BU352 Chapter 3 â Analyzing the Marketing Environment Week 2 A ...
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
A Marketing Environment Analysis Framework -Marketers who understand and manage the changes in their marketing environments are able to adapt their product and service offerings to meet new challenges and opportunities -Sometimes firms can even anticipate trends Microenvironmental Factors Company Capabilities -The first factor that affects the consumer is the firm itself -Marketers can use an analysis of the external environment, like the SWOT analysis to categorize an opportunity as either attractive or unattractive and, if it appears attractive, to assess it relative to the firm’s existing competencies Competition -Greater competition means more choices for consumers which influences their buying decisions -Competitive intelligence (CI) – used by firms to collect and synthesize information about their position with respect to their rivals; enables companies to anticipate changes in the marketplace rather than merely react to them -CI enables companies to anticipate changes in the marketplace rather than merely react to them -The strategies to father CI can range from simply sending a retail employee to a competitive store to check merchandise, prices, and foot traffic to more involved methods such as, -Reviewing public materials, including websites, press releases, industry journals, annual reports, etc. -Interviewing customers, suppliers, partners or former employees -Analyzing a rival’s marketing tactics, distribution practices, pricing, and hiring needs -Although CI is widely regarded as a necessary function in today’s world, certain methods of obtaining information have come under ethical and legal scrutiny Corporate Partners -Few firms operate in isolation – Ex. Car company relies on a sheet metal, tire manufacturer companies -Parties that work with the focal firm are its corporate partners Macroenvironmental Factors -Macroenvironmental factors – aspects of the external environment – culture, demographics, social trends, technological advances, economic situation, and political/legal environment (CDSTEP) – that affect companies Culture Culture -The shared meanings, beliefs, morals, values, and customs of a group of people -Our various cultures influence what, why, how, where, and when to buy Country Culture -Country culture – the easy-to-spot visible nuances that are particular to a country, such as dress symbols, ceremonies, language, colours, and food preferences, and more subtle aspects, which are trickier to identify Regional Subcultures -The region in which people live in a particular country affects the way they react to different cultural
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
rituals or even how they prefer a particular product category -Ex. A resident of Quebec is 25% less likely to buy a hot prepared or reheatable meal than a resident of Ontario Demographics -Demographics – characteristics of human populations and segments, especially those used to identify consumer markets, such as age, gender, income, race, ethnicity, and education Generational Cohorts -Generational cohort – a group of people of the same generation – typically have similar purchase behaviours because they have shared experiences and are in the same stage of life -Tweens – generational cohort of people who are not quite teenagers but are not young children either (Ages 9 to 12); they’re in between -Tweens spend their money mostly on food and drinks, electronics, and clothing -Tweens learn about new products from TV shows and friends -Generation Y – generational cohort of people between the ages of 13 and 32; the biggest cohort since the original postwar baby boom -More skeptical about what they hear in the media, which makes marketing to the group more challenging -Generation X – generational cohort of people between the ages of 36 and 47 -Possess considerable spending power because they tend to wait to get married and buy houses later in life -Baby boomers – generational cohort of people born after World War II; are between the ages of 48 and 66 -Quest for youth, in both attitude and appearance provides a massive market for anti-aging products, cosmetics, pharmaceuticals, and biotechnology -Seniors – North America’s fastest growing generational cohort; people aged 65 and older -Older people are not saving anymore and they see to be buying goods and services at the same pace as younger generations -They spend their money on travel, second homes, luxury cars, electronic equipment, investments, home furnishings, and clothing -Seniors tend to like “made in Canada” items and recognizable brand names,, value, quality, and classic styles Income -The mediam income of Canadian families in 2008 was approximately $63 900 -Canadians may be classified into distinct groups based on their income and other factors such as background, education, and occupation: upper class, middle class, working class and under class -Upper class consumers are more affluent, and their spending patterns are not influenced by economic conditions -Income > $70 000 -Middle class earn between $30 000 - $70 000 with the majority tending toward the higher end of the scale -They tend to be careful about their spending and are often value-conscious -Working class earn between $20 000-$30 000 barely sufficient income to cover their basic needs -Under class earn less than $20 000 and often rely on assistance to cover their basic needs Education -Higher levels of education lead to better jobs and higher incomes -For some products, marketers can combine education level with other data such as occupation and
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
income to obtain pretty accurate predictions of purchase behaviour Gender -The shift in attitude and behaviour towards the different sexes affects the way many firms design and promote their products and services Ethnicity -Statistics Canada data shows that the ethnic composition of Canada has changed over the least two decades and will continue to change in the next decade -The growing number of ethnic groups or visible minorities represents both a challenge and a marketing opportunity Social Trends -Social trends shape consumer values in Canada, the United States and around the world -Social trends tend to change over time and in their popularity and importance Greener Consumers -Green marketing – involves a strategic effort by firms to supply customers with environmentally friendly merchandise Marketing to Children -Children are highly impressionable -Advertisers must market food in reasonably proportioned sizes Privacy Concerns -More and more consumers worldwide sense a loss of privacy The Time-Poor Society -Both parents work and kids are busy so it is hard to reach them -Consumers today have hundreds of ways to watch TV shows and it is hard to market to them because they can watch them online, or PVR them and skip commercials -Many customers attempt to cope with their lack of leisure time by multi-tasking and don’t pay attention to the commercials and advertisements -Marketers are thus faced with the challenge of finding more creative ways to get their marketing messages out to consumers under these ever-changing media consumption trends Technological Advances -Technological advances – technological changes that have contributed to the improvement of the value of both products and services in the past few decades -On the retail side, firms are able to track an item from the moment it is manufactured, through the distribution system, to the retail store, and to the hands of the final customer through an RFID chip -Different technology adoption levels also matter to marketers when communicating a new product or using a new media type -As well as posing a serious threat to marketers, the mixture of social media and traditional media is also an opportunity for marketers to demonstrate their customer care efforts and gain free publicity Economic Situation -Economic situation – economic changes that affect the way consumers buy merchandise and spend money -Inflation – refers to the persistent increase in the prices of goods and services
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
-Foreign currency fluctuations – changes in the value of a country’s currency relative to the currency of another country; can influence consumer spending -Interest rates – represent the cost of borrowing money -Recession – a period of economic downturn when the economic growth of the country is negative for at least a couple of consecutive quarters Political/Legal Environment -Political/legal environment – comprises political parties, government organizations, and legislation and laws that promote or inhibit trade and marketing activities -Organizations must fully understand and comply with and legislation regarding fair competition, consumer protection, or industry-specific regulation -Legislation has been enacted to protect consumers in a variety of ways -No false or misleading advertising is allowed, manufacturers are required to identify and remove any harmful or hazardous material, and organizations must adhere to fair and reasonable business practices when they communicate with consumers -The government enacts laws focused on specific industries and on consumers -Certain laws create an opportunity for marketers -Regulation tends to increase the cost of compliance and compliance usually requires more paperwork, time, effort, money and may cause delays when government approval is needed
Chapter 3 – Analyzing the Marketing Environment
Week 2
A Marketing Environment Analysis Framework -Marketers who understand and manage the changes in their marketing environments are able to adapt their product and service offerings to meet new challenges and opportunities -Sometimes firms can even anticipate trends Microenvironmental Factors Company Capabilities -The first factor that affects the consumer is the firm itself -Marketers can use an analysis of the external environment, like the SWOT analysis to categorize an opportunity as either attractive or unattractive and, if it appears attractive, to assess it relative to the firm’s existing competencies Competition -Greater competition means more choices for consumers which influences their buying decisions -Competitive intelligence (CI) – used by firms to collect and synthesize information about their position with respect to their rivals; enables companies to anticipate changes in the marketplace rather than merely react to them -CI enables companies to anticipate changes in the marketplace rather than merely react to them -The strategies to father CI can range from simply sending a retail employee to a competitive store to check merchandise, prices, and foot traffic to more involved methods such as, -Reviewing public materials, including websites, press releases, industry journals, annual reports, etc. -Interviewing customers, suppliers, partners or former employees -Analyzing a rival’s marketing tactics, distribution practices, pricing, and hiring needs -Although CI is widely regarded as a necessary function in today’s world, certain methods of obtaining information have come under ethical and legal scrutiny Corporate Partners -Few firms operate in isolation – Ex. Car company relies on a sheet metal, tire manufacturer companies -Parties that work with the focal firm are its corporate partners Macroenvironmental Factors -Macroenvironmental factors – aspects of the external environment – culture, demographics, social trends, technological advances, economic situation, and political/legal environment (CDSTEP) – that affect companies Culture Culture -The shared meanings, beliefs, morals, values, and customs of a group of people -Our various cultures influence what, why, how, where, and when to buy Country Culture -Country culture – the easy-to-spot visible nuances that are particular to a country, such as dress symbols, ceremonies, language, colours, and food preferences, and more subtle aspects, which are trickier to identify Regional Subcultures -The region in which people live in a particular country affects the way they react to different cultural
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
rituals or even how they prefer a particular product category -Ex. A resident of Quebec is 25% less likely to buy a hot prepared or reheatable meal than a resident of Ontario Demographics -Demographics – characteristics of human populations and segments, especially those used to identify consumer markets, such as age, gender, income, race, ethnicity, and education Generational Cohorts -Generational cohort – a group of people of the same generation – typically have similar purchase behaviours because they have shared experiences and are in the same stage of life -Tweens – generational cohort of people who are not quite teenagers but are not young children either (Ages 9 to 12); they’re in between -Tweens spend their money mostly on food and drinks, electronics, and clothing -Tweens learn about new products from TV shows and friends -Generation Y – generational cohort of people between the ages of 13 and 32; the biggest cohort since the original postwar baby boom -More skeptical about what they hear in the media, which makes marketing to the group more challenging -Generation X – generational cohort of people between the ages of 36 and 47 -Possess considerable spending power because they tend to wait to get married and buy houses later in life -Baby boomers – generational cohort of people born after World War II; are between the ages of 48 and 66 -Quest for youth, in both attitude and appearance provides a massive market for anti-aging products, cosmetics, pharmaceuticals, and biotechnology -Seniors – North America’s fastest growing generational cohort; people aged 65 and older -Older people are not saving anymore and they see to be buying goods and services at the same pace as younger generations -They spend their money on travel, second homes, luxury cars, electronic equipment, investments, home furnishings, and clothing -Seniors tend to like “made in Canada” items and recognizable brand names,, value, quality, and classic styles Income -The mediam income of Canadian families in 2008 was approximately $63 900 -Canadians may be classified into distinct groups based on their income and other factors such as background, education, and occupation: upper class, middle class, working class and under class -Upper class consumers are more affluent, and their spending patterns are not influenced by economic conditions -Income > $70 000 -Middle class earn between $30 000 - $70 000 with the majority tending toward the higher end of the scale -They tend to be careful about their spending and are often value-conscious -Working class earn between $20 000-$30 000 barely sufficient income to cover their basic needs -Under class earn less than $20 000 and often rely on assistance to cover their basic needs Education -Higher levels of education lead to better jobs and higher incomes -For some products, marketers can combine education level with other data such as occupation and
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
income to obtain pretty accurate predictions of purchase behaviour Gender -The shift in attitude and behaviour towards the different sexes affects the way many firms design and promote their products and services Ethnicity -Statistics Canada data shows that the ethnic composition of Canada has changed over the least two decades and will continue to change in the next decade -The growing number of ethnic groups or visible minorities represents both a challenge and a marketing opportunity Social Trends -Social trends shape consumer values in Canada, the United States and around the world -Social trends tend to change over time and in their popularity and importance Greener Consumers -Green marketing – involves a strategic effort by firms to supply customers with environmentally friendly merchandise Marketing to Children -Children are highly impressionable -Advertisers must market food in reasonably proportioned sizes Privacy Concerns -More and more consumers worldwide sense a loss of privacy The Time-Poor Society -Both parents work and kids are busy so it is hard to reach them -Consumers today have hundreds of ways to watch TV shows and it is hard to market to them because they can watch them online, or PVR them and skip commercials -Many customers attempt to cope with their lack of leisure time by multi-tasking and don’t pay attention to the commercials and advertisements -Marketers are thus faced with the challenge of finding more creative ways to get their marketing messages out to consumers under these ever-changing media consumption trends Technological Advances -Technological advances – technological changes that have contributed to the improvement of the value of both products and services in the past few decades -On the retail side, firms are able to track an item from the moment it is manufactured, through the distribution system, to the retail store, and to the hands of the final customer through an RFID chip -Different technology adoption levels also matter to marketers when communicating a new product or using a new media type -As well as posing a serious threat to marketers, the mixture of social media and traditional media is also an opportunity for marketers to demonstrate their customer care efforts and gain free publicity Economic Situation -Economic situation – economic changes that affect the way consumers buy merchandise and spend money -Inflation – refers to the persistent increase in the prices of goods and services
BU352
Chapter 3 – Analyzing the Marketing Environment
Week 2
-Foreign currency fluctuations – changes in the value of a country’s currency relative to the currency of another country; can influence consumer spending -Interest rates – represent the cost of borrowing money -Recession – a period of economic downturn when the economic growth of the country is negative for at least a couple of consecutive quarters Political/Legal Environment -Political/legal environment – comprises political parties, government organizations, and legislation and laws that promote or inhibit trade and marketing activities -Organizations must fully understand and comply with and legislation regarding fair competition, consumer protection, or industry-specific regulation -Legislation has been enacted to protect consumers in a variety of ways -No false or misleading advertising is allowed, manufacturers are required to identify and remove any harmful or hazardous material, and organizations must adhere to fair and reasonable business practices when they communicate with consumers -The government enacts laws focused on specific industries and on consumers -Certain laws create an opportunity for marketers -Regulation tends to increase the cost of compliance and compliance usually requires more paperwork, time, effort, money and may cause delays when government approval is needed
