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The Marketing Environment and Marketing Ethics chapter 2 Prepared by Deborah Baker Texas Christian University Chapter 2 Version 3e ©2003 South-Western 1 Learning Objectives 1. Discuss the external environment of marketing, and explain how it affects a firm. chapter 2 2. Describe the social factors that affect marketing. 3. Explain the importance to marketing managers of current demographic trends. Chapter 2 Version 3e ©2003 South-Western 2 Learning Objectives (continued) 4. Explain the importance to marketing managers of multiculturalism and growing ethnic markets. chapter 2 5. Identify consumer and marketer reactions to the state of the economy. 6. Identify the impact of technology on a firm. Chapter 2 Version 3e ©2003 South-Western 3 Learning Objectives (continued) 2 8. Explain the basics of foreign and domestic competition. chapter 7. Discuss the political and legal environment of marketing. 9. Describe the role of ethics and ethical decisions in business. 10. Discuss corporate social responsibility. Chapter 2 Version 3e ©2003 South-Western 4 1 Learning Objective Discuss the external environment of marketing, and explain how it affects a firm. Chapter 2 Version 3e ©2003 South-Western 5 1 Target Market A defined group most likely to buy a firm’s product. Chapter 2 Version 3e ©2003 South-Western 6 1 External Marketing Environment External Environment is not controllable Social Change Ever-Changing Marketplace Demographics Economic Conditions Product Distribution Promotion Price Competition Target Market Political & Legal Factors Environmental Scanning Chapter 2 Version 3e Technology ©2003 South-Western 7 1 External Marketing Environment Social Demographic Economic External Environmental Factors Technologic Political and Legal Competitive Chapter 2 Version 3e ©2003 South-Western 8 2 Learning Objective Describe the social factors that affect marketing. Chapter 2 Version 3e ©2003 South-Western 9 2 Social Factors Social Factors Values Lifestyle Attitudes Chapter 2 Version 3e ©2003 South-Western 10 2 Social Values Cultural Creativity Today’s MarketingOriented Values Traditionalism Modernism Chapter 2 Version 3e ©2003 South-Western 11 2 Marketing-Oriented Values Cultural Creativity Traditionalism Modernism Chapter 2 Version 3e Interested in new products and services. “Heartlanders” with nostalgic views Place high value on success, materialism, technology ©2003 South-Western 12 2 The Poverty of Time A lack of time to do anything but work, commute to work, handle family situations, do housework, shop, eat, sleep... Chapter 2 Version 3e ©2003 South-Western 13 2 Component Lifestyles The practice of choosing goods and services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle. Chapter 2 Version 3e ©2003 South-Western 14 2 Role of Families & Women 58% of all females are in the workforce Rising purchasing power from dualincome families Change of “traditional” purchasing roles Chapter 2 Version 3e ©2003 South-Western 15 3 Learning Objective Explain the importance to marketing managers of current demographic trends. Chapter 2 Version 3e ©2003 South-Western 16 3 Demographic Factors Demographics Age Ethnicity Location Chapter 2 Version 3e ©2003 South-Western 17 3 Age Groups: Generation Y Born between 1979 and 1994 Size creates immense marketing impact Respond to ads differently Chapter 2 Version 3e ©2003 South-Western 18 3 Age Groups: Generation X Born between 1965 and 1978 Savvy and cynical consumers Indulge themselves with meals/alcohol, clothing, and electronics Chapter 2 Version 3e ©2003 South-Western 19 3 Age Groups: Baby Boomers Born between 1946 and 1964 Cherish youth, convenience, and individuality Individualism has led to a personalized economy Chapter 2 Version 3e ©2003 South-Western 20 3 Personalized Economy Delivering goods and services at a good value on demand. Chapter 2 Version 3e ©2003 South-Western 21 Product Characteristics in a Personalized Economy Customization Immediacy Value Chapter 2 Version 3e 3 Products are custom designed and marketed to small target markets Products are delivered at the consumer’s convenience Businesses must price competitively or create innovative products ©2003 South-Western 22 3 Age Groups: Older Consumers Age “50 plus” Healthier, wealthier, better educated Considerable purchasing power Market potential not fully tapped Chapter 2 Version 3e ©2003 South-Western 23 3 Location: Americans on the Move Average U.S. citizen moves every six years Immigrants add $10 billion yearly to economy Migration is a global phenomenon Chapter 2 Version 3e ©2003 South-Western 24 4 Learning Objective Explain the importance to marketing managers of multiculturalism and growing ethnic markets. Chapter 2 Version 3e ©2003 South-Western 25 4 Growing Ethnic Markets U.S. population is becoming a multicultural society and workforce Trend in U.S. is toward greater multiculturalism Chapter 2 Version 3e ©2003 South-Western 26 4 Multiculturalism When all major ethnic groups in an area-such as a city, county, or census tract--are roughly represented. Chapter 2 Version 3e ©2003 South-Western 27 4 U.S. Multicultural Makeup 100% 80% Whites African Hispanic Asian 60% 40% 20% 0% Chapter 2 Version 3e ©2003 South-Western 28 4 Multicultural Marketing Niche Marketing Marketing Strategies for Multicultural Markets Adapting Promotion Stitching Niches Chapter 2 Version 3e ©2003 South-Western 29 4 Stitching Niches A strategy for multicultural marketing that combines ethnic, age, income, and lifestyle markets, on some common basis, to form a large market. Chapter 2 Version 3e ©2003 South-Western 30 5 Learning Objective Identify consumer and marketer reactions to the state of the economy. Chapter 2 Version 3e ©2003 South-Western 31 5 Economic Factors Economic Areas of Concern to Marketers Distribution of Consumer Income Recession Inflation Chapter 2 Version 3e ©2003 South-Western 32 5 Rising Incomes 66% of U.S. households earn “middle-class” income Over 10% earn over $75,000, primarily from dual-income families More discretionary income for high-end goods and services Chapter 2 Version 3e ©2003 South-Western 33 5 Inflation Prices rise with no wage increase Purchasing Power decreases Increase profit margins by increasing efficiency Consumers reaction: – – Search for lowest prices Rely on coupons and sales Chapter 2 Version 3e ©2003 South-Western 34 5 Recession Income, production and employment fall Reduced demand for goods and services Chapter 2 Version 3e ©2003 South-Western 35 5 Recession Marketing Strategies Improve existing products Introduce new products Maintain customer services Emphasize top-of -the line products Chapter 2 Version 3e ©2003 South-Western 36 6 Learning Objective Identify the impact of technology on a firm. Chapter 2 Version 3e ©2003 South-Western 37 6 Basic Research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. Chapter 2 Version 3e ©2003 South-Western 38 6 Applied Research An attempt to develop new or improved products. Chapter 2 Version 3e ©2003 South-Western 39 6 Technological & Resource Factors New technology helps firm cope with other environmental factors U.S. excels at basic research, but falls short at applied research Information technology has helped U.S. economic growth Chapter 2 Version 3e ©2003 South-Western 40 7 Learning Objective Discuss the political and legal environment of marketing. Chapter 2 Version 3e ©2003 South-Western 41 7 Political and Legal Factors Laws and Regulations Protect Businesses Consumers Chapter 2 Version 3e Society New Technology ©2003 South-Western 42 7 Federal Legislation Sherman Act of 1890 Clayton Act of 1914 Federal Trade Commission Act of 1914 Robinson-Patman Act of 1936 Wheeler-Lea Amendments to the FTC Act of 1938 Lanhma Act of 1946 Celler-Kefauver Antimerger Act of 1950 Hart-Scott-Rodino Act of 1976 Chapter 2 Version 3e ©2003 South-Western 43 7 Regulatory Agencies Consumer Product Safety Commission Federal Trade Commission Food & Drug Administration Chapter 2 Version 3e ©2003 South-Western 44 7 Regulatory Agencies Consumer Product Safety Commission Protects consumer safety in and around their homes Federal Trade Commission Prevents unfair methods of competition in commerce Food & Drug Administration Enforces safety regulations for food and drug products Chapter 2 Version 3e ©2003 South-Western 45 8 Learning Objective Explain the basics of foreign and domestic competition. Chapter 2 Version 3e ©2003 South-Western 46 8 Competitive Factors How many competitors? Control How big are competitors? How interdependent is industry? Chapter 2 Version 3e ©2003 South-Western 47 8 Global Competition More foreign firms are entering U.S. market Foreign firms in U.S. now compete on product quality Global markets are highly competitive Chapter 2 Version 3e ©2003 South-Western 48 9 Learning Objective Describe the role of ethics and ethical decisions in business. Chapter 2 Version 3e ©2003 South-Western 49 9 Ethics The moral principles or values that generally govern the conduct of an individual. Chapter 2 Version 3e ©2003 South-Western 50 9 Morals The rules people develop as a result of cultural values and norms. Chapter 2 Version 3e ©2003 South-Western 51 9 Ethical Behavior in Business Legal? Ethical? Chapter 2 Version 3e ©2003 South-Western 52 9 Ethical Development Levels More Selfish Preconventional Morality Conventional Morality More Mature Chapter 2 Version 3e Postconventional Morality ©2003 South-Western 53 9 Morality and Business Ethics Preconventional Morality • Childlike level • Based on what will be punished or rewarded. • Self-centered, calculating, selfish. Chapter 2 Version 3e ©2003 South-Western 54 9 Morality and Business Ethics Conventional Morality • Moves toward the expectations of society • Concerned over legality and the opinion of others. • “When in Rome, do as the Romans” Chapter 2 Version 3e ©2003 South-Western 55 9 Morality and Business Ethics Postconventional Morality • Morality of the mature adult • Concern about how they judge themselves. • Concern if it is right in the long run. Chapter 2 Version 3e ©2003 South-Western 56 9 Ethical Decision Making Extent of Problems Top Management Actions Probability of Harm Chapter 2 Version 3e Potential Consequences Time Until Consequences ©2003 South-Western Social Consensus Number Affected 57 9 Code of Ethics A guideline to help marketing managers and other employees make better decisions. Chapter 2 Version 3e ©2003 South-Western 58 9 Creating Ethical Guidelines Help identify acceptable business practices Help control behavior internally Reduce confusion in decision making Facilitate discussion about right and wrong Chapter 2 Version 3e ©2003 South-Western 59 Learning Objective 10 Discuss corporate social responsibility. Chapter 2 Version 3e ©2003 South-Western 60 10 Corporate Social Responsibility Philanthropic Be a good citizen. Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Chapter 2 Version 3e ©2003 South-Western 61