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Chapter 2: The External Marketing Environment
Chapter 2 The external marketing environment
• Learning Objectives:• Explain the impact of the economy on marketing practices
• Explain the influence of competitive forces on strategies
• Discuss how social trends shape marketing strategies
• Explain how lifestyle trends &environmental concerns influence marketing strategies
• Explain the influence of technology on how marketing companies are shifting their focus
• Identify the role that laws, regulations and self regulation play in the practice of marketing
• www.the-cma.org: Canadian Marketing Association
• Office of consumer affairs: Industry Canada & competition act
Copyright © 2010 Pearson Education Canada 1
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
External Influences on Marketing
2
EconomyCompetition
Social / DemographicTechnology
Laws / Regulations
Marketing Plan
Customers
The environment is constantly changing therefore new marketing strategies must evolve. A business must anticipate change and react accordingly with its marketing strategies.
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Economic Influences
3
A variety of economic factors influence the state of the Canadian economy. In good times Marketing is aggressive & in bad times it’s conservative!!
GDPEmployment
InflationCanadian $
Interest Rates
The relationship between these influences is dynamic. A marketer must adjust marketing strategies accordingly. The U.S.A. is Canada's largest trading partner and when the $ is high(like now) our goods are less attractive to Americans so sales drop which affects many things!
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Competitive Influences
4
Monopoly
Oligopoly
MonopolisticCompetition
PureCompetition
One firm serves market: e.g. government controls milk production Parmalat : Saputo & Agropur plus the L.C.B.O
A few firms serve market such as bell, Telus and Rogers
Many firms with unique marketing mixes serve market e.g. fast food restaurants
Many firms with similar products; no differential advantage
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Competitor Classifications
5
DirectCompetition
Indirect Competition
Competition from alternate or substitute products: Coke, Pepsi, 7Up, Dr. Pepper or Sony, Kodak, Cannon, Olympus & Fuji all compete in the camera market
Competition from products offering similar benefits. Coke also competes with Gatorade, Dasani, Fruitopia and Red Bull and in retailing the likes of Shoppers, Jean Coutu, Zellers, Wall Mart and Sears competing for the pharmacy market share
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Competitive Position
6
The strength of a brand or company relative to its competitors is determined by market share. Market share is:
“the sales volume of a brand or company expressed as a percentage of total market sales volume.”
25% market share
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Competitive Position
7
Leader
Challenger
Follower
Nicher
Coca-Cola; Colgate: generally referred to as industry leaders**
Pepsi-Cola; Crest; an aggressive marketer that pursues growth
7Up; Aim or Arm & Hammer: content to follow the leaders on product and price
IBC Soda; Oral B Rembrandt: concentrates on all resources on one segment
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Demographic and Social Trends(pages39-47)
8
Demographics is the study of the characteristics of the population. Market planners analyze trends like the following categories: the challenge is to keep present older customers while trying to attract younger ones & ethnic
• Size and Age
• Location
• Family Formation
• Spending Power and Wealth
• Education
• Multiculturalism
• Lifestyles and Environmental Influences
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Canada’s Ethnic Population
9
Market 2006
Toronto 42.9%
Vancouver 41.7%
Calgary 22.2%
Edmonton 17.1%
Montreal 16.5%
Ottawa 16.0%
Winnipeg 15.0%
Halifax 7.5%
Regina 6.6%
St. John’s 1.9%
Figures represent the ethnic percentage of each markets total population.
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Technological Influences
10
Many experts believe technology is the single biggest force that will shape and reshape the marketplace. New products, new packaging and the emergence of electronic commerce and communications has changed the landscape. Internet shopping dominates the market
Database Management and CRM programs
Interactive Communications online and on cell phones like blackberry’s are very common as is social media networks like face book & my space
Growth of E-Marketing and E-Commerce: car manufacturers now allocate 20% of their marketing budget to online communications
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
E-Commerce in Canada
11
E-Commerce sales only represent a small fraction of the overall economy but the future is bright.
• 9.2 million Canadian adults window shop online and 6 of 10 window shoppers make an online or offline purchase.
• Online purchases by consumers (B2C E-commerce) amounted to $13.8 billion in 2007.
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Legal and Regulatory Influences
12
Industry Canada and the Competition Act govern business practice in Canada. The objectives of the Actare:
1. To maintain and encourage competition
2. To ensure participation by small business
3. To provide consumers with choice and fair prices
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Self-Regulation
13
Many industries establish their own regulations that all members must follow.
The Canadian Marketing Association ha its own Code of Ethics and Standards of Practice.
Chapter 2: The External Marketing Environment
Copyright © 2010 Pearson Education Canada
Inputs for Satisfying Customers
14
When devising a marketing strategy a manager must consider external and internal influences.
External Environment
• Economy• Competition• Social /Demographics• Lifestyle• Environment• Laws / Regulations
InternalEnvironment
• Corporate Culture• Corporate Marketing Culture
• Marketing Mix• Resources Available
MarketingPlan
TargetMarket
Chapter 2: The External Marketing Environment
Some Stats and info• Over the last 3 years in Ontario over 40 communities have
experienced layoffs: Oshawa, Windsor & Smith Falls to name a few with losses of 130,00 jobs
• Ontario’s GDP has gone from 2nd highest to 7th!
• Price of oil has shot gas prices through the roof from .70cents a litre to $1.10 in some places: impact: gas guzzling trucks and SUVs are not hot any more: impact truck sales are down company’s cut back production and layoff’s are not far behind
• Wal-Mart & Costco are booming! Why?? Consumers are looking to see where they can get value for their dollar” sales are up 4% and 9% respectively( a true marketing success)
• www.marketingmag.com www.finacialpost.com
• Generation Y is forcing a change www.businessweek .com
Copyright © 2010 Pearson Education Canada 15