Chapter 3 Analyzing the Marketing Environment
Chapter 3 Analyzing the Marketing Environment A Marketing Environment Analysis Framework Consumer is the centre of all marketing efforts. Goal of value-based marketing is to offer greater value than competitors requiring that the marketers view the business from a customer’s perspective Successfully Leveraging Company Capabilities – must focus efforts on satisfying customer needs that match core competencies of the business; involves categorizing an opportunity, and if attractive assess whether it can be part of the company’s core competency. Building Relationships with Corporate Partners – must rely on other parties to supply/deliver components. Just-in-time Inventory Systems are designed to deliver less merchandise more frequently than traditional inventory systems in an effort to keep inventory costs down Microenvironmental Factors Aspects of the external environment that affect a company’s business such as: o Company Capabilities: the firm itself should focus their efforts on satisfying customer needs that match their core competencies. o Competition: marketers must understand their firm’s competitors, including their strengths, weaknesses, and likely reactions to the marketing activities their own firm undertakes. Competitive Intelligence – used to collect and synthesize information about their position with respect to their rivals; enables companies to anticipate market developments than simply react to them. Review public materials, interview customers, analyze rival’s marketing tactics o Corporate Partners: few firms operate in isolation; parties that work with the focal firm are its corporate partners. Macroenvironmental Factors Culture: the shared meanings, beliefs, morals, values, and customs of a group of people o Country Culture entails 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. o Regional Subcultures the region in which people live in a particular country affects the way they react to different cultural rituals or how they refer to a particular product category.
Demographics: refer to the countable characteristics of human populations and segments, especially those used to identify consumer markets such as age, gender, income, ethnicity and education. o Generational Cohorts – a group of people from the same generation who typically have similar purchase behaviours because they have shared experiences and are in the same stage of life. Seniors – North America’s fastest growing group, 65+. Spending has increased; like value, quality, and classic styles, loyal, and willing to spend, demand hassle-free shopping; prefer to buy few high quality items Baby Boomers – people born after WWII; are between the ages of 48 and 66; individualistic, prefer leisure time, have a feeling of economic security even though they spend carelessly (believe they can take care of themselves), obsession with maintaining youth and love to rock ‘n’ roll. Gen X – people between the ages of 36 and 47; 5mil/15% of Canadian population; more likely to be unemployed, carry high debt loads, more likely to live with their parents; high buying power, less interested in shopping, shopping savvy, risk averse, cynical about advertising, demand convenience. Gen Y – people between the ages of 13 and 32; 7mil/21% of pop.; skeptical about media, look for healthy options, internet and tech-savvy, strong emphasis on balancing work and life. Tweens – people who are not quite teenagers but are not young children either (ages 9 to 12); strong influence on family purchases, need quick engagement (do everything at a lightning speed) and sincerity; value conscious. o
Income – broad range creates marketing opportunities at both the high and low ends of the market Upper class – very affluent, spending patterns are not influenced by economic conditions, have high discretionary incomes and purchase luxury items, highly educated, work in managerial roles
Middle class – can afford a good life most of the time, careful about their spending, valueconscious Working class – or low-income families, barely sufficient income to cover basic needs Under class – often rely on assistance to cover their basic needs Education – higher levels of education lead to better jobs and higher incomes Gender – male/female roles have been blurred, shift in attitude and behaviour affects the way firms design and promote their products and services, should be more careful about gender neutrality in positioning products Ethnicity 1/5 Canadians are immigrants; large influxes of Chinese and South Asian presents both a challenge and opportunity; must know the culture, values and spending patterns of these consumers; spend more than Canadians on big-ticket items
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Social Trends: shape consumer values, change over time o Greener Consumers – (green marketing) involves a strategic effort by firms to supply customers with environmentally friendly merchandise; consumers respond positively to efforts encouraging green behaviour o Marketing to Children – CSPI proposed a guideline which outlines a variety of changes to advertising directed at children, highly impressionable o Privacy Concerns - with growing accessibility to information online, this has become an issue. o The Time Poor Society - most of the time is spent with or at work; many ways to spend leisure time; multitasking to achieve both takes away from full effects of marketing.
Technological Advances: technological advances have accelerated greatly during the past few decades, improving the value of both products and services, enabling us to track the travel process of a product into the hands of the customer.
Economic Situation – economic changes that affect the way consumers buy merchandise and spend money; depends on 3 factors: o Inflation – makes buyers less likely to spend. o Foreign currency fluctuation – if Canadian dollar is stronger, buyers are more likely to spend. o Interest Rates – high interest rates make buyers save and they are less likely to spend.
Political /Legal Environment comprises political parties, government organizations, and legislation and laws. Organizations must fully understand and comply with any legislation regarding fair competition, consumer protection, or industry-specific regulation; must promote a competitive market place, foster fair pricing practices for suppliers and consumers, and promote free trade agreements with foreign nations.
Demographics: refer to the countable characteristics of human populations and segments, especially those used to identify consumer markets such as age, gender, income, ethnicity and education. o Generational Cohorts – a group of people from the same generation who typically have similar purchase behaviours because they have shared experiences and are in the same stage of life. Seniors – North America’s fastest growing group, 65+. Spending has increased; like value, quality, and classic styles, loyal, and willing to spend, demand hassle-free shopping; prefer to buy few high quality items Baby Boomers – people born after WWII; are between the ages of 48 and 66; individualistic, prefer leisure time, have a feeling of economic security even though they spend carelessly (believe they can take care of themselves), obsession with maintaining youth and love to rock ‘n’ roll. Gen X – people between the ages of 36 and 47; 5mil/15% of Canadian population; more likely to be unemployed, carry high debt loads, more likely to live with their parents; high buying power, less interested in shopping, shopping savvy, risk averse, cynical about advertising, demand convenience. Gen Y – people between the ages of 13 and 32; 7mil/21% of pop.; skeptical about media, look for healthy options, internet and tech-savvy, strong emphasis on balancing work and life. Tweens – people who are not quite teenagers but are not young children either (ages 9 to 12); strong influence on family purchases, need quick engagement (do everything at a lightning speed) and sincerity; value conscious. o
Income – broad range creates marketing opportunities at both the high and low ends of the market Upper class – very affluent, spending patterns are not influenced by economic conditions, have high discretionary incomes and purchase luxury items, highly educated, work in managerial roles
Middle class – can afford a good life most of the time, careful about their spending, valueconscious Working class – or low-income families, barely sufficient income to cover basic needs Under class – often rely on assistance to cover their basic needs Education – higher levels of education lead to better jobs and higher incomes Gender – male/female roles have been blurred, shift in attitude and behaviour affects the way firms design and promote their products and services, should be more careful about gender neutrality in positioning products Ethnicity 1/5 Canadians are immigrants; large influxes of Chinese and South Asian presents both a challenge and opportunity; must know the culture, values and spending patterns of these consumers; spend more than Canadians on big-ticket items
o o o
Social Trends: shape consumer values, change over time o Greener Consumers – (green marketing) involves a strategic effort by firms to supply customers with environmentally friendly merchandise; consumers respond positively to efforts encouraging green behaviour o Marketing to Children – CSPI proposed a guideline which outlines a variety of changes to advertising directed at children, highly impressionable o Privacy Concerns - with growing accessibility to information online, this has become an issue. o The Time Poor Society - most of the time is spent with or at work; many ways to spend leisure time; multitasking to achieve both takes away from full effects of marketing.
Technological Advances: technological advances have accelerated greatly during the past few decades, improving the value of both products and services, enabling us to track the travel process of a product into the hands of the customer.
Economic Situation – economic changes that affect the way consumers buy merchandise and spend money; depends on 3 factors: o Inflation – makes buyers less likely to spend. o Foreign currency fluctuation – if Canadian dollar is stronger, buyers are more likely to spend. o Interest Rates – high interest rates make buyers save and they are less likely to spend.
Political /Legal Environment comprises political parties, government organizations, and legislation and laws. Organizations must fully understand and comply with any legislation regarding fair competition, consumer protection, or industry-specific regulation; must promote a competitive market place, foster fair pricing practices for suppliers and consumers, and promote free trade agreements with foreign nations.
