Chap 2 The Marketing Environment

The Marketing Environment
The Marketing
Environment
Copyright © 2008 Pearson Education Canada 3-1 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
• 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
Demographic
Company
Cultural Economic
Publics Suppliers
Company
Competitors Customers
Political Natural
Intermediaries
Technological
Figure 3.1
The Microenvironment
The Company’s Microenvironment
• Company’s Internal Environment- functional

areas such as top management, finance, and
manufacturing, etc.
• Suppliers - provide the resources needed to

produce goods and services and are an important
link in the “value delivery system”.
• Marketing Intermediaries - help the company to

promote, sell, and distribute its goods to final
buyers.
The Company’s Microenvironment
• Customers - five types of markets that

purchase a company’s goods and services.
• Competitors - those who serve a target

market with similar products and services
against whom a company must gain strategic
advantage.
• Publics - any group that perceives itself

having an interest in a company’s ability to
achieve its objectives.
Types of Customer Markets
International Consumer
Markets Markets
Company
Government Business
Markets Markets
Reseller
Markets
Types of Publics
Financial i.e. Banks
Media i.e. Newspapers
Government i.e. Regulations
Citizen-Action i.e. Consumer Groups
Local i.e. Neighborhood Residents
General Public
Internal i.e. Employees
Figure 3.2
The Macroenvironment
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
• 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.
• Key Generations • Born between 1946 and
1964
– Baby Boomers • Baby boom in Canada
– Generation X started and finished later
– Generation Y 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
Many products
are targeted to
Baby boomers’
growing health
issues and
concerns
1976
– Baby Boomers
• First generation of
– Generation X latchkey children
– Generation Y • Maintain a cautious
economic outlook
• Respond to socially
responsible companies
• Skeptical, impatient, and
highly mobile,
• Primary market by 2010
1994
– Baby Boomers • Children of the baby
– Generation X boomers represent 20% of
the population
– Generation Y • Range in age from
preteens to mid-twenties.
• New products, services,
and media cater to GenY
• Attractive and
challenging target for
marketers
Toyota has
designed a
comic book
called Fuel to
attract Gen Y
to its Celica
model
• 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
• 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
• Better Educated People
– Increase in post-secondary education
• 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
Telus knows the importance of cultural diversity
Volkswagen also targets people with disabilities
Economic Environment
• Factors that affect consumer buying
power and spending patterns
• Types of economy will influence resources
to work with
• 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
• Changing Consumer
Spending Patterns
• Engel’s laws: amount
spent on various
categories changes as
income rises
Natural Environment
• Involves the natural resources that are needed as
inputs by marketers or that are affected by
marketing activities
• Trends
– Shortages of raw materials
– Increased pollution
– Increased government intervention
– Canadian federal law: Environmental Protection Act
(1989)
– Green movement
– Focus on environmental sustainability strategies
Car
manufacturers
are designing
cars that are
more
environmentally
friendly
Technological Environment
Rapid Pace of Unlimited

Change Opportunities
Issues in the Technological

Environment
Increased Practical, Affordable

Regulation Products
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
As technology
changes, the
consumers have
new needs. This
product helps the
consumer with the
problem of
multiple chargers
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
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
universe
Cultural Environment
Of
Oneself
Of Of
the Universe Cultural Values Others
of a
Of Society Of
Nature Organizations
Of
Society
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.”

Chap 2 The Marketing Environment

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Chap 2 The Marketing Environment

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The Marketing Environment

• Company’s Internal Environment- functional

• Suppliers - provide the resources needed to

• Marketing Intermediaries - help the company to

• Customers - five types of markets that

• Competitors - those who serve a target

• Publics - any group that perceives itself

Financial i.e. Banks

Media i.e. Newspapers

Government i.e. Regulations

Citizen-Action i.e. Consumer Groups

Local i.e. Neighborhood Residents

Internal i.e. Employees

Rapid Pace of Unlimited

Issues in the Technological

Increased Practical, Affordable

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