Marketing: An Introduction: COMM 223 DR. K. Buyukkurt

Marketing:
An Introduction
COMM 223
DR. K. Buyukkurt
4-1 Copyright © 2018 Pearson Canada Inc.

Part 2:
Understanding the Marketplace and Consumers
CHAPTER 4
Analyzing the
Marketing
Environment
4-2 Copyright © 2018 Pearson Canada Inc. 2

Chapter 4: Analyzing the Marketing Environment
Chapter
Describe the 4: Learning Objectives
environmental forces that
affect the company’s ability to serve its
customers.
1
Explain how changes in the demographic
and economic environments affect
2 marketing decisions.
Identify the major trends in the firm’s
3 natural and technological environments.
Explain the key changes in the political and
4 cultural environments.

“There are three kinds of companies:

1. those who make things happen (Proactive)
2. those who watch things happen (Passive,
some react following changes), and
3. those who wonder what’s happened.”
If you want to be in the first category, you need to
anticipate the environmental forces and
plan in advance (be proactive).
• Steve Jobs quoting Wayne Gretzky:
http://www.youtube.com/watch?v=LXqrOkyAIEw

Environmental Forces
• The Marketing
Environment
 Factors and outside
marketing that affect
marketing management’s
ability to build and
maintain successful
relationships with target
customers.

Environmental Forces
• Microenvironment:
Forces with direct impact to the company
Internal & external
• Macroenvironment:
External forces with direct impact across
industries
• These are the external factors that we
incorporate into our SWOT ANALYSIS.
• They create opportunities and threats for a
company.

Recall SWOT Analysis
Macro
Environment

“We have a very strong brand identity that is

very well differentiated in a positive way.”
This is a(n) ………….
• A) Strength
• B) Weakness
• C) Opportunity
• D) Threat

“The declining birth rate in Canada is a(n)

___________ for Toys R Us and toy
manufacturers.
• A) Strength
• B) Weakness
• C) Opportunity
• D) Threat

“More and more the consumers are shopping

online. This is a(n) _________ for traditional
retailers like Sears and The Bay.
• A) Strength
• B) Weakness
• C) Opportunity
• D) Threat

The Microenvironment

• Marketing Intermediaries
 Resellers (Channel members)
 Physical distribution firms
(Logistics related firms)
 Marketing service agencies

• Publics
 Financial publics
 Media publics
 Government publics
 Citizen-action publics
 Legal publics
 General public

The Macroenvironment

The Demographic Environment

• Demography:
Study of human populations in terms of size,

density, location, age, gender, race,
occupation, and other statistics
Demographic environment is important
because it involves people, and people make
up markets
Changing age demographics of the Canadian
population is both an opportunity and a threat
 http://www12.statcan.gc.ca/census-recensement/index-eng.cfm

• Demography:
ht
tp://www12.statcan.gc.ca/census-recensement/index-
eng.cfm
Some key statistics at Statistics Canada

web site:http
://www.statcan.gc.ca/daily-quotidien/170615/dq1706
15c-eng.htm?HPA=1&indid=4098-1&indgeo=0
 http://www12.statcan.gc.ca/census-recensement/inde
x-eng.cfm?PRCODE=01#keystats
Generations in Canada
THREE GENERATIONS
Maximum Minimum
Born between Age Age Population Size
Baby Boomers 1947 1966 70 51 9.8 million
Generation X 1967 1976 50 41 7.0 million
Generation Y 1977 2000 40 17 10.4 million
Generation Z 2001 2015 16 2 5.6 million

http://topics.time.com/baby-boomers/

Some famous
baby-boomers

Baby Boomers: Many of them Refuse to Age

Baby Boomers: Traveling to Exotic

Destinations

Many products are

targeted to Baby
boomers’ growing
health issues and
concerns:
Example: Low
cholesterol and low fat
egg beaters, vitamins,
supplements

Some Baby boomers are still investing

in retirement (pension) funds
https://www.youtube.com/watch?v=Q1cSryFEwzQ

Demographic Environment: GENERATION X

• Generation X includes people born between 1967 and
1976: 7 million (“MTV generation”)
• High parental divorce rates
• Maintain a cautious economic outlook
• Respond to socially responsible companies
• Less materialistic, skeptical, highly mobile
• Family comes first
• Becoming one of the primary target segments
GENERATION X
Quentin Tarantino,
Julia Roberts,
Brad Pitt,
Michele Obama

GENERATION X
• You Know You're a Gen-Xer If...
• You remember exactly where you were when you
heard Kurt Cobain was dead.
• You rocked at games like "Asteroids," "Pac-Man"
and "Joust.“
• Your family once owned an Apple II-C.
• Some of the most influential Web sites of today --
including YouTube, Amazon.com, and Google
-- sprang from the minds of yesterday's (

Generation Y - Millenials

GENERATION Y
• Also called millennials (or echo boomers) include
those born between 1977 and 2000: 10.4 million
• Children of the baby boomers
• Represent approximately 20 % of the population
• Comfortable with technology, “plugged-in
generation”.
• Technology is a way of life with them
• Joining work force in increasing numbers
• See Wall Street Journal for a collection of articles on
Generation Y:
• http://www.cbc.ca/news/politics/millennials-money-c
anada-generation-1.3462064
(How wealthy are they?)
Generation Z
• Born after 2000.
• 5.6 Million in Canada
• Kids, Tweens (11-12),
• Teens (13 – 16) + 17

Generation z
 Born after 2000

 Make up important kid,
tween, and teen markets
 5.6 million
 Fluent with digital
technology

• Forming brand relationships which will affect their
consumption behavior Generation
in the future.Z
• Fluency and comfort with digital technology.
• Blending on-line and off-line worlds to socialize and shop.
• Mostly they ask parents to buy products for them.
• Retailers are opening special stores for them (“Gap Kids”,
“Netflix Just for Kids”, etc.)
• Social media plays a critical role for those who are 13 & +
• They value “experiences”. You need to engage them
(colours, music, videos, variety, etc.)
• Many parents monitor the behavior of Gen Z kids. Beware
of the potential “wrath” of parents as a marketer.

Why do we observe similarities of consumer

behaviour within a generation?
• Those who belong to the same generation and live in the
same sociocultural and economic environment have
similar life experiences.
• This is especially true if the life experiences took place
during “formative years” (high school and university
years)
• They are of similar age, stage-of-life and possibly
somewhat similar life styles.

Caution: Generational Segmentation is

TOO BROAD
• Immigration and existing ethnic, racial, and
religious diversity in Canada creates
dissimilarities within generations.
• Generation is an “extremely broad” rather than
a “fine” segmentation variable. It needs to be
supplemented with other segmentation
variables that we will cover in Chapters 6 and 7.

Demographic Environment
• Canada: population is estimated to be

• 36, 591, 241 (Statistics Canada, April 2017)
• Changing age structure of Canadian Population:
Visit and play the dynamic graph:
• http://www12.statcan.gc.ca/census-recenseme
nt/2011/dp-pd/pyramid-pyramide/his/index-en
g.cfm
• What do you conclude?

Demographic Environment: Gender Differences

Example:

Demographic Environment: Gender Differences

Example

• As it is very apparent from the age

pyramid in the previous slide Canadian
population is aging.
• Life expectancy and average age are
increasing.
• This is one of the most important
demographic trends.


• Canadian family/households are
changing:
Growing market of “non-traditional”
households
Growing “crowded nest” syndrome
Fewer families have children
More dual-income families

• Better Educated, White-

Collar Population:
Increased demand for
higher quality
Increased understanding
of value
Creates demand in
different products

• Increasing Diversity:
 Large and growing visible
minority market
 Growth in recognized
disabilities
 Acceptance of LGBT and
gay
4-40
marriages
Copyright © 2018 Pearson Canada Inc.

• Geographic Shifts in Population
Growth rates across Canada are not uniform
Rural to urban migration continues
Buying habits differ by region
Growth in telecommuting market

The Economic Environment
• Nations vary greatly in

their levels and
distribution of income
Industrial economies
Developing economies
Subsistence economies

The Economic Environment

• Factors that affect spending
1. Changes in income
• Consumption frenzy, record personal debt
• Economic crisis leading to consumer frugality
• Value marketing is key to success
2. Changes in spending patterns
• Engel’s laws note that consumers at different income
levels have different spending patterns
3. Changes in consumer debt, interest rates,
employment, income distribution, economic
business cycles (recession, boom, etc.)

Natural Environment
• Natural resources are used
to produce goods
 Shortage of raw materials
 Increased pollution
 Increased government
intervention
• Increasing emphasis on creating
environmentally-sustainable and
eco friendly products

Technological Environment
• Increasing rate of innovation
 Emergence of new product markets and
opportunities
 Increasing rate of product obsolescence
 Shortening of product life cycles
 Emergence of social networks
 Increasing importance of digital networks for
information flow
 Increasing use of artificial intelligence and learning
algorithms for business.
 “Connected home”, “connected” people”
Political Environment
• Regulatory Trends - Evolving laws influence organizations
• Business related Government Legislation:
 Protects companies from each other
 Protects consumers from unfair business practices
 Protects the interests of society
• Increased emphasis on ethics and socially responsible
behaviour.

The Cultural Environment

• Society’s major cultural
views are expressed in
people’s views of:
Themselves
Others
Organizations
Society
Nature
The Universe

The Cultural Environment

Core beliefs and values
More persistent than secondary values.
Passed on from parents to children and are
reinforced by schools, churches, businesses,
and government
Secondary beliefs and values
More open to change
Include people’s views of themselves, others,
organizations, society, nature, and the
universe.
• Shifts in
“Cocooning in Secondary Cultural
the digital age”: Values
Enjoying home.
• People’s view of organizations, corporations,
government agencies: Sharp decrease in trust and
loyalty towards corporations, organizations,
government agencies, politicians, financial
institutions over the last decades.
• Increase in volunteerism and valuing those
who volunteer (especially among generation Y).
• Move away from formal to casual dress and
casual behaviour.
• Belief that nature is finite and vulnerable.
• Increasing love of nature, demand for organic and
eco friendly products.

Cause-Related Marketing
• Companies linking themselves with worthwhile
causes

How do companies deal with the changing macro

environment?
There seems to be three kinds of companies:
1. those who make things happen (Proactive:
Anticipate, get ready for the next “tide”)
2. those who watch things happen (Passive,
some react following changes), and
3. those who wonder what’s happened. (They do
not completely understand the effects of macro
factors).
If you want to be in the first category, you need to
anticipate the environmental forces and
plan in advance (be proactive).

Marketing: An Introduction: COMM 223 DR. K. Buyukkurt

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Marketing:

4-1 Copyright © 2018 Pearson Canada Inc.

4-2 Copyright © 2018 Pearson Canada Inc. 2

4-3 Copyright © 2018 Pearson Canada Inc.

“There are three kinds of companies:

4-4 Copyright © 2018 Pearson Canada Inc.

4-5 Copyright © 2018 Pearson Canada Inc.

4-6 Copyright © 2018 Pearson Canada Inc.

Recall SWOT Analysis

4-7 Copyright © 2018 Pearson Canada Inc.

“We have a very strong brand identity that is

4-8 Copyright © 2018 Pearson Canada Inc.

“The declining birth rate in Canada is a(n)

4-9 Copyright © 2018 Pearson Canada Inc.

“More and more the consumers are shopping

4-10 Copyright © 2018 Pearson Canada Inc.

4-11 Copyright © 2018 Pearson Canada Inc.

4-12 Copyright © 2018 Pearson Canada Inc.

4-13 Copyright © 2018 Pearson Canada Inc.

4-14 Copyright © 2018 Pearson Canada Inc.

The Demographic Environment

Study of human populations in terms of size,

The Demographic Environment

Some key statistics at Statistics Canada

4-17 Copyright © 2018 Pearson Canada Inc.

4-18 Copyright © 2018 Pearson Canada Inc.

4-19 Copyright © 2018 Pearson Canada Inc.

Baby Boomers: Many of them Refuse to Age

4-20 Copyright © 2018 Pearson Canada Inc.

Baby Boomers: Traveling to Exotic

4-21 Copyright © 2018 Pearson Canada Inc.

Many products are

4-22 Copyright © 2018 Pearson Canada Inc.

Some Baby boomers are still investing

4-23 Copyright © 2018 Pearson Canada Inc.

Demographic Environment: GENERATION X

4-25 Copyright © 2018 Pearson Canada Inc.

4-26 Copyright © 2018 Pearson Canada Inc.

4-27 Copyright © 2018 Pearson Canada Inc.

4-29 Copyright © 2018 Pearson Canada Inc.

The Demographic Environment

 Born after 2000

4-30 Copyright © 2018 Pearson Canada Inc.

4-31 Copyright © 2018 Pearson Canada Inc.

Why do we observe similarities of consumer

4-32 Copyright © 2018 Pearson Canada Inc.

Caution: Generational Segmentation is

4-33 Copyright © 2018 Pearson Canada Inc.

• Canada: population is estimated to be

4-34 Copyright © 2018 Pearson Canada Inc.

Demographic Environment: Gender Differences

4-35 Copyright © 2018 Pearson Canada Inc.

Demographic Environment: Gender Differences

4-36 Copyright © 2018 Pearson Canada Inc.

The Demographic Environment

• As it is very apparent from the age

4-37 Copyright © 2018 Pearson Canada Inc.

The Demographic Environment

4-38 Copyright © 2018 Pearson Canada Inc.

The Demographic Environment

• Better Educated, White-

4-39 Copyright © 2018 Pearson Canada Inc.

The Demographic Environment