CHAPTER TWO THE MARKETING ENVIRONMENT AND MARKETING ETHICS

CHAPTER TWO THE MARKETING ENVIRONMENT AND MARKETING ETHICS Prepared by: Jack Gifford Miami University (Ohio) © 2001 South-Western College Publishing 1

EXTERNAL ENVIRONMENT © 2001 South-Western College Publishing 2

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 © 2001 South-Western College Publishing 3

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 © 2001 South-Western College Publishing 4

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 © 2001 South-Western College Publishing 5

THE EXTERNAL ENVIRONMENT FACING MARKETERS : DEMOGRAPHICS (continued) • DEMOGRAPHICS – – – Size of middle class Per capita income Education Birth rate Housing market Population density • In underdeveloped nations, secondary data is often bad or nonexistent! © 2001 South-Western College Publishing 6

THE EXTERNAL ENVIRONMENT FACING MARKETERS : ECONOMIC FACTORS • Distribution of consumer incomes • Inflation rate • Recessions © 2001 South-Western College Publishing 7

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 © 2001 South-Western College Publishing 8

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 © 2001 South-Western College Publishing 9

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 © 2001 South-Western College Publishing 10

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 © 2001 South-Western College Publishing 11

THE EXTERNAL ENVIRONMENT FACING MARKETERS: COMPETITION • Amount and strength of competition • The relative size of the competition • Degree of interdependence within the industry © 2001 South-Western College Publishing 12

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 © 2001 South-Western College Publishing 13

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! © 2001 South-Western College Publishing 14

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 © 2001 South-Western College Publishing 15

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. © 2001 South-Western College Publishing 16

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: innerdirected, mature judgement © 2001 South-Western College Publishing 17

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 © 2001 South-Western College Publishing 18

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 © 2001 South-Western College Publishing 19

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 © 2001 South-Western College Publishing 20

CORPORATE SOCIAL RESPONSIBILITY (CSR) • Economic responsibility, PLUS • Legal responsibility, PLUS • Ethical responsibility, PLUS • Philanthropic responsibilities CSR © 2001 South-Western College Publishing 21

THE MYTH OF E-MAIL PRIVACY SLICE-OF-LIFE INSERT • Should corporate email be private? • Should Michael Smyth have been fired? • What would you do if you were told by your boss to monitor another employee’s e-mail and report your findings to the boss? © 2001 South-Western College Publishing 22

GLOBAL PERSPECTIVE SCORING BIG IN CHINA INSERT • Do you think the Fed. Ex or the UPS will be more successful in the long run in China? Why? • Which company is taking more risk? ? © 2001 South-Western College Publishing OR 23