Transcript chapter 2 The Marketing Environment and Marketing Ethics

The Marketing Environment
and Marketing Ethics
chapter
2
Prepared by
Deborah Baker
Texas Christian University
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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.
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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.
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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.
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1
Learning Objective
Discuss the external environment
of marketing,
and explain how it affects a firm.
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1
Target Market
A defined group most likely
to buy a firm’s product.
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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
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Technology
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1
External Marketing Environment
Social
Demographic
Economic
External
Environmental
Factors
Technologic
Political and Legal
Competitive
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2
Learning Objective
Describe the social factors
that affect marketing.
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Social Factors
Social Factors
Values
Lifestyle
Attitudes
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Social Values
Cultural Creativity
Today’s
MarketingOriented
Values
Traditionalism
Modernism
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Marketing-Oriented Values
Cultural
Creativity
Traditionalism
Modernism
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Interested in new products
and services.
“Heartlanders” with
nostalgic views
Place high value on success,
materialism, technology
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The Poverty of Time
A lack of time to do
anything but work,
commute to work, handle
family situations, do
housework, shop, eat,
sleep...
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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.
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Role of Families & Women
 58% of all females are in the
workforce
 Rising purchasing power from dualincome families
 Change of “traditional” purchasing
roles
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3
Learning Objective
Explain the importance
to marketing managers
of current demographic trends.
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3
Demographic Factors
Demographics
Age
Ethnicity
Location
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Age Groups: Generation Y
 Born between 1979 and 1994
 Size creates immense marketing
impact
 Respond to ads differently
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Age Groups: Generation X
 Born between 1965 and 1978
 Savvy and cynical consumers
 Indulge themselves with
meals/alcohol, clothing, and
electronics
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Age Groups: Baby Boomers
 Born between 1946 and 1964
 Cherish youth, convenience,
and individuality
 Individualism has led to a
personalized economy
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Personalized Economy
Delivering goods and
services at a good value
on demand.
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Product Characteristics in a
Personalized Economy
Customization
Immediacy
Value
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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
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Age Groups: Older Consumers

Age “50 plus”

Healthier, wealthier, better
educated

Considerable purchasing
power

Market potential not
fully tapped
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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
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4
Learning Objective
Explain the importance to
marketing managers
of multiculturalism and
growing ethnic markets.
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Growing Ethnic Markets

U.S. population is becoming a
multicultural society and workforce

Trend in U.S. is toward greater
multiculturalism
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Multiculturalism
When all major ethnic
groups in an area-such as a city, county, or
census tract--are roughly
represented.
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U.S. Multicultural Makeup
100%
80%
Whites
African
Hispanic
Asian
60%
40%
20%
0%
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Multicultural Marketing
Niche
Marketing
Marketing
Strategies
for
Multicultural
Markets
Adapting
Promotion
Stitching
Niches
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Stitching Niches
A strategy for
multicultural marketing
that combines ethnic,
age, income, and lifestyle
markets, on some
common basis, to form
a large market.
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5
Learning Objective
Identify consumer and marketer
reactions to the state of the economy.
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Economic Factors
Economic Areas
of Concern to
Marketers
Distribution of
Consumer
Income
Recession
Inflation
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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
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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
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5
Recession

Income, production and employment fall

Reduced demand for goods and services
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Recession Marketing Strategies
 Improve existing products
 Introduce new products
 Maintain customer services
 Emphasize top-of -the line products
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Learning Objective
Identify the impact of
technology on a firm.
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Basic Research
Pure research that aims to
confirm an existing theory
or to learn more about a
concept phenomenon.
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Applied Research
An attempt to develop new
or improved products.
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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
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Learning Objective
Discuss the political and
legal environment of marketing.
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Political and Legal Factors
Laws and Regulations Protect
Businesses
Consumers
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Society
New
Technology
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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
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Regulatory Agencies

Consumer Product Safety Commission

Federal Trade Commission

Food & Drug Administration
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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
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8
Learning Objective
Explain the basics of foreign and
domestic competition.
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8
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is industry?
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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
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9
Learning Objective
Describe the role of ethics and
ethical decisions in business.
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Ethics
The moral principles or
values that generally
govern the conduct of an
individual.
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Morals
The rules people develop as
a result of cultural values
and norms.
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Ethical Behavior in Business
Legal?
Ethical?
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Ethical Development Levels
More
Selfish
Preconventional
Morality
Conventional
Morality
More
Mature
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Postconventional
Morality
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Morality and Business Ethics
Preconventional
Morality
• Childlike level
• Based on what will be punished or
rewarded.
• Self-centered, calculating, selfish.
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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”
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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.
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Ethical Decision Making
Extent of
Problems
Top
Management
Actions
Probability of
Harm
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Potential
Consequences
Time Until
Consequences
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Social
Consensus
Number
Affected
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Code of Ethics
A guideline to help
marketing managers and
other employees make
better decisions.
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Creating Ethical Guidelines
 Help identify acceptable business
practices
 Help control behavior internally
 Reduce confusion in decision making
 Facilitate discussion about right and
wrong
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Learning Objective
10
Discuss corporate social responsibility.
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Corporate Social Responsibility
Philanthropic
Be a good citizen.
Ethical
Do what is right.
Legal
Obey the Law.
Economic
Be profitable.
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