Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 3 The Marketing Environment, Ethics, and Social Responsibility

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-2 Environmental Scanning and Management: Closely Related Environmental Scanning Environmental Scanning Environmental Management Environmental Management

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-3 This advertisement shows an Anti- Drug Commercial. This is an example of Social Responsibility on the part of Government.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-4 Elements of the Marketing Mix Within an Environmental Framework

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-5 SOTHEBYS.COM Environmental Scanning resulted in the Amazon- Sotheby’s partnership

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-6 The Competitive Environment Competitive Environment: The interactive process that occurs in the marketplace among marketers of: Directly competitive products Substitute products All products

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-7 RIMADYL Developed by Pfizer’s Animal Health Division, Offers Dogs Relief From Arthritis Pain. Pfizer’s Patent Gives It Exclusive Rights to Produce and Market the Medication.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-8 Types of Competition Types of Competition Directly Competitive Products  Legoland Competes with Other Theme Parks in California

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3-9 Direct Competition: Lincoln Developed This Smaller Luxury Car to Compete Directly with Luxury Cars of Similar Size

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Types of Competition Types of Competition Indirectly Competitive Products Mountain Dew Competes Directly with Other Soft Drinks As Well as Indirectly with Substitutes Like Bottled or Canned Iced Tea and Bottled Water

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Types of Competition Types of Competition All Consumer Purchases This PlayStation Navy Seals Game Competes Against Many Products, From Dining Out to Buying a New Pair of Shoes

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Developing a Competitive Strategy Developing a Competitive Strategy Should we compete? If so, in what markets should we compete? How should we compete?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved This Quizno’s advertisement about demonstrates the importance of asking and addressing the three critical questions

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Political-Legal Environment Component of the marketing environment consisting of laws and interpretations of laws that require firms to operate under competitive conditions and to protect consumer rights.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Bell Atlantic & GTE Deregulation Increases Competitiveness in the Telecommunications Industry

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Government Regulation Government Regulation Protection of Competitors  Began in the late 19th century  Aimed at to maintaining a competitive environment by reducing the trend toward monopolies

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Protection of Small Businesses  Began during the depression era of the 1930s  Meant to protect independent merchants against competition from larger chain stores  Included the Robinson-Patman Act

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Protection of Consumers  Began mainly in the 1960s  Increased focus on consumer protection

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Industry Deregulation  Began in the late 1970s  Focused on deregulating specific industries  Included: Airline Deregulation Act Telecommunications Act

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Newest regulatory frontier is cyberspace  Immediate goal is protection of consumers from online fraud and deceptive advertising  Privacy and child protection issues present difficulties

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Other Regulatory Forces Other Regulatory Forces Consumer interest groups  National Coalition Against Misuse of Pesticides Special-interest groups  American Association of Retired People (AARP) Self-regulatory groups

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Influencing the Political-Legal Environment Influencing the Political-Legal Environment Companies fight unjust regulations Regulations can present new opportunities Political lobbying Boycotts Political action committees

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Economic Environment Economic Environment Factors that influence consumer buying power and marketing strategies  stage of the business cycle  Inflation  Unemployment  resource availability  income Stages in the Business Cycle Stages in the Business Cycle Cyclical patterns: prosperity, recession, depression, and recovery.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Godiva Expanding Product Lines During the Prosperity Stage Godiva adds ice cream to its product line

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Inflation Inflation The devaluation of money by reducing what it can buy through persistent price increases. Unemployment Unemployment The proportion of people in the economy who do not have jobs and are actively looking for work.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved HotJobs.com helps job seekers and employers find each other online

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Income Income Discretionary income: the amount of money people have to spend after paying for necessities  Online Services Designed to Meet the Needs of Wealthy Consumers

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Resource Availability Resource Availability Demarketing: the process of reducing consumer demand for a product to a level that a firm can reasonably supply... may be the result of resource shortages.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The International Economic Environment The International Economic Environment Marketers must consider the economic environment of other nations Changes in foreign currency rates may affect marketing decisions Recessions in one part of the world may be offset by prosperity in another

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Austrian Tourist Office Economic Growth in Other Countries Often Means Increased Potential Growth Due to Foreign Tourists

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Technological Environment The technological environment represents the application of knowledge in science, inventions, and innovations to marketing. Applying technology helps Fidelity improve customer service

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Applying technology, a service is created for consumers to access their credit report on the WWW

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Social-Cultural Environment The relationship between marketing and society and its culture GardenBurger is a leader in marketing meatless products that satisfy demands of vegetarians and health-conscious consumers

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Doritos WOW! Frito-Lay Launches Low-Fat Snacks for Health-Conscious Consumers

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved This commercial demonstrates how the social-cultural environment influences marketing and the presentation of a important issue.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Importance in International Marketing Decisions The social-cultural context often exerts a more pronounced influence on marketing decisions in the international sphere

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Consumerism Consumerism John F. Kennedy’s Statement of Consumer Rights  The right to choose freely  The right to be informed  The right to be heard  The right to be safe

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Ethical Issues in Marketing Marketing ethics: Marketer’s standards of conduct and moral values Lorillard Tobacco Company Launches Youth Smoking Prevention Advertising Campaign

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Criticisms of the Competitive Marketing System Criticisms of the Competitive Marketing System Marketing costs are too high The marketing system is inefficient Marketers and the business system collude and commit price-fixing Firms deliver poor product quality and service Consumers receive incomplete, false, and/or misleading information The marketing system produces health and safety hazards Marketers persuasively promote unwanted and unnecessary products to those who least need them

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Is the term Marketing Ethics an oxymoron? Class Discussion

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Ethical Problems in Marketing research Ethical Problems in Marketing research Alleged invasions of personal privacy Gathering marketing information in exchange for money or free offers Ethical Problems in Product strategy Ethical Problems in Product strategy Product quality Planned obsolescence Brand similarity Packaging

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Ethical Problems in Distribution strategy Ethical Problems in Distribution strategy Degree of control over a channel Should a company maintain distribution in marginally profitable outlets with no alternative source of supply Ethical Problems in Pricing Ethical Problems in Pricing Probably the most regulated aspect Most unethical pricing behavior is also illegal

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Ethical Problems in Promotional strategy Ethical Problems in Promotional strategy Ethically questionable personal selling  Gifts and bribes Questionable advertising Promotion of questionable features Questionable WWW related promotional practices

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Budweiser beer is a leading spender on television ads like this one. Are such expenditures ethical? Would MADD agree with you?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved This is one of the ads Camel Cigarettes is running after dropping its “Joe Camel” ads featuring the popular cartoon camel character. Is this an ethical advertisement? Class Discussion

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Social Responsibility in Marketing Marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Benetton’s ads are often controversial. Do you consider this a Socially Responsible Advertisement? Class Discussion

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Four-Step Pyramid of Corporate Social Responsibility

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Budweiser Advertising Its Socially Responsible Hispanic Scholarship Fund

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Socially Responsible Marketing Decisions Socially Responsible Marketing Decisions Focus on the long-run Are consumer oriented Do not infringe on society Focus on adding value Set objectives along broad social terms instead of narrowly defined products and services

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Marketing and Ecology Marketing and Ecology Planned obsolescence Pollution Recycling The Ad Council Promotes Recycling as a Social Responsibility Issue

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved America’s Electric Utility Companies Electric Utility Companies Promote Their Efforts Regarding Environmental Protection

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Green Marketing Protection, promotion, and reclamation of environmentally sensitive products  Ford Motor Company Promotes Its Recycling and Environmental Efforts