THE MARKETING ENVIRONMENT AND MARKETING ETHICS CHAPTER THREE THE MARKETING ENVIRONMENT AND MARKETING ETHICS Prepared by: Jack Gifford Miami University (Ohio) 2000 South-Western College Publishing

2000 South-Western College Publishing EXTERNAL ENVIRONMENT SOCIAL VARIABLES ECONOMIC VARIABLES DEMOGRAPHIC VARIABLES POLITICAL VARIABLES TECHNOLOGICAL VARIABLES LEGAL VARIABLES COMPEITIVE VARIABLES 2000 South-Western College Publishing

UNDERSTANDING THE EXTERNAL ENVIRONMENT The external environment is largely not controllable by the marketer In the unusual circumstance where the marketer is large enough to influence the external environment, it is referred to as environmental management. Must be anticipated and understood Identify future opportunities and threats 2000 South-Western College Publishing

UNDERSTANDING THE EXTERNAL ENVIRONMENT: SOCIAL CHANGE Attitudes, values and lifestyles Environmentalists Poverty of time Experiences over materialism Role of work Two income families Component lifestyles Changing roles of families and working women Cultural changes Cultural creatives Traditionalism Modernism 2000 South-Western College Publishing

UNDERSTANDING THE EXTERNAL ENVIRONMENT: DEMOGRAPHICS Study of people’s vital statistics (age, gender, race, etc.) Age Generation Y Generation X Baby boomers Older consumers Geographic mobility Within the United States and between cities Immigration and migration Growing ethnic markets African Americans U.S. Hispanics Asian-Americans Multiculturalism 2000 South-Western College Publishing

THE EXTERNAL ENVIRONMENT FACING MARKETERS : DEMOGRAPHICS (continued) Size of middle class Per capita income Education Birth rate Housing market Population density In underdeveloped nations, secondary data is often bad or nonexistent! 2000 South-Western College Publishing

THE EXTERNAL ENVIRONMENT FACING MARKETERS : ECONOMIC FACTORS Distribution of consumer incomes Inflation rate Recessions 2000 South-Western College Publishing

2000 South-Western College Publishing THE EXTERNAL ENVIRONMENT FACING MARKETERS: TECHNOLOGICAL & RESOURCE FACTORS Technological Role of R & D Rate of technological change The computer and the Internet Resources Physical Human capital Intellectual capital 2000 South-Western College Publishing

THE EXTERNAL ENVIRONMENT FACING MARKETERS: POLITICAL & LEGAL FACTORS Balance between government and private enterprise is essential for the survival of a democracy. Decentralization of power Political stability 2000 South-Western College Publishing

THE EXTERNAL ENVIRONMENT FACING MARKETERS: POLITICAL & LEGAL FACTORS Federal legislation Sherman Act of 1890 Clayton Act of 1914 Federal Trade Commission Act of 1914 Robinson-Patman Act of 1936 Wheeler-Lea Amendments to the FTC Act of 1938 Lanhma Act of 1946 Celler-Kefauver Antimerger Act of 1950 Hart-Scott-Rodino Act of 1976 2000 South-Western College Publishing

2000 South-Western College Publishing THE EXTERNAL ENVIRONMENT FACING MARKETERS: POLITICAL & LEGAL FACTORS (continued) Regulatory Agencies Consumer Product Safety Commission Set mandatory safety standards for many consumer products Federal Trade Commission Prevent unfair methods of competition in commerce Investigate business competitions Regulate advertising found to be deceptive Food and Drug Administration Enforce regulations against selling and distributing adulterated, misbranded, or hazardous food and drug products 2000 South-Western College Publishing

THE EXTERNAL ENVIRONMENT FACING MARKETERS: COMPETITION Amount and strength of competition The relative size of the competition Degree of interdependence within the industry 2000 South-Western College Publishing

COMPETITION FOR MARKET SHARE Increased competition for market share More companies offering more products aimed at the same customers Increased market share often results in economies of scale and domination of supply chains 2000 South-Western College Publishing

2000 South-Western College Publishing GLOBAL COMPETITION U.S. companies compete in the United States with many foreign companies. U.S. companies also market their products and services throughout the world, resulting in increased global competition! 2000 South-Western College Publishing

MORALITY AND BUSINESS ETHICS Today’s business ethics actually consist of a subset of major life values learned since birth. The values businesspeople use to make decisions have been acquired through family, educational and religious institutions. Ethical values are situation specific and time oriented 2000 South-Western College Publishing

MORALITY AND BUSINESS ETHICS Developing an ethical base for business and personal conduct Examine consequences of a particular act Who is helped or hurt? How long lasting are the consequences? Greatest good for the greatest number? Create personal universal decision rules Always treat others as you would like to be treated. It is wrong to lie, bribe, or exploit If it is against the law, it should not be done. 2000 South-Western College Publishing

2000 South-Western College Publishing ETHICAL DEVELOPMENT THREE STAGES PRE-CONVENTIONAL MORALITY: calculating, self-centered, measure reward versus punishment, egocentric CONVENTIONAL MORALITY: loyalty and obedience to organization or society, legality, how viewed by others; “When in Rome, do as the Romans do.” POST-CONVENTIONAL MORALITY:inner-directed, mature judgement 2000 South-Western College Publishing

2000 South-Western College Publishing UNETHICAL PRACTICES MARKETING MANAGERS MAY HAVE TO DEAL WITH INCLUDE... Gift giving Misleading advertising or warranties Manipulation of data Invasion of customer privacy Price deception Inaccurate statements about competition Stereotypical portrayals of … Exploitation of disadvantaged Unsafe products or services 2000 South-Western College Publishing

2000 South-Western College Publishing ETHICAL DECISION MAKING Factors that tend to influence ethical decision making in business Extent of ethical problems within the organization Top-management actions of ethics Potential magnitude of consequences Social consensus Probability of harmful outcome(s) Length of time between the decision and the onset of consequences Number of people to be affected 2000 South-Western College Publishing

ETHICAL GUIDELINES AND CODES OF ETHICS ADVANTAGES Helps employees and management identify acceptable business behavior Effective internal control of behavior Provides guidelines for making decisions The process of developing a code of ethics facilitates discussion and “buy-in” by all parties 2000 South-Western College Publishing

CORPORATE SOCIAL RESPONSIBILITY (CSR) Economic responsibility, PLUS Legal responsibility, PLUS Ethical responsibility, PLUS Philanthropic responsibilities CSR 2000 South-Western College Publishing

THE MYTH OF E-MAIL PRIVACY SLICE-OF-LIFE INSERT Should corporate email be private? Should Michael Smyth have been fired? What would you do if you were told by your boss to monitor another employee’s e-mail and report your findings to the boss? 2000 South-Western College Publishing

GLOBAL PERSPECTIVE SCORING BIG IN CHINA INSERT Do you think the FedEx or the UPS will be more successful in the long run in China? Why? Which company is taking more risk? ? OR FedEx 2000 South-Western College Publishing