Chapter 2 The External Marketing Environment Copyright © 2013 Pearson Canada Inc.

Chapter 2The External Marketing Environment

Copyright © 2013 Pearson Canada Inc.

Copyright © 2013 Pearson Canada Inc. 1-2

Marketing Defined

“The activities, institutions, and processes for creating, communicating, and delivering,

offerings

that have value for customers, clients, partners, and society at large.”

The Marketing Mix

NEEDS

Product Price Promotion(Mktg Communications)

Place(Distribution)

Customer

Customer’s Needs

Organization’s Needs

TradeConsumer B2B Customer


The Marketing Process

Assess Customer Needs

Identify and Select a Target

Develop Marketing Strategy

Develop Customer Relationship Strategy

Evaluation and Control

Marketing Plan• Develop• Implement• Evaluate

The Marketing Process

Assess Customer

Needs

Identify and SelectTarget Market

Develop MarketingStrategy

ProductPrice

Mkt. Comm.Distribution

Test MarketingRoll-out (Full Scale)

Evaluation And

Control


Developing a Marketing Strategy: The Marketing Mix

Product

Price

MarketingCommunications

Distribution

MarketingMix

Consumeror

Business Customer


External Forces Influence Marketing Decisions

• Economic • Competitive• Social• Demographic• Technology• Legal and Regulatory

Marketing Plan

Customers

A business must anticipate change and react accordingly with its marketing strategies.

Analysis

Objective Setting

External Forces


Economic Forces

A variety of economic factors influence the state of the economy.

• GDP Growth• Canadian $• Interest Rates• Employment• Consumer

Spending• Imports and

Exports

The relationship between these influences is dynamic. A marketer must adjust marketing strategies accordingly.


Competitive Forces

Monopoly

Oligopoly

One firm serves market; government regulations protect consumers. (e.g. your local cable company).

The competitive environment an organization operates in must be considered:

A few large firms dominate the market; aggressive marketing and a follow-the-leader mindset among competitors. (e.g. mobile phone services).


Competitive Forces

Monopolistic Competition

PureCompetition

Many competitors with unique marketing strategies; intensity of marketing is based on position (Hyundai)https://www.youtube.com/watch?v=6v9yuBDmmAQ

All firms market a uniform product; no noticeable differentiation; market supply and demand dictates price. (e.g. dollar store items).

https://www.youtube.com/watch?v=6v9yuBDmmAQ




Competitor Strategies

DirectCompetition

Indirect Competition

Competition from alternative products or services: Coke, Pepsi, RC Cola, private label Cola

Competition from substitute products that offer customers the same benefit. Coke also competes with Gatorade, Dasani, Fruitopia and Red Bull.

Marketers must consider the strategies of direct and indirect competitors.


Competitive PositionThe strength of a brand or company relative to its competitors is determined by market share. Market Share is:

“the sales volume of a brand or company expressed as a percentage of total market sales volume.”

The Think Marketing box on p. 36 illustrates how Home Depot analyzes external forces.


Market Share

Market share can be based on unit sales volume or dollar sales volume. Example dollar calculation:

Market Share = Brand Dollar Sales / Market Dollar Sales x 100

Example: = $2,500,000 / $10,000,000 x 100

= 25%

Think - How much of the market do we control – for now?


Competitive Position

Leader

Challenger

Follower

Nicher

Largest in market share and leader in strategic actions: Coca-Cola; Tim Hortons, Subway.

A brand that is generally satisfied with its market share position: Dr. Pepper, Mr. Sub.

A brand or company that focuses all resources on one segment of market: Porter Airlines.

A brand striving to gain leadership via aggressive marketing actions: Pepsi-Cola challenges Coca-Cola.


Social ForcesMarketers must be aware of and react to social changes that are taking place. Three dominant social trends prevail:

1. Canadian families lead hectic lifestyles.

2. Canadians are expressing a strong concern for health and welfare.

3. There is a genuine concern for the natural environment.


Concern for Health: Applied

Becel was an innovator. From the day it was introduced to market it was positioned as a “good for you” product.


Concern for the Environment: Applied

Toyota leads the way in the automobile industry with its environmentally friendly vehicles.


Demographic Forces

Demographics: the study of the characteristics of the population.

• Size - # of people• Age• Gender• Education• Location• Family Formation and Household Size


Demographic Forces

• Spending Power and Wealth

• Education

• Multiculturalism

See Think Marketing Box on p.43 for details on Home Depot’s ethnic marketing programs.

Mercedes appeals to high income boomers.


Demographic Forces

Boom Bust Echo

Tweens

Pre- and early adolescents, age 8 to 14

Access to information and growing purchasing power

Emerging as “the richest generation” and the “most influential generation in history”

Generation Y

• Born between 1979 and 1994• Population of 7.4 million in Canada• Researchers have found Gen Yers

to be:– Impatient– Family-oriented– Inquisitive– Opinionated– Diverse– Time managers– “Street Smart”

• Word of mouth marketing is effective

Online

http://www.mountaindew.comhttp://www.northface.com

http://www.mountaindew.com/

http://www.northface.com/

Participation Mark (1%)

• Mountain Dew and The North Face are brands preferred by Generation Y.

• http://www.mountaindew.com• http://www.northface.com

• Visit each company’s Web site and identify the elements

that make the site appealing to Gen Yers.

• Do there seem to be any elements that might have crossover appeal for Generation X?

• Which ones?

http://www.mountaindew.com/

http://www.northface.com/

Generation X

• Born between 1965 and 1979

• Population of over 4.5 million in Canada

• Savvy and cynical consumers

• Time is at a premium, and outsourcing is utilized

• Entering their money-making years

Baby Boomers

• Born between 1946 and 1964• Population of 9 million + in Canada—the

largest demographic segment• Expect to remain in the workforce longer than

previous generations• Income will continue to grow

as they keep working

Parents are called “Traditionalists”

Four segments of the baby-boomer cohort:

1.Looking for balance. Very active and saving time is important. Opportunities for travel-related businesses and food-service businesses.

2.Confident and living well.Highest incomes of all segments and enjoy being the first to purchase a new product. Stylish and trendy. Opportunities for luxury goods and services.

3.At-ease boomers.Do not worry about future, job, or financial security. Home-centric and family-oriented. Opportunities for traditional household products. Brand names resonate strongly.

4.Overwhelmed boomers.Lowest income of all segments and worry about the future. Health is a big concern. Below average on accepting technology and on using electronic, digital, and tech products.


Canada’s Ethnic Population


Technological Forces

Many experts believe technology is the single biggest force that will shape and reshape the marketplace.

• Database Management and CRM programs

• Interactive Communications online and on smartphones

• Mobility is fastest growing MKTG sector

• Growth of E-Marketing and E-Commerce


E-Commerce in Canada


Legal and Regulatory Forces

Industry Canada and the Competition Act govern business practice in Canada. The objectives of the Act are:

1. To maintain and encourage competition.

2. To ensure that small- and medium-sized businesses have an equitable opportunity to participate in the Canadian economy.

3. To provide consumers with product choice and competitive prices.


Self-Regulation

Many industries establish their own regulations that all members must follow.

The Canadian Marketing Association has its own Code of Ethics and Standards of Practice.

Complete details about the CMA’s regulations are available at www.the-cma.org.

http://www.the-cma.org/


Visual Model

For Wednesday

• Participation mark 1%- hand in observations and answers to questions on slide 24.

• Handout course outlines• Handout Marketing Plan Project Assignment• Think about who you would like to work with

in your group for the MPP. (6 people to a group)

Chapter 2 The External Marketing Environment Copyright © 2013 Pearson Canada Inc.

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