Ethics, Social Responsibility,
and, the Marketing Environment
Chapter 2
Prepared by
Deborah Baker
Texas Christian University
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Learning Objectives
1. Describe the role of ethics and ethical
decisions in business
2. Discuss corporate social responsibility.
3. Discuss the external environment of
marketing, and explain how it affects a firm.
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Learning Objectives (continued)
4. Describe the social factors that affect
marketing.
5. Explain the importance to marketing
managers of current demographic trends.
6. Explain the importance to marketing
managers of multiculturalism and growing
ethnic markets.
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Learning Objectives (continued)
7. Identify consumer and marketer
reactions to the state of the economy.
8. Identify the impact of technology on a
firm.
9. Discuss the political and legal
environment of marketing.
10.Explain the basics of foreign and
domestic competition.
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1
Learning Objective
Describe the role
of ethics and ethical
decisions in business.
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1
Ethics and Morals
Ethics
The moral principles or values
that generally govern the conduct
of an individual.
Morals
The rules people develop as a
result of cultural values and
norms.
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1
Ethical Behavior in Business
Ethical?
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Legal?
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1
Ethical Development Levels
More
Selfish
Preconventional
Morality
Conventional
Morality
More
Mature
Postconventional
Morality
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Morality and Business Ethics
Preconventional
Morality
 Childlike level
 Based on what will be punished
or rewarded
 Self-centered, calculating, selfish
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1
Morality and Business Ethics
Conventional
Morality
 Moves toward the expectations of
society
 Concerned over legality and the opinion
of others
 “When in Rome, do as the Romans”
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Morality and Business Ethics
Postconventional
Morality
 Morality of the mature adult
 Concern about how they judge
themselves
 Concern if it is right in the long run
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1
Ethical Decision Making
Extent of
Problems
Top
Management
Actions
Probability of
Harm
Potential
Consequences
Time Until
Consequences
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Social
Consensus
Number
Affected
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1
Code of Ethics
On Line
http://www.ethics.ubc.ca/
resources/business
A guideline to help
marketing managers and
other employees make
better decisions.
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Creating 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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1
Unethical Practices
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2
Learning Objective
Discuss corporate
social responsibility.
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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2
Corporate Social Responsibility
On Line
http://www.equalexchange.com
http://www.crest.com
Philanthropic
Be a good citizen.
Ethical
Do what is right.
Legal
Obey the Law.
Economic
Be profitable.
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3
Learning Objective
On Line
http://www.levi.com
Discuss the external
environment of
marketing, and
explain how it
affects a firm.
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3
Target Market
A defined group most likely
to buy a firm’s product.
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3
External Marketing Environment
External Environment
is not controllable
Social
Change
Demographics
Ever-Changing
Marketplace
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Environmental
Scanning
Technology
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3
External Marketing Environment
Social
Demographic
Economic
External
Environmental
Factors
Technologic
Political and Legal
Competitive
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4
Learning Objective
Describe the social
factors that affect
marketing.
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4
Social Factors
Social Factors
Values
Attitudes
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Lifestyle
23
4
American Values
Self-Sufficiency
Upward Mobility
Work Ethic
Basic
American
Values
Conformity
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The Influence of Values
on Buying Habits
4
1. Reliability
2. Durability
3. Easy maintenance
Ranked
Characteristics
of
Product Quality
4. Ease of use
5. Trusted brand
6. Low price
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4
The 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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4
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.
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Role 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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5
Learning Objective
Explain the
importance to
marketing managers
of current
demographic trends.
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5
Demographic Factors
Demography
Age
Location
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Race and
Ethnicity
30
5
The Demographic Facts of life
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Age Groups: Generation Y
On Line
http://www.generation-y.com
 Born between 1979 and 1994
 Size creates immense marketing
impact
 Respond to ads differently
 Love customized products
On Line
http://www.mountaindew.com
and services
http://www.northface.com
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5
Age Groups: Generation X
 Born between 1965 and 1978
 Savvy and cynical consumers
 Indulge themselves with
meals/alcohol, clothing, and
electronics
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5
Age 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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5
Personalized Economy
Delivering customized
goods and services at a
good value on demand.
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5
Age Groups: Older Consumers
On Line
http://www.gct.com
http://www.maupintour.com

Age “55 plus”

Healthier, wealthier,
better educated

Definite about wants
and needs

Have unique behavior
patterns

Not happy with advertising treatment
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6
Learning Objective
Explain the
importance to
marketing managers
of multiculturalism
and growing ethnic
markets.
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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6
Growing 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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6
Multiculturalism
On Line
http://www.bet.com
http://www.multiculturalmarketingresources.com
When all major ethnic
groups in an area-such as a city, county, or
census tract--are roughly
represented.
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7
Learning Objective
Identify consumer
and marketer
reactions to the
state of the
economy.
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7
Economic Factors
Economic Areas
of Concern to
Marketers
Distribution of
Consumer
Income
Recession
Inflation
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7
Rising Incomes

66% of U.S. households
earn “middle-class” income

Over 10% earn over $75,000, primarily
from dual-income families

More discretionary income for
high-end goods and services
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7
Inflation

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 Essentials of Marketing 4e Lamb Hair McDaniel
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7
Recession

Income, production and
employment fall

Reduced demand for
goods and services
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Recession Marketing Strategies
 Improve existing products
 Introduce new products
 Maintain customer services
 Emphasize top-of -the line products
and promote product value
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8
Learning Objective
Identify the impact
of technology on
a firm.
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Basic and Applied Research
Basic
Research
Pure research that aims to
confirm an existing theory or to
learn more about a concept
phenomenon.
Applied
Research
An attempt to develop new or
improved products
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8
Technological & Resource Factors

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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9
Learning Objective
Discuss the
political and legal
environment
of marketing.
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9
Political and Legal Factors
Laws and Regulations Protect
Businesses
Consumers
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Society
New
Technology
50
9
Federal Legislation
Sherman Act
Clayton Act
Federal Trade Commission Act
Robinson-Patman Act
Wheeler-Lea Amendments to the FTC Act
Lanham Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
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Regulatory Agencies
On Line
http://www.ftc.gov

Consumer Product Safety
Commission

Federal Trade Commission

Food & Drug Administration
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Regulatory Agencies
On Line
http://www.fda.gov
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
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10
Learning Objective
Explain the basics of
foreign and domestic
competition.
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10
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
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10
Competitive Factors
Competition for
Market Share
and
Profits
Chapter 2 Essentials of Marketing 4e Lamb Hair McDaniel
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Global
Competition
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10
Global 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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