Chapter 14 Marketing environments and ethics

Learning objectives 1Discuss the external environment of marketing, and explain how it affects an organisation 2Describe the sociocultural factors that affect marketing 3Explain the importance to marketing managers of current demographic trends

Learning objectives (cont.) 4Explain the importance to marketing managers of multiculturalism and growing ethnic markets 5Identify consumer and marketer reactions to the state of the economy 6Identify the impact of technology on an organisation 7Discuss the political and legal environment of marketing

Learning objectives (cont.) 8Explain the basics of foreign and domestic competition 9Describe the role of ethics and ethical decisions in business 10Discuss corporate social responsibility

Learning objective 1 Define the term marketing Discuss the external environment of marketing, and explain how it affects an organisation

Target market A defined group most likely to buy a firm’s product. 1

External marketing environment External environment is not controllable Ever-changing marketplace 1 Target market ProductDistribution Pricing Integrated marketing communication Competitive environment Technological environment Political and legal environment Sociocultural environment Economic environment

External environmental factors 1 Social Demographic Economic Technological Political and legal Competitive

Learning objective 2 Describe four marketing management philosophies. Describe the sociocultural factors that affect marketing

Sociocultural factors 2 Age factors Generation Y Generation X Baby boomers

Age groups: Generation Y Born between 1979 and 1994 Size creates immense marketing impact Respond to ads differently 2

Age groups: Generation X Born between 1965 and 1978 Savvy and cynical consumers Indulge themselves with meals, alcohol, clothing and electronics 2

Age groups: Baby boomers Born between 1946 and 1964 Cherish youth, convenience and individuality Individualism has led to a personalised economy 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. 2

Learning objective 3 Describe four marketing management philosophies. Explain the importance to marketing managers of current demographic trends

Components of Australian natural population increase 3 ABS

Demographic factors 3 Age Location Ethnicity

Learning objective 4 Explain the importance to marketing mangers of multiculturalism and growing ethnic markets

Growing ethnic markets Australian population is becoming a multicultural society and workforce. Trend in Australia is toward greater multiculturalism. 4

Multiculturalism When a society has more than one ethnic culture, the society receives benefits as a result of this diversity 4

Multicultural marketing 4 Marketing strategies for multicultural markets Niche marketing Adapting promotion Stitching niches

Learning objective 5 Identify consumer and marketer reactions to the state of the economy

Economic areas of concern to marketers 5 Distribution of consumer income Inflation Recession

Inflation Prices rise with no wage increase. Purchasing power decreases. Increase profit margins by increasing efficiency. Consumers’ reaction: -search for lowest prices -rely on sales. 5

Recession Income, production and employment fall. Reduced demand for goods and services. 5

Recession marketing strategies Improve existing products. Maintain and expand customer service. Emphasise top-of-the-line products. 5

Learning objective 6 Identify the impact of technology on an organisation

Primary research Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. 6

Applied research An attempt to develop new or improved products. 6

Learning objective 7 Discuss the political and legal environment of marketing

Political and legal factors Every aspect of the marketing mix is subject to laws and regulations 7 Product Price Place Promotion

Australian Competition and Consumer Commission (ACCC) Ensures compliance with parts IV, IVA, V and VA of the Trade Practices Act, Conduct Code and Prices Surveillance Act. Actively pursues violations of their marketing statutes. 7

Explain the basics of foreign and domestic competition Learning objective 8

Competitive factors How many competitors? How big are competitors? How interdependent is industry? 8 No control

Competition Global competition Provide same product in all markets around the world International competition Modified products for different countries 8

Describe the role of ethics and ethical decisions in business Learning objective 9

Ethics The moral principles or values that generally govern the conduct of an individual. 9

Morals The rules people develop as a result of cultural values and norms. 9

Ethical behaviour in business 9 Who is helped or hurt? How long-lasting are the consequences? What actions produce the greatest good for the greatest number of people?

Ethical development levels 9 More selfish More mature Preconventional morality Conventional morality Postconventional morality

Ethical decision-making Extent of ethical problems within the organisation Top management actions on ethics Potential magnitude of the consequences Social consensus Probability of a harmful outcome Length of time between the decision and the onset of consequences Number of people to be affected 9

Code of ethics A guideline to help marketing managers and other employees make better decisions. 9

Creating ethical guidelines 9 Helps identify acceptable business practices. Helps control behaviour internally. Reduces confusion in decision- making. Facilitates discussion about right and wrong.

Discuss corporate social responsibility Learning objective 10

Corporate social responsibility 10 Philanthropic – Be a good citizen Ethical – Do what is right Legal – Obey the law Economic – Be profitable