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SITUATION ANALYSIS
Marketing environment: the actors and forces outside marketing that affect marketing managements ability to build and maintain
successful relationships with target customers
Marketers must be environmental trend trackers and opportunity seekers
Microenvironment: actors close to the company that affect its ability to serve its customers the company, suppliers, marketing
intermediaries, customer markets, competitors and publics
Macroenvironment: larger societal forces that affect the microenvironment demographic, economic, natural, technological,
political and cultural forces
THE COMPANYS MICROENVIRONMENT
Marketing success depends on relationships with those other than customers
The Company
Marketing must work with other company groups (top management, finance, R&D, operations, accounting) that form the
internal environment these sectors have an impact on marketing plans/actions must think consumer
Suppliers
Important link in companys overall customer value delivery system must treat like partners
Provide resources needed to produce goods and services
Marketing managers must watch supply availability and costs can affect marketing and customer satisfaction
Marketing Intermediaries
Marketing intermediaries: firms that help the company to promote, sell and distribute its good to final buyers
Resellers: distribution channel firms that help the company find customers or make sales to them (eg wholesalers, retailers
who buy and resell merchandise; Costco, Winners, Future Shop)
Physical distribution firms: help company to stock and move goods from their points of origin to destinations
Marketing services agencies: marketing research firms, advertising agencies, media firms, marketing consulting firms; help
company target and promote its products to right markets
Financial intermediaries: banks, credit companies, insurance companies that help finance transactions or ensure against
risks associated with buying and selling goods
Company must partner effectively with these marketing intermediaries as they affect value delivery system
Competitors
Marketers must gain strategic advantage by positioning their offerings strongly against competitors offerings in the minds
of consumers not enough to fulfill needs of target consumers
Firms need to adapt suitable competitive marketing strategies based on their size and industry position
3 types of competition (BMW):
o Direct: similar products (Mercedes Benz)
o Indirect: not similar, but products that are easily substituted, i.e. fill need in a different way (Driver services)
o Marketplace: competing for buyers limited discretionary buying power (Cottage)
Anything that target consumer may spend their money on
Competitive Intelligence
Collect, analyze information about rivals
o Analyze their strengths and weaknesses
o Predict their new product launches
o Anticipate their marketing campaigns and responses to your market programs
o Look for indications of new trends
Seeking sustainable competitive advantage
o Should we compete?
o How should we compete?
Publics
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Public: any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives
Financial publics: influence companys ability to obtain funds; banks, stockholders
Media publics: carries news, features, editorial opinion; newspapers, magazines, radio/TV stations
Government publics: take government developments into account; consult lawyers on/of product/advertising truth
Citizen-action publics: consumer organizations, environmental groups, minority groups; consumer/citizen groups
Local publics: neighborhood residents, community organizations
General public: firm needs to be concerned with general publics attitude towards its products/activities; public image of
company affects its buying
Internal publics: workers, managers, volunteers, board of directors; large firms use newsletters/memos to inform and
motivate internal publics
Customers
Most important actors in companys microenvironment
Aim of entire value delivery system is to serve target customers and create strong relationships with them
Five types of customer markets:
o Consumer markets: individuals/households that buy goods/services for personal consumption; end users
o Business markets: goods/services are purchased for further processing or for production process
o Reseller markets: buy goods/services to resell at a profit; business to business, business to consumer
o Government markets: government agencies buy goods/services to produce public services or give to others who
need them
o International markets: buyers of all types in other countries (mentioned above)
THE COMPANYS MACROENVIRONMENT
Demographic Environment
Demography: the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics
Demography is important as people make up markets
Me generation resulted from one-child policy in China showered with attention and luxuries
Track changing age and family structures, geographic population shifts, educational characteristics, population diversity
Changing Age Structure of the Population
Most important demographic trend in Canada is the changing age structure of the population
Baby Boomers: the 9.8 million Canadians born during the baby boom following World War II and lasting till mid 1960s
Went through years of prosperity, free spending and little saving
Recent recession had a great effect on them, resulting in them spending more carefully and working longer
Wealthiest generation in Canadian history (controls half of Canadas wealth)
Generation X: the 7 million Canadians born between 1967 and 1976 in the birth dearth following baby boom
Seek success, less materialistic, prize experience, not acquisition
Family comes first (children and parents), career second
More skeptical bunch, prefer quality over quantity, less receptive to marketing pitches
Most educated generation to date
Spending more carefully due to debt and tight budgets, as well as saving for retirement
Millennials (Generation Y): the 10.4 million children of the Canadian Baby Boomers, born between 1977 and 2000
Consists of tweens, teens and young adults (largest group)
Possesses fluency and comfort with digital technology way of life
Prefer to seek out info and engage in two-way brand conversations
Marketers need to form more precise age-specific segments within each group
The Changing Canadian Household
Growing crowded nest syndrome
Fewer families have children
Average Canadian household shrank to 2.5 people
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Marketers need to consider distinctive needs and buying habits of non-traditional households
More dual-income families with more women in the workforce
Geographic Shifts in Population
More Canadians have been moving from rural to urban areas more commuting, higher incomes, greater variety of
goods/services
Interprovincial moves and income are related
Cities are surrounded by large suburban areas
SOHO (small office/home office) market resulting from migration to metropolitan and suburban areas from people
telecommuting (working at home/remote office)
People in different regions buy differently
A Better-Educated, More White-Collar, More Professional Population
More people have post-secondary certificates and university degrees
Rising number of educated people will increase the demand for quality products, books, magazines, travel, personal
computers and Internet services
Increasing Diversity
Sharp increase in visible minority population due to immigration
Important for marketers to recognize this and practise ethnic marketing
o Companies now feature people from different backgrounds in their ads, however, this is not enough
Communicate in consumers native language, ensuring that theyre not alienating sophisticated second-generation
individuals
Sexual orientation homosexuals tend to be more cosmopolitan and professional, high incomes (LGBT community)
Disability great need for tailored products/services, considerable spending power
Economic Environment
Economic environment: factors that affect consumer buying power and spending patterns
Marketers must pay close attention to major trends and consumer spending patterns
Industrial economies: constitute rich markets for many different kinds of goods
Subsistence economies: consume most of nations own agricultural and industrial output and offer few market opportunities
Developing economies: offer outstanding marketing opportunities for the right kinds of products
Changes in Income and Spending
North American consumers spend more due to income growth, boom in stock market, increase in house values
o Consumption frenzy, record/high debt
After the economic meltdown, over-consumers now have resorted to frugality and changed spending patterns buying less,
looking for greater value in things
Value marketing: marketers in all industries are looking for ways to offer todays more financially cautious buyers greater value
just the right combination of product quality and good service at a fair price
Income distribution: how income is distributed throughout population; in Canada, rich is getting richer, poor is getting poorer,
middle class is stagnating tiered market
Changing Consumer Spending Patterns
Food, housing, transportation use up most household income
Consumers at different income levels have different spending patterns
Engels laws: differences noted more than a century ago by Ernst Engel in how people shift their spending across food, housing,
transportation, health care, and other food and services categories as family income rises
As family income rises, % on food declines, % on housing remains constant (utilities such as gas, electricity, public services
decrease), others and savings increase
Changes in major economic variables have large impact on market place
Natural Environment
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Natural environment: natural resources that are needed as inputs by marketers or that are affected by marketing activities
Marketers should be aware of following trends in natural environment:
o Shortage of raw materials: air pollution, water shortages, renewable resources (forests, food), non-renewable
resources (oil, coal, minerals)
o Increased pollution: damage quality of natural environment; disposable of chemical nuclear wastes
o Increased government intervention: government efforts to promote a clean environment; however nations lack
funds and political accord to mount a worldwide environmental effort
Environmental sustainability: developing strategies and practices that create a world economy that the planet can support
indefinitely
Create environmentally friendly products, develop recyclable/biodegradable packaging, recycled materials, better pollution
controls, more energy-efficient operations
Technological Environment
Technological environment: forces that create new technologies, creating new product and market opportunities
Technological environment changes rapidly
Challenge is to make practical, affordable new products
Every new technology replaces an older technology
o Companies that do not keep up may find their products outdated miss new product/market opportunities
Research and development (R&D) develop new products adding marketing people to R&D teams to try to obtain a
stronger market orientation
Government bans unsafe products and sets safety standards
o Regulations result in higher research costs, and longer time to market for new products
Political and Social Environment
Political environment: laws, government agencies, and pressure groups that influence and limit various organizations and
individuals in a given society
Legislation Regulating Business
Public policy: set of laws and regulations that limit business for the good of society as a whole
Almost every marketing activity is subject to a wide range of laws and regulations
Legislation affecting business around the world has increased steadily over the years
o Competition, fair trade practices, environmental protection, product safety, truth in advertising, consumer privacy,
packing and labeling, pricing (Canada)
o Marketers must keep up with regulations are constantly changing
o Business legislation enacted for following reasons:
Protect companies from each other (neutralize competition) and prevent unfair competition
Protect consumers from unfair business practices
Protect interests of society against unrestrained business behaviour
New laws and enforcement will continue to increase as there is a diverse range of domestic/international government
agencies that regulate marketing activities marketers need to understand laws
Business is also governed by social codes and rules of professional ethics
Socially responsible firms actively seek out ways to protect the long-run interests of consumers and environment
o Internet marketing has created a new set of social and ethical issues online privacy issues
o Companies may know too much information about consumers and may take unfair advantage of them
Cause-related marketing companies link themselves to causes to exercise social responsibility and positive image
o Some companies are founded entirely on cause-related missions
Value-led business or caring capitalism mission is use business to make the world a better place
Primary form of corporate giving
But firms may use cause-related marketing as a strategy more than as giving 3
Cultural Environment
Cultural environment: institutions and other forces that affect societys basic values, perceptions, preferences and behaviours
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Cultural environment shapes peoples basic beliefs and values, which defines their relationships with others
Ethnicity, race, age, culture, sex, sexual orientation
Following cultural characteristics can affect marketing decision-making
o Persistence of cultural values peoples core beliefs have a high degree of persistence
Core beliefs and values are passed on from parents to children and reinforced by schools, churches,
business and government
Secondary beliefs and values are more open to change
Marketers have a better chance of changing secondary values than core
Shifts in secondary cultural values marketers ability to predict cultural shifts will allow them to spot new
opportunities/threats
Peoples views of themselves people vary in their emphasis on serving themselves; some seek personal pleasure,
others seek self-realization marketers can target products/services based on self-views
Peoples views of others economic downturn has promoted cocooning, or staying at home more and spending
less
Peoples views of organizations majority of people are willing to work for major organizations and expect them to
carry out societys work; however, there is a sharp decrease in confidence and loyalty toward business and political
organizations
Peoples views of society nationalists defend, reformers want to change, malcontents want to leave; peoples view
on society influences their consumption patterns and attitudes toward marketplace
Eg Canadians have great sense of national pride, buy things made in Canada Molson
Peoples view of nature long-term trend has been peoples growing mastery over nature through technology and
the belief that nature is bountiful, but recently, people have been realizing that nature is finite and fragile
sustainability, organic, natural
Peoples views of the universe religious beliefs of the origin of the universe; however Canadians have been
gradually moving away from religion
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Social and Cultural Trends
Culture
Greener consumers
Privacy concerns
Time Poor society when both parents are working
Ethnicity immigration patterns, beliefs, social habits
Country culture - Canadian culture (laid back, friendly)
Regional subcultures relate to different provinces; BC (more sustainable living, more active)
RESPONDING TO THE MARKETING ENVIRONMENT
Some firms take a REACTIVE stance
o View the marketing environment as uncontrollable which they must react and adapt
o Passively accept it and dont try to change it
o Analyze environmental forces and design strategies that will help company avoid threats and take advantage of
opportunities the environment provides
Some firms take a PROACTIVE stance
o Take aggressive actions to affect the publics and forces in their marketing environment
o Run advertorials (ads expressing editorial points of view) to shape public opinion
o Press lawsuits and file complaints with regulators to keep competitors in line
o Form contractual agreements to better control their distribution channels
o By taking action, firms can often overcome the seemingly uncontrollable environmental events
Class Example: Seventh Generation
Philosophy Behind Business
Want to provide green products to society
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Create a more sustainable supply chain
Fulfilling their share of corporate responsibility
Products the Company Offers
Various cleaning and household items
o Household cleaners, laundry, baby care, dishwashing, recycled paper &household supplies (bathroom tissue, paper
towels, napkins, trash bags)
All promote environmentally friendly attributes
Companys Community Activities
7Gen Blog establishment of online community allows the firm to communicate directly with consumers, as well as
establish a more personal relationship that can satisfy the needs of the customers
7th Gen Nation customers can sign up to be a member of the firms exclusive online community offers coupons,
newsletters and other member privileges