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Chapter 2

The Global Marketing Environment

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MIrwin/McGraw-Hill
cGraw-Hill/Irwin Copyright © 2001
Copyright by The
© 2004 McGraw-Hill
by The McGraw-Hill Companies, Inc.
Companies, Inc. All All rights
rights reserved.
reserved.
 After Studying This Chapter
You Should Be Able To:
 Understand the nature of the marketing environment and
why it is important to marketers.

 Describe the major components of the social environment

and how trends in the social environment affect marketing.

 Understand how the economic environment affects

marketing.

 See how the political/legal environment affects marketing.

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 After Studying This Chapter
You Should Be Able To:
 Appreciate the importance of the
technological environment to marketers.

 Understand differences in the competitive

environment.

 Know how changes in the institutional

environment affect marketers.
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 The Marketing Environment

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 Creation of Market Opportunities & Threats

 The Marketing
Environment Creates
Opportunities or Threats
in 2 Ways:
1. Changes affect specific
markets.
2. Changes affect specific
marketing activities.

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 Identifying Market Opportunities and Threats

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 The Social Environment

 The Social Environment:

 All factors and trends related to groups of
people including:
 Their number
 Characteristics
 Behavior
 Growth Projections

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 The Demographic Environment

 The Demographic
Environment:
 Refers to the size, distribution,
and growth rate of groups of
people with different
characteristics.

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 The Demographic Environment

Global Population Size and Growth:

 The world population is now more than six billion.

 Approximately 95 percent of that growth took place in

developing countries in Asia, Africa, and Latin
America.

 China currently has the largest population, followed

by India, with the United States a distant third.

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 The Demographic Environment

Global Demographic
Characteristics & Trends: U.S. Population Shifts
 The larges cities and the
highest city growth Urban: Rural:
rates are in developing
countries such as 1900: 39.6% 60.4%
Mexico, Brazil, and
India. 1990: 75.2% 24.8%

 Urban population is
growing in many
developed countries.

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 The World’s Largest Cities
City 1995 2015 (est.)
(in thousands) (in thousands)
1. Tokyo, Japan 26,959 28,887
2. Mexico City, Mexico 16,562 19,190
3. Sao Paulo, Brazil 16,533 20,320
4. New York, USA 16,332 17,602
5. Mumbai, India 15,138 26,218
6. Shanghai, China 13,584 17,969
7. Los Angeles, USA 12,410 14,217
8. Calcutta, India 11,923 17,305
9. Buenos Aires, Argentina 11,802 13,856
10. Seoul, South Korea 11,609 12,980

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 Median Ages In Selected Countries
Country 1990 2010

Italy 36.2 42.4

Japan 37.2 42.2
Britain 35.7 40.0
U.S. 32.9 37.4
Korea (North & South) 25.7 34.4
China 25.4 33.9
Brazil 22.9 29.2
Mexico 20.0 6.5
Nigeria 16.3 18.1

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 The Cultural Environment

 The cultural environment refers to factors and

trends related to how people live and behave
and what they buy.

 Cultural factors include:

 Values
 Ideas
 Attitudes
 Beliefs
 Activities of specific population subgroups

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 Issues in the Cultural Environment

 Cultural Diversity
 Changing Roles

 Emphasis on Health &

Fitness
 Desire for Convenience

 Consumerism

 Popular Culture

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 The Economic Environment

 The economic environment includes factors and trends

related to income levels and the production of goods
and services.

 Economic trends in different parts of the world can affect

marketing activities in other parts of the world.

 Market opportunities are a function of both economic

size and growth. The Gross Domestic Product (GDP)
represents the total size of a country’s economy
measured in the amount of goods and services
produced.
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 The Political/Legal Environment

 The political/legal environment

encompasses factors and trends related to
governmental activities, specific laws and
regulations that affect marketing practice.

 The political/legal environment is closely

tied to the social and economic
environments
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 Global Political Trends

 International political events greatly

affect marketing activities.

 The most significant global political

trend is the “war on terrorism.”

 A second important political trend is

movement toward free trade and
away from protectionism.

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 Global Political Trends

 Benefits to Free Trade:

 Countries with the freest trade had the highest
GDP growth from 1990 to 2000.

 Free trade in a global economy requires the

free movement of people, goods, and capital
across borders.

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 Legislation
 Organizations must
deal with laws at the
international, federal,
state, and local
levels.
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 U.S. laws directly
affecting marketing
typically fall into two
categories:
 Those promoting
competition among firms.
 Those protecting
consumers and society.
 Key U.S. Laws Promoting Competition

 Sherman Act (1890) - Prohibits monopolistic practices

 Clayton Act (1914) - Prohibits anticompetitive activities

 Federal Trade Commission Act (1914) - Establishes

regulatory agency to enforce laws against unfair
competition

 Robinson-Patman Act (1936) - Prohibits price

discrimination

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 Key U.S. Laws Promoting Competition

 Lanham Trademark Act (1946) - Protects

trademarks and brand names

 Magnusson-Moss Act (1975) - Regulates

warranties

 United States-Canada Trade Act (1988) - Allows

free trade between United States and Canada

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 Key U.S. Laws Protecting Consumers & Society

 Food, Drug, and Cosmetics Act (1938) - Regulates food,

drug, and cosmetic industries

 Fair Packaging and Labeling Act (1966) - Regulates

packaging and labeling

 Consumer Credit Protection Act (1960) - Requires full

disclosure of financial charges for loans

 Child Protection and Toy Safety Act (1969) - Prevents

marketing of dangerous products to children

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 Key U.S. Laws Protecting Consumers & Society

 Fair Credit Report Act (1970) - Regulates reporting and

use of credit information

 Fair Debt Collections Practice Act (1970) - Regulates

methods for collecting debts

 Child Protection Act (1990) - Regulates advertising on

children’s television programs

 Americans with Disabilities Act (1990) - Prohibits

discrimination against consumers with disabilities

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 Important U.S. Regulatory Agencies

 Federal Trade Commission (FTC) - Regulates

business practices

 Consumer Product Safety Commission (CPSC)

- Protects consumers from unsafe products

 Environmental Protection Agency (EPA) -

Protects environment

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 Important U.S. Regulatory Agencies

 Food & Drug Administration (FDA) - Regulates

food, drug, and cosmetic industries

 Interstate Commerce Commission (ICC) -

Regulates interstate transportation industry

 Federal Communications Commission (FCC) -

Regulates interstate communications industry

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 The Technological Environment

 Includes factors and trends related to

innovations that affect the development of
new products or the marketing process:
 New-product development

 How marketing activities are performed

 New technologies spawning new industries

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 The Competitive Environment

 All the organizations that attempt to

serve similar customers.

 Two types of major competitors:

 Brand Competitors
 Product Competitors

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 The Competitive Environment

 Brand Competitors:
 Provide the most direct competition, offering
the same types of products as competing
firms.

 Product Competitors:
 Offer different types of products to satisfy the
same general need.

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 The Institutional Environment

 The Institutional Environment:

 All the organizations involved in marketing products
and services.

 These include:
 Marketing Research Firms
 Advertising Agencies
 Wholesalers
 Retailers
 Suppliers
 Customers

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 The Future

 The only certainty about the

future is that it will be uncertain
and change will occur at an
increasing rate.

 It will also be more complex.

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