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Copyright 2007 Pearson Education Canada4-1

Marketing: An IntroductionSecond Canadian Edition

Armstrong, Kotler, Cunningham, Mitchell and Buchwitz

Chapter Four

The Marketing Environment


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Looking Ahead Describe the environmental forces that affect

the companys ability to serve its customers.

Explain how changes in the demographic and

economic environments affect marketingdecisions.

Identify the major trends in the firms naturaland technological environments.

Explain the key changes in the political andcultural environments.

Discuss how companies can react to themarketing environment.


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Marketing EnvironmentDefined

The factors and forces outside

marketings direct control that affectmarketing managements ability to

develop and maintain successful

transactions with target customers.


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Microenvironment.

Actors close to the company that affect its

ability to serve its customers. Unique to the company.

Macroenvironment.

Larger societal forces that affect themicroenvironment.

Considered to be beyond the control of theorganization.

Marketing Environment


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The Microenvironment

Factors that are unique to the companyand that the company can influence.

Company. Suppliers.

Marketing intermediaries.

Customers.

Competitors.

Publics.


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The Company

Companys internal environment.

Areas insidea company.

Affects the marketing departmentsplanning strategies.

All departments must think consumer and

work together to provide superior customer

value and satisfaction.


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Provide resources needed to producegoods and services.

Important link in the value deliverysystem.

Most marketers treat suppliers like

partners.

Suppliers



Marketing Intermediaries

Help the company to promote, sell anddistribute its goods to final buyers.

Resellers. Physical distribution firms.

Marketing services agencies.

Financial intermediaries.



Three types of customers.

Consumers who buy for personal use.

Business buyers who buy for the use of thecompany.

Government buyers who buy on behalf ofpublic services.

Customers



Competitors

Those who serve a target market withproducts and services that are viewed by

consumers as being reasonablesubstitutes.

Company must gain strategic advantageagainst these organizations.

Company size and industry positiondetermines best competitive strategy.



Publics

Group that has an interest in or impacton an organization's ability to achieve

its objectives. Financial publics.

Media publics.

Government publics.

Citizen action publics.

Local publics.

General publics.

Internal publics.



The Macroenvironment

Factors that all companies in theindustry experience in common and that

are difficult to influence. Demographic environment.

Economic environment.

Natural forces. Technological force.

Political forces.

Cultural forces.



Demographics

The study of human populations interms of size, density, location, age,gender, race, occupation and otherstatistics.

Marketers track changing age and familystructures, geographic population shifts,educational characteristics andpopulation diversity.



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 Canadas

average age.

Major influencer of demographic andsocioeconomic change. Prime target of consumer product

marketers.



Changing Canadian Household

Common-law and long-parent familiesnow 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.



Population Shifts

Canadas growth rate only 3% from 2001

to 2204.

Population of Saskatchewan andNewfoundland 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.



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.



Economic Environment

All those factors that affect consumerbuying power and spending patterns.

Income levels and distribution. The necessity of products.

Changes in trends and consumer spendingpatterns.

Economies of different nations.


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Economic Changes

Changes in income. 1980s consumption frenzy.

1990s squeezed consumer. 2000s value marketing.

Income distribution 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.


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Changing Spending Patterns

Food, clothing, housing and fuelspending dropping as a percentage of

total spending. Increased spending in:

Personal goods and services.

Recreation, entertainment, education andculture.

Engels Law remains true.


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Natural Environment

Involves the natural resources that areneeded as inputs by marketers or that

are affected by marketing activities.


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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.


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Technological Environment

Most dramatic force now shaping ourdestiny.

Changes rapidly. Creates new markets and opportunities.


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Technological Environment

Challenge is to make practical,affordable products.

Safety regulations result in higherresearch costs and longer time betweenconceptualization and introduction ofproduct.


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Political Environment

Includes laws, government agenciesand pressure groups that influence or

limit various organizations andindividuals in a given society.

Increasing legislation.

Changing government agency

enforcement.

More emphasis on ethics and sociallyresponsible actions.


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Key Political/Legal Issues

Fair competition.

Fair trade practices.

Environmental protection. Product safety.

Truth in advertising.

Packaging and labelling.

Pricing.


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Key Canadian Legislation

The Competition Act.

National Trade Mark and True Labelling

Act. Motor Vehicle Safety Act.

Food and Drug Act.

Personal Information Protection andElectronic Documents Act.


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Cultural Environment

The institutions and other forces thataffect a societys basic values,

perceptions, preference and behaviours. Cultural values are highly persistent.

Learned from family and community.


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Core beliefs and values are passed onfrom parents to children and are

reinforced by schools, churches,business and government.

Secondary beliefs and values are more

open to change.


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Major Consumer Themes Yankelovich Monitor has identified

eight major consumer value themes:1. Paradox.

2. Trust not.3. Go it alone.4. Smarts really count.5. No sacrifices.6. Stress hard to beat.7. Reciprocity is the way to go.8. Me 2.


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Culture is expressed through peoples

views of:

Themselves. Others. Organizations. Society.

Nature. The Universe.


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Global Marketing Environment Trade restrictions.

Tariffs.

Embargos.

Quotas.

Exchange controls.

Non-tariff barriers.

World Trade Organization.

Economic communities.


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World Trade Organization

Voluntary trade associationestablished in 1995, 144 members

doing 90% of world trade. Objective is to promote international

trade by removing barriers through

negotiation.


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Managing Environments

The passive approach.

Monitor and analyze.

Adapt strategies to avoid threats and takeadvantage of opportunities.

The environmental managementperspective.

React aggressively to change forces.

Lobbying, advertorials, lawsuits, complaints.


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Looking Back Describe the environmental forces that affect

the companys ability to serve its customers.

Explain how changes in the demographic and

economic environments affect marketingdecisions.

Identify the major trends in the natural andtechnological environments.

Explain the key changes in the political andcultural environments.

Discuss how companies can react to themarketing environment.