Social Responsibility, Ethics, and the Marketing Environment


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Social Responsibility, Ethics, and the Marketing Environment

  1. 1. CHAPTER 3 Social Responsibility, Ethics, and the Marketing Environment Prepared by Deborah Baker Texas Christian University Designed by Eric Brengle B-books, Ltd. Introduction to Marketing McDaniel, Lamb, Hair 9
  2. 2. Learning Outcomes LO I LO 2 LO 3 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
  3. 3. 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 LO 5 LO 6 LO 4
  4. 4. 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 LO 9 LO IO LO 8 LO 7
  5. 5. Corporate Social Responsibility Discuss corporate social responsibility LO I
  6. 6. Corporate Social Responsibility LO I 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. Sustainability
  7. 7. REVIEW LEARNING OUTCOME LO I Corporate Social Responsibility Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Philanthropic Be a good citizen.
  8. 8. Ethical Behavior in Business Describe the role of ethics and ethical decisions in business LO 2
  9. 9. Ethical Behavior in Business LO 2 Ethics Morals 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.
  10. 10. Ethical Development Levels LO 2 Preconventional Morality Conventional Morality Postconventional Morality More Mature More Childlike <ul><li>Based on what will be punished or rewarded </li></ul><ul><li>Self-centered, calculating, selfish </li></ul><ul><li>Moves toward the expectations of society </li></ul><ul><li>Concerned over legality and the opinion of others </li></ul><ul><li>Concern about how they judge themselves </li></ul><ul><li>Concern if it is right in the long run </li></ul>
  11. 11. Ethical Decision Making LO 2 Influential Factors Extent of Problems Top Management Actions Potential Consequences Social Consensus Probability of Harm Time Until Consequences Number Affected
  12. 12. Biz Flix Jaws LO 2
  13. 13. Code of Ethics LO 2 Code of Ethics A guideline to help marketing managers and other employees make better decisions. Online
  14. 14. Creating Ethical Guidelines <ul><li>Helps identify acceptable business practices </li></ul><ul><li>Helps control behavior internally </li></ul><ul><li>Avoids confusion in decision making </li></ul><ul><li>Facilitates discussion about right and wrong </li></ul>LO 2
  15. 15. Ethical Norms and Values for Marketers LO 2 Exhibit 3.3
  16. 16. The External Marketing Environment Discuss the external environment of marketing, and explain how it affects a firm LO 3
  17. 17. External Marketing Environment LO 3 Demographics Social Change Economic Conditions Political & Legal Factors Technology Competition Environmental Scanning Target Market External Environment (uncontrollable) Ever-Changing Marketplace Product Distribution Promotion Price Internal (within the organization) Marketing mix
  18. 18. Target Market LO 3 Target Market A defined group most likely to buy a firm’s product.
  19. 19. Social Factors Describe the social factors that affect marketing LO 4
  20. 20. Social Factors LO 4 Values Attitudes Lifestyle
  21. 21. Social Factors LO 4 Social Factors Influence: Products purchased Prices paid for products Effectiveness of promotions How, where, and when people purchase
  22. 22. Social Factors LO 4 Core American Values Self-Sufficiency Upward Mobility Work Ethic Conformity
  23. 23. The Influence of Values on Buying Habits LO 4 Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price
  24. 24. Component Lifestyles LO 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.
  25. 25. <ul><li>Growth of dual-income families results in increased purchase power </li></ul><ul><li>Approximately 63% of work-age females are in the workforce </li></ul><ul><li>Women expect different things in life </li></ul><ul><ul><li>purchase bulk of technology products </li></ul></ul><ul><ul><li>do most of the grocery shopping </li></ul></ul><ul><ul><li>second largest group of home buyers after couples </li></ul></ul><ul><li>Single households outnumber married households with kids </li></ul>Role of Families and Working Women LO 4
  26. 26. REVIEW LEARNING OUTCOME LO 4 Social Factors that Affect Marketing
  27. 27. Demographic Factors Explain the importance to marketing managers of current demographic trends LO 5
  28. 28. Demographic Factors LO 5 Demography The study of people’s vital statistics, such as their age, race and ethnicity, and location.
  29. 29. Tweens LO 5 <ul><li>Pre- and early adolescents, age 8 to 14 </li></ul><ul><li>Population of 29 million </li></ul><ul><li>Purchasing power of $39 billion in 2007 </li></ul><ul><li>View TV ads as “just advertising” </li></ul><ul><li>Emerging as “the richest generation” and the “most influential generation in history” </li></ul>
  30. 30. Generation Y <ul><li>Born between 1979 and 1994 </li></ul><ul><li>Population of 60 million </li></ul><ul><li>Purchasing power of $200 billion annually </li></ul><ul><li>Researchers have found Gen Yers to be: </li></ul><ul><ul><li>Impatient </li></ul></ul><ul><ul><li>Family-oriented </li></ul></ul><ul><ul><li>Inquisitive </li></ul></ul><ul><ul><li>Opinionated </li></ul></ul><ul><ul><li>Diverse </li></ul></ul><ul><ul><li>Time managers </li></ul></ul><ul><ul><li>“ Street Smart” </li></ul></ul><ul><li>Word of mouth marketing is effective </li></ul>LO 5 Online
  31. 31. Generation X <ul><li>Born between 1965 and 1978 </li></ul><ul><li>Population of 40 million </li></ul><ul><li>Savvy and cynical consumers </li></ul><ul><li>Time is at a premium, and outsourcing is utilized </li></ul><ul><li>Entering their money-making years </li></ul>LO 5
  32. 32. Baby Boomers <ul><li>Born between 1946 and 1964 </li></ul><ul><li>Population of 77 million— the largest demographic segment </li></ul><ul><li>$1 trillion in spending power for people aged 50 to 60 </li></ul><ul><li>Income will continue to grow as they keep working </li></ul><ul><li>Four segments of baby boomers: “ Looking for balance” “Confident and living well” “At ease” “Overwhelmed” </li></ul>LO 5
  33. 33. REVIEW LEARNING OUTCOME LO 5 Current Demographic Trends Age Tweens 8 to 14 yrs 29 million Gen Y 1979-1994 60 million Gen X 1965-1978 40 million Baby Boom 1946-1964 77 million
  34. 34. Growing Ethnic Markets Explain the importance to marketing managers of multiculturalism and growing ethnic markets LO 6
  35. 35. Growing Ethnic Markets LO 6 <ul><li>Spending power of ethnic markets by 2008: </li></ul><ul><ul><li>Hispanics-- $1 trillion </li></ul></ul><ul><ul><li>African Americans-- $921 billion </li></ul></ul><ul><ul><li>Asian Americans-- $526 billion </li></ul></ul><ul><li>Diversity can result in bottom-line benefits to companies. </li></ul>
  36. 36. Marketing to Hispanic Americans LO 6 <ul><li>The population’s diversity creates challenges for targeting this group. </li></ul><ul><li>Hispanics tend to be brand loyal, but are not aware of many U.S. brands. </li></ul><ul><li>Nearly half of adult U.S. Hispanics have home Internet access. </li></ul>
  37. 37. Marketing to African Americans LO 6 <ul><li>Many firms are creating products for the African American market. </li></ul><ul><li>Promotional dollars and media choices directed toward African Americans continue to increase. </li></ul>
  38. 38. Marketing to Asian Americans LO 6 <ul><li>Younger, better educated, and have highest average income of all groups </li></ul><ul><li>Many products have been developed for Asian American market. </li></ul><ul><li>Cultural diversity within the Asian American market complicates promotional efforts. </li></ul>
  39. 39. REVIEW LEARNING OUTCOME LO 6 Multiculturalism and Growing Ethnic Markets
  40. 40. Economic Factors Identify consumer and marketer reactions to the state of the economy LO 7
  41. 41. Economic Factors LO 7 Distribution of Consumer Income Inflation Recession
  42. 42. Consumers’ Incomes <ul><li>Median U.S. household income in 2007 projected at $45,000 </li></ul><ul><li>Incomes have risen at a slow pace. </li></ul><ul><li>Education is the primary determinant of earning potential. </li></ul><ul><li>Consumers are strapped for cash. </li></ul>LO 7
  43. 43. The Financial Power of Women <ul><li>Women bring in half of the household income. </li></ul><ul><li>Women control 51.3 percent of the private wealth in the U.S. </li></ul><ul><li>Women control 80 percent of household spending. </li></ul><ul><li>Women are now the primary buyers in male-dominated categories: </li></ul><ul><ul><li>68% of new cars </li></ul></ul><ul><ul><li>66% of computers </li></ul></ul><ul><ul><li>66% of home improvements </li></ul></ul><ul><ul><li>53% of investments </li></ul></ul><ul><ul><li>51% of consumer electronics </li></ul></ul>LO 7
  44. 44. Purchasing Power LO 7 Purchasing Power A comparison of the relative cost of a set standard of goods and services in different geographic areas.
  45. 45. Inflation LO 7 Inflation A measure of the decrease in the value of the money, expressed as the percentage reduction in value since the previous year.
  46. 46. Recession LO 7 Recession A period of economic activity characterized by negative growth, which reduces demand for goods and services.
  47. 47. Recession Marketing Strategies <ul><li>Improve existing products and introduce new ones </li></ul><ul><li>Maintain and expand customer services </li></ul><ul><li>Emphasize top-of-the-line products and promote product value </li></ul>LO 7
  48. 48. Technological Factors Identify the impact of technology on a firm LO 8
  49. 49. Research LO 8 Basic Research Applied 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
  50. 50. Technological Factors <ul><li>U.S. excels at basic and applied research. </li></ul><ul><li>Many firms use the market concept to guide research. </li></ul><ul><li>New technology internally creates a long-term competitive advantage. </li></ul><ul><li>External technology </li></ul><ul><ul><li>Creates more efficient operation or better products </li></ul></ul><ul><ul><li>May render existing products obsolete </li></ul></ul>LO 8
  51. 51. Technological Factors <ul><li>Innovation is becoming a global process. </li></ul><ul><li>New technologies create new opportunities </li></ul><ul><ul><li>RSS (Really Simple Syndication) </li></ul></ul><ul><ul><li>Blogging </li></ul></ul>LO 8
  52. 52. REVIEW LEARNING OUTCOME LO 8 Impact of Technology on a Firm Basic Research Marketing Mix Applied Research Technology Advances
  53. 53. Political and Legal Factors Discuss the political and legal environment of marketing LO 9
  54. 54. Political and Legal Factors LO 9 <ul><li>New technology </li></ul><ul><li>Society </li></ul><ul><li>Businesses </li></ul><ul><li>Consumers </li></ul>Laws and Regulations Protect:
  55. 55. Federal Legislation LO 9 <ul><ul><li>Sherman Act </li></ul></ul><ul><ul><li>Clayton Act </li></ul></ul><ul><ul><li>Federal Trade Commission Act </li></ul></ul><ul><ul><li>Celler-Kefauver Antimerger Act </li></ul></ul><ul><ul><li>Hart-Scott-Rodino Act </li></ul></ul>Regulate competitive environment Robinson-Patman Act Regulate pricing practices Wheeler-Lea Act Control false advertising
  56. 56. Regulatory Agencies LO 9 Consumer Product Safety Commission Federal Trade Commission Food & Drug Administration Protects consumer safety in and around their homes Prevents unfair methods of competition in commerce Enforces safety regulations for food and drug products Online
  57. 57. Powers of the FTC LO 9 Cease-and-Desist Order Consent Decree Affirmative Disclosure Corrective Advertising Restitution Counteradvertising
  58. 58. Consumer Privacy LO 9 <ul><li>Gramm-Leach-Bliley Act </li></ul><ul><li>Health Insurance Portability and Accountability Act (HIPPA) </li></ul><ul><li>California’s Notice of Security Breach Law </li></ul>Government Actions
  59. 59. REVIEW LEARNING OUTCOME LO 9 Political and Legal Environment of Marketing
  60. 60. Competitive Factors Explain the basics of foreign and domestic competition LO IO
  61. 61. Competitive Factors LO IO <ul><li>How many competitors? </li></ul><ul><li>How big are competitors? </li></ul><ul><li>How interdependent is the industry? </li></ul>Control
  62. 62. Competitive Factors <ul><li>Competition for Market Share and Profits </li></ul><ul><li>Firms must work harder to maintain profits and market share. </li></ul><ul><li>Global Competition </li></ul><ul><li>More foreign firms are entering U.S. market. </li></ul><ul><li>Foreign firms in U.S. now compete on product quality. </li></ul>LO IO
  63. 63. REVIEW LEARNING OUTCOME Political and Legal Environment LO IO Mature Industries Slow Growth / No Growth Highly Competitive Marketplace Can only increase market share by taking it from a competitor.