Chapter 2 Ver 2e1 Chapter 2 ©2000 South-Western College Publishing The Marketing Environment and Marketing Ethics Prepared by Deborah Baker Texas Christian

Chapter 2 Ver 2e 1

Chapter 2Chapter 2

©2000 South-Western College Publishing

The Marketing EnvironmentThe Marketing Environmentand Marketing Ethicsand Marketing Ethics

Prepared byDeborah BakerTexas Christian University

Chapter 2 Ver 2e 2

1. Discuss external environment of marketing, and explain how it affects a firm.

2. Describe social factors that affect marketing.

3. Explain the importance to marketing managers of current demographic trends.

Chapter 2 ObjectivesChapter 2 Objectives


(continued)

Chapter 2 Ver 2e 3

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.



(continued)

Chapter 2 Ver 2e 4

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.



Chapter 2 Ver 2e 5

The External Marketing EnvironmentThe External Marketing Environment

DemographicsDemographics

SocialChangeSocial

Change

EconomicConditionsEconomicConditions

Political & Legal FactorsPolitical &

Legal Factors

TechnologyTechnology

CompetitionCompetition

Ever-ChangingMarketplace

EnvironmentalScanning

Target Market

ProductDistributionPromotion

Price

ProductDistributionPromotion

Price

External Environment is not controllable


Chapter 2 Ver 2e 6

Social ChangeSocial Change


Economic ConditionsEconomic Conditions


Political / LegalPolitical / Legal


External Environmental

Factors

External Environmental

Factors

The External Marketing EnvironmentThe External Marketing Environment


Chapter 2 Ver 2e 7

Social FactorsSocial Factors

ValuesValues

AttitudesAttitudes

LifestyleLifestyle



Chapter 2 Ver 2e 8


Social FactorsInfluence ...

Social FactorsInfluence ...


Products that people buy

Prices paid for products

Effectiveness of specific promotions

How, where, and when people expect to purchase products

Chapter 2 Ver 2e 9


Social ChangeSocial Change

Market-oriented values of Y2K

Market-oriented values of Y2K

Role of Families &

Women

Role of Families &

Women

58% of all females work, Women buy male-oriented products, Purchase role of dual career families

Product innovation, Environmental issues,Poverty of time

Cultural Changes Cultural Creatives, Traditionalism, Modernism

Diverse needs and interests, Variety,Complex consumer buying habits

Component Lifestyles


Chapter 2 Ver 2e 10

Demographic FactorsDemographic Factors

AgeAge

LocationLocation

EthnicityEthnicity



Chapter 2 Ver 2e 11


Generation Y: Born to ShopAge 16 and underImmense marketing impactAffected by change in families,

workforce, and technology

Generation X: Savvy and Cynical Between age 17--29 Materialistic, but critical Marketing challenge

AgeAge


Chapter 2 Ver 2e 12

AgeAge


Baby Boomers: America’s Mass Market Born between 1946 and 1964 Cherish youth, convenience, individualism Led to a personalized economy

with products/services that are: Custom-designed Convenient and immediate Value-added through features or price

Focus on family, health, convenience, finances, and reading


Chapter 2 Ver 2e 13

AgeAge


Older Consumers: Not Just Grandparents Age “50 plus” Healthier, wealthier, and better

educated Considerable purchasing power

for cars, home remodeling, and travel Market potential not fully

tapped due to misconceptions about “mature adults”


Chapter 2 Ver 2e 14

LocationLocation

Americans on the Move

Average U.S. citizen moves every six years

Implications for real estate, retail location decisions, communications, and Internet

Immigrants add $10 billion yearly to economy



Chapter 2 Ver 2e 15


EthnicityEthnicity

Growing Ethnic Markets

U.S. population is shifting to society characterized by three ethnic minorities: African-Americans U.S. Hispanics Asian-Americans

Trend in U.S. is toward greater multiculturalism


Chapter 2 Ver 2e 16©South-Western College Publishing

EthnicityEthnicity

0%

20%

40%

60%

80%

100%

1999 2023

Whites

African

Hispanic

Asian

Demographic FactorsDemographic FactorsMulticultural Makeup of the U.S.

Chapter 2 Ver 2e 17


EthnicityEthnicityNiche

Marketing (one segment)

NicheMarketing

(one segment)

Adapting Promotion

(one message)

Adapting Promotion

(one message)

StitchingNiches

(combine markets)

StitchingNiches

(combine markets)

MarketingStrategies

forMulticultural

Markets

MarketingStrategies

forMulticultural

Markets


Chapter 2 Ver 2e 18

Economic FactorsEconomic Factors

Distribution of Consumer Income

Distribution of Consumer Income

InflationInflation

RecessionRecession

Key Economic Factors of Interest

to Marketers

Key Economic Factors of Interest

to Marketers


Chapter 2 Ver 2e 19


Rising Incomes

66% of U.S. households earn “middle-class” income

Over 8% earn over $75,000, primarilyfrom dual-income families

More discretionary income for high-quality, high-priced goods and services

Distribution of Consumer

Income

Distribution of Consumer

Income


Chapter 2 Ver 2e 20


InflationInflation

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


Chapter 2 Ver 2e 21


RecessionRecession

Income, production and employment fall

Reduced demand for goods and services

Marketing strategies: Improve existing products Introduce new products Maintain customer services Emphasize top-of -the line products


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Technological and Resource FactorsTechnological and Resource Factors

New technology helps firm cope with other environmental factors

U.S. excels at basic research, but falls short at applied research

Many U.S. companies seek short-term profits and take minimal risk



Chapter 2 Ver 2e 23

Political and Legal FactorsPolitical and Legal Factors

Political / Legal FactorsPolitical / Legal Factors

Consumers

Businesses Society

New Technology

Government Laws and Regulations Protect


Chapter 2 Ver 2e 24

Sherman Act of 1890

Clayton Act of 1914

Federal Trade Commission Act of 1914

Robinson-Patman Act of 1936

Wheeler-Lea Amendments to the FTC Act of 1938

Lanhma Act of 1946

Celler-Kefauver Antimerger Act of 1950

Hart-Scott-Rodino Act of 1976


Federal Legislation


Chapter 2 Ver 2e 25


Consumer Product Safety Commission

Federal Trade Commission

Food & Drug Administration

Regulatory Agencies for Marketing Affairs


Chapter 2 Ver 2e 26

Competitive FactorsCompetitive Factors

How many competitors?

How big are competitors?

How interdependent is industry?


MinimalMinimalControlControl

MinimalMinimalControlControl


Chapter 2 Ver 2e 27

Competitive FactorsCompetitive Factors

U.S. firms compete internationally as a growth strategy

More foreign firms are entering U.S.

Foreign firms now compete on product quality

Global markets are highly competitive

Global CompetitionGlobal Competition


Chapter 2 Ver 2e 28

Ethical Behavior in BusinessEthical Behavior in Business


Ethical?Ethical? Legal?Legal?

Chapter 2 Ver 2e 29

Ethical DevelopmentEthical Development

PreconventionalMorality

PreconventionalMorality

ConventionalMorality

ConventionalMorality

PostconventionalMorality

PostconventionalMorality

MoreMature

MoreSelfish

• Based on what will immediately be punished or rewarded.

• Self-centered.

• Morality of mature adult, how they judge themselves.

• Concern if it is right in the long run.

• Concerned over legality and the opinion of others.

• “When in Rome, do as the Romans”


Chapter 2 Ver 2e 30

Ethical Decision MakingEthical Decision Making

Social Consensus

Social Consensus

Extent of ProblemsExtent of Problems

Top Management

Actions

Top Management

ActionsPotential

ConsequencesPotential

Consequences

Probability of Harm

Probability of Harm

Number AffectedNumber Affected

Time Until Consequences

Time Until Consequences


Chapter 2 Ver 2e 31

Ethical GuidelinesEthical Guidelines

Advantages of Creating Ethical GuidelinesAdvantages of Creating Ethical Guidelines

Identify acceptable business practices

Internally control behavior

Reduce confusion in decision making

Facilitate discussion about right and wrong


Chapter 2 Ver 2e 32

Corporate Social ResponsibilityCorporate Social Responsibility

EthicalEthicalDo what is right.Do what is right.

LegalLegalObey the Law.Obey the Law.

EconomicEconomicBe profitableBe profitable..

PhilanthropicPhilanthropicBe a good citizen.Be a good citizen.


Documents

Chapter 2 Ver 2e1 Chapter 2 ©2000 South-Western College Publishing The Marketing Environment and Marketing Ethics Prepared by Deborah Baker Texas Christian