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© 2011 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, Social Responsibility, and Ethics
Pride/FerrellFoundations of MarketingFourth Edition
Prepared by Milton PressleyUniversity of New Orleans
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Objectives1. Recognize the importance of environmental
scanning and analysis.2. Explore the effects of competitive, economic,
political, legal and regulatory, technological, and sociocultural factors on marketing strategies.
3. Understand the concept and dimensions of social responsibility.
4. Differentiate between ethics and social responsibility.
© 2011 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• Environmental Scanning
– The process of collecting information about forces in the marketing environment.
• Environmental Analysis– The process of assessing and interpreting
the information gathered through environmental scanning.
– ‘How you deal with the information collected.’
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Responding to Environmental Forces
Environmental Forces
ControllableUncontrollable
Passive Reactive Active Reactive
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Environmental Forces
Environmental Forces
Competitive
PoliticalEconomic
Legal and Regulatory Technological
Sociocultural
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The Marketing Environment• Bosch is responding to the marketing
environment by showing a concern for the environment in this commercial.
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Types of Competitors• Brand competitors
– Firms that market products with similar features and benefits to the same customers at similar prices
• Product competitors– Firms that compete in the same product class but
market products with different features, benefits, and prices
• Generic competitors– Firms that provide very different products that
solve the same problem or satisfy the same basic customer need
• Total budget competitors– Firms that compete for the limited financial
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How Competitive Forces Align
Types of Competitors
Brand Competitors
Generic Competitors
Product Competitors
Total BudgetCompetitors
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Competitive Forces
Brand and Product Competition – Other firms that market products that are similar to or can be substituted for a firm’s products in the same georgraphic area
IKEA and Lowe’s compete in the kitchen remodeling market.
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Selected Characteristics of Competitive Structures
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Monitoring Competition• Helps determine competitors’ strategies and
their effects on firm’s own strategies• Guides development of competitive
advantage and adjusting firm’s strategy• Provides ongoing information about
competitors• Assists in maintaining a marketing
orientation• What are the ethical issues that emerge in
managing competitive intelligence?
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Buying Power and
• Buying Power– Resources such as money, goods, and services,
that can be traded in an exchange• Disposable Income
– After-tax income• Discretionary Income
– Disposable income available for spending and saving after an individual has purchased the basic necessities
• Willingness to spend– An inclination to buy because of expected
satisfaction from a product, influenced by the ability to buy and the numerous psychological and social forces
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Economic Forces• The Business Cycle – a pattern of economic
fluctuations that has four stages:
Prosperity
Recession
Depression
Recovery
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The Business Cycle• Prosperity
– Unemployment is low and total income is relatively high
• Recession– Unemployment rises and total buying power
declines
• Depression– Unemployment is extremely high, wages are very
low, total disposable income is at a minimum, and consumers lack confidence in the economy
• Recovery
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Figure 3.1 American Customer
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The Marketing Environment
Economic Forces
Tag Heuer and Omega rely on consumers with significant discretionary income to purchase their watches.
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Political Forces• Enactment of legislation
• Legal decisions interpreted by courts through civil and criminal cases
• Influence of regulatory agencies
• Marketers– Adjust to conditions– Influence the process through
contributions and lobbying
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The Federal Trade Commission (FTC)
• Most heavily influences marketing activities (of all regulatory units)
• Large portion of its resources spent on curbing inappropriate behavior:– false advertising– misleading pricing– deceptive packaging and labeling
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Legal and Regulatory Influence• Procompetitive legislation- preserves
competition• Consumer protection legislation
– Protect people from harm– Prohibit hazardous products– Information disclosure– Particular marketing activities
• Encourages compliance• Regulatory agencies• Self-regulatory forces
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Table 3.2-Major Federal Laws That Affect Marketing Decisions-Procompetitive
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Table 3.2-Major Federal Laws That Affect Marketing Decisions-Consumer Protection
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Table 3.2-Major Federal Laws That Affect Marketing Decisions-Copyright
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Regulatory Forces• Regulatory Agencies
– Federal Trade Commission (FTC)– Food and Drug Administration (FDA)– Consumer Product Safety Commission– Federal Communications Commission
(FCC)– Environmental Protection Agency (EPA)– Federal Power Commission (FPC)
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Self-Regulatory Forces• Better Business Bureau • National Advertising
Review Board (NARB) Advantages
- Less expensive - More realistic and operational
Limitations - Nonmember firms do not have to abide - Lack of enforcement tools - Often less strict
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• Technology– The application of knowledge
and tools to solve problems and perform tasks more efficiently.
• Effects of technology» Dynamic change» Ability to reach customers» Self-sustaining technology
Impact of Technology
The use of corn ethanol is having an impact on many industries and companies such as BASF
Insert illustration from p. 61
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Sociocultural ForcesThe influences in a society
and its culture(s) that change people’s attitudes, beliefs, norms, customs, and lifestyles
In our culture, there are changing values
regarding the provision of health care.
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Figure 3.2 U.S. Population Projections
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Social Responsibility• An organization’s
obligation to maximize its positive impact and minimize its negative impact on society.
– Marketing citizenship– Stakeholder responsiveness
The Nature of Social Responsibility
The Home Depot recognizes its social responsibility in hiring over 50,000 members of the military community over the past several years.
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Discussion Question• List four things or values that you think
Walgreens should consider important to its social responsibility. After the discussion, click on the @ symbol below to see Walgreen's’ Social Responsibility statement.
@
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Marketing CitizenshipThe adoption of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders
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Pyramid of Social Responsibility
Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/August 1991. Copyright 1991 by the Foundation for the School of Business at Indiana University. Reprinted with permission.
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Marketing Citizenship AffectsStakeholder Groups
Stakeholder Groups:Customers
Marketing channel members
Employees
Possible Effects:• Positive product evaluation• Customer loyalty• Positive word-of-mouth• Long-term relationships• Enhanced corporate reputation
• Long-term partnerships• Trusting relationships• Enhanced efficiency in communications
• Improved self-concept• Increased commitment and motivation• Reduced absenteeism and turnover• Trust in co-worker relationships• Enhanced efficiency in communication
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Ethical DimensionMarketing Ethics – Principles and standards that
define acceptable marketing conduct as determined by various stakeholder
Ethical issue – An identifiable problem, situation, or opportunity requiring a choice among several actions that must be evaluated as right or wrong
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Table 3.3 Ethical Issues in Marketing
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Philanthropic Dimension• Cause-related marketing
– the practice of linking products to a particular social cause on an ongoing or short-term basis
• Strategic philanthropy – the synergistic use of organizational core
competencies and resources to address key stakeholders’ interests and achieve both organizational and social benefits
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Green Marketing • The specific development,
pricing, promotion, and distribution of products that do not harm the natural environment.
Demonstrating Social Responsibility
Shell recognizes its environmental responsibilities through recycling programs and efforts to reduce greenhouse gases.
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Foundations of Consumerism
• Consumerism– The organized efforts of individuals, groups,
and organizations to protect the rights of consumers
• Lobbying government officials and agencies• Letter-writing campaigns and boycotts
– Kennedy’s Consumer “Bill of Rights”• Right to safety• Right to be informed• Right to choose• Right to be heard
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Discussion Question• Click on the @ symbol below to see
Walgreens’ “Four-Way Test.” Based on ethical business principles, these four questions are the foundation of the “Walgreen Way.”
• Can you think of something to add to this “Four-Way Test” to improve Walgreen’s ethics?
@
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Social Responsibility and Ethics in Marketing
• Incorporating Social Responsibility and Ethics Into Strategic Planning
- Ethics – individual and group decisions or judgments about right and wrong
- Social Responsibility- total effect of marketing decisions on society
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Social Responsibility and Ethics in Marketing
Incorporating Social Responsibility
The EPA recognizes companies as “Climate Leaders” who reduce their carbon footprint and control greenhouse gas emissions
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
After Reviewing This Chapter You Should:
1. Be able to recognize the importance of environmental scanning and analysis.
2. Be able to explore the effects of competitive, economic, political, legal and regulatory, technological, and sociocultural factors on marketing strategies.
3. Understand the concept and dimensions of social responsibility.
4. Be able to differentiate between ethics and social responsibility.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Concepts• Environmental scanning• Environmental analysis• Competition• Brand competitors• Product competitors• Generic competitors• Total budget competitors• Monopoly• Oligopoly• Monopolistic competition• Pure competition• Buying power• Disposable income• Discretionary income
• Federal Trade Commission (FTC)
• Better Business Bureau (BBB)• National Advertising Review
Board (NARB)• Technology• Sociocultural forces• Social responsibility• Marketing citizenship• Marketing ethics• Ethical issue• Cause-related marketing• Strategic philanthropy• Green marketing• Consumerism• Codes of conduct