1 Chapter 3 Instructor Shan A. Garib, Fall 2012

Corporate Social Responsibility: a business’s concern for society’s welfare -reflects consideration of long-term interest of both company and it’s relationship to society -simmilar to market oriented firms but with a larger focus -business needs rich people to buy their goods/services so need to help to poor 2

Four Components of Total Corporate Social Responsibility: 1. Economic 2. Legal 3. Ethical 4. Philanthropic 3

Ethics: Moral principles and values that direct behaviour -personally held Morals: rules people develop as a result of cultural values of norms -characterized as good or bad eg. Selling to disadvantaged customer 4

Morality and Business Ethics -The values of business people have been acquired through family, education and religion -To develop a personal set of ethics: -evaluate the consequance of a particular act -stress importance of rules 5

Morality and Business Ethics -To develop a personal set of ethics: -evaluate the consequance of a particular act -stress importance of rules, laws -develop moral character through: 1. preconventional morality 2. conventional morality 3. postconventional morality 6

Ethical Decision Making is influenced by: 1. Extent of ethical problems in the organization 2. Top management ethics 3. Potential magnitude of consequences 4. Social consensus 5. Probability of a harmful outcome 6. Length of time to consequences 7. Number of people affected 7

(Code of) Ethical Guidelines to help managers make better decisions Advantages: 1. Employees see what their firm thinks is acceptable 2. Effective internal control on behaviour as opposed to external like the government 3. Avoid confusion 8

Understanding the External Environment -Managers must constantly change the marketign mix (4P’s) to reflect the ever changing environment -This is doen through “environmental scanning” -Goal: identify future opportunities and threats!! 9

Environmental Management: sometimes the company can impliment strategies that influence the environment -done through lobbying -environmental factors include: -social -demo -economic -tech -political, legal 10

-Hardest to infulence and change -they influence what you buy, prices paid... -examples are: consumer attitudes, values and lifestyles 11

Market-oriented Values Value: a strongly held belief, determines what is important and not important Four values influencing our lifestyles and attitudes: 1. self-sufficiency – stand on own feet 2. upward mobility – work hard, you get it 3. work ethic – hard work is moral and right 4. conformity – noone should expect to be treated differnetly from anyone else 12

Values influence our buying habits. -consumers insist on hogh quality products -ranking characteristics of product quality: 1. reliability 2. durability 3. easy maintenance 4. ease of use 5. a trusted brand name 6. a low price 13

The growth of component lifestyles -choosing products and services that meet diverse needs and interests Eg. Banker/biker 14

The changing role of families and working women Duel incomes means greater purchasing power! 15

Demography: study of people’s vital statisitcs -strongly related to consumer behaviour -each age froup has own tastes and biases Tweens: 9-14 Generation Y: 79-94, tech, clothes -diverse -savvy -impatient Gen X: spending varied, 40 are money making years 16

Demography: study of people’s vital statisitcs -strongly related to consumer behaviour -each age froup has own tastes and biases Gen X: spending varied -40’s are money making years Boomers: largest segment -biggest spenders -brand hop 50% of population now in larger cities 17

Ethnic and Cultural Diversity Multiculturalism: major ethnic groups in an area are equally represented -mostly in larger urban areas -cmopanies change their marketing programmes to relfect this change eg. CIBC, hospitals -25% of visible minority population is under 14, and will be able to converse in multiple languages 18

Three areas of concern for marketers: 1. consumers’ incomes 2. inflation 3. recession 19

Three areas of concern for marketers: 1. consumers’ incomes 2. inflation 3. recession 20

Three areas of concern for marketers: 1. consumers’ incomes -median income for a family is 58k CAD -education primary determinant of earnign potential -Income, willingness to buy, ability to buy determines target market eg. dollar store in lower income neighbourhoods 21

Three areas of concern for marketers: 1a. consumers’ incomes -credit cards allow lower and middle income earners to live like the rich 1b. purchasing power: comparing income to cost of things -or, income minus cost of living eg. Prices in Nova Scotia 3x less than in Toronto. If make the same as worker in Toronto then can afford more -more disrectionary income 22

Three areas of concern for marketers: 2. inflation: decrease in value of money or, increase in prices eg. Choc bar $1 then goes up to $1.05 inflation rate is 5% -if salary raises are 5% then same purchasing power before the change as after 23

Three areas of concern for marketers: 3. Recession: negative frowth in economy for 6months+ -reduction in demand for goods/services -different marketing approach: 1. improve products, or new ones 2. expand customer service 3. emphasize top of the line and promote product value 24

External technology important to marketing managers: 1. by acquiring technology, more efficient operation or create a better product 2. new technology may render existing technology obsolete eg. Camera film -staying technologically relevant means managers need to do research and adopt new technologies 25

Staying technologically relevant means managers need to do research and adopt new technologies Research: expand knowledge, confirm exisiting theory Applied research: develop new or improved products 26

Federal Legislation affecting how business is conducted is administered through the competition bureau -enforces laws covering: bankruptcy, trade practices, competition, credit, labelling, packaging, copyrights, trademarks and patents Provincial Laws: different laws for different provinces eg. Quebec language laws 27

Self-regulation: indusrty groups that police themselves eg. CMA developing guidelines and ethical practices Consumer Privacy -Every firm should be able to justify the type and use of information it has -Privacy Act and Personal Information Protection and Electronic Documents Act: protect privacy of personal information for collection, use and disclosure 28

The competitive environment is made up of: 1. Number of competitors 2. Size of competitors 3. Degree of interdependance 29

Competition for Market Share and Profits -As population grows, costs rise, resources limited firms have to work harder to maintain profits and market share!!!!! 30