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Chapter 3
The Marketing Environment, Ethics, and
Social Responsibility
Environmental Scanning
• the process of collecting info about the
external mkt environment in order to id &
interpret potential trends
Competition in a Competitive
Environment
1. direct competition between marketers of
similar products
ie: Huggies vs. Pampers
2. marketers of products that can be
substituted for each other
ie: bus vs airplane
3. Competition for consumer dollars
– product can be similar or dissimilar, all firms
compete for part of consumer dollars
ie: car purchase vs. lawn service
Competitive Strategy
1. Should we compete?
– decide based on: resources, objectives &
profitability
2. If so, in what markets should we compete?
– allocate resources to areas of greatest
opportunity (target market)
3. How should we compete?
– Price, Quality, etc.
The Political-Legal
Environment
• laws that govern business activity
Table 2.1 Pg. 49
• FTC: false/misleading advertising
– What happens if firms don’t comply??
The Economic Environment
5 Factors
1. BUSINESS CYLES
– prosperity
• marketers: expand product lines, raise prices, etc.
– recession
• marketers: lower prices,eliminate marginal products,
etc. (6 months)
– depression
– recovery - consumer ability to buy is up - but
confidence is not
2. INFLATION
– rising price level that results in reduced
consumer buying power
3. UNEMPLOYMENT
– rises during recessions, lowers during
prosperity & recovery periods
4. RESOURCE AVAILABILITY
– Limited resources:
– DEMARKETING - try to reduce consumer
demand
- ie: utility companies
5. INCOME
– marketers study income stats & trends to
estimate market potential
– interested in discretionary income
THE TECHNOLOGICAL
ENVIRONMENT
• Can create an entire new industry, not just
new products. What are some examples??
The Social-Cultural
Environment
• relate btw marketing & society and its
culture
• marketers must be sensitive to changes in
values & demographics
• Ex. Low-fat food
Criticisms of Competitive
Marketing System
1. Costs too high
2. Marketing system is inefficient
3. Marketers guilty of collusion & price fixing
4. product quality & service are poor
5. consumers get incomplete, false, or misleading
information
6. marketing system has produced health & safety
hazards
7. unwanted/unnecessary products are promoted to
those who need them least
MARKETING ETHICS
AREAS OF CONCERN
1. Marketing Research- invasion of privacy
2. Product Strategy Ethics
- misleading packaging
- odd sizing of products
- bottles w/ concave bottoms
3. Distribution Strategy Ethics
- should products in marginally profitable outlets
be kept because no alternative source of
supply?
4. Promotional Strategy Ethics
– gives rise to majority of ethical questions
– gifts & bribes common enticements
5. Pricing Ethics
– unethical price behavior is usually illegal
AMA Code of Ethics:
SOCIAL RESPONSIBILITY
• acceptance of obligation to consider profit,
consumer satisfaction, & societal well-being
of equal value in evaluating firm
performance