1Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning The Marketing Environment and Marketing Ethics Prepared by Deborah Baker Texas Christian University Chapter 3

2Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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.

3Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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.

4Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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.

5Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Discuss the external environment of marketing, and explain how it affects a firm. 1 1 On Line On Line

6Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Target Market A defined group most likely to buy a firm’s product. 1 1

7Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning External Marketing Environment Demographics Social Change Social Change Economic Conditions Economic Conditions Political & Legal Factors Political & Legal Factors Technology Competition EnvironmentalScanning Target Market Product Distribution Promotion Price Product Distribution Promotion Price External Environment is not controllable Ever-ChangingMarketplace 1 1

8Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning External Marketing Environment Social Demographic Economic Technologic Political and Legal Competitive External Environmental Factors External Environmental Factors 1 1

9Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Describe the social factors that affect marketing. 2 2

10Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Social Factors Values Attitudes Lifestyle Social Factors 2 2

11Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning American Values Self-Sufficiency BasicAmericanValuesBasicAmericanValues Upward Mobility Work Ethic Conformity 2 2

12Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning The Influence of Values on Buying Habits 1. Reliability 2. Durability 3. Easy maintenance 4. Ease of use 5. Trusted brand 6. Low price Ranked Characteristics of Product Quality Ranked Characteristics of Product Quality 2 2

13Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning The Poverty of Time A lack of time to do anything but work, commute to work, handle family situations, do housework, shop, eat, sleep

14Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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. 2 2

15Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 2 2

16Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Who Holds the Purse Strings? 2 2

17Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Explain the importance to marketing managers of current demographic trends. 3 3

18Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Demographic Factors Age Location Race and Ethnicity Demography 3 3

19Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning The Demographic Facts of life 3 3

20Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Age Groups: Generation Y  Born between 1979 and 1994  Size creates immense marketing impact  Respond to ads differently  Love customized products and services 3 3 On Line On Line On Line On Line

21Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Age Groups: Generation X  Born between 1965 and 1978  Savvy and cynical consumers  Indulge themselves with meals/alcohol, clothing, and electronics 3 3

22Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 3 3

23Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Personalized Economy Delivering customized goods and services at a good value on demand. 3 3

24Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Age Groups: Older Consumers  Age “55 plus”  Healthier, wealthier, better educated  Definite about wants and needs  Have unique behavior patterns  Not happy with advertising treatment 3 3 On Line On Line

25Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Explain the importance to marketing managers of multiculturalism and growing ethnic markets. 4 4

26Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 4 4

27Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Multiculturalism When all major ethnic groups in an area-- such as a city, county, or census tract--are roughly represented. 4 4 On Line On Line

28Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Identify consumer and marketer reactions to the state of the economy. 5 5

29Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Economic Factors Distribution of Consumer Income Inflation Recession Economic Areas of Concern to Marketers 5 5

30Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 5 5

31Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 5 5

32Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Recession  Income, production and employment fall  Reduced demand for goods and services 5 5

33Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Recession Marketing Strategies  Improve existing products  Introduce new products  Maintain customer services  Emphasize top-of -the line products and promote product value 5 5

34Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Identify the impact of technology on a firm. 6 6

35Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Basic and Applied Research Basic Research Applied 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 6 6

36Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 6 6

37Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Using Technology to Boost Productivity 6 6

38Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Discuss the political and legal environment of marketing. 7 7

39Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Political and Legal Factors Consumers Businesses Society New Technology Laws and Regulations Protect 7 7

40Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 7 7

41Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Regulatory Agencies  Consumer Product Safety Commission  Federal Trade Commission  Food & Drug Administration 7 7 On Line On Line

42Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 7 7 On Line On Line

43Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Explain the basics of foreign and domestic competition. 8 8

44Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Competitive Factors How many competitors? How big are competitors? How interdependent is the industry? Control 8 8

45Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Competitive Factors 8 8 Competition for Market Share andProfits andProfits Global Competition

46Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 8 8

47Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Describe the role of ethics and ethical decisions in business. 9 9

48Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Ethics and Morals 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. 9 9

49Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Ethical Behavior in Business Ethical? Legal? 9 9

50Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Ethical Development Levels Preconventional Morality Preconventional Morality Conventional Morality Conventional Morality Postconventional Morality Postconventional Morality More Mature More Selfish 9 9

51Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Morality and Business Ethics Preconventional Morality Preconventional Morality  Childlike level  Based on what will be punished or rewarded  Self-centered, calculating, selfish 9 9

52Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Morality and Business Ethics Conventional Morality Conventional Morality  Moves toward the expectations of society  Concerned over legality and the opinion of others  “When in Rome, do as the Romans” 9 9

53Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Morality and Business Ethics Postconventional Morality Postconventional Morality  Morality of the mature adult  Concern about how they judge themselves  Concern if it is right in the long run 9 9

54Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Ethical Decision Making Social Consensus Extent of Problems Top Management Actions Potential Consequences Probability of Harm Number Affected Time Until Consequences 9 9

55Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Code of Ethics A guideline to help marketing managers and other employees make better decisions. 9 9 On Line resources/business On Line resources/business

56Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Creating Ethical Guidelines  Help identify acceptable business practices  Help control behavior internally  Reduce confusion in decision making  Facilitate discussion about right and wrong 9 9

57Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Unethical Practices 9 9

58Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Discuss corporate social responsibility. 10

59Chapter 3 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Corporate Social Responsibility Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Philanthropic Be a good citizen. 10 On Line On Line