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1Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
The Marketing Environment The Marketing Environment and Marketing Ethicsand Marketing Ethics
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 3
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2Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning ObjectivesLearning Objectives
1. Discuss the external environment of marketing, and explain how it affects a firm.
2. Describe the social factors that affect marketing.
3. Explain the importance to marketing managers of current demographic trends.
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3Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objectives Learning Objectives (continued)(continued)
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.
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4Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objectives Learning Objectives (continued)(continued)
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.
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5Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Discuss the external environment of marketing, and explain how it affects a firm.
1On Linehttp://www.levi.com
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6Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Target MarketTarget Market
A defined group most likely to buy a firm’s product.
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7Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
External Marketing External Marketing EnvironmentEnvironment
Demographics
SocialChange
EconomicConditions
Political & Legal Factors
Technology
Competition
EnvironmentalEnvironmentalScanningScanning
Target Market
ProductDistributionPromotion
Price
External Environment External Environment is not controllableis not controllable
Ever-ChangingEver-ChangingMarketplaceMarketplace
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8Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
External Marketing External Marketing EnvironmentEnvironment
Social
Demographic
Economic
Technologic
Political and Legal
Competitive
External Environmental
Factors
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9Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Describe the social factors that affect marketing.
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10Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Social FactorsSocial Factors
Values Attitudes Lifestyle
Social Factors
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11Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
American ValuesAmerican Values
Self-Sufficiency
Basic Basic American American
ValuesValues
Upward Mobility
Work Ethic
Conformity
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12Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
The Influence of Values The Influence of Values on Buying Habitson Buying Habits
1. Reliability
2. Durability
3. Easy maintenance
4. Ease of use
5. Trusted brand
6. Low price
RankedCharacteristics
of Product Quality
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13Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
The Poverty of TimeThe Poverty of Time
A lack of time to do anything but work,
commute to work, handle family situations, do
housework, shop, eat, sleep...
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14Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Component LifestylesComponent Lifestyles
The practice of choosing goods and services that
meet one’s diverse needs and interests rather than conforming to a single,
traditional lifestyle.
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15Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Role of Families & WomenRole 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
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16Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Who Holds the Purse Strings?Who Holds the Purse Strings?2
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17Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the importance to marketing managersof current demographic trends.
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18Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Demographic FactorsDemographic Factors
Age Location Race and Ethnicity
Demography
3 Click Screenfor Ads
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19Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
The Demographic Facts of lifeThe Demographic Facts of life3
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20Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Age Groups: Generation YAge Groups: Generation Y
Born between 1979 and 1994 Size creates immense marketing
impact Respond to ads differently Love customized products
and services
3On Linehttp://www.generation-y.com
On Linehttp://www.mountaindew.comhttp://www.northface.com
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21Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Age Groups: Generation XAge Groups: Generation X
Born between 1965 and 1978
Savvy and cynical consumers
Indulge themselves with meals/alcohol, clothing, and electronics
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22Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Age Groups: Baby BoomersAge 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
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23Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Personalized EconomyPersonalized Economy
Delivering customized goods and services at a good value on demand.
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24Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Age Groups: Older Age Groups: Older ConsumersConsumers
Age “55 plus” Healthier, wealthier,
better educated Definite about wants
and needs Have unique behavior
patterns Not happy with advertising treatment
3On Linehttp://www.gct.comhttp://www.maupintour.com
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25Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the importance to marketing managers of multiculturalism and growing ethnic markets.
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26Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Growing Ethnic MarketsGrowing 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
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27Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
MulticulturalismMulticulturalism
When all major ethnicgroups in an area--
such as a city, county, or census tract--are roughly
represented.
4On Linehttp://www.bet.comhttp://www.multiculturalmarketingresources.com
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28Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Identify consumer and marketer reactions to the state of the economy.
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29Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Economic FactorsEconomic Factors
Distribution of Consumer
Income
Inflation
Recession
Economic Areas of Concern to
Marketers
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30Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Rising IncomesRising Incomes
66% of U.S. households earn “middle-class” income
Over 10% earn over $75,000, primarilyfrom dual-income families
More discretionary income for high-end goods and services
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31Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
InflationInflation
Prices rise with no wage increasePurchasing Power decreases
Increase profit margins by increasing efficiency
Consumers reaction:• Search for lowest prices• Rely on coupons and sales
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32Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
RecessionRecession
Income, production and employment fall
Reduced demand for goods and services
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33Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Recession Marketing Recession Marketing StrategiesStrategies
Improve existing products
Introduce new products
Maintain customer services
Emphasize top-of -the line productsand promote product value
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34Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Identify the impact of technology on a firm.
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35Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Basic and Applied ResearchBasic and Applied Research
Basic Research
AppliedResearch
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
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36Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Technological & Resource Technological & Resource FactorsFactors
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
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37Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Using Technology to Using Technology to Boost ProductivityBoost Productivity6
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38Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Discuss the political and legal environment of marketing.
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39Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Political and Legal FactorsPolitical and Legal Factors
Consumers
Businesses Society
New Technology
Laws and Regulations ProtectLaws and Regulations Protect
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40Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Federal LegislationFederal Legislation
Sherman ActClayton ActFederal Trade Commission Act Robinson-Patman ActWheeler-Lea Amendments to the FTC ActLanham ActCeller-Kefauver Antimerger ActHart-Scott-Rodino Act
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41Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Regulatory AgenciesRegulatory Agencies
Consumer Product Safety Commission
Federal Trade Commission
Food & Drug Administration
7On Linehttp://www.ftc.gov
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42Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Regulatory AgenciesRegulatory Agencies
Consumer Product Safety Commission
Federal Trade Commission
Food & Drug Administration
Protects consumer safety in and around their homes
Prevents unfair methods ofcompetition in commerce
Enforces safety regulations for food and drug products
7On Linehttp://www.fda.gov
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43Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the basics of foreign and domestic competition.
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44Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Competitive FactorsCompetitive Factors
How many competitors?
How big are competitors?
How interdependent isthe industry?
Control
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45Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Competitive FactorsCompetitive Factors8
Competition forCompetition forMarket ShareMarket Share
and and ProfitsProfits
Global Global CompetitionCompetition
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46Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Global CompetitionGlobal Competition
More foreign firms are entering U.S. market
Foreign firms in U.S. now compete on product quality
Global markets are highly competitive
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47Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Describe the role of ethics and ethical decisions in business.
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48Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Ethics and MoralsEthics 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.
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49Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Ethical Behavior in BusinessEthical Behavior in Business
Ethical?Ethical? Legal?Legal?
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50Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Ethical Development LevelsEthical Development Levels
PreconventionalMorality
ConventionalMorality
PostconventionalMorality
MoreMature
MoreSelfish
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51Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Morality and Business EthicsMorality and Business Ethics
PreconventionalMorality
Childlike level Based on what will be punished
or rewarded Self-centered, calculating, selfish
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52Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Morality and Business EthicsMorality and Business Ethics
ConventionalMorality
Moves toward the expectations of society
Concerned over legality and the opinion of others
“When in Rome, do as the Romans”
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53Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Morality and Business EthicsMorality and Business Ethics
PostconventionalMorality
Morality of the mature adult Concern about how they judge
themselves Concern if it is right in the long run
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54Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Ethical Decision MakingEthical Decision Making
Social Consensus
Extent of Problems
Top Management
ActionsPotential
Consequences
Probability of Harm
Number Affected
Time Until Consequences
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55Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Code of EthicsCode of Ethics
A guideline to help marketing managers and other employees
make better decisions.
9On Linehttp://www.ethics.ubc.ca/resources/business
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56Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Creating Ethical GuidelinesCreating Ethical Guidelines
Help identify acceptable business practices
Help control behavior internally
Reduce confusion in decision making
Facilitate discussion about right and wrong
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57Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Unethical PracticesUnethical Practices9
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58Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Discuss corporate social responsibility.
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59Chapter 3 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Corporate Social Corporate Social ResponsibilityResponsibility
EthicalEthicalDo what is right.Do what is right.
LegalLegalObey the Law.Obey the Law.
EconomicEconomicBe profitable.Be profitable.
PhilanthropicPhilanthropicBe a good citizen.Be a good citizen.
10On Linehttp://www.equalexchange.comhttp://www.crest.com