1. Copyright © 2005 Pearson Education Canada Inc. The Marketing Environment Chapter 5 Powerpoint slides Extendit! version Instructor name Course name School name Date Principles of Marketing: 6th Canadian Edition

2. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th 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 Canada Inc. Principles of Marketing: 6th 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 Canada Inc. Principles of Marketing: 6th Canadian Edition 5.4 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

5. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.5 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

6. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.6 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

7. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.7 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

8. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.8 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

9. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.9 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

10. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.10 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

11. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.11 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

12. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.12 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

13. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.13 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

14. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.14 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

15. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.15 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

16. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.16 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

17. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.17 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

18. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.18 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

19. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 5.19 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