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Chapter 14 Marketing environments and ethics Learning objectives 1 Discuss the external environment of marketing, and explain how it affects an organisation 2 Describe the sociocultural factors that affect marketing 3 Explain the importance to marketing managers of current demographic trends Learning objectives (cont.) 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 an organisation 7 Discuss the political and legal environment of marketing Learning objectives (cont.) 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 Learning objective 1 Discuss the external Define the term environment of marketing marketing, and explain how it affects an organisation 1 Target market A defined group most likely to buy a firm’s product. 1 External marketing environment External environment is not controllable Competitive environment Economic environment Product Sociocultural environment Ever-changing marketplace Distribution Technological environment Target market Integrated marketing communication Pricing Political and legal environment 1 External environmental factors • Social • Demographic • Economic • Technological • Political and legal • Competitive Learning objective 2 Describe marketing Describefour the sociocultural management philosophies. factors that affect marketing 2 Sociocultural factors Age factors • Generation Y • Generation X • Baby boomers 2 Age groups: Generation Y • Born between 1979 and 1994 • Size creates immense marketing impact • Respond to ads differently 2 Age groups: Generation X • Born between 1965 and 1978 • Savvy and cynical consumers • Indulge themselves with meals, alcohol, clothing and electronics 2 Age groups: Baby boomers • Born between 1946 and 1964 • Cherish youth, convenience and individuality • Individualism has led to a personalised economy 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. Learning objective 3 Explain the importance to Describe four marketing marketing managers of management philosophies. current demographic trends 3 Components of Australian natural population increase 30 Crude birth rate 25 Crude death rate 20 15 10 5 0 1901 1920 1940 1960 1980 2000 ABS 3 Demographic factors • Age • Location • Ethnicity Learning objective 4 Explain the importance to marketing mangers of multiculturalism and growing ethnic markets 4 Growing ethnic markets • Australian population is becoming a multicultural society and workforce. • Trend in Australia is toward greater multiculturalism. 4 Multiculturalism When a society has more than one ethnic culture, the society receives benefits as a result of this diversity 4 Multicultural marketing Marketing strategies for multicultural markets • Niche marketing • Adapting promotion • Stitching niches Learning objective 5 Identify consumer and marketer reactions to the state of the economy 5 Economic areas of concern to marketers • Distribution of consumer income • Inflation • Recession 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 sales. 5 Recession • Income, production and employment fall. • Reduced demand for goods and services. 5 Recession marketing strategies • Improve existing products. • Maintain and expand customer service. • Emphasise top-of-the-line products. Learning objective 6 Identify the impact of technology on an organisation 6 Primary research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. 6 Applied research An attempt to develop new or improved products. Learning objective 7 Discuss the political and legal environment of marketing 7 Political and legal factors Every aspect of the marketing mix is subject to laws and regulations • • • • Product Price Place Promotion 7 Australian Competition and Consumer Commission (ACCC) Ensures compliance with parts IV, IVA, V and VA of the Trade Practices Act, Conduct Code and Prices Surveillance Act. Actively pursues violations of their marketing statutes. Learning objective 8 Explain the basics of foreign and domestic competition 8 Competitive factors • How many competitors? • How big are competitors? • How interdependent is industry? No control 8 Competition Global competition Provide same product in all markets around the world International competition Modified products for different countries Learning objective 9 Describe the role of ethics and ethical decisions in business 9 Ethics The moral principles or values that generally govern the conduct of an individual. 9 Morals The rules people develop as a result of cultural values and norms. 9 Ethical behaviour in business • Who is helped or hurt? • How long-lasting are the consequences? • What actions produce the greatest good for the greatest number of people? 9 Ethical development levels More selfish Preconventional morality Conventional morality More mature Postconventional morality 9 Ethical decision-making • • • • • • • Extent of ethical problems within the organisation Top management actions on ethics Potential magnitude of the consequences Social consensus Probability of a harmful outcome Length of time between the decision and the onset of consequences Number of people to be affected 9 Code of ethics A guideline to help marketing managers and other employees make better decisions. 9 Creating ethical guidelines • Helps identify acceptable business practices. • Helps control behaviour internally. • Reduces confusion in decisionmaking. • Facilitates discussion about right and wrong. Learning objective 10 Discuss corporate social responsibility 10 Corporate social responsibility Philanthropic – Be a good citizen Ethical – Do what is right Legal – Obey the law Economic – Be profitable