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Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 1
MKTG
Designed byAmy McGuire, B-books, Ltd.
Prepared byDana Freeman, B-books, Ltd.
Lamb, Hair, McDaniel 2009-2010
Social
Responsibility, Ethics,
and the Marketing
Environment
3CHAPTER
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 2
Learning Outcomes
Discuss corporate social responsibility
Describe the role of ethics and ethical decisions in business
Discuss the external environment of marketing, and explain how it affects a firm
LO1
LO2
LO3
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 3
Learning Outcomes
Describe the social factors that affect marketing
Explain the importance to marketing managers of current demographic trends
Explain the importance to marketing managers of multiculturalism and growing ethnic markets
LO4
LO5
LO6
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 4
Learning Outcomes
Identify consumer and market reactions to the state of the economy
Identify the impact of technology on a firm
Discuss the political and legal environment of marketing
Explain the basics of foreign and domestic competition
LO7
LO8
LO9
LO10
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 5Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 5
Discuss corporate social responsibility
Corporate Social ResponsibilityCorporate Social ResponsibilityLO1
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 6
LO1
Corporate Social Responsibility
The idea that socially The idea that socially
responsible companies will responsible companies will
outperform their peers by outperform their peers by
focusing on the world’s focusing on the world’s
social problems and viewing social problems and viewing
them as opportunities to them as opportunities to
build profits and help the build profits and help the
world at the same time.world at the same time.
SustainabilitySustainability
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 7
REVIEW LEARNING OUTCOMELO1
Corporate Social Responsibility
EthicalEthical
LegalLegal
EconomicEconomic
PhilanthropicPhilanthropic
Be profitable.Be profitable.
Obey the Law.Obey the Law.
Do what is right.Do what is right.
Be a good citizen.Be a good citizen.
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 8Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 8
Describe the role of ethics and ethical
decisions in business
Ethical Behavior in BusinessEthical Behavior in BusinessLO2
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 9
Ethical Behavior in Business
LO2
EthicsEthics
MoralsMorals
The moral principles or values that
generally govern the conduct of individuals.
The rules people develop as a result of cultural values and norms.
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 10
Ethical Development Levels
LO2
PreconventionalMorality
ConventionalMorality
PostconventionalMorality
MoreMature
MoreChildlike
• Based on what will be punished or rewarded
• Self-centered, calculating, selfish
• Moves toward the expectations of society
• Concerned over legality and the opinion of others
• Concern about how they judge themselves
• Concern if it is right in the long run
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 11
Ethical Decision Making
LO2
Influential Factors
Extent of Problems
Top Management Actions
Potential Consequences
Social Consensus
Probability of Harm
Time UntilConsequences
Number Affected
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 12
Code of Ethics
LO2
A guideline to help marketing
managers and other employees
make better decisions.
Code of EthicsCode of Ethics
http://www.ethicsweb.ca
Online
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 13
Creating Ethical Guidelines
LO2
Helps identify acceptable business practices
Helps control behavior internally
Avoids confusion in decision making
Facilitates discussion about right and wrong
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 14
Ethical Norms and Values for Marketers
LO2
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 15Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 15
Discuss the external
environment of marketing, and explain how it affects a firm
The External Marketing EnvironmentThe External Marketing EnvironmentLO3
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 16
External Marketing Environment
LO3
DemographicsDemographics
SocialChangeSocial
Change
EconomicConditionsEconomicConditions
Political & Legal FactorsPolitical &
Legal Factors
TechnologyTechnology
CompetitionCompetition
EnvironmentalScanning
Target Market
External Environment (uncontrollable)
Ever-ChangingMarketplace
ProductDistributionPromotion
Price
ProductDistributionPromotion
Price
Internal (within the
organization)
Marketing mix
Chapter 3 Copyright ©2010Cengage Learning Inc. All rights reserved. 17
Target MarketLO3
A defined group most likely to
buy a firm’s product.
Target MarketTarget Market
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 18Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 18
Describe the social factors that affect
marketing
Social FactorsSocial FactorsLO4
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 19
LO4
Social Factors
ValuesValues
AttitudesAttitudes
LifestyleLifestyle
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 20
LO4
Social Factors
Social Factors Influence:Social Factors Influence:
Products purchasedProducts purchased
Prices paid for productsPrices paid for products
Effectiveness of promotionsEffectiveness of promotions
How, where, and when people purchaseHow, where, and when people purchase
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 21
LO4
Social Factors
Self-SufficiencySelf-Sufficiency
Upward MobilityUpward Mobility
Work EthicWork Ethic
ConformityConformity
Core American Values
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 22
LO4
The Influence of Values on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 23
LO4
Component Lifestyles
ComponentLifestyles
ComponentLifestyles
The practice of choosing goods
and services that meet one’s
diverse needs and interests
rather than conforming to a
single, traditional lifestyle.
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 24
LO4
Role of Families and Working Women
Growth of dual-income families results in increased purchase power
Approximately 60 percent of work-age females are in the workforce
Women expect different things in life
– purchase bulk of technology products
– do most of the grocery shopping
– second largest group of home buyers after couples
Single households outnumber married households with kids
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 25
REVIEW LEARNING OUTCOMELO4
Social Factors that Affect Marketing
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 26Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 26
Explain the importance to marketing managers of current demographic
trends
Demographic FactorsDemographic FactorsLO5
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 27
Demographic FactorsLO5
DemographyDemography The study of people’s
vital statistics, such as
their age, race and
ethnicity, and location.
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 28
TweensLO5
Pre- and early adolescents, age 8 to 14
Population of 29 million
Annual purchasing power of $39 billion
View TV ads as “just advertising”
Emerging as “the richest generation” and the “most influential generation in history”
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 29
Generation YLO5
Born between 1979 and 1994
Population of 60 million
Purchasing power of $200 billion annually
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
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 30
Generation XLO5
Born between 1965 and 1978
Population of 40 million
Savvy and cynical consumers
Time is at a premium, and outsourcing is utilized
Entering their money-making years
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 31
Baby BoomersLO5
Born between 1946 and 1964
Population of 77 million—the largest demographic segment
$1 trillion in spending power for people aged 50 to 60
Income will continue to grow as they keep working
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 32
REVIEW LEARNING OUTCOMELO5
Current Demographic Trends
AgeTweens
8 to 14 yrs29 million
Gen Y
1979-199460 million
Gen X
1965-197840 million
Baby Boom
1946-196477 million
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 33Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 33
Explain the importance to marketing managers of multiculturalism and growing ethnic markets
Growing Ethnic MarketsGrowing Ethnic MarketsLO6
Chapter 3 Copyright ©2010Cengage Learning Inc. All rights reserved. 34
Growing Ethnic MarketsLO6
Spending power of ethnic markets by 2011:
Hispanics: $1.2 trillion
African Americans: $921 billion
Asian Americans: $526 billion
Diversity can result in bottom-line benefits to companies.
Chapter 3 Copyright ©2010Cengage Learning Inc. All rights reserved. 35
Marketing to Hispanic AmericansLO6
The population’s diversity creates challenges for targeting this group.
Hispanics tend to be brand loyal, but are not aware of many U.S. brands.
Nearly half of adult U.S. Hispanics have home Internet access.
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved 36
LO6B
eyond t
he
Book
Why Multicultural Marketing?
“[With ethnic marketing] you're going to get more share of the heart, more share of the mind, and ultimately, more share of the wallet.”
About one in three U.S. residents is a minority, representing over 100.7 million people.
7 states more than tripled their Hispanic population between 1990 and 2000: Alabama, Arkansas, Georgia, North Carolina, South Carolina, Tennessee, and Nevada.
Twenty percent of babies born in the United States are Latino.
SOURCE: Mike Robinson, CEO LaVerdad Marketing & Media, http://www.laverdadmarketing.com/la_casa.htm; Lisa Biank Fasig, "An Expanding Business for an Expanding Market," Business Courier of Cincinnati, September 7, 2007
Chapter 3 Copyright ©2010Cengage Learning Inc. All rights reserved. 37
Marketing to African AmericansLO6
Many firms are creating products for the African American market.
Promotional dollars and media choices directed toward African Americans continue to increase.
Chapter 3 Copyright ©2010Cengage Learning Inc. All rights reserved. 38
Marketing to AsianAmericans
LO6
Younger, better educated, and have highest average income of all groups
Many products have been developed for Asian American market.
Cultural diversity within the Asian American market complicates promotional efforts.
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 39
REVIEW LEARNING OUTCOMELO6
Multiculturalism and Growing Ethnic Markets
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 40Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 40
Identify consumer and marketer
reactions to thestate of the economy
Economic FactorsEconomic FactorsLO7
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 41
Economic Factors
LO7
Distribution of Consumer Income
Inflation
Recession
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 42
Consumers’ Incomes
LO7
Median U.S. household income in 2008 was $49,000
Incomes have risen at a slow pace.
Education is the primary determinant of earning potential.
Consumers are strapped for cash.
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 43
The Financial Power of Women
LO7
Women bring in half of the household income.
Women control 51.3 percent of the private wealth in the U.S.
Women control 80 percent of household spending.
Women are now the primary buyers in male-dominated categories: 68% of new cars 66% of computers 60% of home improvements 53% of investments 51% of consumer electronics
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 44
Purchasing Power
LO7
A comparison of the relative cost of
a set standard of goods and services
in different geographic areas.
PurchasingPower
PurchasingPower
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 45
Inflation
LO7
A measure of the decrease in the
value of the money, expressed as the
percentage reduction in value since
the previous year.
InflationInflation
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 46
Recession
LO7
A period of economic activity
characterized by negative growth,
which reduces demand for goods
and services.
RecessionRecession
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 47
Recession Marketing Strategies
LO7
Improve existing products and introduce new ones
Maintain and expand customer services
Emphasize top-of-the-line products and promote product value
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved 48
Thriving in an Economic Downturn
Wal-Mart saw double-digit profit growth during the recent economic downturn. How? A shift in strategy it calls Win/Play/Draw:
Win: Outmaneuver competitors with low prices on hot
products (flat-screen TVs)
Play: Reduce range of offerings to feature “hot sellers” (its
$20 L.e.i. jeans)
Draw: Keep a stock of one-stop-shopping essentials
(hardware, pharmacy items)
Beyond t
he
Book
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 49Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 49
Identify the impact of
technology on a firm
Technological FactorsTechnological FactorsLO8
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 50
Research
LO8
Basic ResearchBasic Research
Applied ResearchApplied Research
Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon.
An attempt to develop new or improved products
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 51
Technological Factors
LO8
U.S. excels at basic and applied research.
Many firms use the market concept to guide research.
New technology internally creates a long-term competitive advantage.
External technology Creates more efficient operation or better products May render existing products obsolete
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 52
Technological Factors
LO8
Innovation is becoming a global process.
New technologies create new opportunitiesRSS (Really Simple
Syndication)Blogging
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 53
REVIEW LEARNING OUTCOMELO8
Impact of Technology on a Firm
BasicResearch
BasicResearch
MarketingMix
MarketingMix
AppliedResearch
AppliedResearch
TechnologyAdvances
TechnologyAdvances
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 54Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 54
Discuss the political and legal
environment of marketing
Political and Legal FactorsPolitical and Legal FactorsLO9
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 55
LO9
Political and Legal Factors
New technology Society Businesses Consumers
Laws and Regulations Protect:Laws and Regulations Protect:
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 56
LO9
Federal Legislation
Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino Act
Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino Act
Regulate competitiveenvironment
Robinson-Patman ActRobinson-Patman ActRegulate pricing practices
Wheeler-Lea ActWheeler-Lea ActControl falseadvertising
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 57
LO9
Regulatory Agencies
Consumer Product Safety Commission
Consumer Product Safety Commission
Federal Trade Commission
Federal Trade Commission
Food & Drug AdministrationFood & Drug
Administration
Protects consumer safety in and around their homes
Prevents unfair methods ofcompetition in commerce
Enforces safety regulations for food and drug products
Online
http://www.ftc.gov
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 58
LO9
Powers of the FTC
Cease-and-Desist OrderCease-and-Desist Order
Consent DecreeConsent Decree
Affirmative DisclosureAffirmative Disclosure
Corrective AdvertisingCorrective Advertising
RestitutionRestitution
CounteradvertisingCounteradvertising
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 59
LO9
Consumer Privacy
Gramm-Leach-Bliley Act
Health Insurance Portability and Accountability Act (HIPPA)
California’s Notice of Security Breach Law
Government ActionsGovernment Actions
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 60
REVIEW LEARNING OUTCOMELO9
Political and Legal Environment of Marketing
3.2
3.3
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 61Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 61
Explain the basics of foreign and domestic
competition
Competitive FactorsCompetitive FactorsLO10
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 62
Competitive Factors
LO10
How many competitors?
How big are competitors?
How interdependent isthe industry?
Control
Chapter 3 Copyright ©2010 Cengage Learning Inc. All rights reserved. 63
Competitive Factors
LO10
Competition for Market Share and Profits
Global Competition
Firms must work harder to maintain profits and market share.
More foreign firms are entering U.S. market.
Foreign firms in U.S. now compete on product quality.
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