lhm chapter 03 7e

1Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

The Marketing Environment The Marketing Environment and Marketing Ethicsand Marketing Ethics

Prepared byPrepared byDeborah BakerDeborah Baker

Texas Christian UniversityTexas Christian University

Chapter 3

2Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning ObjectivesLearning Objectives

1. Discuss the external environment of marketing, and explain how it affects a firm.

2. Describe the social factors that affect marketing.

3. Explain the importance to marketing managers of current demographic trends.

3Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objectives Learning Objectives (continued)(continued)

4. Explain the importance to marketing managers of multiculturalism and growing ethnic markets.

5. Identify consumer and marketer reactions to the state of the economy.

6. Identify the impact of technology on a firm.

4Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objectives Learning Objectives (continued)(continued)

7. Discuss the political and legal environment of marketing.

8. Explain the basics of foreign and domestic competition.

9. Describe the role of ethics and ethical decisions in business.

10. Discuss corporate social responsibility.

5Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Discuss the external environment of marketing, and explain how it affects a firm.

1On Linehttp://www.levi.com

6Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Target MarketTarget Market

A defined group most likely to buy a firm’s product.

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7Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

External Marketing External Marketing EnvironmentEnvironment

Demographics

SocialChange

EconomicConditions

Political & Legal Factors

Technology

Competition

EnvironmentalEnvironmentalScanningScanning

Target Market

ProductDistributionPromotion

Price

External Environment External Environment is not controllableis not controllable

Ever-ChangingEver-ChangingMarketplaceMarketplace

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8Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

External Marketing External Marketing EnvironmentEnvironment

Social

Demographic

Economic

Technologic

Political and Legal

Competitive

External Environmental

Factors

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9Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Describe the social factors that affect marketing.

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10Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Social FactorsSocial Factors

Values Attitudes Lifestyle

Social Factors

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11Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

American ValuesAmerican Values

Self-Sufficiency

Basic Basic American American

ValuesValues

Upward Mobility

Work Ethic

Conformity

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12Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

The Influence of Values The Influence of Values on Buying Habitson Buying Habits

1. Reliability

2. Durability

3. Easy maintenance

4. Ease of use

5. Trusted brand

6. Low price

RankedCharacteristics

of Product Quality

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13Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

The Poverty of TimeThe Poverty of Time

A lack of time to do anything but work,

commute to work, handle family situations, do

housework, shop, eat, sleep...

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14Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Component LifestylesComponent Lifestyles

The practice of choosing goods and services that

meet one’s diverse needs and interests rather than conforming to a single,

traditional lifestyle.

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15Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Role of Families & WomenRole of Families & Women

58% of all females (ages 16-65) are in the workforce

Purchasing power from dual-career families is rising

“Traditional” purchasing roles and patterns are changing

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16Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Who Holds the Purse Strings?Who Holds the Purse Strings?2

17Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Explain the importance to marketing managersof current demographic trends.

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18Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Demographic FactorsDemographic Factors

Age Location Race and Ethnicity

Demography

3 Click Screenfor Ads

19Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

The Demographic Facts of lifeThe Demographic Facts of life3

20Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Age Groups: Generation YAge Groups: Generation Y

Born between 1979 and 1994 Size creates immense marketing

impact Respond to ads differently Love customized products

and services

3On Linehttp://www.generation-y.com

On Linehttp://www.mountaindew.comhttp://www.northface.com

21Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Age Groups: Generation XAge Groups: Generation X

Born between 1965 and 1978

Savvy and cynical consumers

Indulge themselves with meals/alcohol, clothing, and electronics

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22Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Age Groups: Baby BoomersAge Groups: Baby Boomers

Born between 1946 and 1964 Cherish youth, convenience,

and individuality In the “nesting stage” of life Individualism has led to a

personalized economy

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23Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Personalized EconomyPersonalized Economy

Delivering customized goods and services at a good value on demand.

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24Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Age Groups: Older Age Groups: Older ConsumersConsumers

Age “55 plus” Healthier, wealthier,

better educated Definite about wants

and needs Have unique behavior

patterns Not happy with advertising treatment

3On Linehttp://www.gct.comhttp://www.maupintour.com

25Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Explain the importance to marketing managers of multiculturalism and growing ethnic markets.

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26Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Growing Ethnic MarketsGrowing Ethnic Markets

U.S. population is becoming a multicultural society and workforce

Trend in U.S. is toward greater multiculturalism

Growth in three ethnic minorities:• African-Americans• U.S. Hispanics• Asian-Americans

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27Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

MulticulturalismMulticulturalism

When all major ethnicgroups in an area--

such as a city, county, or census tract--are roughly

represented.

4On Linehttp://www.bet.comhttp://www.multiculturalmarketingresources.com

28Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Identify consumer and marketer reactions to the state of the economy.

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29Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Economic FactorsEconomic Factors

Distribution of Consumer

Income

Inflation

Recession

Economic Areas of Concern to

Marketers

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30Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Rising IncomesRising Incomes

66% of U.S. households earn “middle-class” income

Over 10% earn over $75,000, primarilyfrom dual-income families

More discretionary income for high-end goods and services

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31Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

InflationInflation

Prices rise with no wage increasePurchasing Power decreases

Increase profit margins by increasing efficiency

Consumers reaction:• Search for lowest prices• Rely on coupons and sales

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32Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

RecessionRecession

Income, production and employment fall

Reduced demand for goods and services

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33Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Recession Marketing Recession Marketing StrategiesStrategies

Improve existing products

Introduce new products

Maintain customer services

Emphasize top-of -the line productsand promote product value

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34Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Identify the impact of technology on a firm.

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35Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Basic and Applied ResearchBasic and Applied Research

Basic Research

AppliedResearch

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

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36Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Technological & Resource Technological & Resource FactorsFactors

New technology is a weapon against inflation and recession

U.S. excels at basic and applied research

Information technology and the Internet have increased productivity

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37Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Using Technology to Using Technology to Boost ProductivityBoost Productivity6

38Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Discuss the political and legal environment of marketing.

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39Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Political and Legal FactorsPolitical and Legal Factors

Consumers

Businesses Society

New Technology

Laws and Regulations ProtectLaws and Regulations Protect

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40Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Federal LegislationFederal Legislation

Sherman ActClayton ActFederal Trade Commission Act Robinson-Patman ActWheeler-Lea Amendments to the FTC ActLanham ActCeller-Kefauver Antimerger ActHart-Scott-Rodino Act

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41Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Regulatory AgenciesRegulatory Agencies

Consumer Product Safety Commission

Federal Trade Commission

Food & Drug Administration

7On Linehttp://www.ftc.gov

42Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Regulatory AgenciesRegulatory Agencies

Consumer Product Safety Commission

Federal Trade Commission

Food & Drug Administration

Protects consumer safety in and around their homes

Prevents unfair methods ofcompetition in commerce

Enforces safety regulations for food and drug products

7On Linehttp://www.fda.gov

43Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Explain the basics of foreign and domestic competition.

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44Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Competitive FactorsCompetitive Factors

How many competitors?

How big are competitors?

How interdependent isthe industry?

Control

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45Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Competitive FactorsCompetitive Factors8

Competition forCompetition forMarket ShareMarket Share

and and ProfitsProfits

Global Global CompetitionCompetition

46Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Global CompetitionGlobal Competition

More foreign firms are entering U.S. market

Foreign firms in U.S. now compete on product quality

Global markets are highly competitive

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47Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Describe the role of ethics and ethical decisions in business.

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48Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Ethics and MoralsEthics and Morals

Ethics

Morals

The moral principles or values that generally govern the conduct of an individual.

The rules people develop as a result of cultural values and norms.

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49Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Ethical Behavior in BusinessEthical Behavior in Business

Ethical?Ethical? Legal?Legal?

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50Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Ethical Development LevelsEthical Development Levels

PreconventionalMorality

ConventionalMorality

PostconventionalMorality

MoreMature

MoreSelfish

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51Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Morality and Business EthicsMorality and Business Ethics

PreconventionalMorality

Childlike level Based on what will be punished

or rewarded Self-centered, calculating, selfish

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52Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Morality and Business EthicsMorality and Business Ethics

ConventionalMorality

Moves toward the expectations of society

Concerned over legality and the opinion of others

“When in Rome, do as the Romans”

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53Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Morality and Business EthicsMorality and Business Ethics

PostconventionalMorality

Morality of the mature adult Concern about how they judge

themselves Concern if it is right in the long run

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54Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Ethical Decision MakingEthical Decision Making

Social Consensus

Extent of Problems

Top Management

ActionsPotential

Consequences

Probability of Harm

Number Affected

Time Until Consequences

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55Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Code of EthicsCode of Ethics

A guideline to help marketing managers and other employees

make better decisions.

9On Linehttp://www.ethics.ubc.ca/resources/business

56Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Creating Ethical GuidelinesCreating Ethical Guidelines

Help identify acceptable business practices

Help control behavior internally

Reduce confusion in decision making

Facilitate discussion about right and wrong

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57Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Unethical PracticesUnethical Practices9

58Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Learning Objective Learning Objective

Discuss corporate social responsibility.

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59Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Corporate Social Corporate Social ResponsibilityResponsibility

EthicalEthicalDo what is right.Do what is right.

LegalLegalObey the Law.Obey the Law.

EconomicEconomicBe profitable.Be profitable.

PhilanthropicPhilanthropicBe a good citizen.Be a good citizen.

10On Linehttp://www.equalexchange.comhttp://www.crest.com