1. The External Marketing Environment

2. The Environment
T he environment which markets exist in are constantly changing
Problems, opportunities, successes, and failures are largely based on a company’s ability to adapt
To foresee and adjust to change, companies must research and review external competition and factors in the marketplace
Trends that company analyze include are:
Economy
Competition
Technology
Laws other regulations
The consumer

3. Economy Influences
The economy has a significant impact on the marketing activity of a company
The factors that contribute to the Canadian Economy include the following:
Gross Domestic
The GDP is the total value of good and services produced in a country on an annual basis. Positive growth in GDP from year to year would reflect a productive economy and plentiful jobs
Inflation
Inflation refers to a general rising price level for goods and services, resulting in reduced purchase power. For example, if inflation rises significantly next year we can buy less with the money we have
Employment
Employment refers to the number of people with jobs from year to year. A high level of employment refers to a vibrant economy and vice versa
Real Income
This is income adjusted for inflation over time

4. Economic Influences: Income
Disposable Income refers to the amount one has after taxes and other expenses (What you have left after you pay your bills)
Disposable Income has consistently fallen in Canada since the early 1990s
This trend is due to a rise in hydro, gas, telephone, and so on
Due to this trend, many families debt are rising and families are spending less on luxuries and vacations, focusing instead on the necessities

5. Economic Influences: Value of the Canadian Dollar
The Canadian Dollar is heavily effected by the economy of Canada
The Canadian Dollar in turn heavily effects Canada’s internal and external markets
When the Canadian Dollar is low, Canada’s exports are very valuable for countries such as the United States
When the Canadian Dollar is high, Canada’s exports are less valuable and Canadians begin to shop outside of Canada
In the case of the USA, Canada traditionally sells 83% of its exports to the USA, while Canada gets 70% of its trade from the USA

6. Economic Influences: Free Trade
Canada is part of the North American Free Trade Agreement which includes Mexico and the United States
All these countries have the ability to trade in each others markets without facing heavy tariffs or trade fees
Combined, the market of these countries is 360 million consumers with annual output of $10 Trillion
Disadvantages in Canada include relocation of Canadian businesses to Mexico where land and wages are much cheaper

7. Economic Influences: Business Cycles
Economic growth is measured in Canada by the amount the GDP increases or decreases
In the last 5 years, Canada’s GDP has grown 5% annually
The economy of each country is continually expanding or receding in different stages:
Recession
Depression
Recovery
Prosperity

8. Business Cycles: Recessions and Depressions
When countries experience periods with a lower GDP, consumer spending is also lowered.
Lower spending contributes to a lower GDP and a spiral effect usually takes place
A decline in a countries GDP that lasts longer than 6 months is known as a recession
When recessions last a long time and are harsher then usual they are known as a depression

9. Business Cycles: Recovery and Prosperity
Just as declines in the economy cause a decline in spending, an increase in the economy often brings with it more spending
Businesses respond to this by manufacturing more and marketing more aggressively
The initial period of increase in economy is known as the recovery stage
When the economy is successful for an extended time it is known as the prosperity stage