The Marketing Environment and Marketing Ethics 2 chapter Prepared by Deborah Baker Texas Christian University Chapter 2 Version 3e

chapter 2 Learning Objectives 1. Discuss the external environment of marketing, and explain how it affects a firm. 2. Describe the social factors that affect marketing. 3. Explain the importance to marketing managers of current demographic trends. 2 chapter Chapter 2 Version 3e

Learning Objectives (continued) 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 a firm. 2 chapter Chapter 2 Version 3e

Learning Objectives (continued) 7. Discuss the political and legal environment of marketing. 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. 2 chapter Chapter 2 Version 3e

Discuss the external environment and explain how it affects a firm. 1 Learning Objective Discuss the external environment of marketing, and explain how it affects a firm. Chapter 2 Version 3e

A defined group most likely to buy a firm’s product. 1 Target Market A defined group most likely to buy a firm’s product. Chapter 2 Version 3e

External Marketing Environment 1 External Marketing Environment Demographics Social Change Economic Conditions Political & Legal Factors Technology Competition Environmental Scanning Target Market Product Distribution Promotion Price External Environment is not controllable Ever-Changing Marketplace Chapter 2 Version 3e

External Marketing Environment 1 External Marketing Environment Social Demographic Economic Technologic Political and Legal Competitive External Environmental Factors Chapter 2 Version 3e

Describe the social factors 2 Learning Objective Describe the social factors that affect marketing. Chapter 2 Version 3e

2 Social Factors Social Factors Values Attitudes Lifestyle Chapter 2 Version 3e

2 Social Values Today’s Marketing- Oriented Values Cultural Creativity Modernism Cultural Creativity Traditionalism Today’s Marketing- Oriented Values Chapter 2 Version 3e

Marketing-Oriented Values 2 Marketing-Oriented Values Cultural Creativity Traditionalism Modernism Interested in new products and services. “Heartlanders” with nostalgic views Place high value on success, materialism, technology Chapter 2 Version 3e

2 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 Version 3e

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. Chapter 2 Version 3e

Role of Families & Women 2 Role of Families & Women 58% of all females are in the workforce Rising purchasing power from dual-income families Change of “traditional” purchasing roles Chapter 2 Version 3e

Explain the importance of current demographic trends. 3 Learning Objective Explain the importance to marketing managers of current demographic trends. Chapter 2 Version 3e

3 Demographic Factors Demographics Age Location Ethnicity Chapter 2 Version 3e

Age Groups: Generation Y 3 Age Groups: Generation Y Born between 1979 and 1994 Size creates immense marketing impact Respond to ads differently Chapter 2 Version 3e

Age Groups: Generation X 3 Age Groups: Generation X Born between 1965 and 1978 Savvy and cynical consumers Indulge themselves with meals/alcohol, clothing, and electronics Chapter 2 Version 3e

Age Groups: Baby Boomers 3 Age Groups: Baby Boomers Born between 1946 and 1964 Cherish youth, convenience, and individuality Individualism has led to a personalized economy Chapter 2 Version 3e

Delivering goods and services at a good value 3 Personalized Economy Delivering goods and services at a good value on demand. Chapter 2 Version 3e

Product Characteristics in a Personalized Economy 3 Customization Immediacy Value Products are custom designed and marketed to small target markets Products are delivered at the consumer’s convenience Businesses must price competitively or create innovative products Chapter 2 Version 3e

Age Groups: Older Consumers 3 Age Groups: Older Consumers Age “50 plus” Healthier, wealthier, better educated Considerable purchasing power Market potential not fully tapped Chapter 2 Version 3e

Location: Americans on the Move 3 Location: Americans on the Move Average U.S. citizen moves every six years Immigrants add $10 billion yearly to economy Migration is a global phenomenon Chapter 2 Version 3e

4 Learning Objective Explain the importance to marketing managers of multiculturalism and growing ethnic markets. Chapter 2 Version 3e

Growing Ethnic Markets 4 Growing Ethnic Markets U.S. population is becoming a multicultural society and workforce Trend in U.S. is toward greater multiculturalism Chapter 2 Version 3e

4 Multiculturalism When all major ethnic groups in an area-- such as a city, county, or census tract--are roughly represented. Chapter 2 Version 3e

U.S. Multicultural Makeup 4 U.S. Multicultural Makeup 0% 20% 40% 60% 80% 100% 1999 2023 Whites African Hispanic Asian Chapter 2 Version 3e

Multicultural Marketing 4 Multicultural Marketing Stitching Niches Niche Marketing Adapting Promotion Strategies for Multicultural Markets Chapter 2 Version 3e

markets, on some common basis, to form a large market. 4 Stitching Niches A strategy for multicultural marketing that combines ethnic, age, income, and lifestyle markets, on some common basis, to form a large market. Chapter 2 Version 3e

Identify consumer and marketer reactions to the state of the economy. 5 Learning Objective Identify consumer and marketer reactions to the state of the economy. Chapter 2 Version 3e

Economic Areas of Concern to Marketers Distribution of Consumer Income 5 Economic Factors Economic Areas of Concern to Marketers Distribution of Consumer Income Recession Inflation Chapter 2 Version 3e

5 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 Version 3e

5 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 Prices Chapter 2 Version 3e

5 Recession Income, production and employment fall Reduced demand for goods and services Chapter 2 Version 3e

Recession Marketing Strategies 5 Recession Marketing Strategies Improve existing products Introduce new products Maintain customer services Emphasize top-of -the line products Chapter 2 Version 3e

6 Learning Objective Identify the impact of technology on a firm. Chapter 2 Version 3e

6 Basic Research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. Chapter 2 Version 3e

An attempt to develop new or improved products. 6 Applied Research An attempt to develop new or improved products. Chapter 2 Version 3e

Technological & Resource Factors 6 Technological & 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 Chapter 2 Version 3e

Discuss the political and legal environment of marketing. 7 Learning Objective Discuss the political and legal environment of marketing. Chapter 2 Version 3e

Political and Legal Factors 7 Political and Legal Factors Laws and Regulations Protect Consumers Businesses Society New Technology Chapter 2 Version 3e

7 Federal Legislation Sherman Act of 1890 Clayton Act of 1914 Federal Trade Commission Act of 1914 Robinson-Patman Act of 1936 Wheeler-Lea Amendments to the FTC Act of 1938 Lanhma Act of 1946 Celler-Kefauver Antimerger Act of 1950 Hart-Scott-Rodino Act of 1976 Chapter 2 Version 3e

7 Regulatory Agencies Consumer Product Safety Commission Federal Trade Commission Food & Drug Administration Chapter 2 Version 3e

7 Regulatory Agencies 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 Chapter 2 Version 3e

Explain the basics of foreign and 8 Learning Objective Explain the basics of foreign and domestic competition. Chapter 2 Version 3e

Control 8 Competitive Factors How many competitors? How big are competitors? How interdependent is industry? Chapter 2 Version 3e

8 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 Version 3e

Describe the role of ethics and ethical decisions in business. 9 Learning Objective Describe the role of ethics and ethical decisions in business. Chapter 2 Version 3e

9 Ethics The moral principles or values that generally govern the conduct of an individual. Chapter 2 Version 3e

The rules people develop as a result of cultural values and norms. 9 Morals The rules people develop as a result of cultural values and norms. Chapter 2 Version 3e

Ethical Behavior in Business 9 Ethical Behavior in Business Ethical? Legal? ??? Judgments Vary Chapter 2 Version 3e

Ethical Development Levels 9 Ethical Development Levels More Mature Selfish Preconventional Morality Conventional Postconventional Chapter 2 Version 3e

Morality and Business Ethics 9 Morality and Business Ethics Preconventional Morality Childlike level Based on what will be punished or rewarded. Self-centered, calculating, selfish. Chapter 2 Version 3e

Morality and Business Ethics 9 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 Version 3e

Morality and Business Ethics 9 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 Version 3e

Ethical Decision Making 9 Ethical Decision Making Extent of Problems Top Management Actions Potential Consequences Social Consensus Probability of Harm Time Until Consequences Number Affected Chapter 2 Version 3e

9 Code of Ethics A guideline to help marketing managers and other employees make better decisions. Chapter 2 Version 3e

Creating Ethical Guidelines 9 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 Version 3e

Discuss corporate social responsibility. 10 Learning Objective Discuss corporate social responsibility. Chapter 2 Version 3e

Corporate Social Responsibility 10 Corporate Social Responsibility Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Philanthropic Be a good citizen. Chapter 2 Version 3e