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Key Concepts Corporate Social Responsibility Corporate Social Responsibility Philanthropic Be a good citizen. Ethical Do what is right. Legal Obey the Law. Economic Be profitable. 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. Code of Ethics A guideline to help marketing managers and other employees make better decisions. Dot.com bubble of 1990s Enron Madoff Subprime crisis Financial institutions - AIG, Wachovia, Lehman Brothers, Merrill Lynch and Citigroup GREED ** IRRESPONSIBILITY GLOBAL CRISIS Helps identify acceptable business practices Helps control behavior internally Avoids confusion in decision making Facilitates discussion about right and wrong Internal (within the organization) External Environment (uncontrollable) Social Change Demographics Ever-Changing Marketplace Marketing mix Economic Conditions Product Distribution Promotion Price Competition Target Market Political & Legal Factors Environmental Scanning Technology Target Market A defined group most likely to buy a firm’s product. Social factors that affect marketing Attitudes Values Lifestyle Social Factors Influence: Products purchased Prices paid for products Effectiveness of promotions How, where, and when people purchase Core American Values Self-Sufficiency Upward Mobility Work Ethic Conformity Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price 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 Demography The study of people’s vital statistics, such as their age, race and ethnicity, and location. 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” Born between 1979 and 1994 Population of 60 million Purchasing power of $200 billion annually Researchers have found Gen Yers to be: ◦ ◦ ◦ ◦ ◦ ◦ ◦ Impatient Family-oriented Inquisitive Opinionated Diverse Time managers “Street Smart” Word of mouth marketing is effective http://www.mountaindew.com http://www.northface.com Born between 1965 and 1978 Population of 40 million Savvy and cynical consumers Time is at a premium, and outsourcing is utilized Entering their moneymaking years 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 Age Tweens Gen Y Gen X Baby Boom 8 to 14 yrs 29 million 1979-1994 60 million 1965-1978 40 million 1946-1964 77 million The importance of multiculturalism and growing ethnic markets to marketing managers 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. 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. Many firms are creating products for the African American market. Promotional dollars and media choices directed toward African Americans continue to increase. 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. Consumer and marketer reactions to the state of the economy Economic Factors Distribution of Consumer Income Inflation Recession Consumers’ Incomes 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. LO7 The Financial Power of Women 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% 66% 66% 53% 51% of of of of of new cars computers home improvements investments consumer electronics Recession Recession A period of economic activity characterized by negative growth, which reduces demand for goods and services. Recession Marketing Strategies Improve existing products and introduce new ones Maintain and expand customer services Emphasize top-ofthe-line products and promote product value The impact of technology on a firm Technological Factors U.S. excels at basic and applied research. Many firms use the market concept to guide research. New technology internally creates a longterm competitive advantage. External technology Creates more efficient operation or better products May render existing products obsolete Technological Factors Innovation is becoming a global process. New technologies create new opportunities RSS (Really Simple Syndication) Blogging Basic Research Applied Research Marketing Mix Technology Advances Political and Legal Factors Laws and Regulations Protect: New technology Society Businesses Consumers Federal Legislation Regulate competitive environment Regulate pricing practices Control false advertising Sherman Act Clayton Act Federal Trade Commission Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Robinson-Patman Act Wheeler-Lea Act 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 http://www.ftc.gov Powers of the FTC Cease-and-Desist Order Consent Decree Affirmative Disclosure Corrective Advertising Restitution Counteradvertising Consumer Privacy Government Actions Gramm-Leach-Bliley Act Health Insurance Portability and Accountability Act (HIPPA) California’s Notice of Security Breach Law