Chapter 3 The Marketing Environment, Ethics, and Social Responsibility

Environmental Scanning the process of collecting info about the external mkt environment in order to id & interpret potential trends

Competition in a Competitive Environment 1. direct competition between marketers of similar products ie: Huggies vs. Pampers 2. marketers of products that can be substituted for each other ie: bus vs airplane

3. Competition for consumer dollars –product can be similar or dissimilar, all firms compete for part of consumer dollars ie: car purchase vs. lawn service

Competitive Strategy 1. Should we compete? –decide based on: resources, objectives & profitability 2. If so, in what markets should we compete? –allocate resources to areas of greatest opportunity (target market) 3. How should we compete? –Price, Quality, etc.

The Political-Legal Environment laws that govern business activity Table 3.1 Pg. 86 FTC: false/misleading advertising –What happens if firms don’t comply??

The Economic Environment

5 Factors 1. BUSINESS CYLES –prosperity marketers: expand product lines, raise prices, etc. –recession marketers: lower prices,eliminate marginal products, etc. (6 months) –depression –recovery - consumer ability to buy is up - but confidence is not

2. INFLATION –rising price level that results in reduced consumer buying power – flation.html 3. UNEMPLOYMENT –rises during recessions, lowers during prosperity & recovery periods –

4. RESOURCE AVAILABILITY –Limited resources: –DEMARKETING - try to reduce consumer demand - ie: utility companies

5. INCOME – marketers study income stats & trends to estimate market potential –interested in discretionary income

THE TECHNOLOGICAL ENVIRONMENT Can create an entire new industry, not just new products. What are some examples??

The Social-Cultural Environment relate btw marketing & society and its culture marketers must be sensitive to changes in values & demographics Ex. Low-fat food

Criticisms of Competitive Marketing System 1. Costs too high 2. Marketing system is inefficient 3. Marketers guilty of collusion & price fixing 4. product quality & service are poor

5. consumers get incomplete, false, or misleading information 6. marketing system has produced health & safety hazards 7. unwanted/unnecessary products are promoted to those who need them least

MARKETING ETHICS AREAS OF CONCERN 1. Marketing Research- invasion of privacy 2. Product Strategy Ethics - misleading packaging - odd sizing of products - bottles w/ concave bottoms 3. Distribution Strategy Ethics - should products in marginally profitable outlets be kept because no alternative source of supply?

4. Promotional Strategy Ethics –gives rise to majority of ethical questions –gifts & bribes common enticements 5. Pricing Ethics –unethical price behavior is usually illegal

AMA Code of Ethics:

SOCIAL RESPONSIBILITY acceptance of obligation to consider profit, consumer satisfaction, & societal well-being of equal value in evaluating firm performance