Chapter 3: Analyzing the Marketing Environment
A Marketing Environment Analysis Framework
Marketers who understand and manage the changes in their marketing environments are able to adapt their
product and service offerings to meet new challenges and opportunities
o I.e. Canadian Tire introduced new store formats based on its understanding of the marketplace
Many marketers get new ideas for products or services by monitoring the environment
Analyzing the marketing environment also helps marketers assess their strengths and the value of their products,
and any weaknesses resulting from changes in the environment
Companies analyze their marketing environment using a framework (see pg. 79)
o At the heart of the framework is the consumer
o The consumer may be influenced by the firm’s microenvironment, including immediate actions of the
focal company, the company’s competition, and the corporate partners that work with the firm to make
and supply products
o The firm (and consumers indirectly) is influenced by the macro-environment, which includes influences
such as culture and demographics, social, technological, etc.
One of the goals of value- based marketing is to provide greater value to consumers than competitors offer
o Requires that the marketing firm looks at the entire business process from a consumer’s point of view
Consumers’ needs and wants, and their ability to purchase, are affected by factors that change and evolve over
time
o Firms must keep track of their competitors’ activities and communicate with their corporate partners
o They monitor their macro-environment to determine how factors influence consumers and how they
should respond to them
Micro-Environmental Factors
Factors affecting consumers’ micro-environment: the company, its competition, and its corporate partners
Company Capabilities
In the firm’s micro-environment, the first factor that affects the consumer is the firm itself
Successful marketing firms focus their efforts on satisfying consumer needs that match their core competencies
o I.e. the primary strength for Apple used to be the design, manufacture, distribution, promotion of Macs
It then recognized a trend among consumers for sleek but functional portable devices—its core
competency is now in the digital audio player arena with its iPod, iPhone, and iPad
Competition
Significantly affects consumers in the micro-environment
Greater competition may mean more choices for consumers, which influences their buying decisions
It is critical that marketers understand their firm’s competitors, including their strengths and weaknesses and
likely reactions to their firm’s marketing activities
Firms use competitive intelligence to collect and synthesize information about their position with respect to their
rivals
o CI enables companies to anticipate changes in the marketplace rather than merely react to them
o Can include interviewing customers, suppliers, partners, or former employees
Corporate Partners
Few firms operate in isolation
o I.e. automobile manufacturers collaborate with suppliers of sheet metal, tire manufacturers, component
part makers, dealerships, etc.
Can work with partners to innovate
Macro-Environmental Factors
Marketers must also understand the macro-environmental factors that operate in the external environment
Culture
Culture is broadly defined as the shared meanings, beliefs, values, morals, and customs of a group of people
Passed down from generation to generation and learned over time
Challenge for marketers is to have products or services identifiable by and relevant to a particular group of people
, Our various cultures influence what, why, how, where, and when we buy
Marketers must take into account the culture of the country and the region within a country
Country culture is easy-to-spot, visible nuances that are particular to a country, such as a dress, symbols,
ceremonies, language, colours, and food preferences
Regional subcultures are the region in which people live in a particular country
o Affects the way they react to different cultural rituals, or even how they refer to a particular product
category
o I.e. a resident of Quebec is 25% less likely to buy a hot prepared meal than a resident of Ontario
Attributed to Quebec women’s desire to cook
o Quebec consumers are less price sensitive when grocery shopping
Demographics
Demographics indicate the characteristics of human populations and segments, especially those used to identify
consumer markets
o I.e. age, gender, income, race, ethnicity…
o Provides an easily understood snapshot of the typical consumer in a specific target market
Networks can use demographic information to set their advertising fees, whereas advertisers can use it to choose
the best shows on which to advertise
Generational cohorts are a group of people of the same generation who typically have similar purchase
behaviours because they have shared experiences and are in the same stage of life
Tweens
People who are not quite teenagers but are not young children either (age 9-12)
The importance of tweens to marketers stems from their immense buying power
Influence family purchases
Massive market for cell phone features among tweens
o Web surfing, photo capabilities, texting
Spend their money mostly on food and drinks, electronics, and clothing
Learn about new products from TV shows and friends
Not easy to market to
Generation Y
Also called the millennials
Generation of people born between 1972 and 1992
Varies the most in age—people in their 20s, some in their 40s
Skeptical about what they hear in the media- marketing to this group is challenging
Expect a healthy option at fast food restaurants
Internet and technology savvy
Will be starting families soon—targeted in household items
Generation X
People born between 1966 and 1971
The first generation of latchkey kids (those who grew up in homes in which both parents worked)
More likely to be unemployed, carry higher debt loads, travel the world, and move far away from their
parents
Possess considerable spending power because they tend to wait to get married and buy houses later in life
Much less interested in shopping than their parents, and are far more cynical
Demand convenience
Less likely to believe advertising claims or what salespeople tell them
Hard to market to them, but word-of-mouth advertising from people they know and trust can give
marketers the credibility needed
Much less interested in status products than older generations
Baby Boomers
After WWII, the birth rate in Canada rose sharply, resulting in a group known as the baby boomers
Born between 1946 and 1965
Largest cohort of the population
A Marketing Environment Analysis Framework
Marketers who understand and manage the changes in their marketing environments are able to adapt their
product and service offerings to meet new challenges and opportunities
o I.e. Canadian Tire introduced new store formats based on its understanding of the marketplace
Many marketers get new ideas for products or services by monitoring the environment
Analyzing the marketing environment also helps marketers assess their strengths and the value of their products,
and any weaknesses resulting from changes in the environment
Companies analyze their marketing environment using a framework (see pg. 79)
o At the heart of the framework is the consumer
o The consumer may be influenced by the firm’s microenvironment, including immediate actions of the
focal company, the company’s competition, and the corporate partners that work with the firm to make
and supply products
o The firm (and consumers indirectly) is influenced by the macro-environment, which includes influences
such as culture and demographics, social, technological, etc.
One of the goals of value- based marketing is to provide greater value to consumers than competitors offer
o Requires that the marketing firm looks at the entire business process from a consumer’s point of view
Consumers’ needs and wants, and their ability to purchase, are affected by factors that change and evolve over
time
o Firms must keep track of their competitors’ activities and communicate with their corporate partners
o They monitor their macro-environment to determine how factors influence consumers and how they
should respond to them
Micro-Environmental Factors
Factors affecting consumers’ micro-environment: the company, its competition, and its corporate partners
Company Capabilities
In the firm’s micro-environment, the first factor that affects the consumer is the firm itself
Successful marketing firms focus their efforts on satisfying consumer needs that match their core competencies
o I.e. the primary strength for Apple used to be the design, manufacture, distribution, promotion of Macs
It then recognized a trend among consumers for sleek but functional portable devices—its core
competency is now in the digital audio player arena with its iPod, iPhone, and iPad
Competition
Significantly affects consumers in the micro-environment
Greater competition may mean more choices for consumers, which influences their buying decisions
It is critical that marketers understand their firm’s competitors, including their strengths and weaknesses and
likely reactions to their firm’s marketing activities
Firms use competitive intelligence to collect and synthesize information about their position with respect to their
rivals
o CI enables companies to anticipate changes in the marketplace rather than merely react to them
o Can include interviewing customers, suppliers, partners, or former employees
Corporate Partners
Few firms operate in isolation
o I.e. automobile manufacturers collaborate with suppliers of sheet metal, tire manufacturers, component
part makers, dealerships, etc.
Can work with partners to innovate
Macro-Environmental Factors
Marketers must also understand the macro-environmental factors that operate in the external environment
Culture
Culture is broadly defined as the shared meanings, beliefs, values, morals, and customs of a group of people
Passed down from generation to generation and learned over time
Challenge for marketers is to have products or services identifiable by and relevant to a particular group of people
, Our various cultures influence what, why, how, where, and when we buy
Marketers must take into account the culture of the country and the region within a country
Country culture is easy-to-spot, visible nuances that are particular to a country, such as a dress, symbols,
ceremonies, language, colours, and food preferences
Regional subcultures are the region in which people live in a particular country
o Affects the way they react to different cultural rituals, or even how they refer to a particular product
category
o I.e. a resident of Quebec is 25% less likely to buy a hot prepared meal than a resident of Ontario
Attributed to Quebec women’s desire to cook
o Quebec consumers are less price sensitive when grocery shopping
Demographics
Demographics indicate the characteristics of human populations and segments, especially those used to identify
consumer markets
o I.e. age, gender, income, race, ethnicity…
o Provides an easily understood snapshot of the typical consumer in a specific target market
Networks can use demographic information to set their advertising fees, whereas advertisers can use it to choose
the best shows on which to advertise
Generational cohorts are a group of people of the same generation who typically have similar purchase
behaviours because they have shared experiences and are in the same stage of life
Tweens
People who are not quite teenagers but are not young children either (age 9-12)
The importance of tweens to marketers stems from their immense buying power
Influence family purchases
Massive market for cell phone features among tweens
o Web surfing, photo capabilities, texting
Spend their money mostly on food and drinks, electronics, and clothing
Learn about new products from TV shows and friends
Not easy to market to
Generation Y
Also called the millennials
Generation of people born between 1972 and 1992
Varies the most in age—people in their 20s, some in their 40s
Skeptical about what they hear in the media- marketing to this group is challenging
Expect a healthy option at fast food restaurants
Internet and technology savvy
Will be starting families soon—targeted in household items
Generation X
People born between 1966 and 1971
The first generation of latchkey kids (those who grew up in homes in which both parents worked)
More likely to be unemployed, carry higher debt loads, travel the world, and move far away from their
parents
Possess considerable spending power because they tend to wait to get married and buy houses later in life
Much less interested in shopping than their parents, and are far more cynical
Demand convenience
Less likely to believe advertising claims or what salespeople tell them
Hard to market to them, but word-of-mouth advertising from people they know and trust can give
marketers the credibility needed
Much less interested in status products than older generations
Baby Boomers
After WWII, the birth rate in Canada rose sharply, resulting in a group known as the baby boomers
Born between 1946 and 1965
Largest cohort of the population
