Part 1 Designing Customer Oriented Marketing Strategies 1

Part 1: Designing Customer. Oriented Marketing Strategies 1. Marketing: Creating Satisfaction through Customer Relationships 2. Strategic Planning and the Marketing Process 3. The Marketing Environment, Ethics, and Social Responsibility 4. E-Commerce: Marketing in the Digital Age Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 3 The Marketing Environment, Ethics, and Social Responsibility Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter Objectives 1. 2. 3. 4. 5. 6. 7. 8. Identify the five components of the marketing environment. Explain the types of competition marketers face and the steps necessary for developing a competitive strategy. Describe how government and other groups regulate marketing activities and how marketers can influence the political –legal environment. Outline the economic factors that affect marketing decisions and consumer buying power. Discuss the impact of the technological environment on a firm’s marketing activities. Explain how the social-cultural environment influences marketing. Describe the role of marketing in society and identify the two major social issues in marketing. Identify the four levels of the social responsibility pyramid. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3

Environmental Scanning and Environmental Management n Environmental Scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends n Environmental Management involves marketers’ efforts toward achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 4

n Elements of the Marketing Mix within an Environmental Framework Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 5

The Competitive Environment n Competitive Environment: Environment The interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power. üMonopoly üDeregulation movement üOligopoly Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 6

n Types of Competition üDirectly Competitive Products üIndirectly Competitive Products w Involves products than can be substituted for one another üAll Consumer Purchases w Occurs in the sense that all firms compete for the buyers’ purchases Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 7

n Developing a Competitive Strategy üShould we compete? üIf so, in what markets should we compete? üHow should we compete? n Time-based competition is a strategy of developing and distributing goods and services more quickly than competitors Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 8

The Political-Legal Environment n Component of the marketing environment consisting of laws and interpretations of laws that require firms to operate under competitive conditions and to protect consumer rights. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 9

n Government Regulation üMaintaining a Competitive Environment w Began in the late 19 th century w Aimed at to maintaining a competitive environment by reducing the trend toward monopolies w Included: Sherman Antitrust Act Clayton Act Federal Trade Commission Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 10

n Government Regulation üRegulating Competition w Began during the depression era of the 1930 s w Meant to protect independent merchants against competition from larger chain stores w Included the Robinson-Patman Act Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 11

n Government Regulation üProtecting Consumers w Began mainly in the 1960 s w Increased focus on consumer protection w Newest regulatory frontier is cyberspace w Included: FDA Consumer product safety Electronic Signature Aviation security Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12

n Government Regulation üDeregulating Specific Industries w Began in the late 1970 s w Focused on deregulating specific industries w Included: Airline Deregulation Act Motor Carrier Act Telecommunications Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 13

n Other Regulatory Forces üConsumer interest groups w National Coalition Against Misuse of Pesticides w PETA üSpecial-interest groups w American Association of Retired People (AARP) üSelf-regulatory groups w Direct Marketing Association w Council of Better Business Bureaus Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 14

n Controlling the Political-Legal Environment üCompanies fight unjust regulations üRegulations can present new opportunities üPolitical lobbying üBoycotts üPolitical action committees Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 15

The Economic Environment n Factors that influence consumer buying power and marketing strategies, including stage of the business cycle, inflation, unemployment, resource availability and income n Stages in the Business Cycle üCyclical patterns consisting of the stages of prosperity, recession, depression, and recovery. w Wealth effect Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 16

n Inflation and Deflation üInflation: The devaluation of money by reducing what it can buy through persistent price increases. üDeflation: Falling prices, better? n Unemployment üThe proportion of people in the economy who do not have jobs and are actively looking for work. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 17

n Income üDiscretionary income: the amount of money people have to spend after paying for necessities such as food, clothing, and housing. n Resource Availability üDemarketing: the process of reducing consumer demand for a good or service to a level that the firm can supply. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 18

n The International Economic Environment üMarketers must consider the economic environment of other nations üChanges in foreign currency rates may affect marketing decisions üRecessions in one part of the world may be offset by prosperity in another Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 19

The Technological Environment n The technological environment represents the application of knowledge in science, inventions, and innovations to marketing. ü Applying technology helps Fidelity improve customer service Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 20

The Social-Cultural Environment n The relationship between marketing and society and its culture n Importance in International Marketing Decisions üThe social-cultural context often exerts a more pronounced influence on marketing decision-making in the international sphere than in the domestic arena Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 21

n Consumerism üA social force within the environment designed to protect the consumer by exerting legal, moral, and economic pressures on business and government. üJohn F. Kennedy’s Statement of Consumer Rights w The right to choose freely w The right to be informed w The right to be heard w The right to be safe Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 22

Ethical Issues in Marketing ethics: Marketer’s standards of conduct and moral values Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 23

n Criticisms of the Competitive Marketing System ü Marketing costs are too high ü The marketing system is inefficient ü Marketers and the business system collude and commit price-fixing ü Firms deliver poor product quality and service ü Consumers receive incomplete, false, and/or misleading information ü The marketing system produces health and safety hazards ü Marketers persuasively promote unwanted and unnecessary products to those who least need them Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 24

n Ethical Problems in Marketing Research üAlleged invasions of personal privacy üGathering marketing information in exchange for money or free offers n Ethical Problems in Product Strategy üProduct quality üPlanned obsolescence üBrand similarity üPackaging Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 25

n Ethical Problems in Distribution Strategy üDetermining the appropriate degree of control over a channel üDetermining whether a company should distribute its products in marginally profitable outlets that have no alternative source of supply n Ethical Problems in Pricing üProbably the most regulated aspect üMost unethical pricing behavior is also illegal Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 26

n Ethical Problems in Promotional Strategy üThe source of the majority of ethical questions üEthically questionable personal selling w Gifts and bribes üQuestionable advertising üPromotion of questionable features (air bags) üQuestionable WWW related promotional practices Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 27

Social Responsibility in Marketing n Social responsibility üMarketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 28

n The Four-Step Pyramid of Corporate Social Responsibility Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 29

n Marketing’s Responsibilities üTraditionally concerned managers’ relationships with customers, employees, and stockholders üExtended to relations with government and the general public üToday, corporate responsibility has expanded to cover the entire societal framework in the US and throughout the world Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 30

n Marketing and Ecology üPlanned obsolescence üPollution üRecycling üGreen Marketing Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 31