age 25: Grow by 4.8%.
 25-34 years old: Decline by 5%.
 35-44 years old: Increase by 4.5%.
 45-64 years old: Grow by 2.5 million, or
39.5%.
 Over age 65: Grow by 20%.
Source: Statistics Canada Projections
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Changing Ethnicity
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Chinese growing to be second largest
language group in Canada
Over one million Chinese live in Canada:
 80% in British Columbia and Ontario
Have unique buying habits and needs
Make an “ethnic” market segment
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Economic Change
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consider the effect on consumers of:
 recession
(business cycle)
 changes in interest rates
 inflation
 unemployment
how are consumers likely to respond?
 they often shop around more; store and brand
loyalty suffer when consumers are uncertain
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Price Policy Must Respond
to Economic Conditions
With little inflation, companies are having trouble raising
prices. Instead they are:
 Redesigning products for ease of manufacture or to cut
out costly, superfluous features.
 Using price-driven costing rather than cost-plus pricing.
 Emphasizing everyday low prices, rather than sporadic
rebates and discounts.
 Forging closer links with customers to speed up new
product development.
 Introducing “bare-bones” products.
 Investing in high-tech equipment to cut costs.
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Are Wealthy Consumers
All the Same? No!!!
Research has identified five distinct groups:
 Luxury lovers — 29 percent. Flaunt their
affluence.
 Savvy affluents — 23 percent. Seek bargains,
hide their wealth.
 Trailblazers — 21 percent. Love adventure travel,
active investors.
 Contented affluents —14 percent. “Old money,”
country-club set, believe in large estate for their
children.
 Strained affluents —13 percent. Have large debt
burden, believe strongly in image.2 - 10
Competitive Change
Competition takes place at three levels:
1. directly at the brand or store level
2. at the level of substitute
products/services
3. From marketers of all products and
services competing for the same
consumer dollar
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Social and
Cultural Change
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the way in which we lead our lives is also changing:
lifestyles and values
greater emphasis on quality of life
changing gender roles
different attitudes toward physical activity,
exercise, and diet among certain segments
increased emphasis on quality and value
environmentalism has affected marketing
increased demands for convenience
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Trends in
Attitude Change
Changing male/female roles
 Emphasis on quality of life
 Growing interest in physical fitness, health and
wellness
 Growing focus on service quality
 Aging population
 Growth in influence of young buyers
 Growing environmental awareness and concern
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“Green” Consumers
(from Roper Starch Worldwide)
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True-Blue Greens - Change their personal behaviour
and purchases to aid the environment.
Greenback Greens - Support environmental political
candidates and donate money to environmental causes
but are not as willing to change their habits.
Sprouts - Make a few environmental friendly
purchases.
Grousers - Grudgingly acknowledge environmental
mandates.
Basic browns - Most apathetic and their ranks are
growing.
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Technological Change
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Advancing technology creates new forms of
competition and communications; fax, ATM’s, CDROM, cellular, Internet
Also creates new industries to be supplied
Also has important effects on how people spend
their time: working and shopping from home, voice
mail, surfing the Net
Think about the fact that today technology is
accepted by consumers, expected by them,
transparent to them, and often disposable
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Impact of
Technological Change
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Launches entirely new industries, such as multimedia,
digital communications and electronic commerce
Alters or virtually destroys existing industries, such as
the effect of e-mail on regular mail and even fax
Stimulates other markets and industries, such as the
effect of the debit card and Internet shopping on the
retailing industry
Over 40% of Canadians had Internet access in
1999
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Political and Legal Change
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government and laws affect marketing at
many levels
legislation often has implications for
marketing; some more direct than others
considerable amount of consumer protection
legislation in effect in Canada
many industries are directly affected by
legislation; packaging, labelling, advertising
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The External
Microenvironment
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external to the firm, but part of its marketing system
because of its close relationship
its market; the people or organizations whose wants
and needs the firm intends to satisfy
its suppliers; the other firms upon whom the firm
relies to provide quality products and services so
that it can serve its customers
marketing intermediaries; other firms that
represent the channel of distribution for the firm’s
products and services
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The Company’s
Marketing Program
Suppliers
Marketing
intermediaries
COMPANY’S
MARKETING
PROGRAM
Marketing
intermediaries
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The
market
Controllable Factors in
the Marketing Plan
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Internal Factors
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Nonmarketing
Factors
Production
Finance
Personnel
• Company’s location
• Its research and
development strength
• Its image
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Financial
resources
COMPANY’S
NONMARKETING
RESOURCES
Research
and
development
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The New
Internal Market
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Internal marketing ensures that employees are ‘on
side’ with the goals of the organization
The employees have a direct impact on product
and service quality, dependability, and overall
productivity
The employees are an “internal market” which
impact every department within the firm
A satisfied internal market will be better able to
satisfy the external (customer) market
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