©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-0 Chapter 3 Decision Making in the New Era of Marketing: Ethics and the Marketing Environment

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-1 Chapter Objectives  Explain how organizations adopt a New Era marketing orientation on ethics and social responsibility  Describe the New Era emphasis on quality

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-2 Chapter Objectives_2  Discuss some of the important aspects of an organization’s internal environment  Explain why marketers scan an organization’s external business environment

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-3 Doing it Right  Ethics are rules of conduct; Business ethics are basic values that guide firm’s behavior –Codes of ethics are written standards of behavior bribery, political contributions, equal employment opportunity, environment, health, safety, etc. –Figure 3.2 provides the AMA code of ethics

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-4 The Consumer Bill of Rights  President John F. Kennedy outlines in his 1961 inaugural speech what came to be known as the Consumer Bill of Rights: –The right to be safe –The right to be informed –The right to be heard –The right to choose freely

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-5 Ethics in the Marketing Mix  Making a product safe  Pricing the product fairly  Promoting the product –Puffery versus deceptive advertising  Getting the product where it belongs –slotting allowances

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-6 Social Responsibility  Management philosophy in which organizations engage in activities that have a positive effect on society and promote the public good  Tools of social responsibility –environmental stewardship –cause marketing –cultural diversity

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-7 Environmental Stewardship  Firms make choices that protect the environment  Green marketing describes a type of environmental stewardship in which firms choose packages, product designs and other aspects of the marketing mix that are earth friendly

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-8 Cause Marketing  Strategy of joining forces with a not-for- profit organization to tackle a social problem –Straight donations to a charity –Donations linked to consumer sales response

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-9 Promoting Cultural Diversity  Cultural diversity programs ensure that marketing policies and hiring practices give people an equal chance to work for the company and buy its products –Examples of strong programs: TJX (TJ Maxx, Marshalls) American Airlines Hertz

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-10 A Focus on Quality  TQM  Adding a dose of quality

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-11 TQM  Calls for company-wide dedication to development, maintenance, and continuous improvement of all aspects of the company’s operations  Seeks to assure customer satisfaction by involving all employees to continually improve quality  Malcolm Baldrige National Quality Award recognizes excellence in U.S. firms

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-12 Adding a Dose of Quality  Product: Improve customer service support  Place: Improve on-time delivery rate  Price: Reduce costs to keep prices fair  Promotion: Provide information when it is convenient for customers

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-13 The Internal Business Environment  Corporate Resources and Competencies  Corporate Culture –Risk-Taking Cultures –Profit-Centered versus People- Centered Cultures

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-14 Where to Work  Fortune magazine publishes a list of the top places to work –The Container Store –SAS Institute –Cisco Systems –Southwest Airlines –Charles Schwab

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-15 Scanning the External Environment  The Economic Environment  The Competitive Environment  The Legal Environment  The Technological Environment  The Sociocultural Environment

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-16 The Economic Environment  The Business Cycle –All economies go through cycles of prosperity, recession, and recovery –The cycle directly affects marketers because of its effect on consumer behavior

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-17 Consumer Confidence  The Power of Expectations –Consumer confidence represents consumer beliefs about what the future holds –Like business cycles, it affects whether consumers buy or cut back on spending

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-18 The Competitive Environment  Analyzing the Competition –Strengths and weaknesses analysis –Competitive intelligence (CI)  Competition in the Microenvironment  Competition in the Macroenvironment

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-19 Competition: The Microenvironment  competition means the alternatives from which the target may choose –Level 1: competition for discretionary income (for income left after a consumer pays for necessities) –Level 2: product competition in which different products attempt to satisfy the same needs or wants –Level 3: brand competition in which competitors offering similar products compete for consumer choice

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-20 Competition: The Macroenvironment  Monopoly - one seller controls market  Oligopoly - relatively small number of sellers, each with a substantial share of market  Monopolistic - many sellers compete for buyers; each offers a slightly different product and has a small share of market  Perfect competition - many small sellers each offering the same product

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-21 The Technological Environment  Technology is an investment a firm must make to succeed  Patents protect inventions

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-22 The Legal Environment: Regulatory Agencies  Food and Drug Administration (FDA)  Federal Trade Commission (FTC)  Federal Communications Commission (FCC)  Interstate Commerce Commission (ICC)  Consumer Product Safety Commission (CPSC)  Environmental Protection Agency (EPA)

©2003 Prentice Hall,IncMarketing: Real People, Real Choices 3rd edition 3-23 The Sociocultural Environment  Characteristics of society  Characteristics of people in that society  Cultural values and beliefs  Popular culture