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Explain the purpose of environmental scanning. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO: LO1 Explain the purpose of environmental scanning. LO2 Describe social forces such as demographics and culture. LO3 Discuss how economic forces affect marketing. LO4 Describe how technological changes can affect marketing. 3-2

Discuss the forms of competition that exist in a market. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 3, YOU SHOULD BE ABLE TO: LO5 Discuss the forms of competition that exist in a market. Explain how regulatory forces ensure competition and protect producers and consumers. LO6 LO7 Identify factors that influence ethical and unethical marketing decisions. LO8 Describe the different concepts of social responsibility. 3-3

WHAT IS THE WORLD’S THIRD LARGEST NATION WHAT IS THE WORLD’S THIRD LARGEST NATION? THE SOCIAL NATION CREATED BY FACEBOOK! 3-4

FIGURE 3-1 Environmental forces affect the organization, its suppliers, and its customers 3-5

DEMOGRAPHICS—POPULATION SOCIAL FORCES DEMOGRAPHICS—POPULATION LO2 Environmental Scanning Social Forces Demographics Population at a Glance Population Explosion U.S. Population 3-6

DEMOGRAPHICS—GENERATIONAL COHORTS SOCIAL FORCES DEMOGRAPHICS—GENERATIONAL COHORTS LO2 Baby Boomers: 1946 - 1964 Generation X: 1965 - 1976 Generation Y: 1977 - 1994 Millennials: 1995+ 3-7

Ameritrade, American Airlines, and HTC Which generational cohort is being reached? LO2 3-8

MAKING RESPONSIBLE DECISIONS Millennials Are Going to Change the World! LO2 3-9

DEMOGRAPHICS—RACIAL & ETHNIC DIVERSITY SOCIAL FORCES DEMOGRAPHICS—RACIAL & ETHNIC DIVERSITY LO2 Composition Trends African Americans Hispanics Asian Americans Multicultural Marketing 3-10

DEMOGRAPHICS—THE AMERICAN HOUSEHOLD SOCIAL FORCES DEMOGRAPHICS—THE AMERICAN HOUSEHOLD LO2 Marital Status Cohabitation Blended Family 3-11

DEMOGRAPHICS—POPULATION SHIFTS SOCIAL FORCES DEMOGRAPHICS—POPULATION SHIFTS LO2 Regional Shifts in the U.S.: 2012 3-12

DEMOGRAPHICS—POPULATION SHIFTS SOCIAL FORCES DEMOGRAPHICS—POPULATION SHIFTS LO2 Shifts Within States Rural Cities Suburbs Exurbs 3-13

DEMOGRAPHICS—POPULATION SHIFTS SOCIAL FORCES DEMOGRAPHICS—POPULATION SHIFTS LO2 Statistical Areas (SA): Illinois Combined SA: NE Illinois Micropolitan SA: Dixon, IL Metropolitan SA: St. Louis, MO & SW IL Metropolitan Division: Chicagoland 3-14

SOCIAL FORCES CULTURE LO2 Culture Cultural Values 3-15

MACROECONOMIC CONDITIONS ECONOMIC FORCES MACROECONOMIC CONDITIONS LO3 Economy Inflation Recession 3-16

ECONOMIC FORCES Gross Income Disposable Income Discretionary Income CONSUMER INCOME LO3 Gross Income Disposable Income Discretionary Income 3-17

TECHNOLOGY OF TOMORROW TECHNOLOGICAL FORCES TECHNOLOGY OF TOMORROW LO4 Technology Social Networks Natural User Interfaces Green Infrastructure Biotechnology Tablet Devices, Etc. 3-18

IMPACT ON CUSTOMER VALUE TECHNOLOGICAL FORCES IMPACT ON CUSTOMER VALUE LO4 Impact on Customer Value Plummeting Costs New Products Marketspace Electronic Commerce 3-19

New Yorker, GoToMeeting, and Spot Connect What products might be replaced with these? LO4 3-20

ALTERNATIVE FORMS OF COMPETITION COMPETITIVE FORCES ALTERNATIVE FORMS OF COMPETITION LO5 Competition Pure Competition Monopolistic Competition Oligopoly Pure Monopoly 3-21

FIGURE 3-A Continuum of competition 3-22

Protecting Competition REGULATORY FORCES FEDERAL LEGISLATION LO6 Regulation Protecting Competition Sherman Antitrust Act (1890) Clayton Act (1914) Robinson-Patman Act (1936) 3-23

Protecting Producers and Consumers REGULATORY FORCES FEDERAL LEGISLATION LO6 Protecting Producers and Consumers Patent Law Copyright Law Digital Millennium Copyright Act (1998) Nutritional Labeling 3-24

Protecting Producers and Consumers REGULATORY FORCES FEDERAL LEGISLATION LO6 Protecting Producers and Consumers Consumer Product Safety Act (1972) Consumer Product Safety Commission Consumerism 3-25

Protecting Producers and Consumers REGULATORY FORCES FEDERAL LEGISLATION LO6 Protecting Producers and Consumers Price Fixing Price Discounting 3-26

Protecting Producers and Consumers REGULATORY FORCES FEDERAL LEGISLATION LO6 Protecting Producers and Consumers Federal Trade Commission Act of 1914 Cease and Desist Order Corrective Advertising CAN-SPAM Act (2004) Do Not Call Registry 3-27

Protecting Producers and Consumers REGULATORY FORCES FEDERAL LEGISLATION LO6 Protecting Producers and Consumers Exclusive Dealing Requirement Contracts Exclusive Territorial Distributorships Tying Arrangement 3-28

Protecting Producers and Consumers REGULATORY FORCES FEDERAL LEGISLATION LO6 Protecting Producers and Consumers Landham Act (1946) Trademark Law Revision Act (1988) Madrid Protocol (2003) U.S. Supreme Court: Trademark Colors Federal Dilution Act (1995) Control Through Self-Regulation 3-29

Band-Aid, ChapStick, Jell-O, Kleenex, Vaseline, Frisbee, and Q-Tips Are these brand names generic trademarks? LO6 3-30

ETHICAL MARKETING BEHAVIOR SOCIETAL CULTURE AND NORMS LO7 Ethics Laws Current Perceptions of Ethical Behavior Culture 3-31

FIGURE 3-2 A framework for understanding ethical behavior 3-32

ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO7 Business Cultures Ethics of Exchange Caveat Emptor Consumer Bill of Rights (1962): The Right To Safety To Choose To Be Informed To Be Heard 3-33

ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO7 Ethics of Competition Economic Espionage Bribes and Kickbacks 3-34

MAKING RESPONSIBLE DECISIONS Corporate Conscience in the Cola War LO7 3-35

ETHICAL MARKETING BEHAVIOR CORPORATE CULTURE AND EXPECTATIONS LO7 Corporate Culture Code of Ethics Ethical Behavior of Top Management and Co-Workers Whistle-Blowers 3-36

FIGURE 3-B American Marketing Association Statement of Ethics (abridged) 3-37

ETHICAL MARKETING BEHAVIOR PERSONAL MORAL PHILOSOPHY AND ETHICS Moral Idealism Nestlé’s Gerber Good Start Infant Formula Utilitarianism 3-38

Social Responsibility SOCIAL RESPONSIBILITY IN MARKETING THREE CONCEPTS OF SOCIAL RESPONSIBILITY LO8 Social Responsibility Profit Responsibility Stakeholder Responsibility Societal Responsibility 3-39

FIGURE 3-C Three concepts of social responsibility 3-40

Societal Responsibility SOCIAL RESPONSIBILITY IN MARKETING THREE CONCEPTS OF SOCIAL RESPONSIBILITY LO8 Societal Responsibility Triple-Bottom Line Green Marketing Häagen- Dazs Cause Marketing 3-41

MARKETING MATTERS Will Consumers Switch Brands for a Cause? Yes, If… LO8 3-42

SOCIAL RESPONSIBILITY IN MARKETING SUSTAINABLE DEVELOPMENT Social Audit Sustainable Development 3-43

TOYOTA: BUILDING CLEANER, GREENER CARS VIDEO CASE 3 3-44

FIGURE 1 Who should take the lead in addressing environmental issues? 3-45

VIDEO CASE 3 Toyota 1. How does Toyota’s approach to social responsibility relate to the three concepts of social responsibility described in the text (profit responsibility, stakeholder responsibility, and societal responsibility)? 3-46

VIDEO CASE 3 Toyota 2. How does Toyota’s view of sustainable mobility contribute to the company’s overall mission? 3-47

VIDEO CASE 3 Toyota 3. Has Toyota’s National Parks project been a success? What indicators suggest that the project has had an impact? 3-48

VIDEO CASE 3 Toyota 4. What future activities would you suggest for Toyota as it strives to improve its reputation? 3-49

Environmental Scanning Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends. 3-50

Social Forces Social forces are the demographic characteristics of the population and its values. 3-51

Demographics Demographics describe a population according to selected characteristics such as age, gender, ethnicity, income, and occupation. 3-52

Baby Boomers Baby boomers consist of the generation of children born between 1946 and 1964. 3-53

Generation X Generation X includes the 15 percent of the population born between 1965 and 1976. Also called baby bust. 3-54

Generation Y Generation Y includes the 72 million Americans born between 1977 and 1994. Also called echo-boom or baby boomlet. 3-55

Culture Culture consists of the set of values, ideas, and attitudes that are learned and shared among the members of a group. 3-56

Economy The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household. 3-57

Technology Technology consists of the inventions or innovations from applied science or engineering research. 3-58

Marketspace Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings. 3-59

Competition Competition consists of the alternative firms that could provide a product to satisfy a specific market’s needs. 3-60

Regulation Regulation consists of the restrictions state and federal laws place on business with regard to the conduct of its activities. 3-61

Consumerism Consumerism is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions. 3-62

Self-Regulation Self-regulation is an alternative to government control where an industry attempts to police itself. 3-63

Ethics Ethics are the moral principles and values that govern the actions and decisions of an individual or group. 3-64

Consumer Bill of Rights (1962) The Consumer Bill of Rights (1962) is a law that codified the ethics of exchange between buyers and sellers, including the rights to safety, to be informed, to choose, and to be heard. 3-65

Code of Ethics A code of ethics is a formal statement of ethical principles and rules of conduct. 3-66

Moral Idealism Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. 3-67

Utilitarianism Utilitarianism is a personal moral philosophy that focuses on the “greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. 3-68

Social Responsibility Social responsibility is the idea that organizations are part of a larger society and are accountable to that society for their actions. 3-69

Green Marketing Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products. 3-70

Cause Marketing Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. 3-71

Sustainable Development Sustainable development consists of conducting business in a way that protects the natural environment while making economic progress. 3-72