Ethics Social Responsibility and the Marketing Environment Chapter

Ethics, Social Responsibility, and, the Marketing Environment Chapter 2 Prepared by Deborah Baker Texas Christian University 1

Learning Objectives 1. Describe the role of ethics and ethical decisions in business 2. Discuss corporate social responsibility. 3. Discuss the external environment of marketing, and explain how it affects a firm. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 2

Learning Objectives (continued) 4. Describe the social factors that affect marketing. 5. Explain the importance to marketing managers of current demographic trends. 6. Explain the importance to marketing managers of multiculturalism and growing ethnic markets. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 3

Learning Objectives (continued) 7. Identify consumer and marketer reactions to the state of the economy. 8. Identify the impact of technology on a firm. 9. Discuss the political and legal environment of marketing. 10. Explain the basics of foreign and domestic competition. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 4

1 Learning Objective Describe the role of ethics and ethical decisions in business. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 5

1 Ethics and Morals Ethics The moral principles or values that generally govern the conduct of an individual. Morals The rules people develop as a result of cultural values and norms. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 6

1 Ethical Behavior in Business Ethical? Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning Legal? 7

1 Ethical Development Levels More Selfish Preconventional Morality Conventional Morality More Mature Postconventional Morality Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 8

1 Morality and Business Ethics Preconventional Morality § Childlike level § Based on what will be punished or rewarded § Self-centered, calculating, selfish Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 9

1 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” Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 10

1 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 Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 11

1 Ethical Decision Making Extent of Problems Top Management Actions Probability of Harm Potential Consequences Time Until Consequences Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning Social Consensus Number Affected 12

1 Code of Ethics On Line http: //www. ethics. ubc. ca/ resources/business A guideline to help marketing managers and other employees make better decisions. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 13

1 Creating Ethical Guidelines § Help identify acceptable business practices § Help control behavior internally § Reduce confusion in decision making § Facilitate discussion about right and wrong Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 14

1 Unethical Practices Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 15

2 Learning Objective Discuss corporate social responsibility. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 16

2 Corporate Social Responsibility On Line http: //www. equalexchange. com http: //www. crest. com Philanthropic Be a good citizen. Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 17

3 Learning Objective On Line http: //www. levi. com Discuss the external environment of marketing, and explain how it affects a firm. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 18

3 Target Market A defined group most likely to buy a firm’s product. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 19

3 External Marketing Environment External Environment is not controllable Social Change Demographics Ever-Changing Marketplace Economic Conditions Product Distribution Promotion Price Competition Target Market Political & Legal Factors Environmental Scanning Technology Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 20

3 External Marketing Environment Social Demographic Economic External Environmental Factors Technologic Political and Legal Competitive Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 21

4 Learning Objective Describe the social factors that affect marketing. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 22

4 Social Factors Values Attitudes Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning Lifestyle 23

4 American Values Self-Sufficiency Upward Mobility Work Ethic Basic American Values Conformity Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 24

The Influence of Values on Buying Habits 4 1. Reliability 2. Durability 3. Easy maintenance Ranked Characteristics of Product Quality 4. Ease of use 5. Trusted brand 6. Low price Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 25

4 The Poverty of Time A lack of time to do anything but work, commute to work, handle family situations, do housework, shop, eat, sleep. . . Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 26

4 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. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 27

4 Role of Families & Women § 58% of all females (ages 16 -65) are in the workforce § Purchasing power from dual-career families is rising § “Traditional” purchasing roles and patterns are changing Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 28

5 Learning Objective Explain the importance to marketing managers of current demographic trends. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 29

5 Demographic Factors Demography Age Location Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning Race and Ethnicity 30

5 The Demographic Facts of life Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 31

5 Age Groups: Generation Y On Line http: //www. generation-y. com § Born between 1979 and 1994 § Size creates immense marketing impact § Respond to ads differently § Love customized products On Line http: //www. mountaindew. com and services http: //www. northface. com Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 32

5 Age Groups: Generation X § Born between 1965 and 1978 § Savvy and cynical consumers § Indulge themselves with meals/alcohol, clothing, and electronics Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 33

5 Age Groups: Baby Boomers § Born between 1946 and 1964 § Cherish youth, convenience, and individuality § In the “nesting stage” of life § Individualism has led to a personalized economy Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 34

5 Personalized Economy Delivering customized goods and services at a good value on demand. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 35

5 Age Groups: Older Consumers On Line http: //www. gct. com http: //www. maupintour. com § Age “ 55 plus” § Healthier, wealthier, better educated § Definite about wants and needs § Have unique behavior patterns § Not happy with advertising treatment Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 36

6 Learning Objective Explain the importance to marketing managers of multiculturalism and growing ethnic markets. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 37

6 Growing Ethnic Markets § U. S. population is becoming a multicultural society and workforce § Trend in U. S. is toward greater multiculturalism § Growth in three ethnic minorities: • African-Americans • U. S. Hispanics • Asian-Americans Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 38

6 Multiculturalism On Line http: //www. bet. com http: //www. multiculturalmarketingresources. com When all major ethnic groups in an area-such as a city, county, or census tract--are roughly represented. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 39

7 Learning Objective Identify consumer and marketer reactions to the state of the economy. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 40

7 Economic Factors Economic Areas of Concern to Marketers Distribution of Consumer Income Recession Inflation Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 41

7 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 Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 42

7 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 Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 43

7 Recession § Income, production and employment fall § Reduced demand for goods and services Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 44

7 Recession Marketing Strategies ® Improve existing products ® Introduce new products ® Maintain customer services ® Emphasize top-of -the line products and promote product value Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 45

8 Learning Objective Identify the impact of technology on a firm. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 46

8 Basic and Applied Research Basic Research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. Applied Research An attempt to develop new or improved products Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 47

8 Technological & Resource Factors § New technology is a weapon against inflation and recession § U. S. excels at basic and applied research § Information technology and the Internet have increased productivity Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 48

9 Learning Objective Discuss the political and legal environment of marketing. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 49

9 Political and Legal Factors Laws and Regulations Protect Businesses Consumers Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning Society New Technology 50

9 Federal Legislation Sherman Act Clayton Act Federal Trade Commission Act Robinson-Patman Act Wheeler-Lea Amendments to the FTC Act Lanham Act Celler-Kefauver Antimerger Act Hart-Scott-Rodino Act Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 51

9 Regulatory Agencies On Line http: //www. ftc. gov § Consumer Product Safety Commission § Federal Trade Commission § Food & Drug Administration Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 52

9 Regulatory Agencies On Line http: //www. fda. gov 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 Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 53

10 Learning Objective Explain the basics of foreign and domestic competition. Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 54

10 Competitive Factors How many competitors? Control How big are competitors? How interdependent is the industry? Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 55

10 Competitive Factors Competition for Market Share and Profits Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning Global Competition 56

10 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 Chapter 2 Essentials of Marketing 4 e Lamb Hair Mc. Daniel © 2005 South-Western/Thomson Learning 57