The Marketing Environment, Ethics, and Social Responsibility

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• Chapter 3
• The Marketing Environment, Ethics, and Social
  Responsibility

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Objectives

• Identify the five components of the marketing
  environment.
• Identify the environmental factors that affect
  marketing decisions and consumer buying power.
• 3. Identify the four levels of the social
  responsibility pyramid.

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Environmental Scanning

• Process of collecting information about the
  external marketing environment in order to
  identify and interpret potential trends.
• Upscale chocolate retail outlet sales grew 20
  from 2005-2007
• So Mars launched Ethels Chocolate Lounges named
  for the founding matriarch of the company

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Environmental Management

• Attainment of 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

THE COUNCIL OF BETTER BUSINESS BUREAUS (CBBB)
OUR MISSION is to promote and foster the
highest ethical relationship between businesses
and the public through voluntary self-regulation,
consumer and business education, and service
excellence. The CBBB helps in keeping the
Competitive Environment playing field level.
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Dolls to Ethnic Targets2007

• Nickelodeons bilingual character
• Kmart 2007- 1st mass retailer with dolls in all
  stores
• Terry Lee dolls
• Baby Abuelita singing dolls
• special songs preserving Hispanic heritage
• El patio de mi casa, Tengo una muñeca,
• A la rueda, Amambrocha
• 2050 minorities 50 of U.S. residents
• 30 in 2007
• Hispanic buying power - 1.2T in 2011
• People want a doll a story reflecting who they
  are
• Mattels American Girl with Native American,
  Hispanic, black historical dolls

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Major Federal Law Affecting Marketing
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Burger King 07 Agrees to Limits on Kid-Aimed Ads

• Join Better Business Bureau's Children's Food and
  Beverage Advertising Initiative
• New product raw apples cut to look like french
  fries and served in a box called the Frypod.
• Fits in cars cupholder
• Naming influence from IPod
• May 07 - when Jobs became the largest
  shareholder of Disney
• Disney ended 1 billion deal with McDonalds to
  receive cash for use of its movie cartoon
  characters in Happy Meal tie-ins.

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Major Federal Law Affecting Marketing
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Major Federal Law Affecting Marketing
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Four Stages in the Business Cycle

• Prosperity - Consumer spending maintains a brisk
  pace and buyers are willing to spend more.
• Recessionary Periods - Sales of lower-priced
  brands of grocery and household-goods products
  and private-label goods rise.
• Depression - Consumer spending sinks to its
  lowest level.
• Recovery Stage - The economy emerges from
  recession and consumer purchasing power
  increases.
• Caution often restrains their willingness to buy.
• As a recovery strengths, consumers become more
  indulgent.

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Social-Cultural Environment

• The relationship between marketing and society
  and its culture.
• The U.S. is becoming
• older,
• more affluent and
• more cultural diverse

Consider the Nickelodeon web site. What are they
doing to promote cultural diversity? Is their
approach socially responsible?
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Social-Cultural
Jockey 1976
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Ethical Questions in Marketing
Ethical Issues
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Competitive Advantage

• Montreals Cirque du Soleil
• 32 talent scouts maintain dbase
• of 20,000 potential additions to cast
• Each show as life of 10-12 yrs.
• Runs 5 world tours 5 permanent shows, each with
  a 500M return
• 300 seamstresses, engineers, makeup artist create
  custom show materials
• Award-winning series on Bravo
• NikeID.com customizes
• Lining, mesh, laces, style, shox

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Three Questions of Determining a Competitive
Strategy

• Should we compete?

• If so, in what markets?

• How should we compete?

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1st Competitive Strategy QuestionShould we
Compete?

• Depends on
• Firms resources.
• Objectives.
• Expected profit potential.

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2nd Competitive Strategy QuestionWhat Markets
Should we Compete In?

• Must acknowledge
• Firms limited resources.
• Accept responsibility for allocating these
  resources to the areas of greatest opportunity.

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Ten Steps for Corporation to Improve Standards of
Business Ethics

• Appoint a senior-level ethics compliance officer.
• Set up an ethics code capable of detecting and
  preventing misconduct.
• Distribute a written code of ethics to employees,
  subsidiaries, and associated companies and
  require all business partners to abide by it.
• Conduct regular ethics training programs to
  communicate standards and procedures.
• Establish systems to monitor misconduct and
  report grievances.

• Establish consistent punishment guidelines to
  enforce standards and codes.
• Encourage an open-door policy, allowing employees
  to report cases on misconduct without fear of
  retaliation.
• Prohibit employees with a track record of
  misconduct from holding positions with
  substantial discretionary authority.
• Promote ethically aware and responsible managers.
• Continually monitor effectiveness of all
  ethics-related programs.

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Legoland competes with other theme parks in
California.
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3rd Competitive Strategy QuestionHow Should we
Compete?

• Make product decisions about
• Pricing,
• Distribution,
• Promotional,
• Product quality, and
• Customer service.

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When Sales Fail

• Britannica 650M revenue in 1989 from 4-volume
  encyclopedia sets
• Sales force of 7,500
• Fell to force of 300 in 2005
• Slow to react to changing technologies
• Myopic in defining business as publishing books
  vs. providing information

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Time-Based Competition Strategy

• Developing and distributing goods and services
  more quickly than competitors.

• Provides for
• Flexibility and responsiveness.
• Improve product quality.
• Reduce costs.
• Expand product offerings.
• Enhance customer satisfaction.

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New Regulatory Frontier

• Cyberspace
• How do you police?
• Privacy and child protection issues.
• How do you protect the consumer?

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Economic EnvironmentForces that Influence
Consumer Buying Power and Marketing Strategies

• Business cycle
• Inflation
• Unemployment
• Income
• Resource availability

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Inflation

• Rising prices caused by some combination of
  excess demand and increases in the costs devalues
  money.

• Three possible outcomes
• consumers elect to buy now, in the belief that
  prices will be high later
• they decide to alter their purchasing patterns
  or
• They postpone certain purchases.

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The Four-Step Pyramid ofCorporate Social
Responsibility