Chapter 3. The Marketing Environment, Ethics, and Social Responsibility. Chapter Objectives. Identify the five components of the marketing environment . Explain the types of competition marketers face and the steps necessary for developing a competitive strategy.
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The Marketing Environment, Ethics, and Social Responsibility
Identify the five components of the marketing environment.
Explain the types of competition marketers face and the steps necessary for developing a competitive strategy.
Describe how government and other groups regulate marketingactivities and how marketers can influence the political –legal environment.
Outline the economic factors that affect marketing decisions and consumer buying power.
Discuss the impact of the technological environment on a firm’s marketing activities.
Explain how the social-cultural environment influences marketing.
Describe the role of marketing in society and identify the two major social issues in marketing.
Identify the four levels of the social responsibility pyramid.
Environmental Scanning and Environmental Management
Environmental Scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends
Environmental Management involves marketers’ efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments.
Elements of the Marketing Mix within an Environmental Framework
The Competitive Environment
Competitive Environment: The interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power.
Types of Competition
Directly Competitive Products
Legoland Competes with Other Theme Parks in California
Types of Competition
Indirectly Competitive Products
Involves products than can be substituted for one another
Mountain Dew competes directly with other soft drinks as well as indirectly with substitutes like bottled or canned iced tea and bottled water
Types of Competition
All Consumer Purchases
Occurs in the sense that all firms compete for the buyers’ purchases
Movies compete against many products, from dining out to buying a new pair of shoes.
Developing a Competitive Strategy
Should we compete?
If so, in what markets should we compete?
How should we compete?
Time-based competition is a strategy of developing and distributing goods and services more quickly than competitors
The Political-Legal Environment
Component of the marketing environment consisting of laws and interpretations of laws that require firms to operate under competitive conditions and to protect consumer rights.
Maintaining a Competitive Environment
Began in the late 19th century
Aimed at to maintaining a competitive environment by reducing the trend toward monopolies
Sherman Antitrust Act
Federal Trade Commission
Began during the depression era of the 1930s
Meant to protect independent merchants against competition from larger chain stores
Included the Robinson-Patman Act
Began mainly in the 1960s
Increased focus on consumer protection
Newest regulatory frontier is cyberspace
Consumer product safety
Deregulating Specific Industries
Began in the late 1970s
Focused on deregulating specific industries
Airline Deregulation Act
Motor Carrier Act
Other Federal Regulatory Agencies
Federal Trade Commission
The FCC (telecommunications, radio, and television)
The Food and Drug Administration
Consumer Products Safety Commission
Federal Power Commission
Environmental Protection Agency
Securities & Exchange Commission
Other Regulatory Forces
Consumer interest groups
National Coalition Against Misuse of Pesticides
American Association of Retired People (AARP)
Direct Marketing Association
Council of Better Business Bureaus
The Economic Environment
Factors that influence consumer buying power and marketing strategies, including stage of the business cycle, inflation, unemployment, resource availability and income
Stages in the Business Cycle
Cyclical patterns consisting of the stages of prosperity, recession, depression, and recovery.
The Wealth Effect: Spending for Luxury Products Increases during Recovery and Prosperity Stages
Inflation and Deflation
Inflation: The devaluation of money by reducing what it can buy through persistent price increases.
Deflation: Falling prices, better?
The proportion of people in the economy who do not have jobs and are actively looking for work.
Discretionary income: the amount of money people have to spend after paying for necessities such as food, clothing, and housing.
Demarketing: the process of reducing consumer demand for a good or service to a level that the firm can supply.
The International Economic Environment
Marketers must consider the economic environment of other nations
Changes in foreign currency rates may affect marketing decisions
Recessions in one part of the world may be offset by prosperity in another
Austrian Tourist Office
Economic Growth in Other Countries Often Means Increased Potential Growth Due to Foreign Tourists
The Technological Environment
The technological environment represents the application of knowledge in science, inventions, and innovations to marketing.
Applying technology helps Fidelity improve customer service
The Toyota Prius: one of the First Hybrid Automobiles Available for U.S. Auto Buyers
The Social-Cultural Environment
The relationship between marketing and society and its culture
GardenBurger is a leader in marketing meatless products that satisfy demands of vegetarians and health-conscious consumers
Frito-Lay Launches Low-Fat Snacks for Health-Conscious Consumers
Importance in International Marketing Decisions
The social-cultural context often exerts a more pronounced influence on marketing decision-making in the international sphere than in the domestic arena
A social force within the environment designed to protect the consumer by exerting legal, moral, and economic pressures on business and government.
John F. Kennedy’s Statement of Consumer Rights
The right to choose freely
The right to be informed
The right to be heard
The right to be safe
Addressing Consumer’s Right to Be Safe
Ethical Issues in Marketing
Marketing ethics: Marketer’s standards of conduct and moral values
Criticisms of the Competitive Marketing System
Marketing costs are too high
The marketing system is inefficient
Marketers and the business system collude and commit price-fixing
Firms deliver poor product quality and service
Consumers receive incomplete, false, and/or misleading information
The marketing system produces health and safety hazards
Marketers persuasively promote unwanted and unnecessary products to those who least need them
Figure 3.7, P.99
Ten Steps for Corporation to Improve Standards of Business Ethics
Figure 3.8, P.100
Test Your Work-place Ethics
Ethical Problems in Marketing Research
Alleged invasions of personal privacy
Gathering marketing information in exchange for money or free offers
Ethical Problems in Product Strategy
Ethical Problems in Distribution Strategy
Determining the appropriate degree of control over a channel
Determining whether a company should distribute its products in marginally profitable outlets that have no alternative source of supply
Ethical Problems in Pricing
Probably the most regulated aspect
Most unethical pricing behavior is also illegal
Ethical Problems in Promotional Strategy
The source of the majority of ethical questions
Ethically questionable personal selling
Gifts and bribes
Promotion of questionable features (air bags)
Questionable WWW related promotional practices
Social Responsibility in Marketing
Marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective
The Four-Step Pyramid of Corporate Social Responsibility
Budweiser Advertising Its Socially Responsible Hispanic Scholarship Fund
Traditionally concerned managers’ relationships with customers, employees, and stockholders
Extended to relations with government and the general public
Today, corporate responsibility has expanded to cover the entire societal framework in the US and throughout the world