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Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Part 1: Designing Customer-

Oriented Marketing Strategies

1. Marketing: Creating Satisfactionthrough Customer Relationships

2. Strategic Planning and theMarketing Process

3. The Marketing Environment,

Ethics, and Social Responsibility

4. E-Commerce: Marketing in theDigital Age


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Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 3

The MarketingEnvironment,

Ethics, and Social

Responsibility


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Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-3

Chapter Objectives

1. Identify the five components of the marketing environment.

2. Explain the types of competition marketers face and the stepsnecessary for developing a competitive strategy.

3. Describe how government and other groups regulate marketingactivities and how marketers can influence the politicallegalenvironment.

4. Outline the economic factors that affect marketing decisions andconsumer buying power.

5. Discuss the impact of the technological environment on a firmsmarketing activities.

6. Explain how the social-cultural environment influences marketing.7. Describe the role of marketing in society and identify the two

major social issues in marketing.

8. Identify the four levels of the social responsibility pyramid.


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Environmental Scanning andEnvironmental Management

Environmental Scanning is the process ofcollecting information about the externalmarketing environment to identify andinterpret potential trends

Environmental Management involvesmarketers efforts toward achieving

organizational objectives by predicting andinfluencing the competitive, political-legal,economic, technological, and social-culturalenvironments.


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Elements ofthe Marketing

Mix within anEnvironmentalFramework


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The Competitive Environment

Competitive Environment: The interactiveprocess that occurs in the marketplaceamong marketers of directly competitiveproducts, marketers of products that can be

substituted for one another, and marketerscompeting for the consumers purchasing

power.

Monopoly

Deregulation movement

Oligopoly


7/31Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-7

Types of Competition

Directly Competitive Products

Indirectly Competitive Products

Involves products than can be substituted

for one anotherAll Consumer Purchases

Occurs in the sense that all firms competefor the buyers purchases



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 ofdeveloping and distributing goods and

services more quickly than competitors



The Political-Legal Environment

Component of the marketing environmentconsisting of laws and interpretations of lawsthat require firms to operate undercompetitive conditions and to protect

consumer rights.



Government Regulation

Maintaining a Competitive Environment

Began in the late 19th centuryAimed at to maintaining a competitive

environment by reducing the trend towardmonopolies

Included:

Sherman Antitrust Act

Clayton Act

Federal Trade Commission




Regulating Competition

Began during the depression era of the1930s

Meant to protect independent merchantsagainst competition from larger chainstores

Included the Robinson-Patman Act




Protecting ConsumersBegan mainly in the 1960s

Increased focus on consumer protection

Newest regulatory frontier is cyberspaceIncluded:

FDA

Consumer product safetyElectronic Signature

Aviation security




Deregulating Specific Industries

Began in the late 1970s

Focused on deregulating specific

industriesIncluded:

Airline Deregulation Act

Motor Carrier ActTelecommunications



Other Regulatory Forces

Consumer interest groups

National Coalition Against Misuse ofPesticides

PETA

Special-interest groupsAmerican Association of Retired People

(AARP)

Self-regulatory groupsDirect Marketing Association

Council of Better Business Bureaus



Controlling the Political-Legal Environment

Companies fight unjust regulations

Regulations can present new opportunities

Political lobbying

Boycotts

Political action committees



The Economic Environment

Factors that influence consumer buying

power and marketing strategies, includingstage of the business cycle, inflation,unemployment, resource availability and

income

Stages in the Business Cycle

Cyclical patterns consisting of the stages ofprosperity, recession, depression, andrecovery.

Wealth effect


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Inflation and Deflation

Inflation: The devaluation of money byreducing what it can buy through persistentprice increases.

Deflation: Falling prices, better?

Unemployment

The proportion of people in the economy

who do not have jobs and are activelylooking for work.



Income

Discretionary income: the amount ofmoney people have to spend afterpaying for necessities such as food,clothing, and housing.

Resource Availability

Demarketing: the process of reducingconsumer demand for a good orservice to a level that the firm cansupply.



The International Economic Environment

Marketers must consider the economicenvironment of other nations

Changes in foreign currency rates may

affect marketing decisionsRecessions in one part of the world may be

offset by prosperity in another



The Technological Environment

The technological

environmentrepresents theapplication ofknowledge in science,inventions, andinnovations tomarketing.

Applying technologyhelps Fidelity improvecustomer service



The Social-Cultural Environment

The relationship between marketing and societyand its culture

Importance in International MarketingDecisions

The social-cultural context often exerts amore pronounced influence on marketing

decision-making in the international spherethan in the domestic arena



Consumerism

A social force within the environment

designed to protect the consumer byexerting legal, moral, and economicpressures on business and government.

John F. Kennedys Statement of

Consumer Rights

The right to choose freely

The right to be informed

The right to be heard

The right to be safe



Ethical Issues in Marketing

Marketing ethics: Marketers standards of

conduct and moral values


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Criticisms of the Competitive Marketing System

Marketing costs are too high

The marketing system is inefficient

Marketers and the business system collude andcommit price-fixing

Firms deliver poor product quality and service

Consumers receive incomplete, false, and/ormisleading information

The marketing system produces health and safetyhazards

Marketers persuasively promote unwanted andunnecessary products to those who least needthem


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Ethical Problems in Marketing Research

Alleged invasions of personal privacy

Gathering marketing information inexchange for money or free offers

Ethical Problems in Product StrategyProduct quality

Planned obsolescence

Brand similarity

Packaging


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Ethical Problems in Distribution Strategy

Determining the appropriate degree of

control over a channelDetermining whether a company should

distribute its products in marginallyprofitable outlets that have no alternative

source of supply

Ethical Problems in Pricing

Probably the most regulated aspect

Most unethical pricing behavior is alsoillegal


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Ethical Problems in Promotional Strategy

The source of the majority of ethicalquestions

Ethically questionable personal selling

Gifts and bribesQuestionable advertising

Promotion of questionable features (air bags)

Questionable WWW related promotionalpractices


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Social Responsibility in Marketing

Social responsibility

Marketing philosophies, policies,procedures, and actions that have the

enhancement of societys welfare as aprimary objective


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The Four-StepPyramid of

Corporate SocialResponsibility


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Marketings Responsibilities

Traditionally concerned managers

relationships with customers, employees,and stockholders

Extended to relations with government andthe general public

Today, corporate responsibility hasexpanded to cover the entire societal

framework in the US and throughout theworld


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Marketing and

EcologyEcology

Plannedobsolescence

Pollution

Recycling

Green Marketing

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