Chapter 3 The Marketing Environment, Ethics, and Social Responsibility

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. Describe how government and other groups regulate marketing activities and how marketers can influence the political-legal environment. Outline the economic factors that affect marketing decisions and consumer buying power.

Objectives 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 Process of collecting information about the external marketing environment in order to identify and interpret potential trends.

Environmental Management Attainment of 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 COUNCIL OF BETTER BUSINESS BUREAUS (CBBB) “OUR MISSION is to promote and foster the highest ethical relationship between businesses and the public through voluntary self-regulation, consumer and business education, and service excellence.” The CBBB helps in keeping the Competitive Environment playing field level.

Three Types of Competition Direct – occurs among markets of similar products. Indirect – involves products that are easily substituted. Final type of competition occurs among all organizations that compete for consumers’ purchases.

Three Questions of Determining a Competitive Strategy Should we compete? If so, in what markets? How should we compete?

1st Competitive Strategy Question Should we Compete? Depends on Firm’s resources. Objectives. Expected profit potential.

Legoland competes with other theme parks in California.

2nd Competitive Strategy Question What Markets Should we Compete In? Must acknowledge: Firms limited resources. Accept responsibility for allocating these resources to the areas of greatest opportunity.

3rd Competitive Strategy Question How Should we Compete? Make product decisions about: Pricing, Distribution, Promotional, Product quality, and Customer service.

Time-Based Competition Strategy Developing and distributing goods and services more quickly than competitors. Provides for Flexibility and responsiveness. Improve product quality. Reduce costs. Expand product offerings. Enhance customer satisfaction.

Major Federal Law Affecting Marketing

Major Federal Law Affecting Marketing

Major Federal Law Affecting Marketing

New Regulatory Frontier Cyberspace: How do you “police?” Privacy and child protection issues. How do you protect the consumer?

Economic Environment Forces that Influence Consumer Buying Power and Marketing Strategies Business cycle Inflation Unemployment Income Resource availability

Four Stages in the Business Cycle Prosperity - Consumer spending maintains a brisk pace and buyers are willing to spend more. Recessionary Periods - Sales of lower-priced brands of grocery and household-goods products and private-label goods rise. Depression - Consumer spending sinks to its lowest level. Recovery Stage - The economy emerges from recession and consumer purchasing power increases. Caution often restrains their willingness to buy. As a recovery strengths, consumers become more indulgent.

Inflation Rising prices caused by some combination of excess demand and increases in the costs devalues money. Three possible outcomes: consumers elect to buy now, in the belief that prices will be high later; they decide to alter their purchasing patterns; or They postpone certain purchases.

Social-Cultural Environment The relationship between marketing and society and its culture. The U.S. is becoming older, more affluent and more cultural diverse Consider the Nickelodeon web site. What are they doing to promote cultural diversity? Is their approach socially responsible?

Ethical Questions in Marketing Product Planned obsolescence Product quality and safety Product warranties Fair packaging and labeling Pollution Distribution Exclusive territories Dumping Dealer rights Predatory competition Promotion Bait-and-switch advertising Promotional allowances Bribery Price Price fixing Price discrimination Price increases Deceptive pricing Ethical Issues

Ten Steps for Corporation to Improve Standards of Business Ethics Appoint a senior-level ethics compliance officer. Set up an ethics code capable of detecting and preventing misconduct. Distribute a written code of ethics to employees, subsidiaries, and associated companies and require all business partners to abide by it. Conduct regular ethics training programs to communicate standards and procedures. Establish systems to monitor misconduct and report grievances. Establish consistent punishment guidelines to enforce standards and codes. Encourage an open-door policy, allowing employees to report cases on misconduct without fear of retaliation. Prohibit employees with a track record of misconduct from holding positions with substantial discretionary authority. Promote ethically aware and responsible managers. Continually monitor effectiveness of all ethics-related programs.

The Four-Step Pyramid of Corporate Social Responsibility