The Global Marketing Environment Chapter 2 The Global Marketing Environment McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

After Studying This Chapter You Should Be Able To: Understand the nature of the marketing environment and why it is important to marketers. Describe the major components of the social environment and how trends in the social environment affect marketing. Understand how the economic environment affects marketing. See how the political/legal environment affects marketing.

After Studying This Chapter You Should Be Able To: Appreciate the importance of the technological environment to marketers. Understand differences in the competitive environment. Know how changes in the institutional environment affect marketers.

The Marketing Environment

Creation of Market Opportunities & Threats The Marketing Environment Creates Opportunities or Threats in 2 Ways: Changes affect specific markets. Changes affect specific marketing activities.

Identifying Market Opportunities and Threats

The Social Environment All factors and trends related to groups of people including: Their number Characteristics Behavior Growth Projections

The Demographic Environment Refers to the size, distribution, and growth rate of groups of people with different characteristics.

The Demographic Environment Global Population Size and Growth: The world population is now more than six billion. Approximately 95 percent of that growth took place in developing countries in Asia, Africa, and Latin America. China currently has the largest population, followed by India, with the United States a distant third.

The Demographic Environment Global Demographic Characteristics & Trends: The larges cities and the highest city growth rates are in developing countries such as Mexico, Brazil, and India. Urban population is growing in many developed countries. U.S. Population Shifts Urban: Rural: 1900: 39.6% 60.4% 1990: 75.2% 24.8%

The World’s Largest Cities City 1995 2015 (est.) (in thousands) (in thousands) Tokyo, Japan 26,959 28,887 Mexico City, Mexico 16,562 19,190 Sao Paulo, Brazil 16,533 20,320 New York, USA 16,332 17,602 Mumbai, India 15,138 26,218 6. Shanghai, China 13,584 17,969 7. Los Angeles, USA 12,410 14,217 Calcutta, India 11,923 17,305 Buenos Aires, Argentina 11,802 13,856 Seoul, South Korea 11,609 12,980

Median Ages In Selected Countries Country 1990 2010 Italy 36.2 42.4 Japan 37.2 42.2 Britain 35.7 40.0 U.S. 32.9 37.4 Korea (North & South) 25.7 34.4 China 25.4 33.9 Brazil 22.9 29.2 Mexico 20.0 6.5 Nigeria 16.3 18.1

The Cultural Environment The cultural environment refers to factors and trends related to how people live and behave and what they buy. Cultural factors include: Values Ideas Attitudes Beliefs Activities of specific population subgroups

Issues in the Cultural Environment Cultural Diversity Changing Roles Emphasis on Health & Fitness Desire for Convenience Consumerism Popular Culture

The Economic Environment The economic environment includes factors and trends related to income levels and the production of goods and services. Economic trends in different parts of the world can affect marketing activities in other parts of the world. Market opportunities are a function of both economic size and growth. The Gross Domestic Product (GDP) represents the total size of a country’s economy measured in the amount of goods and services produced.

The Political/Legal Environment The political/legal environment encompasses factors and trends related to governmental activities, specific laws and regulations that affect marketing practice. The political/legal environment is closely tied to the social and economic environments

Global Political Trends International political events greatly affect marketing activities. The most significant global political trend is the “war on terrorism.” A second important political trend is movement toward free trade and away from protectionism.

Global Political Trends Benefits to Free Trade: Countries with the freest trade had the highest GDP growth from 1990 to 2000. Free trade in a global economy requires the free movement of people, goods, and capital across borders.

Legislation Organizations must deal with laws at the international, federal, state, and local levels. U.S. laws directly affecting marketing typically fall into two categories: Those promoting competition among firms. Those protecting consumers and society.

Key U.S. Laws Promoting Competition Sherman Act (1890) - Prohibits monopolistic practices Clayton Act (1914) - Prohibits anticompetitive activities Federal Trade Commission Act (1914) - Establishes regulatory agency to enforce laws against unfair competition Robinson-Patman Act (1936) - Prohibits price discrimination

Key U.S. Laws Promoting Competition Lanham Trademark Act (1946) - Protects trademarks and brand names Magnusson-Moss Act (1975) - Regulates warranties United States-Canada Trade Act (1988) - Allows free trade between United States and Canada

Key U.S. Laws Protecting Consumers & Society Food, Drug, and Cosmetics Act (1938) - Regulates food, drug, and cosmetic industries Fair Packaging and Labeling Act (1966) - Regulates packaging and labeling Consumer Credit Protection Act (1960) - Requires full disclosure of financial charges for loans Child Protection and Toy Safety Act (1969) - Prevents marketing of dangerous products to children

Key U.S. Laws Protecting Consumers & Society Fair Credit Report Act (1970) - Regulates reporting and use of credit information Fair Debt Collections Practice Act (1970) - Regulates methods for collecting debts Child Protection Act (1990) - Regulates advertising on children’s television programs Americans with Disabilities Act (1990) - Prohibits discrimination against consumers with disabilities

Important U.S. Regulatory Agencies Federal Trade Commission (FTC) - Regulates business practices Consumer Product Safety Commission (CPSC) - Protects consumers from unsafe products Environmental Protection Agency (EPA) -Protects environment

Important U.S. Regulatory Agencies Food & Drug Administration (FDA) - Regulates food, drug, and cosmetic industries Interstate Commerce Commission (ICC) - Regulates interstate transportation industry Federal Communications Commission (FCC) - Regulates interstate communications industry

The Technological Environment Includes factors and trends related to innovations that affect the development of new products or the marketing process: New-product development How marketing activities are performed New technologies spawning new industries

The Competitive Environment All the organizations that attempt to serve similar customers. Two types of major competitors: Brand Competitors Product Competitors

The Competitive Environment Brand Competitors: Provide the most direct competition, offering the same types of products as competing firms. Product Competitors: Offer different types of products to satisfy the same general need.

The Institutional Environment All the organizations involved in marketing products and services. These include: Marketing Research Firms Advertising Agencies Wholesalers Retailers Suppliers Customers

The Future The only certainty about the future is that it will be uncertain and change will occur at an increasing rate. It will also be more complex.