Social Responsibility, Ethics, and theMarketing Environment

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Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 3

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Prepared byDeborah Baker

Texas Christian University

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3

Designed by Eric Brengle B-books, Ltd.

Introduction to MarketingMcDaniel, Lamb, Hair

9

Social Responsibility, Ethics, and the

Marketing Environment

2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 3

Learning Outcomes

LOI

LO2

LO3

Discuss corporate social responsibility

Describe the role of ethics and ethical decisions in business

Discuss the external environment of marketing, and explain how it affects a firm


Learning Outcomes

Describe the social factors that affect marketing

Explain the importance to marketing managers of current demographic trends

Explain the importance to marketing managers of multiculturalism and growing ethnic markets

LO5

LO6

LO4


Learning Outcomes

Identify consumer and market reactions to the state of the economy

Identify the impact of technology on a firm

Discuss the political and legal environment of marketing

Explain the basics of foreign and domestic competition

LO9

LOIO

LO8

LO7


Discuss corporate social responsibility

Corporate Social ResponsibilityLOI


SustainabilitySustainability

LOI Corporate Social Responsibility

The idea that socially

responsible companies will

outperform their peers by

focusing on the world’s social

problems and viewing them as

opportunities to build profits and

help the world at the same time.


REVIEW LEARNING OUTCOMELOI

Corporate Social Responsibility

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.


Describe the role of ethics and ethical decisions

in business

Ethical Behavior in BusinessLO2


LO2 Ethical Behavior in Business

EthicsEthics

MoralsMorals

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.


LO2 Ethical Development Levels

PreconventionalMorality

ConventionalMorality

PostconventionalMorality

MoreMature

MoreChildlike

• Based on what will be punished or rewarded

• Self-centered, calculating, selfish

• Moves toward the expectations of society

• Concerned over legality and the opinion of others

• Concern about how they judge themselves

• Concern if it is right in the long run


LO2 Ethical Decision Making

Influential Factors

Extent of Problems

Top Management Actions

Potential Consequences

Social Consensus

Probability of Harm

Time UntilConsequences

Number Affected

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 3

Biz Flix

Jaws

12

LO2


LO2 Code of Ethics

Code of EthicsCode of Ethics A guideline to help marketing

managers and other employees

make better decisions.

http://www.ethicsweb.ca

Online


Creating Ethical Guidelines

Helps identify acceptable business practices

Helps control behavior internally

Avoids confusion in decision making

Facilitates discussion about right and wrong

LO2


LO2 Ethical Norms and Values for Marketers

Exhibit 3.3


Discuss the external environment of marketing,

and explain how it affects a firm

The External Marketing EnvironmentLO3


LO3 External Marketing Environment

DemographicsDemographics

SocialChangeSocial

Change

EconomicConditionsEconomicConditions

Political & Legal FactorsPolitical &

Legal Factors

TechnologyTechnology

CompetitionCompetition

EnvironmentalScanning

Target Market

External Environment (uncontrollable)

Ever-ChangingMarketplace

ProductDistributionPromotion

Price

ProductDistributionPromotion

Price

Internal (within the

organization)

Marketing mix


LO3 Target Market

Target MarketTarget Market A defined group most likely to

buy a firm’s product.


Describe the social factors that affect marketing

Social FactorsLO4

20Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 3LO4

Social Factors

ValuesValues

AttitudesAttitudes

LifestyleLifestyle


LO4 Social Factors

Social Factors Influence:Social Factors Influence:

Products purchasedProducts purchased

Prices paid for productsPrices paid for products

Effectiveness of promotionsEffectiveness of promotions

How, where, and when people purchaseHow, where, and when people purchase


LO4 Social Factors

Self-SufficiencySelf-Sufficiency

Upward MobilityUpward Mobility

Work EthicWork Ethic

ConformityConformity

Core American Values

23Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 LO4

The Influence of Values on Buying Habits

Ranked Characteristics of Product Quality

Reliability

Durability

Easy maintenance

Ease of use

Trusted brand name

Low price


LO4 Component Lifestyles

ComponentLifestyles

ComponentLifestyles

The practice of choosing goods

and services that meet one’s

diverse needs and interests

rather than conforming to a

single, traditional lifestyle.


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

LO4 Role of Families and Working Women


REVIEW LEARNING OUTCOMELO4

Social Factors that Affect Marketing


Explain the importance to marketing managers of

current demographic trends

Demographic FactorsLO5


LO5 Demographic Factors

DemographyDemography The study of people’s vital

statistics, such as their age,

race and ethnicity, and

location.

29Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved

Chapter 3

TweensLO5

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”


Chapter 3

Generation YLO5

Born between 1979 and 1994


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 Online

http://www.mountaindew.comhttp://www.northface.com


Chapter 3

Generation XLO5



Savvy and cynical consumers

Time is at a premium, and outsourcing is utilized

Entering their money-making years


Chapter 3

Baby BoomersLO5


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

Four segments of baby boomers:“Looking for balance” “Confident and living well” “At ease” “Overwhelmed”



Current Demographic Trends

AgeTweens

8 to 14 yrs29 million

Gen Y

1979-199460 million

Gen X

1965-197840 million

Baby Boom

1946-196477 million


Explain the importance to marketing managers of

multiculturalism and growing ethnic markets

Growing Ethnic MarketsLO6


LO6 Growing Ethnic Markets

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.


Chapter 3

Marketing to Hispanic AmericansLO6

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.


Chapter 3

Marketing to African AmericansLO6

Many firms are creating products for the African American market.

Promotional dollars and media choices directed toward African Americans continue to increase.


Chapter 3

Marketing to Asian AmericansLO6

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.



Multiculturalism and Growing Ethnic Markets


Identify consumer and marketer reactions to the

state of the economy

Economic FactorsLO7


LO7 Economic Factors

Distribution of Consumer

Income

Inflation

Recession


LO7 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% of new cars– 66% of computers– 66% of home improvements– 53% of investments– 51% of consumer electronics


LO7

PurchasingPower

PurchasingPower

Purchasing Power

A comparison of the relative

cost of a set standard of goods

and services in different

geographic areas.


LO7

InflationInflation

Inflation

A measure of the decrease in

the value of the money,

expressed as the percentage

reduction in value since the

previous year.


LO7

RecessionRecession

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-of-the-line productsand promote product value


Identify the impact of technology on a firm

Technological FactorsLO8


LO8 Research

Basic ResearchBasic Research

Applied ResearchApplied Research

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


Technological Factors U.S. excels at basic and

applied research.

Many firms use the market concept to guide research.

New technology internally createsa long-term 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



Impact of Technology on a Firm

BasicResearch

BasicResearch

MarketingMix

MarketingMix

AppliedResearch

AppliedResearch

TechnologyAdvances

TechnologyAdvances


Discuss the political and legal environment

of marketing

Political and Legal FactorsLO9


Political and Legal Factors

LO9

New technology Society Businesses Consumers

Laws and Regulations Protect:Laws and Regulations Protect:


Federal Legislation

Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino Act

Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino Act

Regulate competitive

environment

Robinson-Patman Act Robinson-Patman ActRegulate pricing

practices

Wheeler-Lea Act Wheeler-Lea ActControl

falseadvertising


Regulatory Agencies

Online

http://www.ftc.gov

Consumer Product Safety Commission

Consumer Product Safety Commission

Federal Trade Commission

Federal Trade Commission

Food & Drug AdministrationFood & Drug

Administration

Protects consumer safety in and around their homes

Prevents unfair methods ofcompetition in commerce

Enforces safety regulations for food and drug products


LO9 Powers of the FTC

Cease-and-Desist OrderCease-and-Desist Order

Consent DecreeConsent Decree

Affirmative DisclosureAffirmative Disclosure

Corrective AdvertisingCorrective Advertising

RestitutionRestitution

CounteradvertisingCounteradvertising


LO9 Consumer Privacy

Gramm-Leach-Bliley Act

Health Insurance Portability and Accountability Act (HIPPA)

California’s Notice of Security Breach Law

Government ActionsGovernment Actions



Political and Legal Environment of Marketing


Explain the basics of foreign and domestic competition

Competitive FactorsLOIO


LOIO Competitive Factors

How many competitors?

How big are competitors?

How interdependent isthe industry?

Control


LOIO Competitive Factors

Competition for Market Share and Profits

Firms must work harder to maintain profits and market share.

Global Competition

More foreign firms are entering U.S. market.

Foreign firms in U.S. now compete on product quality.


REVIEW LEARNING OUTCOMEPolitical and Legal Environment

LOI

O

Mature Industries

Slow Growth / No Growth

Highly Competitive Marketplace

Can only increasemarket share bytaking it from a competitor.