lhm chapter 03 7e

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1 Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson The Marketing Environment The Marketing Environment and Marketing Ethics and Marketing Ethics Prepared by Prepared by Deborah Baker Deborah Baker Texas Christian University Texas Christian University Chapter 3

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Page 1: 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

Page 2: LHM Chapter 03 7e

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.

Page 3: LHM Chapter 03 7e

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.

Page 4: LHM Chapter 03 7e

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.

Page 5: LHM Chapter 03 7e

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

Page 6: LHM Chapter 03 7e

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.

1

Page 7: LHM Chapter 03 7e

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

1

Page 8: LHM Chapter 03 7e

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

1

Page 9: LHM Chapter 03 7e

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

Learning Objective Learning Objective

Describe the social factors that affect marketing.

2

Page 10: LHM Chapter 03 7e

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

Social FactorsSocial Factors

Values Attitudes Lifestyle

Social Factors

2

Page 11: LHM Chapter 03 7e

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

2

Page 12: LHM Chapter 03 7e

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

2

Page 13: LHM Chapter 03 7e

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...

2

Page 14: LHM Chapter 03 7e

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.

2

Page 15: LHM Chapter 03 7e

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

2

Page 16: LHM Chapter 03 7e

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

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

Page 17: LHM Chapter 03 7e

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.

3

Page 18: LHM Chapter 03 7e

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

Page 19: LHM Chapter 03 7e

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

The Demographic Facts of lifeThe Demographic Facts of life3

Page 20: LHM Chapter 03 7e

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

Page 21: LHM Chapter 03 7e

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

3

Page 22: LHM Chapter 03 7e

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

3

Page 23: LHM Chapter 03 7e

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.

3

Page 24: LHM Chapter 03 7e

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

Page 25: LHM Chapter 03 7e

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.

4

Page 26: LHM Chapter 03 7e

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

4

Page 27: LHM Chapter 03 7e

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

Page 28: LHM Chapter 03 7e

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.

5

Page 29: LHM Chapter 03 7e

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

5

Page 30: LHM Chapter 03 7e

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

5

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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

5

Page 32: LHM Chapter 03 7e

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

RecessionRecession

Income, production and employment fall

Reduced demand for goods and services

5

Page 33: LHM Chapter 03 7e

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

5

Page 34: LHM Chapter 03 7e

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

Learning Objective Learning Objective

Identify the impact of technology on a firm.

6

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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

6

Page 36: LHM Chapter 03 7e

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

6

Page 37: LHM Chapter 03 7e

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

Using Technology to Using Technology to Boost ProductivityBoost Productivity6

Page 38: LHM Chapter 03 7e

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

Learning Objective Learning Objective

Discuss the political and legal environment of marketing.

7

Page 39: LHM Chapter 03 7e

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

7

Page 40: LHM Chapter 03 7e

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

7

Page 41: LHM Chapter 03 7e

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

Page 42: LHM Chapter 03 7e

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

Page 43: LHM Chapter 03 7e

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

Learning Objective Learning Objective

Explain the basics of foreign and domestic competition.

8

Page 44: LHM Chapter 03 7e

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

8

Page 45: LHM Chapter 03 7e

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

Page 46: LHM Chapter 03 7e

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

8

Page 47: LHM Chapter 03 7e

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.

9

Page 48: LHM Chapter 03 7e

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.

9

Page 49: LHM Chapter 03 7e

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

Ethical Behavior in BusinessEthical Behavior in Business

Ethical?Ethical? Legal?Legal?

9

Page 50: LHM Chapter 03 7e

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

Ethical Development LevelsEthical Development Levels

PreconventionalMorality

ConventionalMorality

PostconventionalMorality

MoreMature

MoreSelfish

9

Page 51: LHM Chapter 03 7e

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

9

Page 52: LHM Chapter 03 7e

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”

9

Page 53: LHM Chapter 03 7e

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

9

Page 54: LHM Chapter 03 7e

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

9

Page 55: LHM Chapter 03 7e

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

Page 56: LHM Chapter 03 7e

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

9

Page 57: LHM Chapter 03 7e

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

Unethical PracticesUnethical Practices9

Page 58: LHM Chapter 03 7e

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

Learning Objective Learning Objective

Discuss corporate social responsibility.

10

Page 59: LHM Chapter 03 7e

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