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Social
Responsibility,
Ethics, and the
Marketing
Environment
CHAPTER
3
Marketing
Designed by
Eric Brengle
B-books, Ltd.
9
Lamb, Hair, McDaniel
Chapter 3
Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
Prepared by
Deborah Baker
Texas Christian University
1
Learning Outcomes
LOI
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
LOIO
Explain the basics of foreign and domestic
competition
Chapter 3
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4
LOI
Corporate Social Responsibility
Discuss corporate social
responsibility
Chapter 3
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5
LOI
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.
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LOI REVIEW LEARNING OUTCOME
Corporate Social Responsibility
Philanthropic
Be a good citizen.
Ethical
Do what is right.
Legal
Obey the Law.
Economic
Be profitable.
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LO2
Ethical Behavior in Business
Describe the role of ethics
and ethical decisions
in business
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LO2
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.
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LO2
Ethical Development Levels
More
Childlike Preconventional
Morality
Conventional
Morality
More Postconventional
Morality
Mature
• Based on what will be
punished or rewarded
• Self-centered, calculating,
selfish
• Moves toward the
expectations of society
• Concerned over legality and
the opinion of others
• Concern about how they
judge themselves
• Concern if it is right in
the long run
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LO2
Ethical Decision Making
Influential Factors
Extent of Problems
Probability of Harm
Top Management
Actions
Time Until
Consequences
Potential Consequences
Number Affected
Social Consensus
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LO2
Jaws
12
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LO2
Code of Ethics
Code of Ethics
A guideline to help marketing
managers and other employees
make better decisions.
http://www.ethicsweb.ca
Online
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LO2
Creating Ethical Guidelines
 Helps identify acceptable business practices
 Helps control behavior internally
 Avoids confusion in decision making
 Facilitates discussion about right and wrong
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LO2
Ethical Norms and Values for Marketers
Exhibit 3.3
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LO3
The External Marketing Environment
Discuss the external
environment of marketing,
and explain
how it affects a firm
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LO3
External Marketing Environment
Internal
(within the
organization)
External Environment
(uncontrollable)
Social
Change
Demographics
Ever-Changing
Marketplace
Marketing mix
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Environmental
Scanning
Technology
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LO3
Target Market
Target Market
A defined group most likely to
buy a firm’s product.
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LO4
Social Factors
Describe the social factors
that affect marketing
Chapter 3
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Social Factors
Attitudes
Values
Lifestyle
LO4
Chapter 3
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LO4 Social Factors
Social Factors Influence:
Products purchased
Prices paid for products
Effectiveness of promotions
How, where, and when people purchase
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LO4 Social Factors
Self-Sufficiency
Upward Mobility
Core American Values
Work Ethic
Conformity
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The Influence of Values on Buying Habits
Ranked Characteristics of Product Quality
Reliability
Durability
Easy maintenance
Ease of use
Trusted brand name
Low price
Chapter 2
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23
LO4
LO4
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.
Chapter 3
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24
LO4
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
 Single households outnumber married
households with kids
Chapter 3
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25
LO4 REVIEW LEARNING OUTCOME
Social Factors that Affect Marketing
Chapter 3
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LO5
Demographic Factors
Explain the importance
to marketing managers of
current demographic trends
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LO5
Demographic Factors
Demography
The study of people’s vital
statistics, such as their age,
race and ethnicity, and location.
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Tweens
LO5

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”
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Generation Y
LO5
 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
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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 money-making years
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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
 Four segments of baby boomers:
“Looking for balance”
“Confident and living well”
“At ease”
“Overwhelmed”
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LO5 REVIEW LEARNING OUTCOME
Current Demographic Trends
Age
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
Chapter 3
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LO6
Growing Ethnic Markets
Explain the importance to
marketing managers of
multiculturalism and
growing ethnic markets
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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.
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35
Marketing to Hispanic Americans
LO6

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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Marketing to African Americans
LO6

Many firms are creating products for the
African American market.

Promotional dollars and media choices
directed toward African Americans
continue to increase.
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37
Marketing to Asian Americans
LO6

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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38
LO6 REVIEW LEARNING OUTCOME
Multiculturalism and Growing Ethnic Markets
Chapter 3
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LO7
Economic Factors
Identify consumer and
marketer reactions to the
state of the economy
Chapter 3
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LO7
Economic Factors
Distribution of
Consumer
Income
Inflation
Recession
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Consumers’ Incomes
LO7

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.
Chapter 3
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42
The Financial Power of Women
LO7

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 maledominated categories:
–
–
–
–
–
68% of new cars
66% of computers
66% of home improvements
53% of investments
51% of consumer electronics
Chapter 3
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43
LO7
Purchasing Power
Purchasing
Power
A comparison of the relative
cost of a set standard of goods
and services in different
geographic areas.
Chapter 3
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Inflation
LO7
Inflation
A measure of the decrease in
the value of the money,
expressed as the percentage
reduction in value since the
previous year.
Chapter 3
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Recession
LO7
Recession
A period of economic activity
characterized by negative
growth, which reduces demand
for goods and services.
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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
Chapter 2
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47
LO7
LO8
Technological Factors
Identify the impact of
technology on a firm
Chapter 3
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Research
LO8
Basic Research
Applied Research
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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49
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
Chapter 3
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LO8
50
Technological Factors

Innovation is becoming a global
process.

New technologies create new
opportunities
– RSS (Really Simple
Syndication)
– Blogging
Chapter 3
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LO8
51
LO8 REVIEW LEARNING OUTCOME
Impact of Technology on a Firm
Basic
Research
Applied
Research
Technology
Advances
Marketing
Mix
Chapter 3
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52
LO9
Political and Legal Factors
Discuss the political and
legal environment
of marketing
Chapter 3
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53
Political and Legal Factors
Laws and Regulations Protect:




LO9
New technology
Society
Businesses
Consumers
Chapter 3
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54
Federal Legislation
Regulate
competitive
environment
Regulate
pricing
practices
Control
false
advertising
LO9
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Robinson-Patman Act
Wheeler-Lea Act
Chapter 3
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55
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
http://www.ftc.gov
LO9
Online
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56
LO9
Powers of the FTC
Cease-and-Desist Order
Consent Decree
Affirmative Disclosure
Corrective Advertising
Restitution
Counteradvertising
Chapter 3
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57
Consumer Privacy
LO9
Government Actions
 Gramm-Leach-Bliley Act
 Health Insurance Portability and
Accountability Act (HIPPA)
 California’s Notice of Security Breach Law
Chapter 3
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58
LO9 REVIEW LEARNING OUTCOME
Political and Legal Environment of Marketing
Chapter 3
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59
LOIO
Competitive Factors
Explain the basics of foreign
and domestic competition
Chapter 3
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60
LOIO
Competitive Factors
How many competitors?
Control
How big are competitors?
How interdependent is
the industry?
Chapter 3
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61
LOIO
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.
Chapter 3
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62
LOIO 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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63