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![Page 1: Copyright © 2007 Pearson Education Canada4-1 Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter.](https://reader037.fdocuments.in/reader037/viewer/2022110207/56649d345503460f94a0b170/html5/thumbnails/1.jpg)
Copyright © 2007 Pearson Education Canada4-1
Marketing: An Introduction Second Canadian Edition
Armstrong, Kotler, Cunningham, Mitchell and Buchwitz
Chapter FourThe Marketing Environment
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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.
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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.
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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 the
microenvironment.– Considered to be beyond the control of the
organization.
Marketing Environment
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The Microenvironment• Factors that are unique to the company
and that the company can influence.– Company.– Suppliers.– Marketing intermediaries.– Customers.– Competitors.– Publics.
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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.
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• Provide resources needed to produce goods and services.
• Important link in the “value delivery system.”
• Most marketers treat suppliers like partners.
Suppliers
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Marketing Intermediaries
• Help the company to promote, sell and distribute its goods to final buyers.– Resellers.– Physical distribution firms.– Marketing services agencies.– Financial intermediaries.
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• 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.
Customers
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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.
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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.
– Local publics. – General publics.– Internal publics.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Economic Changes
• Changes in income.– 1980’s – consumption frenzy.– 1990’s – “squeezed consumer.”– 2000’s – 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 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.
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Natural Environment
• Involves the natural resources that are needed 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 our destiny.
• Changes rapidly.
• Creates new markets and opportunities.
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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.
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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.
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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 and Electronic Documents Act.
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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.
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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.
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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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Cultural Environment
• Culture is expressed through people’s 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 association established in 1995, 144 members doing 90% of world trade.
• Objective is to promote international trade by removing barriers through negotiation.
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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.
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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.
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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.