1. Marketing: An Introduction
Armstrong, Kotler, Trifts, Buchwitz, Gaudet
5th Canadian Edition
With DUANE WEAVER

2. CHAPTER 4 Analyzing the Marketing Environment
with Duane Weaver

3. Outline Environmental Forces MicroEnvironment MacroEnvironment
Macro: Demographics
Generational Groups
Canadian Impacts
Outlines learning objectives from this chapter. Each ensuing slide is headed by one of these 5 items.

4. Environmental Forces Forces that affect firm’s success
Microenvironment:
Forces with direct impact to the company
Internal & External
Macroenvironment:
External forces with direct impact across industries
LO 1: Describe the environmental forces that affect the company’s ability to serve its customers
Microenvironment is comprised of forces both controllable and uncontrollable
Macroenvironment often referred to in categories of Competition, Regulation, Economic, Social, Technological (CREST)
CREST forces ultimately expose sources of Opportunities and/or Threats

5. Environment Impact on Decisions
Microenvironment
Stakeholders (aka: publics):
Groups with interest in or impact on a firm’s ability to achieve objectives
Strategic decisions must consider impact on all stakeholders
Strengths & Weaknesses
Opportunities & Threats
Financial
Media
Government
Citizen action
The Company
Suppliers
Marketing Intermediaries
Customers
Competitors
Publics
LO 1: Describe the environmental forces that affect the company’s ability to serve its customers
Financial publics. This group influences the company’s ability to obtain funds. Banks, investment houses, and stockholders are the major financial publics.
Media publics. This group carries news, features, and editorial opinion. It includes newspapers, magazines, and radio and television stations.
Government publics. Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising, and other matters.
Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups.
Local publics. This group includes neighbourhood residents and community organizations. Large companies usually appoint a community relations officer to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes. For example, Ronald McDonald House Charities recognize the importance of community publics.
General public. A company needs to be concerned about the general public’s attitude toward its products and activities. The public’s image of the company affects its buying.
Internal publics. This group includes workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about their company, this positive attitude spills over to external publics.

6. Environment Impact on Decisions
Macroenvironmental Forces:
external & non controllable
Main sources of opportunities and threats
Strategic decisions stem from developing trends
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
Forces in the macroenvironment can be categorized as:
Demographic
Economic
Natural
Technological
Political
Cultural

7. Environment Impact on Decisions
Macro: Demographics
The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics.
Marketers track changing age and family structures, geographic population shifts, educational characteristics and population diversity.
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics
Marketers watch, anticipate and react to changing age and family structures, geographic population shifts, educational characteristics, and population diversity

8. Environment Impact on Decisions
Three largest generational groups:
Baby Boomers
9.8 million
Wealthy but hard hit by recession
Generation X
7 million
Highly educated
Experientially driven
Millennials or Generation Y
10.4 million
Tech savvy
Personally centered
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
Baby Boomers
9.8 million people born between 1947 and 1966
one-third of population
Wealthiest generation that controls over 50% of country’s wealth
Recession hit Baby Boomers hard, eating into nest eggs and retirement prospects
Boomers “think young;” strong targets for financial services
Gen X
7 million born between 1967 and 1976
Defined by shared experiences:
Increased parental divorce rates and more employed mothers resulted in latchkey kids
Less materialistic; prize experiences
Skeptical of marketing
Most educated generation to date
Face economic pressures; spend carefully
Millennials:
10.4 million born between 1977 and 2000
larger than Generation X/Baby Boomers
Includes tweens, teens, and young adults
Fluent with digital technology
Personalization and product customization are key to marketing success

9. Just so you Know Hog Wild Generational Marketing
When it celebrated its110th year of operations in 2013, Harley Davidson ® was simultaneously confronted with an inevitable fork in the road. It’s target market, male baby boomers, were slowly but surely aging away from profitability. While a significant number of Gen X and millennials would be there to carry the torch, HD ® saw the looming threat of the demographic shift. Faced with the dilemma of introducing a new product for a new market, while still maintaining a current product for a current market – all the while protecting the brand that got you there in the first place – how would you advise the motorcycle company to proceed? Visit to see how it approaches generational marketing

10. Environment Impact on Decisions Canadian Impacts
Canadian family/household are changing:
Growing market of “non-traditional” households
Growing “crowded nest” syndrome
Fewer families have children
More dual-income families
Demographics
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
- Canadian family/household are changing:
Growing “crowded nest” syndrome
Fewer families have children
Average Canadian household shrank to 2.5 people
More dual-income families
Needs of non-traditional households must be considered by marketers

11. Environment Impact on Decisions Canadian Impacts
Geographic shifts in population:
Growth rates across Canada are not uniform
Rural to urban migration continues
Buying habits differ by region
Growth in telecommuting market
Demographics
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
Growth rates ( ) across provinces and territories are not uniform
Rural to urban (city, suburb) migration continues
People in different regions buy differently
Shift in where people live is changing how they work
Marketers targeting growing telecommuting market

12. Environment Impact on Decisions Canadian Impacts
Better educated, white-collar population:
Increased demand for higher quality
Increased understanding of value
Creates demand in different products
Demographics
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
As of 2004, 59.1% of people had university degrees or post-secondary certificates

13. Environment Impact on Decisions Canadian Impacts
Increasing diversity:
Large and growing visible minority market
Growth in recognized disabilities
Acceptance of LGBT and gay marriages
Demographics
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
visible minorities
This group is growing 5 times faster than the whole population and has huge purchasing power
Marketers target specially designed ads, products, and promotions at ethnic groups
Marketing efforts are increasing toward:
LGBT community
People with disabilities
LGBT = lesbian, gay, bisexual and transgender

14. Environment Impact on Decisions Canadian Impacts
Factors that affect spending
Changes in income
Consumption frenzy, record personal debt
Economic crisis leading to consumer frugality
Value marketing is key to success
Changes in spending patterns
Engel’s laws note that consumers at different income levels have different spending patterns
Economics
LO 2: Explain how changes in the demographic and economic environments affect marketing decisions
Engel’s laws note that as family income rises, the percentage spent on food declines, the percentage spent on housing remains about constant (except for such utilities as gas, electricity, and public services, which decrease), and both the percentage spent on most other categories and that devoted to savings increase.

15. Economic Changes Changes in income Income distribution
1980’s – consumption frenzy.
1990’s – “squeezed consumer.”
2000’s – value marketing.
Income distribution
Upper class – major market for luxury goods.
Middle class – careful but has the good life.
Working class – sticks to the basics.
Underclass – counts every penny first.
LO 3: Identify the major trends in the firm’s natural and technological environments
Environmental sustainability—an effort to create a world economy that the planet can support indefinitely.

16. Technological Environment
Technology advances
Creating new markets and opportunities
Increasing obsolescence
Accelerating customer needs
Resulting in constantly evolving regulations
LO 3: Identify the major trends in the firm’s natural and technological environments
Government bans unsafe products and sets safety standards
Regulations result in higher research costs, and longer time to market for new products

17. Political Environment
Regulatory Trends:
Evolving laws influence organizations
Marketing activities face:
Increasing legislation
Changing government agency enforcement
Society’s emphasis on ethics and socially responsible behavior
LO 4: Explain the key changes in the political and cultural environments

18. Cultural Environment Secondary CORE
Standard acceptable belief system that affects a society’s basic values
Core beliefs slow to change
Secondary beliefs are more open to change
Secondary
CORE
LO 4: Explain the key changes in the political and cultural environments

19. Cultural Environment
Society’s major cultural views are expressed in people’s views of:
Themselves
Others
Organizations
Society
Nature
The Universe
LO 4: Explain the key changes in the political and cultural environments

20. Responding to the Marketing Environment
Reactive
Proactive
Wait for change; then react
Anticipate change; act now
Missed opportunities
Seized opportunities
Damage from threats
Mitigate impact of threats
LO 5: Discuss how companies can react to the marketing environment
Reactive responses:
Many firms are passive and simply react to changes in the marketing environment
Proactive responses:
Some attempt to manage the marketing environment via aggressive actions designed to affect the publics and forces in the marketing environment