1. Copyright © 2005 Pearson Education Inc. The Marketing Environment Chapter 5 Principles of Marketing, Sixth Canadian Edition

2. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.2 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

3. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.3 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

4. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.4 The Company’s Microenvironment The company: –Management, finance, research & development, purchasing, manufacturing, accounting, and human resources Suppliers Marketing intermediaries: –Resellers –Physical distribution firms –Marketing service agencies –Financial intermediaries Figure 5.1

5. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.5 The Company’s Microenvironment Customers: –Consumer, business, reseller, government, and international markets Competitors Publics: –Financial –Media –Government –Citizen-action groups –Local –General –Internal Figure 5.1

6. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.6 The Company’s Macroenvironment Demographic environment: –Study of human population –Size, density, location, age, race, sex, occupation, and education Trends of interest: –World population growth –Increased diversity –Changing age structure within Canada –Changing households –Higher education –Geographic shifts Figure 5.2

7. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.7 The Company’s Macroenvironment Economic environment: –Factors that affect consumer buying power and spending patterns Trends of interest: –Changes in income, continued spending by consumers –Consumer debt levels rising, savings down –Changing spending patterns Engel’s laws: amount spent on various categories changes as income rises Figure 5.2

8. Copyright © 2005 Pearson Education Inc. 5.8 The Company’s Macroenvironment Natural environment: –Growing shortages of raw materials –Increased pollution –Increased government intervention –Focus on environmental sustainability strategies Figure 5.2

9. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.9 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 Figure 5.2

10. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.10 The Company’s Macroenvironment Political environment: –Laws, government agencies, and pressure groups –Influence and limit organizations and individuals within a society –Increasing legislation –Increased emphasis on ethics and social responsibility –Cause-related marketing –Business legislation is used to protect consumers, businesses, and the interests of society Figure 5.2

11. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.11 The Company’s Macroenvironment Cultural environment: –Institutions and other forces that influence –Society’s basic values, perceptions, preferences, and behaviours –Core beliefs passed on through family, reinforced by institutions –Secondary beliefs are more open to change –People’s views of: Themselves Others Organizations Society Nature The universe Figure 5.2

12. Copyright © 2005 Pearson Education Inc. Principles of Marketing, Sixth Canadian Edition 5.12 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