Chapter 2

The Marketing Environment

Learning Objectives

• Understand the importance of monitoring change in the marketing environment

• Describe how trends in the demographic, socio-cultural, economic, and technological environment affect marketing

• Recognize the impact competition has on companies and their marketing programs

• Understand the regulatory forces that encourage free market competition, and protect consumers from questionable marketing practices

2

Environmental Change

3

Changed the way the consumer:

• Collects information• Communicates• Contributes

Changed the way the consumer:

• Collects information• Communicates• Contributes

The Internet

The Internet

Marketing Environment

4

ChangesChanges

Awareness of changes

Awareness of changes

Thwart threatsThwart threats

OpportunitiesOpportunities

Marketing Environment

5

Marketing Environment

The knowledge from a marketing environmental scan Relevant products, services, and ideas

6

Demographic Forces

• Statistics Canada provides access to demographics information

• Companies can complete their own demographics research

7

Demographic Forces - Age

Aging Population

8

People 50+ control 75% of Canadian household net

worth

People 50+ control 75% of Canadian household net

worth

Demographic Forces

9

Demographic Forces – Diverse Generations

Baby Boomers• 60% of consumer goods and service

expenditures• Have redefined the concept of aging

10

Demographic Forces – Diverse Generations

Generation X• 12% of the population• Not brand loyal• Self-reliant• Entrepreneurial• Educated

11

Demographic Forces – Diverse Generations

Generation Y• 27.5% of the population• Technology and sports

12

Demographic Forces - Urbanization

13

Demographic Forces – Ethnic Diversity

• 2/3 of Canada’s population growth is due to immigration

14

Demographic Forces – Non-Traditional Families

Changes in family structure:• More common-law relationships• Single-parent families• Blended families• Same-sex marriages

15

Socio-Cultural Forces

• Marketers monitor socio-cultural forces so they can capitalize on new opportunities

16

Socio-Cultural Changes

• Ethnic foods• Health and fitness• Environmental awareness• Changing gender roles

17

Economic Forces

• A change in the economy impacts a person’s ability to purchase

18

Economic Forces

Key economic indicators:• Inflation rate• Unemployment rate• Economic growth rate

19

Microeconomic Forces

• Gross income• Disposable income• Discretionary income

20

Technological Forces

• What new inventory are being introduced and how consumers are accepting these technological forces

21

Technological Advances

• Internet and search engines• Email, text, and instant messaging• Social networking sites• Video sharing sites• Downloading• Blogs • Online TV• Cell phones

22

Technological Forces

23

Competitive Forces

• An analysis of direct competitors and indirect competitors is necessary in designing a marketing strategy that is responsive to competition

24

Competition

Types of Competitive Markets

25

Regulatory Forces

• A marketer must be aware of regulations that affect how they do business

26

Regulatory Groups

• Competition Bureau• Canadian Radio & Television &

Telecommunications Commission (CRTC)

• Advertising Standards Council (ASC)• Canadian Marketing Association

(CMA)• Better Business Bureau (BBB)

27

Marketing Environmental Scan

• The process of continually acquiring information on events occurring outside the organization to identify trends, opportunities, and threats to your business

28BACK

Demographics

• The statistical data on a population according to characteristics such as age, gender, ethnicity, income, and occupation

29BACK

Baby Boomers

• People born between 1946 and 1964

30BACK

Generation X

• People born between 1965 and 1976

31BACK

Generation Y

• People born between 1975 and 1995

32BACK

Socio-Cultural Forces

• Cultural values, ideas, and attitudes, and society’s morals and beliefs

33BACK

Economy

• The collective income, expenditures, and resources that affect the cost of running a business or household

34BACK

Gross Income

• Total amount of money made in one year by a person, household, or family unit, including taxes

35BACK

Disposable Income

• Balance of income left after paying taxes that is used for spending and savings

36BACK

Discretionary Income

• Money that consumers have left after paying taxes and buying necessities

37BACK

Technological Forces

• Inventions from applied science or engineering research

38BACK

Direct Competitors

• Similar products sold in the same category

39BACK

Indirect Competitors

• Products competing for the same buying dollar in a slightly different, but related, category

40BACK

Competition

• Alternative products that can satisfy a specific market’s needs

41BACK

Regulations

• Restrictions placed on marketing practices by government and industry associations

42BACK