the marketing environment and marketing ethics
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Chapter 3 Version 6e 1©2002 South-Western
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The Marketing Environment The Marketing Environment and Marketing Ethicsand Marketing Ethics
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Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
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Learning ObjectivesLearning Objectives
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1.1. Discuss the external environment of Discuss the external environment of marketing, and explain how it affects a firm.marketing, and explain how it affects a firm.
2. Describe the social factors that affect 2. Describe the social factors that affect marketing.marketing.
3. Explain the importance to marketing 3. Explain the importance to marketing managers of current demographic trends.managers of current demographic trends.
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Learning Objectives (continued)Learning Objectives (continued)
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4. Explain the importance to marketing 4. Explain the importance to marketing managers of multiculturalism and growing managers of multiculturalism and growing ethnic markets.ethnic markets.
5. Identify consumer and marketer reactions 5. Identify consumer and marketer reactions to the state of the economy.to the state of the economy.
6. Identify the impact of technology on a firm.6. Identify the impact of technology on a firm.
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Learning Objectives (continued)Learning Objectives (continued)
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7. Discuss the political and legal 7. Discuss the political and legal environment of marketing.environment of marketing.
8. Explain the basics of foreign and 8. Explain the basics of foreign and domestic competition.domestic competition.
9. Describe the role of ethics and ethical 9. Describe the role of ethics and ethical decisions in business.decisions in business.
10. Discuss corporate social responsibility.10. Discuss corporate social responsibility.
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Learning Objective Learning Objective 1
Discuss the external environment of marketing,
and explain how it affects a firm.
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Target MarketTarget Market
A defined group most likely to buy a firm’s product.
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External Marketing EnvironmentExternal Marketing Environment1
Demographics
SocialChange
EconomicConditions
Political & Legal Factors
Technology
Competition
EnvironmentalScanning
Target Market
ProductDistributionPromotion
Price
External Environment is not controllable Ever-Changing
Marketplace
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External Marketing EnvironmentExternal Marketing Environment1
Social
Demographic
Economic
Technologic
Political and Legal
Competitive
External Environmental
Factors
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Learning Objective Learning Objective 2
Describe the social factors Describe the social factors that affect marketing.that affect marketing.
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Social FactorsSocial Factors
Values
Attitudes
Lifestyle
Social Factors
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Social ValuesSocial Values
Modernism
Cultural Creativity
Traditionalism
Today’s Today’s Marketing-Marketing-Oriented Oriented
ValuesValues
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Marketing-Oriented ValuesMarketing-Oriented Values
CulturalCreativity
Traditionalism
Modernism
Interested in new products and services.
“Heartlanders” with nostalgic views
Place high value on success, materialism, technology
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The Poverty of TimeThe Poverty of Time2
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 LifestylesComponent Lifestyles2
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 & WomenRole of Families & Women2
58% of all females are in the workforce
Rising purchasing power from dual-income families
Change of “traditional” purchasing roles
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Learning Objective Learning Objective
Explain the importanceExplain the importanceto marketing managersto marketing managers
of current demographic trends.of current demographic trends.
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Demographic FactorsDemographic Factors
Age
Location
Ethnicity
Demographics
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Age Groups: Generation YAge Groups: Generation Y3
Born between 1979 and 1994
Size creates immense marketing impact
Respond to ads differently
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Age Groups: Generation XAge Groups: Generation X3
Born between 1965 and 1978
Savvy and cynical consumers
Indulge themselves with meals/alcohol, clothing, and electronics
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Age Groups: Baby BoomersAge Groups: Baby Boomers3
Born between 1946 and 1964
Cherish youth, convenience, and individuality
Individualism has led to a personalized economy
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Personalized EconomyPersonalized Economy
Delivering goods and services at a good value
on demand.
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Product Characteristics in a Product Characteristics in a Personalized EconomyPersonalized Economy
Customization
Immediacy
Value
Products are custom designed and marketed to small target marketsProducts are delivered at the consumer’s convenience
Businesses must price competitively or create innovative products
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Age Groups: Older ConsumersAge 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 MoveLocation: 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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Learning Objective Learning Objective
Explain the importance to Explain the importance to marketing managers marketing managers
of multiculturalism and of multiculturalism and growing ethnic markets.growing ethnic markets.
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Growing Ethnic MarketsGrowing Ethnic Markets
U.S. population is becoming a multicultural society and workforce
Trend in U.S. is toward greater multiculturalism
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MulticulturalismMulticulturalism
When all major ethnicgroups in an area--
such as a city, county, or census tract--are roughly
represented.
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U.S. Multicultural MakeupU.S. Multicultural Makeup
0%
20%
40%
60%
80%
100%
1999
2023
WhitesAfricanHispanicAsian
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Multicultural MarketingMulticultural Marketing
StitchingNiches
NicheMarketing
Adapting Promotion
MarketingStrategies
forMulticultural
Markets
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Stitching NichesStitching Niches4
A strategy for multicultural marketing that combines ethnic,
age, income, and lifestylemarkets, on some
common basis, to form a large market.
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Learning Objective Learning Objective
Identify consumer and marketer Identify consumer and marketer reactions to the state of the economy.reactions to the state of the economy.
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Economic FactorsEconomic Factors
Distribution of Consumer
Income
Inflation
Recession
Economic Areas of Concern to
Marketers
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Rising IncomesRising Incomes 66% of U.S. households
earn “middle-class” income
Over 10% earn over $75,000, primarilyfrom dual-income families
More discretionary income for high-end goods and services
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InflationInflation 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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RecessionRecession Income, production and employment fall
Reduced demand for goods and services
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Recession Marketing StrategiesRecession Marketing Strategies
Improve existing productsImprove existing products
Introduce new productsIntroduce new products
Maintain customer servicesMaintain customer services
Emphasize top-of -the line productsEmphasize top-of -the line products
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Learning Objective Learning Objective 6
Identify the impact of technology on a firm.
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Basic ResearchBasic Research6
Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon.
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Applied ResearchApplied Research6
An attempt to develop new or improved products.
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Technological & Resource FactorsTechnological & 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 Learning Objective
Discuss the political and Discuss the political and legal environment of marketing.legal environment of marketing.
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Political and Legal FactorsPolitical and Legal Factors
Consumers
Businesses Society
New Technology
Laws and Regulations Laws and Regulations ProtectProtect
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Federal LegislationFederal LegislationSherman Act of 1890Clayton Act of 1914Federal Trade Commission Act of 1914Robinson-Patman Act of 1936Wheeler-Lea Amendments to the FTC Act of 1938 Lanhma Act of 1946Celler-Kefauver Antimerger Act of 1950Hart-Scott-Rodino Act of 1976
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Regulatory AgenciesRegulatory Agencies
Consumer Product Safety Commission
Federal Trade Commission
Food & Drug Administration
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Regulatory AgenciesRegulatory Agencies
Consumer Product Safety Commission
Federal Trade Commission
Food & Drug Administration
Protects consumer safety in and around their homes
Prevents unfair methods ofcompetition in commerce
Enforces safety regulations for food and drug products
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Learning Objective Learning Objective
Explain the basics of foreign and Explain the basics of foreign and domestic competition.domestic competition.
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Competitive FactorsCompetitive Factors8
How many competitors?
How big are competitors?
How interdependent is industry?
Control
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Global CompetitionGlobal 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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Learning Objective Learning Objective
Describe the role of ethics and Describe the role of ethics and ethical decisions in business.ethical decisions in business.
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EthicsEthics
The moral principles or values that generally govern the conduct of an individual.
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MoralsMorals
The rules people develop as a result of cultural values
and norms.
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Ethical Behavior in BusinessEthical Behavior in Business9
Ethical?Ethical? Legal?Legal?
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Ethical Development LevelsEthical Development Levels
PreconventionalMorality
ConventionalMorality
PostconventionalMorality
MoreMature
MoreSelfish
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Morality and Business EthicsMorality and Business EthicsPreconventional
Morality
• Childlike level
• Based on what will be punished or rewarded.
• Self-centered, calculating, selfish.
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Morality and Business EthicsMorality and Business EthicsConventional
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 EthicsMorality and Business Ethics
PostconventionalMorality
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• 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 MakingEthical Decision MakingSocial
ConsensusExtent of Problems
Top Management
ActionsPotential
Consequences
Probability of Harm
Number Affected
Time Until Consequences
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Code of EthicsCode of Ethics
A guideline to help marketing managers and other employees
make better decisions.
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Creating Ethical GuidelinesCreating 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 Learning Objective
Discuss corporate social responsibility.Discuss corporate social responsibility.
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Corporate Social ResponsibilityCorporate 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.
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