Chapter 3 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. THE MARKETING ENVIRONMENT, ETHICS, AND SOCIAL RESPONSIBILITY 1

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 1. Define environmental scanning and environmental management. Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Environmental Scanning ▮ Collecting external marketing environment information to identify and interpret potential trends ▮ Trends represent significant opportunities or threats to the company Example: Consumer Product Safety Commission issued a recall of American Girl Craft Pearly Beads & Ribbon Bracelets kits, citing high levels of lead in some of the beads 3

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Environmental Management ▮ Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social- cultural environments ▮ Strategic alliance - Partnership in which two or more companies combine resources and capital to create competitive advantages in a new market 4

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 2. What are the two kinds of environment? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Environment ▮ Competitive environment ▮ Marketing environment 6

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 3. What are the various components of the competitive environment? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Competitive Environment ▮ Pure competitive market ▮ Monopolistic competitive market ▮ Oligopolistic competitive market ▮ Monopoly 8

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 4. What are the three types of competition? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Types of Competition ▮ Direct Among marketers of similar products Example: Alternative suppliers in the cell phone market such as Verizon and AT&T ▮ Indirect Involves products that are easily substituted Example: In the fast-food industry, pizza competes with chicken, hamburgers, and tacos 10

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Types of Competition ▮ Competition among all firms that compete for consumers’ purchases All firms compete for a limited number of dollars that consumers can or will spend Example: The purchase of a Honda Accord might compete with a Norwegian Cruise Line cruise 11

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 5. What three questions need to be answered in determining a competitive strategy? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Developing a Competitive Strategy ▮ Competitive strategy - Methods through which a firm deals with its competitive environment Should we compete? Depends on firm’s resources, objectives, and expected profit potential In what markets should we compete? Requires marketers to acknowledge their firm’s limited resources 13

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Developing a Competitive Strategy How should we compete? Requires marketers to make product, distribution, promotion, and pricing decisions that give the firm a competitive advantage ▮ Time-based competition - Strategy of developing and distributing goods more quickly than competitors 14

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 6. Define the Marketing Environment. Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Key Environments ▮ Marketing Environment The actors and forces that affect a firm’s ability to build and maintain successful relationships with customers.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 7. What are the components of the marketing environment? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Key Environments ▮ Aspects of the marketing environment: Microenvironment: Actors close to the company Macroenvironment Larger societal forces

Figure 4-1: Actors in the Microenvironment

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Microenvironment ▮ Departments within the company impact marketing planning.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Microenvironment ▮ Suppliers help to create and deliver customer value. Treat suppliers as partners.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Microenvironment ▮ Marketing intermediaries help to sell, promote, and distribute goods. Intermediaries take many forms. Resellers Physical distribution firms Marketing services agencies Financial intermediaries

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Microenvironment ▮ Customer markets must be studied. ▮ Market types Consumer Business Government Reseller International

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Microenvironment ▮ Successful companies provide better customer value than the competition Size and industry position help to determine the competitive strategy.

The Microenvironment Government Media Financial Citizen action groups Local General Internal Various publics must also be considered.

Figure 4-2: Major Macroenvironmental Forces

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Macroenvironment ▮ Key Demographic Trends World population growth Now 6.2 billion Projected to reach 7.9 billion by 2025

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Macroenvironment ▮ Key Demographic Trends   Changing American household  Geographic population shifts  Better-educated, more white-collar workforce  Increasing Diversity

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ Gross domestic product (GDP) - Sum of all goods and services produced by a nation in a year ▮ Economic environment - Factors that influence consumer buying power and marketing strategies ▮ Business cycle - Pattern of stages in the level of economic activity The Economic Environment Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Economic Cycles

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ Prosperity - Consumer spending is brisk; growth in services sector ▮ Recession - Consumers focus on basic, fundamental products ▮ Depression - Consumer spending sinks to its lowest level ▮ Recovery - Consumer purchasing power increases Stages in the Business cycle Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Macroenvironment ▮ The Natural Environment –Concern for the natural environment has grown steadily, increasing the importance of these trends: Shortage of raw materials Increased pollution Increased governmental intervention didas-uniforms/index.htmlhttp:// didas-uniforms/index.html

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 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

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility The Macroenvironment ▮ Key Technological Trends The technological environment is characterized by rapid change. New technologies create new opportunities and markets but make old technologies obsolete. The U.S. leads the world in research and development spending.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ Consists of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights Ignorance or non-compliance can result in fines, negative publicity, and civil damage suits The Political-Legal Environment Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ Falls into four historical phases: Antimonopoly period of the late 19th and early 20th centuries Protecting competitors during the Great Depression of the 1930s The third phase focused onConsumer protection Industry deregulation began in the late 1970s Government Regulation Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ Newest regulatory frontier is cyberspace Federal and state regulators are investigating ways to police the Internet and online services Privacy and child protection issues are difficult enforcement challenge Government Regulation Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ The Federal Trade Commission (FTC) has the broadest regulatory powers over marketing Enforces laws regulating unfair business practices and stops false and deceptive advertising ▮ The FTC uses several procedures to enforce laws Consent order Cease-and-desist orders Government Regulatory Agencies Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ Consumer interest organizations ▮ Other groups attempt to advance the rights of minorities, senior citizens, and other causes ▮ Self-regulatory groupsset guidelines for responsible business conduct Other Regulatory Forces Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility ▮ The relationship between the marketer, society, and culture ▮ Marketers must be sensitive to demographic shifts and changing values ▮ Increasing importance of cultural diversity Example: Univision and Telemundo face growing competition in Spanish-language television programmingUnivisionTelemundo The Social-Cultural Environment Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

The Macroenvironment ▮ Core beliefs are persistent Passed from parents to children; reinforced by society Shape attitudes and behavior ▮ Secondary cultural values change and shift more easily ▮ Society’s cultural values are expressed through people’s views of: Themselves Others Organizations Society Nature The Universe The Cultural Environment

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 8. What are the two ways companies must respond to the marketing environment? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Responding to the Marketing Environment ▮ Reactive: Passive Acceptance and Adaptation Companies design strategies that avoid threats and capitalize upon opportunities. ▮ Proactive: Environmental Management Use of lobbyists, PR, advertorials, lawsuits, complaints, and contractual agreements to influence environmental forces.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 9. What is consumerism? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Consumerism ▮ Social force within the environment that Aids and protects the consumer Exerts legal, moral, and economic pressures on business and government 45

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 10. Define Marketing Ethics. Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Ethical Issues in Marketing ▮ Marketing ethics - Marketers’ standards of conduct and moral values ▮ Some industries are required by law to maintain corporate-level positions responsible for ethics and legal compliance ▮ Workplace may generate serious conflicts when individuals discover that their ethical beliefs don’t match those of their employer 47

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 11. What is social responsibility? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Social Responsibility in Marketing ▮ Marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective ▮ Four dimensions of social responsibility: Economic Legal Ethical Philanthropic 49

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Social Responsibility and Ethics Promote well-being Promote harmony, stability Influence elections Draw crowds to events Responsible marketing can... Ethical = morally right Socially Responsible = society views as best

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 12. What are the four dimensions of social responsibility? Copyright © 2013 by South Western, a division of Cengage Learning. All rights reserved.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Figure The Four Step Pyramid of Social Responsibility 52