1 CHAPTER TWO THE MARKETING ENVIRONMENT AND MARKETING ETHICS © 2001 South-Western College...

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CHAPTER TWO

THE MARKETING ENVIRONMENT AND MARKETING ETHICS

© 2001 South-Western College Publishing

Prepared by:

Jack GiffordMiami University (Ohio)


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EXTERNAL ENVIRONMENT


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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


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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


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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


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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!


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THE EXTERNAL ENVIRONMENT FACING MARKETERS : ECONOMIC FACTORS

• Distribution of consumer incomes

• Inflation rate• Recessions


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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


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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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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


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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


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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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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


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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!


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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


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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.


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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


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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


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ETHICAL DECISION MAKINGFactors 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


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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


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CORPORATE SOCIAL RESPONSIBILITY (CSR)

• Economic responsibility, PLUS

• Legal responsibility, PLUS

• Ethical responsibility, PLUS

• Philanthropic responsibilities

CSR


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THE MYTH OF E-MAIL PRIVACYSLICE-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?


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GLOBAL PERSPECTIVESCORING 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?

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