Lamb, Hair, Mcdaniel: Social Responsibility, Ethics, and The Marketing Environment

Lamb, Hair, McDaniel MKTG2008-2009
3
Social
Responsibility,
CHAPTER Ethics, and the
Marketing Environment
Designed by Prepared by
Amy McGuire, B-books, Ltd. Deborah Baker, Texas Christian University
Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 1

Learning Outcomes
LO1 Discuss corporate social responsibility
LO2 Describe the role of ethics and ethical

decisions in business
LO3 Discuss the external environment of

marketing, and explain how it affects a firm

Learning Outcomes
LO4 Describe the social factors that affect

marketing
LO5 Explain the importance to marketing

managers of current demographic trends
LO6 Explain the importance to marketing

managers of multiculturalism and growing
ethnic markets

Learning Outcomes
Identify consumer and market reactions to

LO7 the state of the economy
LO8 Identify the impact of technology on a firm
Discuss the political and legal environment

LO9 of marketing
LO10 Explain the basics of foreign and domestic

competition

Corporate Social Responsibility
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.
LO1
LO1 REVIEW LEARNING OUTCOME
Corporate Social Responsibility

Philanthropic
Be a good citizen.
Ethical
Do what is right.
Legal
Obey the Law.
Economic
Be profitable.

Ethical Behavior
in Business
The moral principles or values
Ethics that generally govern the
conduct of an individual.
The rules people develop as a

result of cultural values and
Morals norms.
LO2
Ethical Development
Levels
More • Based on what will be
Childlike Preconventional punished or rewarded
Morality
• Self-centered, calculating,
selfish
Conventional • Moves toward the

Morality expectations of society
• Concerned over legality
and the opinion of others
More Postconventional • Concern about how they

Morality judge themselves
Mature
• Concern if it is right in
the long run
LO2
Ethical Decision Making
Influential Factors
Extent of Problems Probability of Harm
Top Management Time Until

Actions Consequences
Potential Consequences Number Affected
Social Consensus
LO2
Code of Ethics
Code of Ethics
A guideline to help marketing

managers and other employees
make better decisions.
http://www.ethicsweb.ca
LO2
Online
Creating Ethical
Guidelines
 Helps identify acceptable business practices
 Helps control behavior internally
 Avoids confusion in decision making
 Facilitates discussion about right and wrong
LO2
Ethical Norms and Values for Marketers
LO2
LO3 External Marketing Environment
External Environment
Internal (uncontrollable) Social
(within the Change Ever-Changing
organization) Demographics Marketplace
Marketing mix
Product Economic
Distribution Conditions
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Technology
Environmental
Scanning

LO3 Target Market
Target Market
A defined group most likely to

buy a firm’s product.

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

Social Factors
Core American Values Self-Sufficiency
Upward Mobility
Work Ethic
Conformity
LO4
The Influence of Values
on Buying Habits
Ranked Characteristics
of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
LO4 Low price

Component Lifestyles
Component The practice of choosing goods

Lifestyles and services that meet one’s
diverse needs and interests
rather than conforming to a
single, traditional lifestyle.
LO4
Role of Families and
Working Women
 Growth of dual-income families results
in increased purchase power
 Approximately 60% 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
LO4 households with kids
Social Factors that Affect Marketing

LO5 Demographic Factors
Demography The study of people’s

vital statistics, such as
their age, race and
ethnicity, and location.

LO5 Tweens
Pre- and early adolescents,

age 8 to 14
Population of 29 million
Annual purchasing power of $39
billion
View TV ads as “just advertising”
Emerging as “the richest generation”
and the “most influential generation in
history”

LO5 Generation Y
Born between 1979 and 1994

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
http://www.mountaindew.com
effective http://www.northface.com
Online
LO5 Generation X
Born between 1965 and

1978
Savvy and cynical
consumers
Time is at a premium, and
outsourcing is utilized
Entering their money-
making years

LO5 Baby Boomers
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

Current Demographic Trends
Tweens Gen Y Gen X Baby Boom

Age
8 to 14 yrs 1979-1994 1965-1978 1946-1964
29 million 60 million 40 million 77 million

LO6 Growing Ethnic Markets
 Spending power of ethnic markets by 2011:

 Hispanics: $1.2 trillion
 African Americans: $921 billion
 Asian Americans: $526 billion
 Diversity can result in bottom-line benefits

to companies.

Marketing to Hispanic
LO6
Americans
 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.

Marketing to African
LO6
Americans
 Many firms are

creating products
for the African
American market.
 Promotional dollars
and media choices
directed toward
African Americans
continue to increase.

Marketing to Asian
LO6
Americans
 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.

Multiculturalism and Growing Ethnic Markets

Economic Factors
Distribution of
Consumer Income
Inflation
Recession
LO7
Consumers’ Incomes
 Median U.S. household income in 2007 was

$45,000
 Incomes have risen at a slow pace.
 Education is the primary

determinant of earning
potential.
 Consumers are strapped

for cash.
LO7
The Financial Power of Women
 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
 60% of home improvements
 53% of investments
LO7  51% of consumer electronics

Purchasing Power
Purchasing
Power
A comparison of the relative cost of a

set standard of goods and services
in different geographic areas.
LO7
Inflation
Inflation
A measure of the decrease in the

value of the money, expressed as the
percentage reduction in value since
the previous year.
LO7
Recession
Recession
A period of economic activity

characterized by negative growth,
which reduces demand for goods
and services.
LO7
Recession Marketing Strategies
 Improve existing products

and introduce new ones
 Maintain and expand

customer services
 Emphasize top-of-the-line
products and promote
product value
LO7
Research
Pure research that aims to

confirm an existing theory or to
Basic Research learn more about a concept
phenomenon.
An attempt to develop new or

Applied Research improved products
LO8
Technological Factors
 U.S. excels at basic and applied research.
 Many firms use the market concept to guide

research.
 New technology internally creates a long-term

competitive advantage.
 External technology
 Creates more efficient operation or better products
 May render existing products obsolete
LO8
Technological Factors
 Innovation is becoming a
global process.
 New technologies create

new opportunities
 RSS (Really Simple
Syndication)
 Blogging
LO8
Impact of Technology on a Firm

Basic Applied Technology
Research Research Advances
Marketing
Mix

Political and Legal Factors
Laws and Regulations Protect:
 New technology
 Society
 Businesses
 Consumers
LO9
Federal Legislation
Sherman Act
Regulate
Clayton Act
competitive
environment Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Regulate
pricing practices Robinson-Patman Act
Control false Wheeler-Lea Act

advertising
LO9
Regulatory Agencies
Consumer Protects consumer safety in

Product Safety
and around their homes
Commission
Federal Trade Prevents unfair methods of
Commission competition in commerce
Food & Drug Enforces safety regulations for

Administration food and drug products
http://www.ftc.gov
LO9
Online
Powers of the FTC
Cease-and-Desist Order
Consent Decree
Affirmative Disclosure
Corrective Advertising
Restitution
Counteradvertising
LO9
Consumer Privacy
Government Actions
 Gramm-Leach-Bliley Act
 Health Insurance Portability and

Accountability Act (HIPPA)
 California’s Notice of Security Breach Law
LO9
Political and Legal Environment of Marketing
3.3
3.4

Competitive Factors
How many competitors?

Control
How big are competitors?
How interdependent is
the industry?
LO10
Competitive Factors
Competition for Market Global Competition

Share and Profits
 Firms must work harder  More foreign firms

to maintain profits and are entering U.S. market.
market share.
 Foreign firms in U.S. now
compete on product
quality.
LO10
Political and Legal Environment

Highly Competitive Marketplace
Mature Industries
Slow Growth /
No Growth
Can only increase

market share by
taking it from a competitor.

Lamb, Hair, Mcdaniel: Social Responsibility, Ethics, and The Marketing Environment

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Lamb, Hair, McDaniel MKTG2008-2009

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 1

LO1 Discuss corporate social responsibility

LO2 Describe the role of ethics and ethical

LO3 Discuss the external environment of

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 2

LO4 Describe the social factors that affect

LO5 Explain the importance to marketing

LO6 Explain the importance to marketing

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 3

Identify consumer and market reactions to

LO8 Identify the impact of technology on a firm

Discuss the political and legal environment

LO10 Explain the basics of foreign and domestic

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 4

The idea that socially

Corporate Social Responsibility

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 6

The rules people develop as a

Conventional • Moves toward the

More Postconventional • Concern about how they

Extent of Problems Probability of Harm

Top Management Time Until

Potential Consequences Number Affected

A guideline to help marketing

 Helps control behavior internally

 Avoids confusion in decision making

 Facilitates discussion about right and wrong

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 13

A defined group most likely to

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 14

Social Factors Influence:

Prices paid for products

LO4 How, where, and when people purchase

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 16

Core American Values Self-Sufficiency

LO4 Low price

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 18

Component The practice of choosing goods

Social Factors that Affect Marketing

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 21

Demography The study of people’s

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 22

Pre- and early adolescents,

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 23

Born between 1979 and 1994

Born between 1965 and

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 25

Born between 1946 and 1964

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 26

Current Demographic Trends

Tweens Gen Y Gen X Baby Boom

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 27

 Spending power of ethnic markets by 2011:

 Diversity can result in bottom-line benefits

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 28

 Nearly half of adult U.S. Hispanics have home

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 29

 Many firms are

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 30

 Many products have been

 Cultural diversity within

Chapter 3 Copyright ©2009 Cengage Learning Inc. All rights reserved. 31