Marketing: Real People, Real Choices 3rd edition 3-1 ©2003 Prentice Hall,Inc

Chapter 3

Decision Making in the New Era of Marketing:

Ethics and the Marketing Environment

Marketing: Real People, Real Choices 3rd edition 3-2 ©2003 Prentice Hall,Inc

Chapter Objectives

Explain how organizations adopt a New Era marketing orientation on ethics and social responsibility

Describe the New Era emphasis on quality

Marketing: Real People, Real Choices 3rd edition 3-3 ©2003 Prentice Hall,Inc

Chapter Objectives_2

Discuss some of the important aspects of an organization’s internal environment

Explain why marketers scan an organization’s external business environment

Marketing: Real People, Real Choices 3rd edition 3-4 ©2003 Prentice Hall,Inc

Doing it Right

Ethics are rules of conduct; Business ethics are basic values that guide firm’s behavior

– Codes of ethics are written standards of behavior• bribery, political contributions, equal

employment opportunity, environment, health, safety, etc.

– Figure 3.2 provides the AMA code of ethics

Marketing: Real People, Real Choices 3rd edition 3-5 ©2003 Prentice Hall,Inc

The Consumer Bill of Rights

President John F. Kennedy outlines in his 1961 inaugural speech what came to be known as the Consumer Bill of Rights:

– The right to be safe– The right to be informed– The right to be heard– The right to choose freely

Marketing: Real People, Real Choices 3rd edition 3-6 ©2003 Prentice Hall,Inc

Ethics in the Marketing Mix

Making a product safe

Pricing the product fairly

Promoting the product

– Puffery versus deceptive advertising Getting the product where it belongs

– slotting allowances

Marketing: Real People, Real Choices 3rd edition 3-7 ©2003 Prentice Hall,Inc

Social Responsibility

Management philosophy in which organizations engage in activities that have a positive effect on society and promote the public good

Tools of social responsibility

– environmental stewardship– cause marketing– cultural diversity

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Environmental Stewardship

Firms make choices that protect the environment

Green marketing describes a type of environmental stewardship in which firms choose packages, product designs and other aspects of the marketing mix that are earth friendly

Marketing: Real People, Real Choices 3rd edition 3-9 ©2003 Prentice Hall,Inc

Cause Marketing

Strategy of joining forces with a not-for- profit organization to tackle a social problem

– Straight donations to a charity

– Donations linked to consumer sales response

Marketing: Real People, Real Choices 3rd edition 3-10 ©2003 Prentice Hall,Inc

Promoting Cultural Diversity

Cultural diversity programs ensure that marketing policies and hiring practices give people an equal chance to work for the company and buy its products

– Examples of strong programs:• TJX (TJ Maxx, Marshalls)• American Airlines• Hertz

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A Focus on Quality

TQM

Adding a dose of quality

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TQM

Calls for company-wide dedication to development, maintenance, and continuous improvement of all aspects of the company’s operations

Seeks to assure customer satisfaction by involving all employees to continually improve quality

Malcolm Baldrige National Quality Award recognizes excellence in U.S. firms

Marketing: Real People, Real Choices 3rd edition 3-13 ©2003 Prentice Hall,Inc

Adding a Dose of Quality

Product: Improve customer service support

Place: Improve on-time delivery rate

Price: Reduce costs to keep prices fair

Promotion: Provide information when it is convenient for customers

Marketing: Real People, Real Choices 3rd edition 3-14 ©2003 Prentice Hall,Inc

The Internal Business Environment

Corporate Resources and Competencies

Corporate Culture

– Risk-Taking Cultures

– Profit-Centered versus People-Centered Cultures

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Where to Work

Fortune magazine publishes a list of the top places to work

– The Container Store– SAS Institute– Cisco Systems– Southwest Airlines– Charles Schwab

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Scanning the External Environment

The Economic Environment

The Competitive Environment

The Legal Environment

The Technological Environment

The Sociocultural Environment

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The Economic Environment

The Business Cycle

– All economies go through cycles of prosperity, recession, and recovery

– The cycle directly affects marketers because of its effect on consumer behavior

Marketing: Real People, Real Choices 3rd edition 3-18 ©2003 Prentice Hall,Inc

Consumer Confidence

The Power of Expectations

– Consumer confidence represents consumer beliefs about what the future holds

– Like business cycles, it affects whether consumers buy or cut back on spending

Marketing: Real People, Real Choices 3rd edition 3-19 ©2003 Prentice Hall,Inc

The Competitive Environment

Analyzing the Competition

– Strengths and weaknesses analysis

– Competitive intelligence (CI) Competition in the Microenvironment

Competition in the Macroenvironment

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Competition: The Microenvironment

competition means the alternatives from which the target may choose

– Level 1: competition for discretionary income (for income left after a consumer pays for necessities)

– Level 2: product competition in which different products attempt to satisfy the same needs or wants

– Level 3: brand competition in which competitors offering similar products compete for consumer choice

Marketing: Real People, Real Choices 3rd edition 3-21 ©2003 Prentice Hall,Inc

Competition: The Macroenvironment

Monopoly - one seller controls market

Oligopoly - relatively small number of sellers, each with a substantial share of market

Monopolistic - many sellers compete for buyers; each offers a slightly different product and has a small share of market

Perfect competition - many small sellers each offering the same product

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The Technological Environment

Technology is an investment a firm must make to succeed

Patents protect inventions

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The Legal Environment: Regulatory Agencies

Food and Drug Administration (FDA)

Federal Trade Commission (FTC)

Federal Communications Commission (FCC)

Interstate Commerce Commission (ICC)

Consumer Product Safety Commission (CPSC)

Environmental Protection Agency (EPA)

Marketing: Real People, Real Choices 3rd edition 3-24 ©2003 Prentice Hall,Inc

The Sociocultural Environment

Characteristics of society

Characteristics of people in that society

Cultural values and beliefs

Popular culture