The Marketing Environment
• Environmental Scanning
– The process of collecting information about
forces in the marketing environment
• Observation
• Secondary sources
• Market research
• Environmental Analysis
– The process of assessing and interpreting the
information gathered through environmental
scanning
• Accuracy
• Consistency
• Significance
Copyright © Houghton Mifflin Company. All rights reserved.
3–1
The Marketing Environment
(cont’d)
• Responding to Environmental Forces
–Reactive approach
• Passive view of environment as uncontrollable
• Current strategy is cautiously adjusted to
accommodate environmental changes
–Proactive approach
• Actively attempts to shape and influence
environment
• Strategies are constructed to overcome market
challenges and take advantage of opportunities
Copyright © Houghton Mifflin Company. All rights reserved.
3–2
Competitive Forces
• Monitoring Competition
–Helps determine competitors’ strategies and
their effects on firm’s own strategies
–Guides development of competitive
advantage and adjusting firm’s strategy
–Provides ongoing information about
competitors
–Assists in maintaining a
marketing orientation
Copyright © Houghton Mifflin Company. All rights reserved.
3–3
Economic Forces
• Buying Power
–Resources, such as money, goods, and
services, that can be traded in an exchange
–Income
• Disposable income—after tax income
• Discretionary income—disposable
income available for spending
and saving beyond the basic
necessities of life
–Credit
–Wealth
Copyright © Houghton Mifflin Company. All rights reserved.
3–4
Economic Forces (cont’d)
• Willingness to Spend
– An inclination to buy because of expected
satisfaction from a product, influenced by the ability
to buy and numerous psychological and social forces
– Expectations influencing the willingness to spend:
•
•
•
•
•
Future employment
Income levels
Prices
Family size
General economic conditions (e.g., rising prices)
Copyright © Houghton Mifflin Company. All rights reserved.
3–5
Legal and Regulatory Forces:
Major Laws
Copyright © Houghton Mifflin Company. All rights reserved.
3–6
Major Laws (cont’d)
Copyright © Houghton Mifflin Company. All rights reserved.
3–7
Major Laws (cont’d)
Copyright © Houghton Mifflin Company. All rights reserved.
3–8
Regulation
• Regulatory Agencies
–Federal Trade Commission (FTC) influences
marketing activities most; can seek civil
penalties and require corrective advertising
• Self-Regulatory Forces
–Better Business Bureau
–National Advertising Review
Board (NARB)
Copyright © Houghton Mifflin Company. All rights reserved.
3–9
Major Regulatory Agencies
Major Federal Regulatory Agencies
AGENCY
MAJOR AREAS OF RESPONSIBILITY
Federal Trade
Commission
(FTC)
Enforces laws and guidelines regarding business
practices; takes action to stop false and deceptive
advertising, pricing, packaging, and labeling
Food and Drug
Administration
(FDA)
Enforces laws and regulations to prevent
distribution of adulterated or misbranded foods,
drugs, medical devices, cosmetics, veterinary
products, and potentially hazardous consumer
products
Consumer
Product Safety
Commission
(FCC)
Ensures compliance with the Consumer Product
Safety Act; protects the public from unreasonable
risk of injury from any consumer product not
covered by other regulatory agencies
Copyright © Houghton Mifflin Company. All rights reserved.
3–10
Major Regulatory Agencies
(cont’d)
Major Federal Regulatory Agencies (cont’d)
AGENCY
MAJOR AREAS OF RESPONSIBILITY
Federal
Regulates communication by wire, radio, and
Communications television in interstate and foreign commerce
Commission
(FCC)
Environmental
Protection
Agency (EPA)
Develops and enforces environmental protection
standards and conducts research into the adverse
effects of pollution
Federal Power
Commission
(FPC)
Regulates rates and sales of natural gas
producers, thereby affecting the supply and price
of gas available to consumers; also regulates
wholesale rates for electricity and gas, pipeline
construction, and U.S. imports and exports of
natural gas and electricity
Copyright © Houghton Mifflin Company. All rights reserved.
3–11
Technological Forces
• Technology
– The application of knowledge and tools to solve
problems and perform tasks more efficiently
• Impact of Technology
– Dynamic means constant change
– Reach refers to how technology
quickly moves through society.
– The self-sustaining nature of
technology as the catalyst
for even faster development
Copyright © Houghton Mifflin Company. All rights reserved.
3–12
Sociocultural Forces
• Sociocultural Forces
– The influences in a society and its culture(s) that
change people’s attitudes, beliefs, norms, customs,
and lifestyles
• Demographic Diversity and Characteristics
– Increasing proportion of older consumers
– Entering another baby boom
– Increasingly multicultural U.S. society
• Cultural Values
– Primary source of values is the family
– Values influence:
• Eating habits (healthier foods)
• Alternative health and medical treatment choices
Copyright © Houghton Mifflin Company. All rights reserved.
3–13
Social Responsibility and
Ethics in Marketing
• Social Responsibility
–An organization’s obligation to maximize its
positive impact and minimize its negative
impact on society
• Marketing citizenship
– The adoption of a strategic focus for fulfilling the
economic, legal, ethical, and philanthropic
social responsibilities expected by stakeholders
• Stakeholders
– Constituents who have a “stake” or claim in
some aspect of the company’s products,
operations, markets, industry, and outcomes
Copyright © Houghton Mifflin Company. All rights reserved.
3–14
The Pyramid of Corporate
Social Responsibility
Source: Archie B. Carroll,
“The Pyramid of Corporate
Social Responsibility: Toward
the Moral Management of
Organizational Stakeholders,”
adaptation of Figure 3, p. 42.
Reprinted from Business
Horizons, July/Aug. 1991.
Copyright © 1991 by the
Trustees at Indiana University,
Kelley School of Business. Used
with permission.
FIGURE 3.3
Copyright © Houghton Mifflin Company. All rights reserved.
3–15
Ethical Dimension
• Marketing Ethics
–Principles and standards that define
acceptable marketing conduct as determined
by various stakeholders
• Ethical Issue
–An identifiable problem,
situation, or opportunity
requiring a choice among
several actions that must be
evaluated as right or wrong,
ethical or unethical
Copyright © Houghton Mifflin Company. All rights reserved.
3–16
Influence Factors of Ethical
Standards
Company
Industry
Government
Customers
Interest Groups
Society
Influence
Factors
Copyright © Houghton Mifflin Company. All rights reserved.
Ethical
Standards
3–17
Ethical Issues in Marketing
Copyright © Houghton Mifflin Company. All rights reserved.
3–18
Texas Instruments’ Ethics
“Quick Test”
• Is the action legal?
• Does it comply with our values?
• If you do it, will you feel bad?
• How will it look in the newspaper?
• If you know it’s wrong, don’t do it!
• If you’re not sure, ask.
• Keep asking until you get an answer
Source: Texas Instruments. Used with permission.
Copyright © Houghton Mifflin Company. All rights reserved.
3–19
Green Marketing
• The specific development, pricing, promotion,
and distribution of products that do not harm
the natural environment
Copyright © Houghton Mifflin Company. All rights reserved.
3–20
Will Consumers Pay an Extra 25 cents/
Gallon to Reduce Pollution and Global
Warming?
Source: “Americans Split on Paying Higher Prices to Reduce Pollution,” USA Today, September 4, 2001, p. A1.
Copyright © Houghton Mifflin Company. All rights reserved.
3–21
Foundations of Consumerism
• Consumerism
–The organized efforts of individuals, groups,
and organizations to protect the rights of
consumers
• Lobbying government officials and agencies
• Letter-writing campaigns and boycotts
–Kennedy’s Consumer “Bill of Rights”
•
•
•
•
Right to safety
Right to be informed
Right to choose
Right to be heard
Copyright © Houghton Mifflin Company. All rights reserved.
3–22
Incorporating Social Responsibility
and Ethics into Strategic Planning
Ethics
Individual and
group decisions
Social
Responsibility
The total effect of
marketing decisions
on society
Overall Strategic Marketing Planning
Copyright © Houghton Mifflin Company. All rights reserved.
3–23