1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. THE EXTERNAL ENVIRONMENT FACING MARKETERS : ECONOMIC FACTORS
Distribution of consumer incomes
Inflation rate
Recessions
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8. 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

9. 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
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10. 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

11. 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

12. THE EXTERNAL ENVIRONMENT FACING MARKETERS: COMPETITION
Amount and strength of competition
The relative size of the competition
Degree of interdependence within the industry
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13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

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

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

23. 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