Chapter 14Marketing 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

Define the term marketingDiscuss the external environment of marketing, and explain how it affects an organisation

Target market

A defined group most

likely to buy a firm’s

product.

1

External marketing environmentExternal environment

is not controllable

Ever-changing marketplace

1

Target market

Product Distribution

PricingIntegrated marketing

communication

Competitive environment

Technological environment

Political and legal environment

Sociocultural environment

Economic environment

External environmental factors1

• Social

• Demographic

• Economic

• Technological

• Political and legal

• Competitive

Learning objective 2

Describe four marketing management philosophies.

Describe the sociocultural

factors that affect

marketing

Sociocultural factors2

Age factors

• Generation Y

• Generation X

• Baby boomers

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.

2

Learning objective 3

Describe four marketing management philosophies.

Explain the importance to marketing managers of current demographic trends

Components of Australian natural population increase

3

0

5

10

15

20

25

30

1901 1920 1940 1960 1980 2000

Crude birth rate

Crude death rate

ABS

Demographic factors3

• Age

• Location

• Ethnicity

Learning objective 4

Explain the importance to

marketing mangers of

multiculturalism and

growing ethnic markets

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 marketing4

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

Economic areas of concern to marketers

5

• Distribution of consumer income

• Inflation

• Recession

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.

5

Learning objective 6

Identify the impact of

technology on an

organisation

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.

6

Learning objective 7

Discuss the political and legal environment of marketing

Political and legal factors

Every aspect of the marketing mix is subject to laws and regulations

7

• Product• Price• Place• Promotion

Australian Competition and Consumer Commission (ACCC)

Ensures compliance with partsIV, IVA, V and VA of the Trade Practices Act, Conduct Code and Prices Surveillance Act. Actively pursues violations of their marketing statutes.

7

Explain the basics of

foreign and domestic

competition

Learning objective 8

Competitive factors

• How many competitors?

• How big are competitors?

• How interdependent is industry?

8

No control

Competition

Global competitionProvide same product in all markets around the world

International competitionModified products for different countries

8

Describe the role of

ethics and ethical

decisions in business

Learning objective 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 business9

• Who is helped or hurt?

• How long-lasting are the consequences?

• What actions produce the greatest good for the greatest number of people?

Ethical development levels9

More selfish

More mature

Preconventional morality

Conventional morality

Postconventional morality

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 guidelines9

• Helps identify acceptable business practices.

• Helps control behaviour internally.

• Reduces confusion in decision-making.

• Facilitates discussion about right and wrong.

Discuss corporate social

responsibility

Learning objective 10

Corporate social responsibility10

Philanthropic – Be a good citizen

Ethical – Do what is right

Legal – Obey the law

Economic – Be profitable