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Pea
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The Marketing Environment
•Chapter 5
•Powerpoint slides
•Extendit! version
•Instructor name
•Course name
•School name
•Date
Principles of Marketing: 6th Canadian Edition
Principles of Marketing: 6th Canadian Edition
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Learning Objectives
• After studying this chapter, you should be able to:– 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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The Marketing Environment
• Marketing environment:– Factors and forces outside of marketing’s direct control
– Affect management’s ability to develop and maintain successful transactions with target customers
• Microenviroment:– Forces close to the company
– That affect its ability to serve customers
• Macroenvironment:– Larger, societal forces that
affect the organization’s microenvironment
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The Company’s Microenvironment
• The company:– Management, finance, research & development, purchasing,
manufacturing, accounting, and human resources
– Each department will have their own objectives
– Need to work in harmony to create customer value
• Suppliers:– Those companies which
provide the resources needed
– Supply availability, pricing, quality are issues that influence the company’s ability to function
– Trend towards partnering
Figure 5.1
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The Company’s Microenvironment (continued)
• Marketing intermediaries:– Firms that help the company promote, sell, and distribute good to
final buyers
• Includes:– Resellers
– Physical distribution firms
– Marketing service agencies
– Financial intermediaries
• Intermediaries are now larger
• Partners in the overall value delivery system
Figure 5.1
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The Company’s Microenvironment (continued)
• Customers:– Consumer, business, reseller, government, institutional, and
international markets
• Competitors:– Company’s marketing strategy must be competitive
• Publics:– Financial
– Media
– Government
– Citizen-action groups
– Local
– General
– Internal
Figure 5.1
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The Company’s Macroenvironment
• Demographic environment:– The study of human populations
– Size, density, location, age, race, sex, occupation, and education
– Marketers are interested because markets are made up of people
• Trends of interest:– World population growth:
from 6.2 billion to 7.9 billion by 2025
– Majority of growth in developing countries
– Growth plus spending power creates emerging market opportunities: China
Figure 5.2
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The Demographic Environment
• Trends of interest:– Changing age structure within Canada
– Largest group boomers (born 1947 to 1966) are getting older
– Baby boom in Canada started and finished later than U.S.– Boomers form a wide range
from 38 to 57 years old
– Entering their peak earning years
– Families and mid-life crisis help to influence spending
– Generation X followed them in reduced numbers
– Generation Y: the children of the boomers
Figure 5.2
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The Demographic Environment
• Trends of interest:– Changing Canadian households
– 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
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The Demographic Environment
• Trends of interest:– Geographic shifts in population
– Growth in population is not uniform
– Continued movement from rural to urban areas
– Immigration primarily to urban centers (next slide)
– Growth of suburban areas
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The Demographic Environment
• Trends of interest:– Better educated population
– Increase in post-secondary education
– Increased 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
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The Company’s Macroenvironment
• Economic environment:– Any and all factors that affect consumer buying power and
spending patterns
– Types of economy will influence resources to work with
• Trends of interest:– Canadian economy has been in
a growth trend since the 1980’s, despite world events and decline in the U.S. economy
– Dual-income families working to keep up
– Mild recession in the early 1990’s squeezed consumers
Figure 5.2
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The Economic Environment
• Trends of interest:– Consumers looking for value in products and services
– Consumer debt levels rising, savings down– Saving for retirement for
boomers is a concern, but not (really) affecting their spending patterns!
– Changing spending patterns
• Engel’s laws: amount spent on various categories changes as income rises
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The Company’s Macroenvironment
• Natural environment:– Natural resources that are needed as inputs by marketers
or that are affected by marketing activities– Growing shortages of raw materials– Increased pollution (polluted lands, ecological lands)– Increased government intervention
– Canadian federal law: Environmental Protection Act (1989)
– Green movement
– Focus on environmental sustainability strategies
Figure 5.2
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The Company’s Macroenvironment
• Technological environment:– New technology creates new markets and opportunities
– Replaces existing products and services
– Research and development activity drives this sector– 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
Figure 5.2
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The Company’s Macroenvironment
• Political environment:– Laws, government agencies, and pressure groups
– Influence and limit organizations and individuals within a society
• Trends of interest:– Cause-related
marketing
– Increasing Business legislation is used to protect consumers, businesses, and the interests of society
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The Company’s Macroenvironment
• Cultural environment:– Institutions and other forces that influence society’s basic values,
perceptions, preferences, and behaviors
– Core beliefs are passed on through family, friends, reinforced by institutions, and (somewhat) resistant to change
– Secondary beliefs are more open to change (tastes, leisure, sexuality)
– People’s views of:• Themselves (own identity),
others (relationship with others), society (pride of belonging to a society)
• Organizations (company trust)• Nature, the universe
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Responding to the Marketing Environment
• Passive approach:– Companies react to uncontrollable factors within their
environments
• Environmental management perspective:– Proactive approach to
influence and affect forces within their environment
– Use lobbyists to influence legislation
– Media events, advertorials to shape public opinion
– Use contractual agreements and legal action when necessary
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In Conclusion…
• The learning objectives for this chapter were:– 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