1. foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environment for Marketing Decisions 2

2. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Objectives 1. Identify the environmental factors that affect marketing decisions. 2. Identify three categories of competition faced by marketers, and outline the issues to consider in developing a competitive strategy. 3. Illustrate the association between marketing plans and the technological environment. 4. Demonstrate how the sociocultural environment influences marketing decisions. 5. Show how the economic environment has a bearing on marketing planning. 6. Explain the major legislative framework that regulates marketing activities. 2 The Environment for Marketing Decisions 2-1

3. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Environmental Planning Process by which the marketing manager gathers and sorts information about the marketing environment. 2 The Environment for Marketing Decisions 2-2

4. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. 2 The Environment for Marketing Decisions 2-3 Components of the Marketing Environment Figure 2.1 The Marketing Plan Customers Economic Conditions Political-legal climate Sociocultural environment Competition Technology

5. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Competitive Environment The interactive process that occurs in the marketplace in which different organizations seek to satisfy similar markets. 2 The Environment for Marketing Decisions 2-4

6. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Types of Competition Inter-product or direct Product-substitute or indirect Alternative-gratification 2 The Environment for Marketing Decisions 2-5

7. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Technological Environment The applications of knowledge based on scientific discoveries, inventions, and innovations. 2 The Environment for Marketing Decisions 2-6

8. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Key Factors of the Technological Environment Computer technology Internet 2 The Environment for Marketing Decisions 2-7

9. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Sociocultural Environment The mosaic of societal and cultural components that are relevant to the organization’s business decisions. 2 The Environment for Marketing Decisions 2-8

10. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Key Factors of the Sociocultural Environment General readiness of society to accept a marketing idea Trust and confidence in business Mixed society Towns and rural communities Gender Consumerism 2 The Environment for Marketing Decisions 2-9

11. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Economic Environment Factors in a region or country that affect the production, distribution, and consumption of its wealth. Key elements are monetary resources, inflation, employment, and productive capacity. 2 The Environment for Marketing Decisions 2-10

12. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Stages of the Business Cycle Recession Depression Recovery Prosperity 2 The Environment for Marketing Decisions 2-11

13. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Inflation and Stagflation Inflation Rising price level resulting in reduced purchasing power for the consumer. Stagflation High unemployment and a rising price level at the same time. 2 The Environment for Marketing Decisions 2-12

14. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Fiscal and Monetary Policy Fiscal Policy Receipts and expenditures of government. Monetary Policy Manipulation of the money supply and market rates of interest. 2 The Environment for Marketing Decisions 2-13

15. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Demarketing The process of cutting consumer demand for a product, because the demand exceeds the level that can reasonably be supplied by the firm or because doing so will create a more favourable corporate image. 2 The Environment for Marketing Decisions 2-14

16. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Political - Legal Environment The laws and interpretation of laws that require firms to operate under competitive conditions and to protect consumer rights. 2 The Environment for Marketing Decisions 2-15

17. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Key Factors in Political - Legal Environment Free-enterprise society Competition Act 2 The Environment for Marketing Decisions 2-16

18. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Competition Act prohibits: Combinations that lessen competition. Mergers or monopolies detrimental to the public. Deceptive trade practices. 2 The Environment for Marketing Decisions 2-17