CHAPTER 02

THE
MARKETING
ENVIRONME
NT

© 2021 McGraw-Hill Education Limited Prepared by: Maria Vincenten, Red River College
Learning Objectives
1. Explain the importance of an environmental
scan and how it is used to improve
marketing programs
2. Describe the elements of an environmental
scan and summarize the trends affecting
each area
3. Outline the current demographic and socio-
cultural influences that affect marketing
approaches

© 2021 McGraw-Hill Education Limited 2

Learning Objectives (continued)
4. Explain how changes in the economic
environment influence consumer purchase
behaviour
5. Discuss the technological developments
shaping current marketing practices
6. Describe the different forms of competition
and the regulatory forces that shape the
marketing industry
7. List the steps in an environment scan
© 2021 McGraw-Hill Education Limited 3
 Canada Post Capitalizes on
E-commerce Trend
• Focus on parcels and direct marketing due to:
– Canadians mailing 2.4B fewer pieces of mail
– Parcel delivery competition
– Volatile spending levels
– Growth of Internet
• Transformation focus:
– Parcel delivery
– Direct marketing

© 2021 McGraw-Hill Education Limited 4

The Marketing Environment
• Six
Environmental Demogra-
phic
forces Socio-
Regulatory
cultural

Marketing
Environment

Competitive Economic

Technolo-
gical

© 2021 McGraw-Hill Education Limited 5

The Marketing Environment (continued)

“Successful marketing programs

must reach out and address
changes and new opportunities in
the marketplace.”

© 2021 McGraw-Hill Education Limited 6

 Situation (SWOT) Analysis
• The essence involves taking stock of
organization’s marketing plans and the external
forces and trends affecting it.
– Strengths
– Weaknesses
– Opportunities
– Threats
• Translate the results from a SWOT into specific
marketing actions  identify critical factor

© 2021 McGraw-Hill Education Limited 7

 An Environmental Scan
• An environmental scan is the process of
continually acquiring information on events
occurring outside an organization to identify
external trends, that are opportunities or
threats to a business.
• Often the first step of developing a more
extensive SWOT
• Let’s look at the six environmental forces more
closely

© 2021 McGraw-Hill Education Limited 8

Demographic Forces
• Understanding ensures:
– marketing efforts are well placed, and
– opportunities are not overlooked
• Statistics Canada 2016 Census
– Aging population, diverse generations,
settling in large cities, and ethnically mixed

© 2021 McGraw-Hill Education Limited 9

Demographic Forces
– An Aging Population

Figure 2–1 Population aged 0 to 14 years and 65 years and older, 1998 to 2018
(estimates) and 2019 to 2038 (projections), Canada

• Significant
growth of the
population
over the age
of 65

© 2021 McGraw-Hill Education Limited 10

Demographic Forces
– An Aging Population (continued)

• Government agencies and marketers are

taking note of these demographic changes
and determining the needs of the aging
market.
– Health care industry
• Areas of specialization
• Home support services
• Personal care items

© 2021 McGraw-Hill Education Limited 11

Demographic Forces
– Diverse Generations

1) Baby
boomers
2) Generation X
3) Generation Y
(Millennials)
4) Generation Z

© 2021 McGraw-Hill Education Limited 12

Demographic Forces
– Big-City Growth

• From 2016 Census data

– Fastest growing G7 country at 1.4%
• July 2019
– Each province and territory grew
• Nunavut and Ontario leading the way
• except Newfoundland and Labrador and NWT
– Boosted by immigration
– Western Canada more rapidly

© 2021 McGraw-Hill Education Limited 13

Demographic Forces
– Ethnic Diversity

• Between 2018 and 2019, 83% of Canada’s

growth was due to the arrival of immigrants
and non-permanent residents
• Multicultural mix creates an interesting array
of opportunities for marketers
– marketing NewsFlash – Chinese Consumers in
Canada

“Canada prides itself on being a

multicultural country.”
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Demographic Forces
– World Markets

• Over 7.7 billion Five Largest Countries

(population in millions, as
people of 2019)
– Canada ranks China 1,431.3
India 1,360.1
number 39 United States 328.1
• Opportunities Indonesia 269.3
Brazil 214.6
for expansion to Source: World Population Review, “Country Population
2020” and “Continent Population 2020,” accessed January
foreign markets 2020 at http://worldpopulationreview.com/.

© 2021 McGraw-Hill Education Limited 15

Demographic Forces
– Changing Household Composition

• Dominant household structure is now one-

person household
– Driven by aging population, economic
independence, and increase in separation/divorce
rates
• Increase in:
– Couples without children
– Common-law relationships
– Same-sex couples
– Multi-generational families
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 Socio-cultural Forces
• Not easy to identify
• Tend to be gradual and sometimes subtle
• Refer to cultural values, ideas, and attitudes
– society’s morals and beliefs
• Marketers monitor changes to capitalize on
new opportunities
–Canadians are fair and inclusive, and value good
quality of life (education, health care, clean air and
water, work-life balance and availability of social
programs)
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Socio-Cultural Forces
- Media

• Device connectivity
– Widespread use of Internet on multiple
devices
– showrooming
• Social media
– No longer just for friends
• TV and video watching
– Over 27 hours per week
© 2021 McGraw-Hill Education Limited 18
Socio-Cultural Forces
- Media (continued)

© 2021 McGraw-Hill Education Limited 19

 Socio-Cultural Forces
- Food Consumption
• Increasingly concerned
about what they eat
– Rise in chronic diseases
– Clarity of definitions
– Switching from processed
– Focus on freshness
• Buying local
• Ethnic more mainstream
• Ready-to-eat fresh meals
© 2021 McGraw-Hill Education Limited 20
 Socio-Cultural Forces
- Attitude and Roles of Men and Women

• One of the most notable

has been in the attitudes
and roles of men and
women in the marketplace
• Some companies are
moving away from
traditional gender norms to
avoid gender stereotypes

© 2021 McGraw-Hill Education Limited 21

Socio-Cultural Forces
- Healthy Living
“There is an ever-increasing
consumer interest in maintaining and
improving health.”

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 Socio-Cultural Forces
- Ethical Consumption
• Canadians most likely to
recycle, buy used or
preowned goods, and use
their own bags when
shopping
– Retailers adopted “green”
aisles
• Willing to make decisions and
support companies that
adopt responsible and ethical
practices
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 Economic Forces
• Marketers need to recognize how the economy
affects the purchase behaviour of their target
markets
– Upswing increased spending
– Downswing causes delays and cancellations
• Canadians are cautious with their spending,
focusing on paying down debt

© 2021 McGraw-Hill Education Limited 24

Economic Forces
- Macroeconomic Forces

• State of a country’s economy as a whole

• Key economic indicators:
– Growth rate (GDP)
– Inflation rate
• Recession
– Unemployment rate
• Marketers may adjust programs to
maximize business results
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 Economic Forces
- Microeconomic Forces
• Directly refers to the supply and demand of goods and
services and how this is impacted by individual,
household, and company decisions to purchase

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 Technological Forces
• Some dramatic technological changes include:
– Artificial intelligence
– Automation
– Internet of Things (IoT)
– Wearables
• Seamlessly move from one device to another
• Consumers want consistent interactions with
brands
• Marketers need to understand online consumer
behaviour
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Technological Forces (continued)
• Each new wave of technology can replace
existing products, and companies need to be
aware of technological changes to ensure that
products do not become obsolete

“Marketers need to know how consumers

are integrating technology into their lives.”

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Canadians’ Use of Technology

• Internet access
• E-commerce
• Cloud-based services
• Privacy
• Music
• Online video
• Computers
• Smartphones
• Mobile payments
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 Competitive Forces
• Marketers must monitor the competitive
activity of products that compete head-to-head
with its brands
– Also the competitive nature of the industry

Direct
Competition
Indirect
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 Types of Competition
• Marketers need to have a clear understanding
of the competitive nature of the industry in
which they function

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 Regulatory Forces
• Regulations are put in place to:
– Protect consumers from unscrupulous business
practices,
– Set acceptable standards of practice, and
– Encourage fair competition
• Ethical business practices should be followed
to avoid consumer backlash and negative
publicity
• Review regulatory bodies and associations
specific to their industry and jurisdiction
© 2021 McGraw-Hill Education Limited 32
 Regulatory Forces
- Competition

• The Competition Bureau

- independent law-
enforcement agency
tasked to ensure that the
market in Canada is
competitive and
innovative
• Canadian Anti-Fraud
Centre (CAFC) – reduce
marketing fraud
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 Regulatory Forces
- Advertising
• Advertising Standards
Canada (ASC) - self-
regulatory non-
government association
run by advertising, media,
and marketing
professionals with the
purpose of setting and
regulating standards of
professional practice in the
advertising industry.
© 2021 McGraw-Hill Education Limited 34
Regulatory Forces
- Do Not Call List
• Canadian Radio-television and
Telecommunications Commission (CRTC)
– Do Not Call List (DNCL)
– Gives consumers the ability to elect to not
receive telemarketing calls by registering their
phone numbers.
• keeps these numbers in the DNCL for five years,
after which consumers must re-register.
• Telemarketers are required by law to subscribe to
the DNCL and to not call the numbers in its
database.
© 2021 McGraw-Hill Education Limited 35
Regulatory Forces
- Marketing & Mobile
• Canadian Marketing Association (CMA)
– Code of Ethics and Standards of Practice
• Canadian Wireless Telecommunications
Association (CWTA)
– Provides resources on communication
devices
• Mobile Marketing Association (MMA)
– Global standards and guidelines

© 2021 McGraw-Hill Education Limited 36

 Regulatory Forces
- Privacy
• Personal Information Protection and
Electronic Documents Act (PIPEDA) refers to
the private-sector collection of personal data.
• Privacy Act - government agencies limits
federal government departments and agencies
from collecting personal information unless it
relates directly to the task at hand and
discloses the purpose of this collection
– exemptions exist for legal and police

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 Regulatory Forces
- SPAM
• Canada’s anti-spam legislation (CASL) - protect
consumers and businesses from unwanted
commercial electronic messages (CEMs)
– including messages to e-mail
addresses, social networking
accounts, and text messages
sent to a cellphone.
– Spam refers to the dissemination
of unsolicited electronic
messages to recipients

© 2021 McGraw-Hill Education Limited 38

 Regulatory Forces
- Online behavioural advertising
• Online behavioural advertising
(OBA) - use of web-based
programs that track consumers’
online browsing activities in order
to serve online ads that
correspond to their browsing
interests
– The Digital Advertising Alliance of
Canada (DAAC) was formed to
ensure that consumers were aware
of OBA and could opt out of the
collection and use of OBA data on
their devices
© 2021 McGraw-Hill Education Limited 39
Steps in an
Environmental Scan
Brainstorm,
Determine the
evaluate, and
Collect the impact that this
implement
facts and fact/trend will
ideas to meet
identify trends have on the
business
business
objectives

• Gather data and • Set business • Brainstorm

information objectives • Evaluate and
• Conduct • Analyze the implement
competitive external trends to alternatives
reviews determine their
• Cluster impact
information into
facts and trends
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 Summary…just the facts (part 1)
1. An environmental scan is the process of continually
acquiring information on events occurring outside
an organization to identify external trends that are
opportunities or threats to a business.
2. Elements in an environmental scan include
demographic factors, socio-cultural factors,
economic factors, technological factors, competitive
factors, and regulatory factors.

© 2021 McGraw-Hill Education Limited 41

 Summary…just the facts (part 2)
3. Demographics is the statistical data about a population
according to characteristics such as gender, age,
ethnicity, income, education, and occupation. Socio-
cultural forces look at cultural values, ideas, and
attitudes, as well as society’s morals and beliefs.
4. Economic forces consider macro and micro
environmental factors. These forces reflect the state of
the overall economy as well as the ability of consumers
to spend.
5. Technological forces relate to scientific inventions and
innovations that may impact the running of a business
and influence consumer behaviour and interactions.
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 Summary…just the facts (part 3)
6. Competitive forces refer to direct and indirect
competitors as well as the competitive nature of the
market in which they function. Regulatory forces are
the restrictions placed on businesses, products, or
services by the government or industry associations.
7. Steps in a marketing environment scan involve (1)
collecting the facts and identifying trends, (2)
determining the impact that these facts/trends will
have on the business, and (3) brainstorming,
evaluating, and implementing ideas.

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