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

3. 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.

4. 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.

5. The Marketing Environment

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

7. Identifying Market Opportunities and Threats

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

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

10. 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.

11. 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: % %
1990: % %

12. The World’s Largest Cities
City (est.)
(in thousands) (in thousands)
Tokyo, Japan 26, ,887
Mexico City, Mexico 16, ,190
Sao Paulo, Brazil 16, ,320
New York, USA 16, ,602
Mumbai, India 15, ,218
6. Shanghai, China 13, ,969
7. Los Angeles, USA 12, ,217
Calcutta, India 11, ,305
Buenos Aires, Argentina 11, ,856
Seoul, South Korea 11, ,980

13. Median Ages In Selected Countries
Country
Italy
Japan
Britain
U.S
Korea (North & South)
China
Brazil
Mexico
Nigeria

14. 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

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

16. 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.

17. 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

18. 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.

19. 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.

20. 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.

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

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

29. 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.

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

31. 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.