1 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 3 Social Responsibility, Ethics, and the Marketing Environment Canadian Adaptation prepared by Don Hill, Langara College

2 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objectives 1.Discuss corporate social responsibility 2.Describe the role of ethics and ethical decisions in business 3.Discuss the external environment of marketing, and explain how it affects a firm

3 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 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 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objectives (continued) 7.Identify consumer and market 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 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Online Discuss corporate social responsibility

6 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3Sustainability 1 Sustainability 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.

7 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Corporate Social Responsibility Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Philanthropic Be a good citizen. Online 1

8 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Describe the role of ethics and ethical decisions in business 2 2 2

9 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 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. 2

10 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Ethical Behavior in Business Ethical? Legal? 2

11 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Ethical Development Levels Preconventional Morality Preconventional Morality Conventional Morality Conventional Morality Postconventional Morality Postconventional Morality More Mature More Selfish 2

12 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Morality and Business Ethics Preconventional Morality Preconventional Morality  Childlike level  Based on what will be punished or rewarded  Self-centered, calculating, selfish 2

13 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 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 do.” 2

14 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 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 2

15 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Ethical Decision Making Social Consensus Extent of Problems Top Management Actions Potential Consequences Probability of Harm Number Affected Time Until Consequences 2

16 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Code of Ethics Code of Ethics Code of Ethics A guideline to help marketing managers and other employees make better decisions. Online 2

17 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Creating Ethical Guidelines Help identify acceptable business practices Help control behaviour internally Avoid confusion in decision making Facilitate discussion about right and wrong 2 Online

18 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Unethical Practices 2

19 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Discuss the external environment of marketing, and explain how it affects a firm 3 3 3

20 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Target Market A defined group most likely to buy a firm’s product. 3

21 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 External Marketing Environment 3 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 (uncontrollable) Ever-ChangingMarketplace Internal (within the organization) Marketing mix

22 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 External Marketing Environment Social Demographic Economic Technologic Political and Legal Competitive External Environmental EnvironmentalFactorsExternal Factors 3

23 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Describe the social factors that affect marketing 4 4 4

24 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Social Factors Values Component Lifestyles Component Lifestyles Changing Role of Women Social Factors 4

25 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Values of Today Self-Sufficiency BasicValuesBasicValues Upward Mobility Work Ethic Conformity 4

26 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 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

27 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Role of Families and Working Women The phenomena of working women has had the greatest effect on marketing than any other social change Nearly two-thirds of all women (ages 18-65) are in the workforce Purchasing power from dual-career families is rising Cost is more important to women. Quality is more important to men. 4

28 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Explain the importance to marketing managers of current demographic trends 5 5 5

29 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Demographic Factors Age Location Race and Ethnicity Demography 5

30 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Generation Y Born between 1979 and 1994 Size creates immense marketing impact Notoriously fickle and skeptical group Change brands very quickly Attached to technology Online y-generation. com 5

31 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Generation X Born between 1965 and 1978 Time is at a premium Spend more on personal services than other groups Majority have children and households Savvy and cynical consumers 5

32 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Baby Boomers Born between 1946 and 1964 Younger Boomers (ages 41 to 49) Home is the castle Spend on kids Older Boomers (ages 50 to 59) Spend on home upgrades, wardrobes Plan vacations 5 Online

33 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Older Consumers Mature market--60-plus years old Lost substantial amount of their nest eggs in stock market meltdown Spend money maintaining their accumulations Direct large portion of budgets for groceries 5

34 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Canadian Population Distribution 5

35 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Explain the importance to marketing managers of multiculturalism and growing ethnic markets 6 6 6

36 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3Multiculturalism 6 Multiculturalism When all major ethnic groups in an area are roughly equally represented.

37 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Growing Multiculturalism Canadian population is becoming a multicultural society and workforce Immigrants are Canada's main source of population growth By 2017 visible minorities in Canada are expected to exceed 20% of the population 6 Online

38 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Implications of Multiculturalism Diversity can result in bottom-line benefits to companies Ethnic markets are not homogeneous Many niches requiring micromarketing strategies Growth in Internet usage 6 Online

39 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Identify consumer and marketer reactions to the state of the economy 7 7 7

40 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Economic Factors Rising Income Inflation Recession Economic Areas of Concern to Marketers 7

41 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Rising Incomes Average disposable income in Canada rose 2% per year between 2004 and 2006 Middle-class income is between $35,000 and $80, % of Canadians 7

42 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Purchasing Power 7 A comparison of the relative cost of a set standard of goods and services in different geographic areas.

43 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3Inflation Prices rise with no wage increase Purchasing power decreases Businesses increase profit margins by increasing efficiency Consumers try to make more economical purchases 7

44 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3Recession Growth rates of income, production, and employment all fall to below zero percent Reduced demand for goods and services 7

45 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Recession Marketing Strategies  Improve existing products  Introduce new products  Maintain and expand customer services  Emphasize top-of -the line products and promote product value 7

46 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Identify the impact of technology on a firm 8 8 8

47 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 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

48 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Technological Factors New technology is a weapon against inflation and recession Canada excels at both basic and applied research New technology internally is a key to long-term competitive advantage create more efficient operation or better products may render existing products obsolete 8

49 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Impact of Technology 8 Basic Research Basic Research Marketing Mix Applied Research Applied Research Technology Advances

50 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Discuss the political and legal environment of marketing 9 9 9

51 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Political and Legal Environment 9 Protecting Consumer Protecting Business Federal Legislation Provincial Legislation Self-Regulation Online

52 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Competition Bureau 9 Mergers Compliance and Operations Economic policy and Enforcement Legislative and Parliamentary External Relations and Public Affairs Civil / Criminal Matters Fair Business Practices

53 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Learning Objective Explain the basics of foreign and domestic competition 10

54 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Competitive Factors How many competitors? How big are competitors? Specific strategies? How strong and aggressive? How interdependent is the industry? Control 10

55 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Competitive Factors Competition for Market Share andProfits andProfits Global Competition 10

56 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 3 Global Competition More foreign firms are entering Canadian market Foreign firms now compete on product quality Global markets are highly competitive 10