Chapter 3 The Marketing Chapter 3 The Marketing Environment Environment

and Marketing Ethicsand Marketing Ethics

External Marketing EnvironmentExternal Marketing Environment

DemographicsDemographics

SocialChangeSocial

Change

EconomicConditionsEconomicConditions

Political & Legal FactorsPolitical &

Legal Factors

TechnologyTechnology

CompetitionCompetition

EnvironmentalScanning

Target Market

ProductDistributionPromotion

Price

ProductDistributionPromotion

Price

External Environment is not controllable Ever-Changing

Marketplace

Marketing-Oriented ValuesMarketing-Oriented Values

CulturalCreativityCultural

Creativity

TraditionalismTraditionalism

ModernismModernism

Interested in new products and services.

“Heartlanders” with nostalgic views

Place high value on success, materialism, technology

The Poverty of TimeThe Poverty of Time

A lack of time to do anything but

work, commute to work, handle

family situations, do housework,

shop, eat, sleep...

Role of Families & WomenRole of Families & Women

• 58% of all females are in the workforce

• Rising purchasing power from dual-income families

• Change of “traditional” purchasing roles

Age Groups: Generation YAge Groups: Generation Y

• Born between 1979 and 1994

• Size creates immense marketing impact

• Respond to ads differently

Age Groups: Generation XAge Groups: Generation X

• Born between 1965 and 1978

• Savvy and cynical consumers

• Indulge themselves with meals/alcohol, clothing, and electronics

Age Groups: Baby BoomersAge Groups: Baby Boomers

• Born between 1946 and 1964

• Cherish youth, convenience, and individuality

• Individualism has led to a personalized economy

Age Groups: Older ConsumersAge Groups: Older Consumers

• Age “50 plus”

• Healthier, wealthier, better educated

• Considerable purchasing power

• Market potential not fully tapped

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

Growing Ethnic MarketsGrowing Ethnic Markets

• U.S. population is becoming a multicultural society and workforce

• Trend in U.S. is toward greater multiculturalism

U.S. Multicultural MakeupU.S. Multicultural Makeup

0%

20%

40%

60%

80%

100%

1999

2023

WhitesAfricanHispanicAsian

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

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

Regulatory AgenciesRegulatory Agencies

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

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

Ethical Decision MakingEthical Decision Making

Social Consensus

Social Consensus

Extent of ProblemsExtent of Problems

Top Management

Actions

Top Management

ActionsPotential

ConsequencesPotential

Consequences

Probability of Harm

Probability of Harm

Number AffectedNumber Affected

Time Until Consequences

Time Until Consequences

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.

Approaches to Ethics

EthicalBehavior

PunishmentPunishment RewardsRewards

Agency &Judicial

Penalties

Agency &Judicial

Penalties

ConsumerComplaints

Boycotts

ConsumerComplaints

Boycotts

ConsumerResponse &

Bonding

ConsumerResponse &

Bonding

Do theRightThing

Do theRightThing

Strategic Philanthropy

• Home Depot - Team Depot -- trains and places employees as volunteers with local youth-enrichment, home-renovation and environmental programs.• Avon - Breast Cancer Awareness Crusade that after six years has raised more than $32 million for women's health programs.• Lens Crafters' "Gift of Sight," or Wal-Mart's "Good Works," and Taco Bell's "Teen Supreme,” are creating programs that have their own names and brand and images and logos. They become integrated with the company. Companies truly have to stand for something -- and do it with integrity and credibility.• Corporate contributions to "cause programs" now exceed $700 million annually.

From Don Oldenburg, Washington Post Staff Writer, Wednesday, May 5, 1999; Page C04

Roper Poll

After price and quality, one-third of Americans consider a company's responsible business practices the most important factor in deciding whether or not to buy a brand. Indeed, social responsibility was more influential than advertising.

• More likely to purchase product associated with a cause they care about (78%).

• Likely to switch brands (66%).• Likely switch retailers (62%).• Pay more for a product (54%).• Pay five percent more (30%).• Pay 10 percent more (24%).• Consumers could name a company they

deemed least socially responsible (18%). Topping the list were Exxon, Dow and General Electric.

Roper Poll

Strategic Value of Corporate Citizenship Walker Research

Brand Loyalty

CompanyReputation Societal

ValueEconomic

Value

Service

Quality

PriceGood Corporate

Citizen

BusinessPractices

EmployeeTreatment

FinancialStability

Care AboutEnvironment

Strategic Value of Corporate Citizenship Walker Research

• 56% saw support of philanthropy as positive• 9% saw support of philanthropy as negative• Ratings of Industries that ‘Overall Support of the Community’

0 20 40 60

Non-Profits

Computers

Food

Utilities

Appliances

Petroleum

Government

Insurance

Chemical

Tobacco

Do Consumers Really Care About Business Ethics?*

Examples: Infant Formula, Outsourcing production to a country with very poor human rights records

The Costs: Getting caught, Nestles, Sears, Beechnut

*Creyer & Ross, Journal of Consumer Marketing

Do Consumers Really Care About Business Ethics?*

Study Results:

• Ethics is important to Consumers

• Ethical behavior is expected

• Willing to pay more for products from ethically responsible firms

• Willing to buy from unethical companies, but only at lower prices

*Creyer & Ross, Journal of Consumer Marketing

Corruption Vs. Investment Growth*

Inve

stm

ent

as %

of

GD

P

Lo

w

H

igh

High Corruption Level Low

Singapore

Ireland Switzlnd

Greece France Mexico France USA

Zaire Zimbabwe Netherlands

Haiti Britain

Ghana Angola

*Washington Post

Also see http://www.transparency.de/