BUSI

2204A (Fall 2018)

Basic Marketing
Nada Elnahla, PhD
 Chapter 2

The Marketing
Environment, Social
Responsibility, and Ethics

2
Copyright © 2019 by Nelson Education Ltd.
 Learning Outcomes
1. Discuss the external
environment of marketing,
and explain how it affects a
firm
2. Describe the competitive
factors that affect marketing
3. Describe the regulatory
factors that affect marketing

Copyright © 2019 by Nelson Education Ltd. 3

 Learning Outcomes
4. Describe the economic factors
that affect marketing
5. Describe the social factors
that affect marketing
6. Explain the importance to
marketing managers of
current demographic trends

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 Learning Outcomes
7. Describe the technological
factors that affect marketing
8. Discuss corporate social
responsibility
9. Describe the role of ethics
and ethical decisions in
business

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 Marketing Mix

Price

Target
Product Market Promo

Place

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 The External Marketing Environment

Changes in the external

environment cause
new consumers to
come and current
ones to go

Consumers

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 Understanding the External Environment
The CREST Model

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Can a business influence the
external environment?

9
 Competitive Environment
Forces of Competition

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 https://hbr.org/1979/03/how-competitive-forces-shape-strategy

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 Regulatory Factors

caution

risk
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 Regulatory Forces—Legislation

Federal Provincial and

Self-Regulation
Legislation Territorial Laws
Competition Act
Quebec’s Bill 101 ASA

Consumer Packaging
and Labelling Act
Alberta Liquor Law
CAB
Privacy Act versus LCBO

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 Regulatory Forces—Consumer Privacy
• PA
• PIPEDA
• Canada’s Anti-Spam Legislation, CASL
– Effective July 1, 2014
• Did the consumer consent to receiving message?
• Do you have a record of consent?
• Can they unsubscribe?
• Enforced by CRTC, the Competition Bureau and the Privacy Commissioner
• http://fightspam.gc.ca/eic/site/030.nsf/eng/00288.html

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 Economic Factors

Inflation

Consumer
Income/Purchasing Recession
Power

Consumer
Purchasing
Behaviour

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 Economic Factors—Consumer Incomes
• Median total family income = $78,870
• Education is the primary determinant of earning
potential
• Today 1/4 of all Canadians spend more than 30% of
income on shelter, far exceeding the affordable housing
standards
• As a result, many Canadians have turned to credit
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 Consumer Incomes—Debt

• For every $1.00

earned, Canadians
are $1.65 in debt

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 Economic Factors—Purchasing Power
• Income in comparison to cost of living
• Discretionary income
–High income relative to cost of living
–More money to spend

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 Economic Factors—Inflation
• Impacts consumer’s purchasing power if salary
increases don’t keep up with inflation
• Inflation pressures consumers to make more
economical purchases and still maintain their standard
of living
• Marketers must be very cognizant of inflation on
consumer’s ability to purchase

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 Economic Factors—Recession
• A period of economic activity characterized by negative
growth
• In a recession, consumers consider the price–value
relationship deliberately before making purchases
• The recession of 2008–2009 had less of an impact on
Canada than the rest of the G7 countries—yet impact was
felt and today high unemployment rates continue

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 Recession—Consumer Response
• To cope during a recession:
– consumers switch to store brands, which on average cost less than
manufacturers’ brands
– Increase use of couponing
– Group couponing sites

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 Economic Factors—Recession

• Geographically isolated:
– Decline in oil prices
– Alberta GDP ê6.5%
– Fort McMurray wildfires
• Environmental influence

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 Social Factors
• Tough to forecast, influence, or integrate into marketing
plans
• Influence other environmental forces

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Social Factors—Marketing Oriented Values

Values
Attitudes Lifestyles

Influence
Consumers

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 Social Factors—Marketing Values
Four values that Perception of Canadians
strongly influence by others
attitudes/lifestyle Results in
– self-sufficiency – trustworthy
– upward mobility – family-oriented
– work ethic – conservative
– fairness – eco-conscious

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 Social Factors—Component Lifestyles
• Component lifestyles:
–Today’s consumer lives a diverse and uniquely rich
lifestyle not defined by stereotypes, enhancing the
complexity of marketing to them!
• A banker can be a baker
• A teacher a rock climber

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 Social Factors—Family
• The role of the family hasn’t
changed but the makeup of
Canadian families has—
DIVERSITY
• Two key resources required for
families—time and money—
are in short supply
– Creating challenges for
families
– Opportunities for marketers
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 Demographic Factors
Race and
ethnicity

Age Location

Strongly
related to
behaviour

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Why does tailoring the marketing
program to an age group matter?

33
 Demographic Factors
Gen-Z—Snowflakes—Tweens
1995‒2009
• Attitudes
• Access to information
• Brand consciousness
• Technical
sophistication

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 Demographic Factors
Gen-Y—Millennials
• Struggling 1979‒2000
• Entrepreneurial
• Heightened social responsibility
• High expectations and
entitlement = work life balance

Networking and social media skills

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 Demographic Factors
Gen-Y—Millennials
• Impatient 1979‒2000
• Family oriented
• Inquisitive yet opinionated
• Diverse
• Good time managers
• Savvy and connected
• Life-balance seekers

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 Demographic Factors
Gen-X
• Time poor—service
1966‒1978
dependent
• Boomers working longer
impacts the careers of Gen-X
• Funding retirement of
boomers
• Tend to get forgotten

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 Demographic Factors
Baby Boomers
• Active, affluent 1947‒1965
• But some, having been hurt by
the recession, worry about
retirement, so they are working
longer
• Younger boomers financially
stretched as they support
children who are challenged to
establish careers
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 Demographic Factors—Population Shifts
• More than 50% of the Canadian population lives in four
major urban regions
• Most of Canada’s growth from immigration
• 90% of new immigrants live in a large metropolitan
market
• Movement to suburb or surrounding urban municipality

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 Demographic Factors—Ethnic and Cultural Diversity

• Multiculturalism
– More than 200 languages spoken
– Greatest evidence in large urban centres
– Impact on marketers is tremendous

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 Technological Factors

External
technology
is
important Make current
Operate more products
efficiently and obsolete and
build a better create
product disruptive
innovations

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 Corporate Social Responsibility

Care for
people

Care for the

Cost of Doing Business Today planet
Profitability

Triple
Bottom
Line

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 Corporate Social Responsibility

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Corporate Social Responsibility—Green Marketing

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 Ethical Behaviour in Business
• Ethics—standard of behaviour by which conduct is
judged
–laws are the values and standards enforced by courts
–ethics are the moral principles and values
• Morals—rules developed as a result of cultural norms
and values

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 Ethical Behaviour in Business
Morality and Business Ethics

Ethical Development
Preconventional
morality
Conventional
morality
Postconventional
morality

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 Ethical Behaviour in Business
Factors Influencing Ethical Decision Making
Extent of ethical problems within the organization
Top-management actions on ethics
Potential magnitude of the consequences
Social consensus
Probability of harmful outcome
Length of time between decision and onset of consequences
Number of people affected

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 Class Discussion
• Baby boomers in Canada are aging. Describe how this might
affect the marketing mix for the following:
– cellphones
– McDonald’s

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