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Part 1: Designing CustomerOriented 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.
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Environmental Scanning and
Environmental Management
 Environmental Scanning is the process of
collecting information about the external
marketing environment to identify and
interpret potential trends
 Environmental Management involves
marketers’ efforts toward achieving
organizational objectives by predicting and
influencing the competitive, political-legal,
economic, technological, and social-cultural
environments.
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 Elements of
the Marketing
Mix within an
Environmental
Framework
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The Competitive Environment
 Competitive 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.
Monopoly
Deregulation movement
Oligopoly
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 Types of Competition
Directly Competitive Products
Indirectly Competitive Products
Involves products than can be substituted
for one another
All Consumer Purchases
Occurs in the sense that all firms compete
for the buyers’ purchases
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 Developing a Competitive Strategy
Should we compete?
If so, in what markets should we compete?
How should we compete?
 Time-based competition is a strategy of
developing and distributing goods and
services more quickly than competitors
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The Political-Legal Environment
 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.
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 Government Regulation
Maintaining a Competitive Environment
Began in the late 19th century
Aimed at to maintaining a competitive
environment by reducing the trend toward
monopolies
Included:
Sherman Antitrust Act
Clayton Act
Federal Trade Commission
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 Government Regulation
Regulating Competition
Began during the depression era of the
1930s
Meant to protect independent merchants
against competition from larger chain
stores
Included the Robinson-Patman Act
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 Government Regulation
Protecting Consumers
Began mainly in the 1960s
Increased focus on consumer protection
Newest regulatory frontier is cyberspace
Included:
FDA
Consumer product safety
Electronic Signature
Aviation security
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 Government Regulation
Deregulating Specific Industries
Began in the late 1970s
Focused on deregulating specific
industries
Included:
Airline Deregulation Act
Motor Carrier Act
Telecommunications
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 Other Regulatory Forces
Consumer interest groups
National Coalition Against Misuse of
Pesticides
PETA
Special-interest groups
American Association of Retired People
(AARP)
Self-regulatory groups
Direct Marketing Association
Council of Better Business Bureaus
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 Controlling the Political-Legal Environment
Companies fight unjust regulations
Regulations can present new opportunities
Political lobbying
Boycotts
Political action committees
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The Economic Environment
 Factors that influence consumer buying
power and marketing strategies, including
stage of the business cycle, inflation,
unemployment, resource availability and
income
 Stages in the Business Cycle
Cyclical patterns consisting of the stages of
prosperity, recession, depression, and
recovery.
Wealth effect
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 Inflation and Deflation
Inflation: The devaluation of money by
reducing what it can buy through persistent
price increases.
Deflation: Falling prices, better?
 Unemployment
The proportion of people in the economy
who do not have jobs and are actively
looking for work.
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 Income
Discretionary income: the amount of
money people have to spend after
paying for necessities such as food,
clothing, and housing.
 Resource Availability
Demarketing: the process of reducing
consumer demand for a good or
service to a level that the firm can
supply.
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 The International Economic Environment
Marketers must consider the economic
environment of other nations
Changes in foreign currency rates may
affect marketing decisions
Recessions in one part of the world may be
offset by prosperity in another
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The Technological Environment
 The technological
environment
represents the
application of
knowledge in science,
inventions, and
innovations to
marketing.
 Applying technology
helps Fidelity improve
customer service
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The Social-Cultural Environment
 The relationship between marketing and society
and its culture
 Importance in International Marketing
Decisions
The social-cultural context often exerts a
more pronounced influence on marketing
decision-making in the international sphere
than in the domestic arena
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 Consumerism
A social force within the environment
designed to protect the consumer by
exerting legal, moral, and economic
pressures on business and government.
John F. Kennedy’s Statement of
Consumer Rights
The right to choose freely
The right to be informed
The right to be heard
The right to be safe
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Ethical Issues in Marketing
 Marketing ethics: Marketer’s standards of
conduct and moral values
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
Criticisms of the Competitive Marketing System
 Marketing costs are too high
 The marketing system is inefficient
 Marketers and the business system collude and
commit price-fixing
 Firms deliver poor product quality and service
 Consumers receive incomplete, false, and/or
misleading information
 The marketing system produces health and safety
hazards
 Marketers persuasively promote unwanted and
unnecessary products to those who least need
them
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 Ethical Problems in Marketing Research
Alleged invasions of personal privacy
Gathering marketing information in
exchange for money or free offers
 Ethical Problems in Product Strategy
Product quality
Planned obsolescence
Brand similarity
Packaging
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 Ethical Problems in Distribution Strategy
Determining the appropriate degree of
control over a channel
Determining whether a company should
distribute its products in marginally
profitable outlets that have no alternative
source of supply
 Ethical Problems in Pricing
Probably the most regulated aspect
Most unethical pricing behavior is also
illegal
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 Ethical Problems in Promotional Strategy
The source of the majority of ethical
questions
Ethically questionable personal selling
Gifts and bribes
Questionable advertising
Promotion of questionable features (air bags)
Questionable WWW related promotional
practices
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Social Responsibility in Marketing
 Social responsibility
Marketing philosophies, policies,
procedures, and actions that have the
enhancement of society’s welfare as a
primary objective
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 The Four-Step
Pyramid of
Corporate Social
Responsibility
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 Marketing’s Responsibilities
Traditionally concerned managers’
relationships with customers, employees,
and stockholders
Extended to relations with government and
the general public
Today, corporate responsibility has
expanded to cover the entire societal
framework in the US and throughout the
world
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 Marketing and
Ecology
Ecology
Planned
obsolescence
Pollution
Recycling
Green Marketing
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