Prepared by Deborah Baker Texas Christian University

1. 9 MarketingLamb, Hair, McDaniel Prepared by Deborah Baker Texas Christian University Designed by Eric Brengle B-books, Ltd. Social Responsibility, Ethics, and theMarketing Environment CHAPTER 3

2. Learning Outcomes LOI Discuss corporate social responsibility Describe the role of ethics and ethical decisions in business Discuss the external environment of marketing, and explain how it affects a firm LO2 LO3

3. Describe the social factors that affect marketing Explain the importance to marketing managers of current demographic trendsExplain the importance to marketing managers of multiculturalism and growing ethnic markets LO4 LO5 LO6 Learning Outcomes

4. Learning Outcomes Identify consumer and market reactions to the state of the economy Identify the impact of technology on a firm Discuss the political and legal environment of marketing Explain the basics of foreign and domestic competition LO7 LO8 LO9 LOIO

5. Corporate Social Responsibility LOI Discuss corporate social responsibility

6. Sustainability Corporate Social Responsibility LOI 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. Philanthropic Be a good citizen. Ethical Do what is right. Legal Obey the Law. Economic Be profitable. REVIEW LEARNING OUTCOME LOI Corporate Social Responsibility

8. Ethical Behavior in Business LO2 Describe the role of ethics and ethical decisions in business

9. The moral principles or values that generally govern the conduct of an individual. Ethics Morals The rules people develop as a result of cultural values and norms. Ethical Behavior in Business LO2

10. Preconventional Morality More Childlike • Based on what will be punished or rewarded • Self-centered, calculating, selfish Conventional Morality • Moves toward the expectations of society • Concerned over legality and the opinion of others Postconventional Morality • Concern about how they judge themselves • Concern if it is right in the long run More Mature Ethical Development Levels LO2

11. Extent of Problems Probability of Harm Top Management Actions Time Until Consequences Potential Consequences Number Affected Social Consensus Ethical Decision Making LO2 Influential Factors

12. Biz Flix LO2 Jaws 12

13. A guideline to help marketing managers and other employees make better decisions. Code of Ethics http://www.ethicsweb.ca Online Code of Ethics LO2

14. Creating Ethical Guidelines LO2 • Helps identify acceptable business practices • Helps control behavior internally • Avoids confusion in decision making • Facilitates discussion about right and wrong

15. Ethical Norms and Values for Marketers LO2 Exhibit 3.3

16. The External Marketing Environment LO3 Discuss the external environment of marketing, and explain how it affects a firm

17. External Environment (uncontrollable) Social Change Internal (within the organization) Demographics Ever-Changing Marketplace Marketing mix Economic Conditions Product Distribution Promotion Price Competition Target Market Political & Legal Factors Technology Environmental Scanning External Marketing Environment LO3

18. Target Market A defined group most likely to buy a firm’s product. Target Market LO3

19. Social Factors LO4 Describe the social factors that affect marketing

20. Attitudes Values Lifestyle Social Factors LO4

21. Social Factors Social Factors Influence: Products purchased Prices paid for products Effectiveness of promotions How, where, and when people purchase LO4

22. Social Factors Self-Sufficiency Upward Mobility Work Ethic Conformity LO4 Core American Values

23. Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price The Influence of Values on Buying Habits LO4

24. 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. Component Lifestyles LO4

25. Role of Families and Working Women LO4 • Growth of dual-income families results in increased purchase power • Approximately 63% of work-age females are in the workforce • Women expect different things in life • purchase bulk of technology products • do most of the grocery shopping • second largest group of home buyers after couples • Single households outnumber married households with kids

26. REVIEW LEARNING OUTCOME LO4 Social Factors that Affect Marketing

27. Demographic Factors LO5 Explain the importance to marketing managers of current demographic trends

28. Demography The study of people’s vital statistics, such as their age, race and ethnicity, and location. Demographic Factors LO5

29. Tweens LO5 • Pre- and early adolescents, age 8 to 14 • Population of 29 million • Purchasing power of $39 billion in 2007 • View TV ads as “just advertising” • Emerging as “the richest generation” and the “most influential generation in history”

30. Generation Y http://www.mountaindew.com http://www.northface.com Online LO5 • Born between 1979 and 1994 • Population of 60 million • Purchasing power of $200 billion annually • Researchers have found Gen Yers to be: • Impatient • Family-oriented • Inquisitive • Opinionated • Diverse • Time managers • “Street Smart” • Word of mouth marketing is effective

31. Generation X LO5 • Born between 1965 and 1978 • Population of 40 million • Savvy and cynical consumers • Time is at a premium, and outsourcing is utilized • Entering their money-making years

32. Baby Boomers LO5 • Born between 1946 and 1964 • Population of 77 million—the largest demographic segment • $1 trillion in spending power for people aged 50 to 60 • Income will continue to grow as they keep working • Four segments of baby boomers: “Looking for balance” “Confident and living well” “At ease” “Overwhelmed”

33. Age Tweens Gen Y Gen X Baby Boom 8 to 14 yrs29 million 1979-199460 million 1965-197840 million 1946-196477 million REVIEW LEARNING OUTCOME LO5 Current Demographic Trends

34. Growing Ethnic Markets LO6 Explain the importance to marketing managers of multiculturalism and growing ethnic markets

35. Growing Ethnic Markets LO6 • Spending power of ethnic markets by 2008: • Hispanics--$1 trillion • African Americans--$921 billion • Asian Americans--$526 billion • Diversity can result in bottom-line benefits to companies.

36. Marketing to Hispanic Americans LO6 • The population’s diversity creates challenges for targeting this group. • Hispanics tend to be brand loyal, but are not aware of many U.S. brands. • Nearly half of adult U.S. Hispanics have home Internet access.

37. Marketing to African Americans LO6 • Many firms are creating products for the African American market. • Promotional dollars and media choices directed toward African Americans continue to increase.

38. Marketing to Asian Americans LO6 • Younger, better educated, and have highest average income of all groups • Many products have been developed for Asian American market. • Cultural diversity within the Asian American market complicates promotional efforts.

39. REVIEW LEARNING OUTCOME LO6 Multiculturalism and Growing Ethnic Markets

40. Economic Factors LO7 Identify consumer and marketer reactions to the state of the economy

41. Distribution of Consumer Income Inflation Recession Economic Factors LO7

42. Consumers’ Incomes LO7 • Median U.S. household income in 2007 projected at $45,000 • Incomes have risen at a slow pace. • Education is the primary determinant of earning potential. • Consumers are strapped for cash.

43. The Financial Power of Women LO7 • Women bring in half of the household income. • Women control 51.3 percent of the private wealth in the U.S. • Women control 80 percent of household spending. • Women are now the primary buyers in male-dominated categories: • 68% of new cars • 66% of computers • 66% of home improvements • 53% of investments • 51% of consumer electronics

44. Purchasing Power A comparison of the relative cost of a set standard of goods and services in different geographic areas. Purchasing Power LO7

45. Inflation A measure of the decrease in the value of the money, expressed as the percentage reduction in value since the previous year. Inflation LO7

46. Recession A period of economic activity characterized by negative growth, which reduces demand for goods and services. Recession LO7

47. Recession Marketing Strategies • Improve existing products and introduce new ones • Maintain and expand customer services • Emphasize top-of-the-line productsand promote product value LO7

48. Technological Factors LO8 Identify the impact of technology on a firm

49. Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. Basic Research Applied Research An attempt to develop new or improved products Research LO8

50. Technological Factors • U.S. excels at basic and applied research. • Many firms use the market concept to guide research. • New technology internally createsa long-term competitive advantage. • External technology • Creates more efficient operation or better products • May render existing products obsolete LO8