Lamb, Hair, McDaniel
MKTG2007-2008
3
Social
Responsibility,
Ethics, and the
Marketing Environment
CHAPTER
Designed by
Amy McGuire, B-books, Ltd.
Chapter 3
Prepared by
Deborah Baker, Texas Christian University
Copyright ©2008 by South-Western, a division of Thomson Learning. 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
Chapter 3
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2
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
Chapter 3
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3
Learning Outcomes
LO7
Identify consumer and market reactions to
the state of the economy
LO8
Identify the impact of technology on a firm
LO9
Discuss the political and legal environment
of marketing
LO10
Explain the basics of foreign and domestic
competition
Chapter 3
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4
What do these firms have in common?
Chapter 3
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5
LO1 Corporate Social Responsibility
Discuss corporate
social responsibility
Chapter 3
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6
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
Chapter 3
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7
LO1 REVIEW LEARNING OUTCOME
Corporate Social Responsibility
Philanthropic
Be a good citizen.
Ethical
Do what is right.
Legal
Obey the Law.
Economic
Be profitable.
Chapter 3
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8
LO2
Social Responsibility
Management philosophy in which
organizations engage in
activities that have a positive
effect on society and promote the
public good
Tools of social responsibility
environmental stewardship
cause marketing
cultural diversity
Chapter 3
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9
Environmental Stewardship
Firms make choices that protect the
environment
Green marketing describes a type of
environmental stewardship in which
firms choose packages, product
designs, and other aspects of the
marketing mix that are earth
friendly
Chapter 3
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10
Stonyfield Farm and Green
Marketing
Chapter 3
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11
Cause Marketing
Strategy of joining forces with a
not-for- profit organization to
tackle a social problem
Straight donations to a charity
Donations linked to consumer
sales response
Chapter 3
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12
Ford & Breast Cancer Research
Chapter 3
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13
Promoting Cultural Diversity
Cultural diversity programs ensure
that marketing policies and hiring
practices give people an equal
chance to work for the company and
buy its products
See Fortune’s Best Companies for
Minorities
McDonald’s ranked #1 in 2004
Chapter 3
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14
LO2
Ethical Behavior in Business
Describe the role of
ethics and ethical
decisions in business
Chapter 3
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15
Ethical Behavior
in Business
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.
LO2
Chapter 3
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16
Ethical Development
Levels
More
Childlike Preconventional
Morality
More
Mature
LO2
Chapter 3
• 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
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17
Ethical Decision Making
Influential Factors
Extent of Problems
Probability of Harm
Top Management
Actions
Time Until
Consequences
Potential Consequences
Number Affected
Social Consensus
LO2
Chapter 3
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18
Biz Flix
LO2
Chapter 3
Jaws
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19
Code of Ethics
Code of Ethics
A guideline to help marketing
managers and other employees
make better decisions.
LO2
http://www.ethicsweb.ca
Online
Chapter 3
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20
Kellogg’s Code of Ethics
Chapter 3
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21
Chapter 3
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22
Creating Ethical
Guidelines
 Helps identify acceptable business practices
 Helps control behavior internally
 Avoids confusion in decision making
 Facilitates discussion about right and wrong
LO2
Chapter 3
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23
Ethical Norms and Values for Marketers
LO2
Chapter 3
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24
LO3
The External Marketing
Environment
Discuss the
external environment
of marketing, and
explain how it
affects a firm
Chapter 3
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25
LO3 External Marketing Environment
Internal
(within the
organization)
External Environment
(uncontrollable)
Social
Change
Ever-Changing
Marketplace
Demographics
Marketing mix
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Environmental
Scanning
Chapter 3
Technology
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26
LO3 Target Market
Target Market
A defined group most likely to
buy a firm’s product.
Chapter 3
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27
LO4
Social Factors
Describe the social
factors that affect
marketing
Chapter 3
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28
Social Factors
Attitudes
Values
Lifestyle
LO4
Chapter 3
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29
Social Factors
Social Factors Influence:
Products purchased
Prices paid for products
Effectiveness of promotions
LO4
Chapter 3
How, where, and when people purchase
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30
Social Factors
Core American Values
Self-Sufficiency
Upward Mobility
Work Ethic
LO4
Chapter 3
Conformity
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31
The Influence of Values
on Buying Habits
Ranked Characteristics
of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
LO4
Chapter 3
Low price
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32
Component Lifestyles
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.
LO4
Chapter 3
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33
Role of Families and
Working Women
 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
LO4
Chapter 3
 Single households outnumber married
households with kids
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34
LO4 REVIEW LEARNING OUTCOME
Social Factors that Affect Marketing
Chapter 3
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35
LO5
Demographic Factors
Explain the importance
to marketing managers
of current demographic
trends
Chapter 3
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36
LO5 Demographic Factors
Demography
Chapter 3
The study of people’s
vital statistics, such as
their age, race and
ethnicity, and location.
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37
LO5 Tweens
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”
Chapter 3
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38
LO5 Generation Y
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
http://www.mountaindew.com
http://www.northface.com
Online
Chapter 3
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39
LO5 Generation X
Born between 1965 and
1978
Population of 40 million
Savvy and cynical
consumers
Time is at a premium, and
outsourcing is utilized
Entering their moneymaking years
Chapter 3
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40
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
Chapter 3
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41
LO5 REVIEW LEARNING OUTCOME
Current Demographic Trends
Age
Chapter 3
Tweens
Gen Y
Gen X
Baby Boom
8 to 14 yrs
29 million
1979-1994
60 million
1965-1978
40 million
1946-1964
77 million
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42
LO6 Growing Ethnic Markets
Explain the importance
to marketing managers
of multiculturalism and
growing ethnic markets
Chapter 3
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43
LO6 Growing Ethnic Markets
 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.
Chapter 3
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44
LO6
Marketing to Hispanic
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.
Chapter 3
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45
LO6
Marketing to African
Americans
 Many firms are
creating products
for the African
American market.
 Promotional dollars
and media choices
directed toward
African Americans
continue to increase.
Chapter 3
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46
LO6
Marketing to Asian
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.
Chapter 3
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47
LO6 REVIEW LEARNING OUTCOME
Multiculturalism and Growing Ethnic Markets
Chapter 3
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48
LO7
Economic Factors
Identify consumer
and marketer
reactions to the
state of the economy
Chapter 3
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49
Economic Factors
Distribution of
Consumer Income
Inflation
LO7
Chapter 3
Recession
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50
Consumers’ Incomes
 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.
LO7
Chapter 3
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51
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:




LO7 
Chapter 3
68% of new cars
66% of computers
66% of home improvements
53% of investments
51% of consumer electronics
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52
Purchasing Power
Purchasing
Power
A comparison of the relative cost of a
set standard of goods and services
in different geographic areas.
LO7
Chapter 3
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53
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
Chapter 3
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54
Recession
Recession
A period of economic activity
characterized by negative growth,
which reduces demand for goods
and services.
LO7
Chapter 3
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55
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
Chapter 3
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56
LO8
Technological Factors
Identify the impact of
technology on a firm
Chapter 3
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57
Research
Basic Research
Pure research that aims to
confirm an existing theory or to
learn more about a concept
phenomenon.
An attempt to develop new or
Applied Research improved products
LO8
Chapter 3
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58
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
LO8  May render existing products obsolete
Chapter 3
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59
Technological Factors
 Innovation is becoming a
global process.
 New technologies create
new opportunities
 RSS (Really Simple
Syndication)
 Blogging
LO8
Chapter 3
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60
LO8 REVIEW LEARNING OUTCOME
Impact of Technology on a Firm
Basic
Research
Applied
Research
Technology
Advances
Marketing
Mix
Chapter 3
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61
LO9 Political and Legal Factors
Discuss the
political and legal
environment of
marketing
Chapter 3
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62
Political and Legal Factors
Laws and Regulations Protect:




New technology
Society
Businesses
Consumers
LO9
Chapter 3
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63
Federal Legislation
Regulate
competitive
environment
Regulate
pricing practices
Control false
advertising
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Robinson-Patman Act
Wheeler-Lea Act
LO9
Chapter 3
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64
Regulatory Agencies
Consumer
Product Safety
Commission
Protects consumer safety in
and around their homes
Federal Trade
Commission
Prevents unfair methods of
competition in commerce
Food & Drug
Administration
Enforces safety regulations for
food and drug products
LO9
http://www.ftc.gov
Online
Chapter 3
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65
Powers of the FTC
Cease-and-Desist Order
Consent Decree
Affirmative Disclosure
Corrective Advertising
Restitution
LO9
Chapter 3
Counteradvertising
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66
Consumer Privacy
Government Actions
 Gramm-Leach-Bliley Act
 Health Insurance Portability and
Accountability Act (HIPPA)
 California’s Notice of Security Breach Law
LO9
Chapter 3
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67
LO9 REVIEW LEARNING OUTCOME
Political and Legal Environment of Marketing
Chapter 3
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68
LO10
Competitive Factors
Explain the basics of
foreign and domestic
competition
Chapter 3
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69
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
LO10
Chapter 3
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70
Competitive Factors
Competition for Market
Share and Profits
 Firms must work harder
to maintain profits and
market share.
Global Competition
 More foreign firms
are entering U.S. market.
 Foreign firms in U.S. now
compete on product
quality.
LO10
Chapter 3
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71
LO10 REVIEW LEARNING OUTCOME
Political and Legal Environment
Highly Competitive Marketplace
Mature Industries
Slow Growth /
No Growth
Can only increase
market share by
taking it from a competitor.
Chapter 3
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72