Transcript No Slide Title

Chapter 3 The Marketing
Environment
and Marketing Ethics
External Marketing Environment
External Environment
is not controllable
Social
Change
Ever-Changing
Marketplace
Demographics
Economic
Conditions
Product
Distribution
Promotion
Price
Competition
Target Market
Political &
Legal Factors
Environmental
Scanning
Technology
Marketing-Oriented Values
Cultural
Creativity
Traditionalism
Modernism
Interested in new products
and services.
“Heartlanders” with
nostalgic views
Place high value on success,
materialism, technology
The Poverty of Time
A lack of time to do anything but
work, commute to work, handle
family situations, do housework,
shop, eat, sleep...
Role of Families & Women
• 58% of all females are in the workforce
• Rising purchasing power from dual-income
families
• Change of “traditional” purchasing roles
Age Groups: Generation Y
• Born between 1979 and 1994
• Size creates immense marketing impact
• Respond to ads differently
Age Groups: Generation X
• Born between 1965 and 1978
• Savvy and cynical consumers
• Indulge themselves with meals/alcohol,
clothing, and electronics
Age Groups: Baby Boomers
• Born between 1946 and 1964
• Cherish youth, convenience,
and individuality
• Individualism has led to a personalized
economy
Age Groups: Older Consumers
•
Age “50 plus”
•
Healthier, wealthier, better
educated
•
Considerable purchasing
power
•
Market potential not
fully tapped
Location: Americans on the Move
•
Average U.S. citizen
moves every six years
•
Immigrants add $10 billion
yearly to economy
•
Migration is a global phenomenon
Growing Ethnic Markets
•
U.S. population is becoming a multicultural
society and workforce
•
Trend in U.S. is toward greater
multiculturalism
U.S. Multicultural Makeup
100%
80%
60%
40%
20%
0%
Whites
African
Hispanic
Asian
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
Technological & Resource Factors
•
New technology helps firm cope
with other environmental factors
•
U.S. excels at basic research,
but falls short at applied research
•
Information technology has
helped U.S. economic growth
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
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
Ethical Decision Making
Extent of
Problems
Top
Management
Actions
Probability of
Harm
Potential
Consequences
Time Until
Consequences
Social
Consensus
Number
Affected
Corporate Social Responsibility
Philanthropic
Be a good citizen.
Ethical
Do what is right.
Legal
Obey the Law.
Economic
Be profitable.
Approaches to Ethics
Ethical
Behavior
Punishment
Agency &
Judicial
Penalties
Consumer
Complaints
Boycotts
Rewards
Consumer
Response &
Bonding
Do the
Right
Thing
Strategic Philanthropy
• Home Depot - Team Depot -- trains and places employees
as volunteers with local youth-enrichment, home-renovation
and environmental programs.
• Avon - Breast Cancer Awareness Crusade that after six
years has raised more than $32 million for women's health
programs.
• Lens Crafters' "Gift of Sight," or Wal-Mart's "Good Works,"
and Taco Bell's "Teen Supreme,” are creating programs that
have their own names and brand and images and logos. They
become integrated with the company. Companies truly have
to stand for something -- and do it with integrity and
credibility.
• Corporate contributions to "cause programs" now exceed
$700 million annually.
From Don Oldenburg, Washington Post Staff Writer, Wednesday, May 5, 1999; Page C04
Roper Poll
After price and quality, one-third of
Americans consider a company's
responsible business practices the most
important factor in deciding whether or not
to buy a brand. Indeed, social
responsibility was more influential than
advertising.
Roper Poll
• More likely to purchase product associated
with a cause they care about (78%).
• Likely to switch brands (66%).
• Likely switch retailers (62%).
• Pay more for a product (54%).
• Pay five percent more (30%).
• Pay 10 percent more (24%).
• Consumers could name a company they
deemed least socially responsible (18%).
Topping the list were Exxon, Dow and
General Electric.
Strategic Value of Corporate Citizenship
Walker Research
Brand Loyalty
Economic
Value
Price
Company
Reputation
Societal
Value
Good Corporate
Citizen
Quality
Business
Practices
Financial
Stability
Service
Employee
Treatment
Care About
Environment
Strategic Value of Corporate Citizenship
Walker Research
• 56% saw support of philanthropy as positive
• 9% saw support of philanthropy as negative
• Ratings of Industries that ‘Overall Support of the Community’
0
20
40
60
Non-Profits
Computers
Food
Utilities
Appliances
Petroleum
Government
Insurance
Chemical
Tobacco
Do Consumers Really Care About
Business Ethics?*
Examples: Infant Formula,
Outsourcing production to a country
with very poor human rights records
The Costs: Getting caught, Nestles,
Sears, Beechnut
*Creyer & Ross, Journal of Consumer Marketing
Do Consumers Really Care About
Business Ethics?*
Study Results:
• Ethics is important to Consumers
• Ethical behavior is expected
• Willing to pay more for products from
ethically responsible firms
• Willing to buy from unethical
companies, but only at lower prices
*Creyer & Ross, Journal of Consumer Marketing
Corruption Vs. Investment Growth*
Investment as % of GDP
High
Low
Also see http://www.transparency.de/
High
Singapore
Zaire
Ireland
Switzlnd
Greece France
Mexico
France
USA
Zimbabwe
Haiti
Netherlands
Britain
Ghana
Angola
Corruption Level
Low
*Washington Post