1. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-1 chapter 3 Prepared by Angela Zigras, Seneca College Deborah Baker, Texas Christian University THE MARKETING ENVIRONMENT

2. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-2 You will learn to... 1.Discuss the external environment of marketing, and explain how it affects a firm. 2. Describe the social factors that affect marketing. 3. Explain the importance to marketing managers of current demographic trends. 4. Explain the importance to marketing managers of multiculturalism and growing ethnic markets.

3. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-3 You will learn to... 5. Identify consumer and marketer reactions to the state of the economy. 6. Identify the impact of technology on a firm. 7. Discuss the political and legal environment of marketing. 8. Explain the basics of foreign and domestic competition. 9. Discuss corporate social responsibility.

4. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-4 Target Market A defined group most likely to buy a firm’s product.

5. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-5 Understanding the External Environment “Environmental Scanning” By collecting and evaluating environmental information marketers can identify future marketing opportunities and threats

6. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-6 External Marketing Environment Demographics Social Change Social Change Economic Conditions Economic Conditions Political & Legal Factors Political & Legal Factors Technology Competition Environmental Scanning Target Market Product Distribution Promotion Price Product Distribution Promotion Price External Environment is not controllable Ever-Changing Marketplace

7. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-7 Social Demographic Economic Technologic Political and Legal Competitive External Environmental Factors External Environmental Factors External Marketing Environment

8. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-8 Environmental Management When a company implements strategies that attempt to shape the external environment with which it operates

9. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-9 Social Factors Values Attitudes Lifestyle Social Factors

10. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-10 Marketing Oriented Values Modernism Cultural Creativity Traditionalism Today’sMarketing-OrientedValues

11. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-11 Marketing-Oriented Values Cultural Creativity Cultural Creativity Traditionalism Modernism Interested in new products and services “Heartlanders” with nostalgic views Place high value on success, materialism, technology

12. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-12 Is work consuming a huge portion of your time? The Poverty of Time A lack of time to do anything but work, commute to work, handle family situations, do housework, shop, eat, sleep...

13. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-13 Component Lifestyles The practice of choosing goods and services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle.

14. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-14 Role of Families & Women  Over 50% of all females are in the workforce  Rising purchasing power from dual- income families  Change of “traditional” purchasing roles

15. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-15 Demographic Factors Age Location Ethnicity Demographics

16. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-16 Generation Y: Born to Shop  Born between 1981 and 1994  Size creates immense marketing impact  Influenced by changing demographics and technology  Respond to ads differently

17. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-17 Generation X: Savvy and Cynical  Born between 1973 and 1983  First generation of latchkey children  Indulge themselves with meals/alcohol, clothing, and electronics

18. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-18 Baby Boomers: A Mass Market Baby Boomers: A Mass Market  Born between 1946 and 1964  Cherish youth, convenience, and individuality  Individualism has led to a personalized economy

19. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-19 Personalized Economy Delivering goods and services at a good value on demand.

20. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-20 Product Characteristics in a Personalized Economy Customization Immediacy Value Products are custom designed and marketed to small target markets Products are delivered at the consumer’s convenience Businesses must price competitively or create innovative products

21. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-21 Older Consumers: Not Just Grandparents  Age “50 plus”  Healthier, wealthier, better educated  Considerable purchasing power  Market potential not fully tapped

22. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-22 Canadians on the Move Canadians on the Move  Over 16% of Canadians move each year  Canadians experience both immigration and migration

23. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-23 Growing Ethnic Markets  Canadian population is becoming a multicultural society and workforce  Over two-thirds of immigrants to Canada are “visible minorities”

24. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-24 Multiculturalism When all major ethnic groups in an area-- such as a city, county, or census tract--are roughly represented.

25. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-25 Multicultural Marketing Stitching Niches Stitching Niches Marketing Strategy for Multicultural Markets Marketing Strategy for Multicultural Markets Ethnic Age Income Lifestyle

26. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-26 Stitching Niches A strategy for multicultural marketing that combines ethnic, age, income, and lifestyle markets, on some common basis, to form a large market.

27. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-27 Economic Factors Distribution of Consumer Income Inflation Recession Economic Areas of Concern to Marketers

28. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-28 Inflation  Prices rise with no wage increase Purchasing Power decreases  Increase profit margins by increasing efficiency  Consumers reaction: – Search for lowest prices – Rely on coupons and sales

29. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-29 Recession  Income, production and employment fall  Reduced demand for goods and services

30. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-30 Recession Marketing Strategies  Improve existing products  Introduce new products  Maintain customer services  Emphasize top-of-the line products

31. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-31 Basic Research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon.

32. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-32 Applied Research An attempt to develop new or improved products.

33. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-33 Technological & Resource Factors  New technology helps firm cope with other environmental factors  Internet has created new challenges  Internet has helped marketers operate more efficiently through better communications

34. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-34 Political and Legal Factors Consumers Businesses Society Government Laws and Regulations Protect

35. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-35 Legal and Regulatory Agencies  Competition Bureau (Bill C-2) 1986  Quebec’s Bill 101 (provincial)  The Canadian Code of Advertising Standards  The Canadian Broadcasting Association  The Canadian Direct Marketing Association

36. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-36 Competitive Factors How many competitors? How big are competitors? How interdependent is industry? Control

37. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-37 Global Competition  More foreign firms are entering market  Foreign firms now compete on product quality  Global markets are highly competitive  NAFTA - Free trade agreement with U.S and Mexico

38. Copyright © 2002 by Nelson, a division of Thomson Canada Limited. Chapter 3 3-38 Corporate Social Responsibility Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Philanthropic Be a good citizen.