chapter 3copyright ©2008 by south-western, a division of thomson learning. all rights reserved 1...

Chapter 3 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1

MKTG

Designed byAmy McGuire, B-books, Ltd.

Prepared byDeborah Baker, Texas Christian University

Lamb, Hair, McDaniel 2007-2008

Social

Responsibility, Ethics,

and the Marketing Environment

3CHAPTER


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


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


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


What do these firms have in common?


Discuss corporate social responsibility

Corporate Social ResponsibilityCorporate Social ResponsibilityLO1


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 social focusing on the world’s social

problems and viewing them problems and viewing them

as opportunities to build as opportunities to build

profits and help the world at profits and help the world at

the same time.the same time.

SustainabilitySustainability


REVIEW LEARNING OUTCOMELO1

Corporate Social Responsibility

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.


Social Responsibility

Management philosophy in which organizations engage in activities that have a positive effect on society and promote the public good

Tools of social responsibility

environmental stewardship

cause marketing

cultural diversity

LO2


Environmental Stewardship

Firms make choices that protect the environment

Green marketing describes a type of environmental stewardship in which firms choose packages, product designs, and other aspects of the marketing mix that are earth friendly


Stonyfield Farm and Green Marketing


Cause Marketing

Strategy of joining forces with a not-for- profit organization to tackle a social problem

Straight donations to a charity

Donations linked to consumer sales response


Ford & Breast Cancer Research


Promoting Cultural Diversity

Cultural diversity programs ensure that marketing policies and hiring practices give people an equal chance to work for the company and buy its products

See Fortune’s Best Companies for Minorities

McDonald’s ranked #1 in 2004


Describe the role of ethics and ethical

decisions in business

Ethical Behavior in BusinessEthical Behavior in BusinessLO2


Ethical Behavior in Business

LO2

EthicsEthics

MoralsMorals

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.


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


Ethical Decision Making

LO2

Influential Factors

Extent of Problems

Top Management Actions

Potential Consequences

Social Consensus

Probability of Harm

Time UntilConsequences

Number Affected


Biz Flix

LO2 Jaws


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


Kellogg’s Code of Ethics


Creating Ethical Guidelines

LO2

Helps identify acceptable business practices

Helps control behavior internally

Avoids confusion in decision making

Facilitates discussion about right and wrong


Ethical Norms and Values for Marketers

LO2


Discuss the external environment

of marketing, and explain how it affects a firm

The External Marketing EnvironmentThe External Marketing EnvironmentLO3


External Marketing EnvironmentLO3

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


Target MarketLO3

A defined group most likely to

buy a firm’s product.

Target MarketTarget Market


Describe the social factors that affect

marketing

Social FactorsSocial FactorsLO4


LO4

Social Factors

ValuesValues

AttitudesAttitudes

LifestyleLifestyle


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


LO4

Social Factors

Self-SufficiencySelf-Sufficiency

Upward MobilityUpward Mobility

Work EthicWork Ethic

ConformityConformity

Core American Values


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


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.


LO4

Role of Families and Working Women

Growth of dual-income families results in increased purchase power

Approximately 63% 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



Social Factors that Affect Marketing


Explain the importance to marketing managers of current demographic

trends

Demographic FactorsDemographic FactorsLO5


Demographic FactorsLO5

DemographyDemography The study of people’s

vital statistics, such as

their age, race and

ethnicity, and location.


TweensLO5

Pre- and early adolescents, age 8 to 14

Population of 29 million

Purchasing power of $39 billion in 2007

View TV ads as “just advertising”

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


Generation YLO5

Born between 1979 and 1994Population of 60 millionPurchasing power of $200 billion annuallyResearchers have found Gen Yers to be:

ImpatientFamily-orientedInquisitiveOpinionatedDiverseTime managers“Street Smart”

Word of mouth marketing is effective

Online

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


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


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



Current Demographic Trends

AgeTweens

8 to 14 yrs29 million

Gen Y

1979-199460 million

Gen X

1965-197840 million

Baby Boom

1946-196477 million


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

Growing Ethnic MarketsGrowing Ethnic MarketsLO6


Growing Ethnic MarketsLO6

Spending power of ethnic markets by 2008:

Hispanics: $1 trillion

African Americans: $921 billion

Asian Americans: $526 billion

Diversity can result in bottom-line benefits to companies.


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.


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.


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.



Multiculturalism and Growing Ethnic Markets


Identify consumer and marketer

reactions to thestate of the economy

Economic FactorsEconomic FactorsLO7


Economic Factors

LO7

Distribution of Consumer Income

Inflation

Recession


Consumers’ Incomes

LO7

Median U.S. household income in 2007 projected at $45,000

Incomes have risen at a slow pace.

Education is the primary determinant of earning potential.

Consumers are strapped for cash.


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 66% of home improvements 53% of investments 51% of consumer electronics


Purchasing Power

LO7

A comparison of the relative cost of

a set standard of goods and services

in different geographic areas.

PurchasingPower

PurchasingPower


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


Recession

LO7

A period of economic activity

characterized by negative growth,

which reduces demand for goods

and services.

RecessionRecession


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


Identify the impact of technology on a firm

Technological FactorsTechnological FactorsLO8


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


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


Technological Factors

LO8

Innovation is becoming a global process.

New technologies create new opportunitiesRSS (Really Simple

Syndication)Blogging



Impact of Technology on a Firm

BasicResearch

BasicResearch

MarketingMix

MarketingMix

AppliedResearch

AppliedResearch

TechnologyAdvances

TechnologyAdvances


Discuss the political and legal

environment of marketing

Political and Legal FactorsPolitical and Legal FactorsLO9


LO9

Political and Legal Factors

New technology Society Businesses Consumers

Laws and Regulations Protect:Laws and Regulations Protect:


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 competitive

environment

Robinson-Patman ActRobinson-Patman ActRegulate

pricing practices

Wheeler-Lea ActWheeler-Lea ActControl falseadvertising


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


LO9

Powers of the FTC

Cease-and-Desist OrderCease-and-Desist Order

Consent DecreeConsent Decree

Affirmative DisclosureAffirmative Disclosure

Corrective AdvertisingCorrective Advertising

RestitutionRestitution

CounteradvertisingCounteradvertising


LO9

Consumer Privacy

Gramm-Leach-Bliley Act

Health Insurance Portability and Accountability Act (HIPPA)

California’s Notice of Security Breach Law

Government ActionsGovernment Actions



Political and Legal Environment of Marketing


Explain the basics of foreign and domestic

competition

Competitive FactorsCompetitive FactorsLO10


Competitive Factors

LO10

How many competitors?

How big are competitors?

How interdependent isthe industry?

Control


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.



0

Political and Legal Environment

Mature Industries

Slow Growth / No Growth

Highly Competitive Marketplace

Can only increasemarket share bytaking it from a competitor.

chapter 3copyright ©2008 by south-western, a division of thomson learning. all rights reserved 1...

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