The Marketing Environment, Social Responsibility, and …stephanielarkin.com/marketing/Ch03.pdf ·...

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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/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans

Transcript of The Marketing Environment, Social Responsibility, and …stephanielarkin.com/marketing/Ch03.pdf ·...

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Chapter 3:The Marketing Environment, Social Responsibility, and Ethics

Pride/FerrellFoundations of MarketingFourth Edition

Prepared by Milton PressleyUniversity of New Orleans

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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.

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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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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

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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.

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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