1 3. The Marketing Environment

2 Marketing Environment The macro-environmental forces that impact firm’s ability to function successfully: –Societal –Economic –Competitive –Technological –Regulatory Monitored through environmental scanning Influenced through environmental management

3 The Macroenvironment: Societal Environment Consumerism –Organized movement to improve rights & power of buyers in relation to sellers Consumer Product Safety Act of 1972  Consumer Product Safety Commission Bill of Rights for Consumers (JFK) –The right to choose freely –The right to be safe –The right to be informed –The right to be heard –The right to consumer education (Pres. Ford, 1975) –The right to service (Pres. Clinton, 1994)

4 The Macroenvironment: Economic Environment Purchasing power & spending patterns Factors –Health of economy—characterized by: GDP trend (relative to past periods) Stage in business cycle –Prosperity, recession, depression, recovery »Recession triggered by inflation (2-3% per year ok) Unemployment levels (4-6% ok) Income trends –Gross income; disposable income; discretionary income

5 The Macroenvironment: Economic Environment Resources needed as inputs; sensitive to marketing Areas of concern –Shortages of raw materials –Increased pollution –Government intervention –Environmentally sustainable strategies Demarketing –Reduces demand for scarce resources

6 Competitive Environment Direct competition –With firms in your industry –E.g., TV networks compete with each other Indirect competition –With firms in other industries –E.g., TV networks compete with social networking websites General competition –For limited customer dollars –E.g., Investment firms like Fidelity compete for discretionary income with consumer goods firms

7 The Macroenvironment: Technological Environment New technologies  new product & market opportunities Trends: –Increasing e-commerce/e-marketing Internet based: –Electronic exchanges, extranets, private exchanges Non-internet based –Electronic data interchange (EDI) »Pioneered by Wal-Mart

8 The Macroenvironment: Regulatory Comprises laws, government agencies, pressure groups Public policy  guidelines for business Trends –Increasing legislation (see Table 3.1, pg. 83) Protect competition Protect companies Protect consumers Protect interests of society –Increased emphasis on ethics & social responsibility

9 Important Legislation Sherman Antitrust Act –No monopolies/mergers that threaten competition Clayton Act –Reinforced Sherman Act –No anti-competitive tying contracts –No interlocking directorates –No anti-competitive stock acquisitions FTC Act –No unfair competition (e.g., charging high slotting fees that keep small mfr. goods off shelf) Wheeler Lea Act –Expands power of FTC Act –No false/misleading advertising Robinson-Patman Act –No anticompetitive price discrimination in the marketing channel

10 Marketing Ethics Moral values & standards of conduct applied to marketing Primary criticisms of marketing’s impact on consumers: –Higher prices– Shoddy products –Deceptive practices– Planned obsolescence –High-pressure selling– Poor service to the disadvantaged (economic redlining) Corporate codes of ethics address issues related to marketing ethics

11 Social Responsibility Firms must place the welfare of stakeholders and society on an equal footing with profits Corporate accountability to society for actions taken encompasses –Profit responsibility Maximize value of shareholders’ stock –Stakeholder responsibility Consider needs of channel members, employees & consumers in decision making –Societal responsibility Preserve environment Meet the needs of consumer –Cause-related marketing