1. 1Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Ethics, Social Responsibility, and, the Marketing Environment Prepared by Deborah Baker Texas Christian University Chapter 2

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

3. 3Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning 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.

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

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

6. 6Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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. 1 1

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

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

9. 9Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 1 1

10. 10Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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” 1 1

11. 11Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 1 1

12. 12Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 1 1

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

14. 14Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 1 1

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

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

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

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

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

20. 20Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 3 3

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

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

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

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

25. 25Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 4 4

26. 26Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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... 4 4

27. 27Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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. 4 4

28. 28Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 4 4

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

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

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

32. 32Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 5 5 On Line http://www.generation-y.com On Line http://www.generation-y.com On Line http://www.mountaindew.com http://www.northface.com On Line http://www.mountaindew.com http://www.northface.com

33. 33Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 5 5

34. 34Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 5 5

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

36. 36Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 5 5 On Line http://www.gct.com http://www.maupintour.com On Line http://www.gct.com http://www.maupintour.com

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

38. 38Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 6 6

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

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

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

42. 42Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 7 7

43. 43Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 7 7

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

45. 45Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 7 7

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

47. 47Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 8 8

48. 48Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 8 8

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

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

51. 51Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 9 9

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

53. 53Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 9 9 On Line http://www.fda.gov On Line http://www.fda.gov

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

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

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

57. 57Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 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 10