1. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1

2. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 The Global Marketing Environment

3. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-3 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-4 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-5 The Marketing Environment

6. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-6 Creation of Market Opportunities & Threats The Marketing Environment Creates Opportunities or Threats in 2 Ways: 1. Changes affect specific markets. 2. Changes affect specific marketing activities. The Marketing Environment Creates Opportunities or Threats in 2 Ways: 1. Changes affect specific markets. 2. Changes affect specific marketing activities.

7. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-7 Identifying Market Opportunities and Threats

8. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-8 The Social Environment The Social Environment:  All factors and trends related to groups of people including: Their number Characteristics Behavior Growth Projections

9. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-9 The Demographic Environment The Demographic Environment:  Refers to the size, distribution, and growth rate of groups of people with different characteristics.

10. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-10 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-11 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. 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. Urban: Rural: 1900: 39.6% 60.4% 1990: 75.2% 24.8% Urban: Rural: 1900: 39.6% 60.4% 1990: 75.2% 24.8% U.S. Population Shifts

12. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-12 The World’s Largest Cities City 1995 2015 (est.)(in thousands) 1.Tokyo, Japan26,959 28,887 2.Mexico City, Mexico16,562 19,190 3.Sao Paulo, Brazil16,533 20,320 4.New York, USA16,332 17,602 5.Mumbai, India15,138 26,218 6. Shanghai, China13,584 17,969 7. Los Angeles, USA12,410 14,217 8.Calcutta, India11,923 17,305 9.Buenos Aires, Argentina11,802 13,856 10.Seoul, South Korea11,609 12,980 City 1995 2015 (est.)(in thousands) 1.Tokyo, Japan26,959 28,887 2.Mexico City, Mexico16,562 19,190 3.Sao Paulo, Brazil16,533 20,320 4.New York, USA16,332 17,602 5.Mumbai, India15,138 26,218 6. Shanghai, China13,584 17,969 7. Los Angeles, USA12,410 14,217 8.Calcutta, India11,923 17,305 9.Buenos Aires, Argentina11,802 13,856 10.Seoul, South Korea11,609 12,980

13. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-13 Median Ages In Selected Countries Italy36.242.4 Japan37.242.2 Britain35.740.0 U.S.32.937.4 Korea (North & South)25.734.4 China25.433.9 Brazil22.929.2 Mexico20.0 6.5 Nigeria16.318.1 Italy36.242.4 Japan37.242.2 Britain35.740.0 U.S.32.937.4 Korea (North & South)25.734.4 China25.433.9 Brazil22.929.2 Mexico20.0 6.5 Nigeria16.318.1 Country19902010

14. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-14 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-15 Issues in the Cultural Environment Cultural Diversity Changing Roles Emphasis on Health & Fitness Desire for Convenience Consumerism Popular Culture Cultural Diversity Changing Roles Emphasis on Health & Fitness Desire for Convenience Consumerism Popular Culture

16. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-16 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-17 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-18 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-19 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-20 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-21 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-22 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-23 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-24 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 Key U.S. Laws Protecting Consumers & Society

25. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-25 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-26 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-27 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-28 The Competitive Environment All the organizations that attempt to serve similar customers. Two types of major competitors:  Brand Competitors  Product Competitors

29. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-29 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. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-30 The Institutional Environment The Institutional Environment:  All the organizations involved in marketing products and services.  These include: Marketing Research Firms Advertising Agencies Wholesalers Retailers Suppliers Customers

31. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-31 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.