Marketing – Chapter 3 – Analyzing the marketing environment
A marketing environment analysis framework
- Important to continuously monitor both internal and external environments
- Important to maximize market segmentation possibilities
- Businesses need to rethink how they offer products and services to consumers
- Need to key an eye on competitors
Company Capabilities
In the firm’s microenvironment, the first factor that affects the consumer is the firm itself.
Successful marketing firms focus their efforts on satisfying customer needs that match their core
competencies. The primary strength of Apple, for instance, originally rested in the design,
manufacture, distribution, and promotion of Macintosh computers. Then Apple successfully
leveraged its core competency in the digital audio player arena first with its iPod, and then the
iPhone, and iPad.
Competition
Competition also significantly affects consumers in the microenvironment. Greater competition
may mean more choices for consumers, which influences their buying decisions. It is critical that
marketers understand their firm’s competitors, including their strengths, weaknesses, and likely
reactions to the marketing activities their own firm undertakes.
Corporate partners
Few firms operate in isolation. For example, automobile manufacturers collaborate with
suppliers of sheet metal, tire manufacturers, component part makers, unions, transport
companies, and dealerships to produce and market their automobiles successfully. Even firms
such as Dell, which makes its own computers and sells them to customers, must purchase
components, consulting services, advertising, and transportation from others. Parties that work
with the focal firm are its corporate partners.
Culture
We broadly define culture as the shared meanings, beliefs, morals, values, and customs of a
group of people. Transmitted by words, literature, and institutions, culture is passed down from
generation to generation and learned over time.
Country culture
artifacts, behaviour, dress, symbols, physical settings, ceremonies, language differences, colours
and tastes, and food preferences—are easy to spot. But the subtle aspects of culture generally are
trickier to identify and navigate.
Regional Subcultures
The region in which people live in a particular country affects the way they react to different
cultural rituals, or even how they refer to a particular product category. A resident of Quebec is
less likely to buy a hot prepared meal or reheatable meal than a resident of Ontario. This
difference is attributed to the province’s rich food culture.
Demographics
indicate the characteristics of human populations and segments, especially those used to identify
consumer markets. Typical demographics such as age (which includes generational cohorts),
gender, income, race, and ethnicity are readily available from market research firms such as
Nielsen, Ipsos, Leger Marketing, and Statistics Canada.
Generational cohorts
has similar purchase behaviours because they have shared experiences and are in the same stage
of life. Applying age as a basis to identify consumers is quite useful to marketers, as long as it is
used in conjunction with other consumer characteristics.
Generation Z
Born after 1991, people in this group were born into a world that already was full of electronic
gadgets and digital technologies such as the Internet and social networks. These technologies are
being developed and adopted at an unprecedented rate.
Generation Y
also called Millennials or the “echo boom” generation, represent just over 4.6 million Canadians,
or about 13 percent of the population. Born between 1982 and 1991, this group ranges from
people in their very late 20s to their late 30s, many of whom have begun their own families.
Generation Y grew up in a more media-intensive and brand-conscious era than their parents.
Thus, they are more skeptical about what they hear in the media, which makes marketing to this
group even more challenging. If Gen Y members believe the sell is “too hard,” they won’t buy.
Regardless of where they live, they watch less TV than an average household, use the Internet at
work for personal reasons, and expect a healthy option at fast-food restaurants. Gen Yers are
Internet and technology savvy and love digital electronics such as cellphones and video games.
Generation X
includes people born between 1965 and 1981. This group represents more than 2.8 million
Canadians, or about 8 percent of the Canadian population. Unlike their baby boomer parents,
Gen X is the first generation of latchkey kids (those who grew up in homes in which both parents
worked), and 50 percent of them have divorced parents. Having grown up in times of economic
recession, they are more likely than previous generations to carry higher debt loads, travel the
world, and move far away from their parents. Gen Xers possess considerable spending power
because they tended to wait to get married and buy houses later in life. They’re much less
interested in shopping than their parents and are far more cynical, which tends to make them
astute consumers. They demand convenience and tend to be less likely to believe advertising
claims or what salespeople tell them. Marketing to Gen X is difficult, but word-of-mouth
advertising from people they know, and trust can give marketers the credibility needed to market
to this cohort.
Baby Boomers
who were born between 1946 and 1964. Once the largest cohort of Canadians, they now
represent 24 percent of the population. Although the baby boomer generation spans 18 years,
experts agree that its members share several traits that set them apart from those born before
World War II. They are individualistic, make leisure time a high priority, believe that they will
always be able to take care of themselves, and have an obsession with maintaining their youth.
The oldest baby boomers have passed age 65 and many have retired. The baby boomers’ quest
for youth, in both attitude and appearance, provides a massive market for anti-aging products,
cosmetics, pharmaceuticals, and biotechnology.
Income
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 (or low-income
earners), and underclass (at or below poverty). Upper-class consumers are very affluent, and
their spending patterns are not influenced by economic conditions. They have high discretionary
incomes and tend to purchase luxury items. The top 10 percent of Canadians have family income
more than $226,000. They are more likely to be highly educated and work in managerial and
executive roles. About 48 percent of Canadian households are in the upper class. Middle-
class families earn between $41,707 and $100,260 with the majority tending toward the higher
end of this scale. They can afford a good life most of the time. They tend to be careful about their
spending and are often value conscious. Approximately 38 percent of Canadian households fall
into the middle class. Working-class (or low-income) families represent 14.2 percent of the
population and earn between $17,267 and $41,707, barely sufficient income to cover their basic
needs.
Education
- Education is related to income which determines spending power
Gender
- Male/Female roles have been shifting Marketing has changed to reflect these shifts
Ethnicity
- Ethnic composition of Canada is changing
- 1/5 Canadians not born in Canada
- Ny 2030 population growth will be mainly attributed to immigration
Technological Advances
- Technology has impacted every aspect of marketing
o New products
o New forms of communication
o New retail channels
Artificial Intelligence
- AI solutions which rely on computer systems to perform task that require human
intelligence such as speech recognition decision making or translation
- Marketers that embrace AI primarily use it for:
o Advanced customer segmentation
o Media selection and buying
o Customer engagement
Robotics
- Applications typically perform work that previously was the responsibility of human
workers
Internet of Things
- IoT emerges when multiple “Smart Devices” with internet-connected sensors, such as
refrigerators, dishwashers, and coffee machines, combine the data they have collected to
help both consumers and companies consume more efficiently
Economic Situation
- Foreign currency fluctuations
- Combined with inflation and interest rates affects a firms ability to market goods and
services
Political/Legal Environment
- Competition act
- Consumer packaging and labelling act
- Food and drugs act
- Access to information act
- Patent act
- North American Free trade agreement NAFTA
Social and natural trends
- Shape consumer values
- These trends change over time
o Greener consumers
o Privacy concerns
Loss of privacy, Identity theft, do not call, do not e-mail
o Time-Poor society
In most families most parents work, consumers have many more choices
regarding leisure time, many consumers multitask
o Health and wellness concerns
In Canada, 61 percent of adults are categorized as obese or overweight
In the past 20 years, child. Obesity has doubled
CSPI has proposed guidelines for responsible food marketing to children,
which outlines a variety to changes to advertising directed at children
Entrepreneurial Marketing 3.1 – Turning trash into Cash
- Adidas – Innovative manufacturing techniques
- Launched a sneaker design using reclaimed trash from the ocean
- Sold 5 million pairs in 2018
Direct product
Two different companies that sell a relatively similar product
- McDonalds and Wendy’s
- Adidas and Nike
- Zara and H&M
Indirect product
Two different companies selling different products
- McDonalds and Pizza hut
- Wendy’s and Starbucks