Prepared by Deborah Baker Texas Christian University

1. 9 MarketingLamb, Hair, McDaniel Prepared by Deborah Baker Texas Christian University Designed by Eric Brengle B-books, Ltd. Social Responsibility, Ethics, and theMarketing Environment CHAPTER 3

2. The External Marketing Environment LO3 Discuss the external environment of marketing, and explain how it affects a firm

3. External Environment (uncontrollable) Social Change Internal (within the organization) Demographics Ever-Changing Marketplace Marketing mix Economic Conditions Product Distribution Promotion Price Competition Target Market Political & Legal Factors Technology Environmental Scanning External Marketing Environment LO3

4. Target Market A defined group most likely to buy a firm’s product. Target Market LO3

5. Social Factors LO4 Describe the social factors that affect marketing

6. Attitudes Values Lifestyle Social Factors LO4

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

8. Social Factors Self-Sufficiency Upward Mobility Work Ethic Conformity LO4 Core American Values

9. Ranked Characteristics of Product Quality Reliability Durability Easy maintenance Ease of use Trusted brand name Low price The Influence of Values on Buying Habits LO4

10. 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. Component Lifestyles LO4

11. Role of Families and Working Women LO4 • 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

12. REVIEW LEARNING OUTCOME LO4 Social Factors that Affect Marketing

13. Demographic Factors LO5 Explain the importance to marketing managers of current demographic trends

14. Demography The study of people’s vital statistics, such as their age, race and ethnicity, and location. Demographic Factors LO5

15. 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”

16. Generation Y http://www.mountaindew.com http://www.northface.com Online 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

17. Generation X LO5 • 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

18. Baby Boomers LO5 • 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”

19. Age Tweens Gen Y Gen X Baby Boom 8 to 14 yrs29 million 1979-199460 million 1965-197840 million 1946-196477 million REVIEW LEARNING OUTCOME LO5 Current Demographic Trends

20. Growing Ethnic Markets LO6 Explain the importance to marketing managers of multiculturalism and growing ethnic markets

21. Growing Ethnic Markets LO6 • 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.

22. 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.

23. 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.

24. 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.

25. REVIEW LEARNING OUTCOME LO6 Multiculturalism and Growing Ethnic Markets

26. Economic Factors LO7 Identify consumer and marketer reactions to the state of the economy

27. Distribution of Consumer Income Inflation Recession Economic Factors LO7

28. 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.

29. 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 male-dominated categories: • 68% of new cars • 66% of computers • 66% of home improvements • 53% of investments • 51% of consumer electronics

30. Purchasing Power A comparison of the relative cost of a set standard of goods and services in different geographic areas. Purchasing Power LO7

31. Inflation A measure of the decrease in the value of the money, expressed as the percentage reduction in value since the previous year. Inflation LO7

32. Recession A period of economic activity characterized by negative growth, which reduces demand for goods and services. Recession LO7

33. Recession Marketing Strategies • Improve existing products and introduce new ones • Maintain and expand customer services • Emphasize top-of-the-line productsand promote product value LO7

34. Technological Factors LO8 Identify the impact of technology on a firm

35. Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. Basic Research Applied Research An attempt to develop new or improved products Research LO8

36. Technological Factors • U.S. excels at basic and applied research. • Many firms use the market concept to guide research. • New technology internally createsa long-term competitive advantage. • External technology • Creates more efficient operation or better products • May render existing products obsolete LO8

37. Technological Factors • Innovation is becoming a global process. • New technologies create new opportunities • RSS (Really Simple Syndication) • Blogging LO8

38. Basic Research Applied Research TechnologyAdvances MarketingMix REVIEW LEARNING OUTCOME LO8 Impact of Technology on a Firm

39. Political and Legal Factors LO9 Discuss the political and legal environment of marketing

40. Laws and Regulations Protect: • New technology • Society • Businesses • Consumers Political and Legal Factors LO9

41. Sherman Act • Clayton Act • Federal Trade Commission Act • Celler-Kefauver Antimerger Act • Hart-Scott-Rodino Act Regulate competitive environment Robinson-Patman Act Regulate pricing practices Wheeler-Lea Act Controlfalse advertising Federal Legislation LO9

42. Online 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

43. Powers of the FTC Cease-and-Desist Order Consent Decree Affirmative Disclosure Corrective Advertising Restitution Counteradvertising LO9

44. Consumer Privacy Government Actions • Gramm-Leach-Bliley Act • Health Insurance Portability and Accountability Act (HIPPA) • California’s Notice of Security Breach Law LO9

45. REVIEW LEARNING OUTCOME LO9 Political and Legal Environment of Marketing

46. Competitive Factors LOIO Explain the basics of foreign and domestic competition

47. How many competitors? How big are competitors? How interdependent isthe industry? Control Competitive Factors LOIO

48. 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. Competitive Factors LOIO

49. Highly Competitive Marketplace Mature Industries Slow Growth / No Growth Can only increasemarket share bytaking it from a competitor. REVIEW LEARNING OUTCOMEPolitical and Legal Environment LOIO