- Marketing Environment: The factors and forces outside marketing’s direct control that affect marketing management’s ability to develop and maintain successful transactions with target customers.
- Marketers have two special aptitudes. They have discipline methods –marketing intelligence and marketing research-for collecting information about marketing environment. They also normally spend more time in the customer and competitor environment. By conducting systematic environmental scanning, marketers can revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace.
- Microenvironment: The forces close to the company that affects its ability to serve its customers-the company, suppliers, marketing channel firm, customer market, competitors, and publics.
- Microenvironment: The larger societal forces that affect the whole microenvironment –demographic, economic, natural, technological, political, and cultural forces.
- They provide the resources needed by the company to produce its goods and services. Marketing managers must be aware of supply availability –supply shortage or delays, labour strikes, and other events that can cost sales in the short run and damage customer satisfaction in the long run.
- Marketing Intermediaries: Firms that help the company to promote, sell, and distribute its goods to final buyers, they include resellers, physical distribution firms, marketing services agencies, and financial intermediaries.
- Reseller à are distribution channel forms that help the company find customers or make sales to them.
- Physical Distribution Firmsà help the company to stock and move goods from their points or origin to their destination. Working with warehouse and transportation firms, a company must determine the best way to store and ship goods, balancing such factors as cost, delivery, speed and safety.
- Marketing Services agenciesà are marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right market.
- Financial Intermediaries à include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.
- The company needs to study its customer market closely.
- 5 Types of customer market:
1. Consumer Market: consist of individuals and households that buy goods and services for personal consumption.
2. Business Market: buy goods and services for further processing or for use in their production process
3. Reseller Market: buys goods and services and resells it to make a profit.
4. Government Market: are composed of government agencies that buy goods and services in order to produce public services or transfer the goods and services to others who need them.
5. International Market: Consists of buyers in other countries, including consumers, producers, resellers and governments.
- Publics: Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectivities.
- Seven types of publics (see page 79 & 80):
1. Financial publics
2. Media publics
3. Government publics
4. Citizen-action publics
5. Local publics
6. General publics
7. Internal publics
The Company’s Microenvironment
- Demography: The study of human population in terms of size, density, location, age, sex, race, occupation, and other statistics.
Changing Age Structure of the Canadian Population
- Baby Boom: The major increase in the annual birth rate following WWII and lasting until the early 1960s. The “baby boomers,” now moving into middle age, are a prime target for marketer.
The Changing family (87)
Geographic Shifts in population (87)
A better educated and more white-collar population (89)
Increasing Diversity (89)
- Economic Environment: Factors that affect consumer buying power and spending patterns.
- Subsistence economies - they consume most of their own agricultural and industrial output.
- Industrial economies – which constitute rich markets for many different kinds of goods.
Chang in Income
- Marketers pay attention to income distribution as well as average income.
Changing Consumer Spending Patterns
- Engel’s Law: Difference noted over a century ago by Earnst Engel in how people shift their spending across food, housing, transportation, health care, and other goods and services categories as family income rises.
- Natural Environment: Natural resources that are needed as inputs by marketers or that are affected by marketing activities.
- Technological Environment: Forces that create new technological, creating new product and market opportunities.
- Political Environment: Consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society.
Legislation Regulation Business
- Canada has many laws covering issues such as competition, fair trade practices, environment protection, product safety, truth in advertising packaging and labelling, price, and other important areas.
- North American Free Trade agreement (NAFTA) replaced the Free Trade Agreement (FTA) in August 2010. It governs free trade among Canada, United States, and Mexico. NAFTA is a historic document since it is the first trade agreement between two developed nation and a developing country.
- Business legislation has been enacted for various reasons. The first is to protect companies from each other. The second purpose of the government regulation is to protect consumers from unfair business practices. The third purpose of the government regulation is to protect the interests of society against unrestrained business behaviour.
- Cultural Environment: Institutions and other forces that affect society’s basic value, perception, preference, and behaviour.
- The following cultural characteristics can affect marketing decision-making:
Persistence of cultural Values
- Core beliefs and valuesà are passed by parents to children and are reinforced by schools, churches, business and government.
- Secondary Beliefs and value à are more open to change. Believing in marriage is a core belief; believing that people should get married early in life is a secondary belief.
Shifts in Secondary Cultural Values
- The major cultural values of a society are expressed in people’s views of themselves and others, as well as in their views of organizations, society, nature and the universe.
People’s Views of themselves
- People use products, brands, and services as a means of self-expression, and they buy products and service that match their views of themselves.
People’s View of others
- This suggests a bright future for the products and services that serve basic needs rather that those relaying on glitz and hype. It also suggests a greater demand for “social support” products and services that improve direct communication between people, such as health clubs and family vacations.
People’s View of Organizations
- They need to review their advertising communications to ensure that their messages are honest. They also need to review their various activities to make sure that they are perceived to be “good corporate citizens”.
People’s View of society
- Patriots à nationalist, pro country
- Reformers à who want to change it
- Malcontent à who want to leave it
People’s View of Nature
People’s View of the universe
- People vary in their beliefs about the origin of the universe and their place in it.
- 1980’s people measured success in terms of career achievements, wealth, and worldly possessions.
- 1990’s success was measured with achievements such as a happy family life and service to one’s community replacing money as the measure if worth.
Responding to the Marketing environment
- Many companies view the marketing environment as an “uncontrollable” element to which they must adapt. They accept the market place and do not change it. They analyse the environmental forces and design strategies that will help the company avoids the threats and take advantage of the opportunities the environment.
- Environmental management perspective: A management perspective in which the firm takes aggressive actions to affect the publics and forces in its marketing environment rather than simply watching and reacting to it.