Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility PDF

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These notes are from the marketing textbook titled "Marketing: The Core." It's the 7th edition by Roger A. Kerin and Steven W. Hartley....

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Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility Environmental Scanning - The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning - Environmental Trends typically arise from five sources: - Social - Economic - Technological - Competitive - Regulatory forces - An Environmental Scan of Today’s Marketplace - A firm conducting an environmental scan of the marketplace might uncover a number of key trends - from the growing popularity of brand advocates, to the increasing application of virtual reality and augmented reality, to the surging scrutiny regarding a collection and use of consumer data Social Forces - The social forces of the environment include the demographic characteristics of the population and its culture - Changes in resources can have a dramatic impact on marketing strategy - Demographics - Describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation is referred to as demographics - General Cohorts - A major reason for the graying of America is that the 73 million baby boomers - the generation of children born between 1946 and 1964 – are growing older - the baby boom cohort is followed by Generation X - Which includes the 50 million people born between 1965 and 1976 - This period is also known as the baby bust, because during this time the number of children born each year was declining - this is a generation of consumers who are self-reliant, supportive of racial and ethnic diversity, and better educated than any previous generation - the generational cohort labeled Generation Y includes the Americans born between 1977 and 1994 - this was a. Of increasing births, which resulted from Baby Boomers having children, and it is often referred to as the echo boom - The term millennials is often used, with inconsistent definitions, to

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refer to younger members of Generation Y - The post millennial generation is referred to as Generation Z, which includes consumers born between 1995 and 2010 Racial and Ethnic Diversity - A notable trend is the changing racial and ethnic composition of the US population - approximately one in three u.s. residents belongs to the following racial or ethnic groups: African-American, Native American or Alaska native, Asian-American, or native Hawaiian or Pacific Islander - many companies are developing Multicultural marketing programs, which are combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races and ethnic groups

Culture - A second social force, culture, incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group - One of the most notable cultural changes has been in the attitudes and roles of men and women in the marketplace - some companies are moving away from traditional gender Norms to avoid gender stereotypes - gender-neutral advertising is also becoming more common - another increasingly important value for consumers in the United States and around the globe is sustainability and preserving the environment Economic Forces - The second component of the environmental scan, the economy, pertains to the income, expenses, and resources that affect the cost of running a business and household - Macroeconomic Conditions - Of particular concern at the macroeconomic level is the performance of the economy based on indicator such as GDP (gross domestic product), unemployment, and price changes (inflation or deflation) - in an inflationary economy, the cost to produce and buy products and services escalates as prices increase - if price rises faster than consumer incomes, the number of items consumers can buy decreases - Periods of declining economic activity are referred to as recessions - during recessions, businesses decrease production, unemployment Rises, and many consumers have less money to spend - Consumer Income - A consumer's ability to buy is related to income, which consists of gross, disposable, and discretionary components - Gross Income

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The total amount of money made in one year by a person, household, or family unit is referred to as gross income - Disposable Income - The second income component, disposable income, is the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation - if taxes rise or fall faster than income, consumers are likely to have more or less disposable income - dramatic changes in the prices of products can lead to spending adjustments - changes in home prices have a psychological impact on consumers, you tend to spend more when they feel their net worth is rising and postpone purchases when it declines - during a recessionary., spending, debt, and the use of credit all decline - Discretionary Income - The third component of income is discretionary income, the money that remains after paying for taxes and necessities - discretionary income is used for luxury items - an obvious problem in defining discretionary versus disposable income is determining what is a luxury and what is a necessity - The percentage of income spent on food and housing typically declines as income increases, which can provide an increase in discretionary income Technological Forces - Technology, the third environmental forces, refers to inventions or innovations from applied science or engineering research - Technology of Tomorrow - Technological change is the result of research, so it is difficult to predict - Some of the most dramatic technological changes occurring now include the following: - artificial intelligence capabilities will impact many marketing functions, including sales, retailing, and consumer service - automation will become prevalent in products ranging from autonomous cars, to delivery drones, to robots in the Home and Office - the internet of things will become a reality as digital assistants such as Amazon's Alexa allow easy connectivity to all electronic devices - wearable technology will take many new forms, from biometric monitors related to Fitness and wellbeing, to visual displays for information and training, to exoskeletons to enhance personal Mobility - Technology’s Impact on Customer Value - Advances in technology have important effects on marketing - first, the cost of a technology is plummeting, causing the customer value

assessment of technology-based products to focus on other dimensions such as quality, service, and relationships - technology also provides value through the development of new products - Technology Enables Data Analytics - Technology has also had a dramatic impact on the operations of marketing organizations - first, the development of online capabilities created the marketspace, and information and communication based electronic exchange environment occupied by sophisticated computer and telecommunications technologies and digital offerings - second, these capabilities led to electronic commerce (e-commerce), or the activities that use electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services - internet-based technology also allows companies to create intranets to communicate within the organization and the extranets to communicate with suppliers, distributors, and other partners such as advertising agencies - Today, technologies have advanced to allow computer chips to be placed in almost anything and to be connected to a network almost anywhere - this network of products embedded with connectivity enabled electronics has come to be known as The Internet of Things (IoT) - the information generated by The Internet of Things has led to an explosion and interest in advanced analytics that can predict consumer preferences and behavior Competitive Forces - The fourth component of the environmental scan, competition, refers to the alternative for firms that could provide a product to satisfy a specific markets needs - there are various forms of competition, and needs company must consider its present and potential competitors and designing it's a marketing strategy - Alternative Forms of Competition - Four basic forms of competition create a continuum from pure competition to monopolistic competition to oligopoly to pure monopoly - at one end of the continuum is pure competition, in which there are many Sellers and each has a similar product - companies that deal in commodities common to agribusiness often are in pure competition position in which distribution is important but other elements of marketing have little impact - in the second point on the continuum, monopolistic competition, many sellers compete with substitutable products within a price range - oligopoly, a common industry structure, occurs in a few companies control the

majority of industry sales - the final point on the continuum, pure monopoly, occurs when only one firm sells the product - monopolies are common for producers of products and services considered essential to a community: water, electricity, and cable service - marketing plays a small role in a monopolistic setting because it is regulated by the state or federal government - government control usually seeks to ensure price protection for the buyer, although deregulation in recent years has encouraged price competition in the electricity market - Small Businesses as Competitors - Small businesses make up the majority of the competitive landscape for most businesses - Research has shown a strong correlation between National Economic growth in the level of new small business activity in previous years Regulatory Forces - For any organization, the marketing and brought her business decisions are constrained, directed, and influenced by regulatory forces - regulation consists of restrictions state and federal laws place on a business with regard to the conduct of its activities - regulation exists to protect companies as well as consumers - much of the regulation from the federal and state levels is the result of an active political process and has been passed to ensure competition and fair business practices - Protecting Competition - Major federal legislation has been passed to encourage competition, which is deemed it desirable because it permits the consumer to determine which competitor will succeed and which will fail - the first such law was the Sherman Antitrust Act (1890) - this was supplemented with the Clayton Act (1914) - this forbids certain actions that are likely to lessen competition, although no actual harm has yet occurred - When small businesses were threatened to, they lobbied for the RobinsonPatman Act (1936) - this act makes it unlawful to discriminate in prices charts a different purchasers of the same product, or the effect may substantially less than competition or help to create a monopoly - Protecting Producers and Consumers - A company can protect its competitive position in new and novel products under the patent law, which gives inventors the right to exclude others from making, using, or selling products that infringe the patented invention - the federal copyright law is another way for a company to protect its competitive

position in a market - it gives the author of a literary, dramatic, musical, or artistic work the exclusive right to print a, perform, or otherwise copy that work - federal laws also protect consumers - various balls address each of the four elements of the marketing mix - Consumerism, a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions - laws also address pricing, distribution, and promotion - the FTC (Federal Trade Commission) has the power to issue cease-and-desist orders and order corrective advertising - Control through Self Regulation - An alternative to government control is self-regulation, where an industry attempts to police itself - there are two problems with self-regulation: non-compliance members and enforcement - if attempts at the regulation are too strong, they may violate the robinson-patman Act - the best known self-regulatory group is the Better Business Bureau (BBB) - this agency is a voluntary Alliance of companies whose goal is to help maintain fair practices - There is a distinction between laws, which are society's values that are enforceable in courts, and ethics, which deal with personal and moral principles and values Understanding Ethical Marketing Behavior - Ethics are the moral principles and values that govern the actions and decisions of an individual or group - they serve as guidelines on how to act rightly and justly when faced with moral dilemmas - Societal Culture and Norms - Culture refers to the set of values, ideas, and attitudes that are learned and shared among the members of a group - Culture also serves as a socializing force that dictates what is morally right and just - this means that moral standards are relative to particular societies - these standards often reflect the laws and regulations that affect social and economic behavior, which can create ethical dilemmas - Business Culture and Industry Practices - Societal culture provides a foundation for understanding World behavior in business activities - business cultures “comprise the effective rules of the game, the boundaries between competitive and unethical Behavior, and the codes of Conduct in

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business dealings” - business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the competitive behavior among sellers - Ethics of Exchange - The Exchange process is Central to the marketing concept - ethical exchanges between sellers and buyers should result in both parties being better off after a transaction - before the 1960s, the legal concept of Caveat Emptor - let the buyer beware - was pervasive in the American Business culture - in 1962, President John F Kennedy outlined Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers - these were the right to safety, to be informed, to choose, and to be heard - Ethics of Competition - Business culture also affects ethical behavior in competition - two kinds of unethical Behavior are most common: economic Espionage and Corruption - economic Espionage is the clandestine collection of Trade Secrets or proprietary information about a company's competitors - this practice is illegal and unethical and Carries serious criminal penalties for the offending individual or business - Espionage activities include illegal trespassing, theft, fraud, misrepresentation, electric hacking, the search of a competitor is trash, and violations of written and implicit employment agreements with non-compete clauses - corruption is a second form of unethical Behavior - corruption involves unethical conduct by a person entrusted with a position of authority, often to acquire a personal benefit - the giving and receiving of bribes, Kickbacks, and gifts are the most common forms of corruption - these practices are more common in business to business and government marketing then in consumer marketing - bribery is most evident in Industries experiencing intense competition and in countries in the earlier stages of Economic Development or facing economic and political turmoil Corporate Culture and Expectations - A third influence on ethical practices is Corporate culture - corporate culture is the set of values, ideas, and attitudes that is learned and shared among the members of an organization - the culture of a company demonstrates itself in the dress, sayings, and manner of work of employees

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culture is also apparent in the expectations for ethical Behavior present in formal codes of ethics and the ethical actions of top management and co-workers - Codes of Ethics - A code of ethics is a formal statement of ethical principles and rules of conduct - ethics codes typically address contributions to government officials and political parties, customer and supplier relations, conflicts of interest, and accurate record-keeping - Ethical Behavior of Top Management and Co-Workers - One reason for violating ethics codes rest in the oppressive behavior of top management and co-workers - observing peers in top management and gauging responses to unethical Behavior play an important role in individual actions - ethical dilemmas can bring personal and professional conflict - states have enacted laws designed to protect whistleblowers, employees who report unethical or illegal actions of their employers Your Personal Moral Philosophy and Ethical Behavior - Ethical choices are based on the personal moral philosophy of the decision maker - moral philosophy is learned through the process of socialization with friends and family and by formal education - it is also influenced by the societal, business, and corporate culture in which a person finds him or herself - two prominent personal moral philosophies have direct bearing on marketing practice: moral idealism and utilitarianism - Moral Idealism - Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome - this philosophy exists in the consumer Bill of Rights and is favored by moral philosophers and consumer interest groups - This philosophy also applies to ethical duties - a fundamental ethical duty is to do no harm - Utilitarianism - An alternative perspective on moral philosophy is utilitarianism, which is a personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits of a consequences of ethical Behavior - is the benefits exceed the cost, then the behavior is ethical - if not, then the behavior is unethical - this philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students

Social Responsibility for Sustainable Marketing - Thesis title marketing concepts dresses marketing's social responsibility by not only satisfy the needs of consumers but also providing for society's welfare - social responsibility means that organizations are part of a larger society and are accountable to that Society for their actions - agreement on the nature and scope of social responsibility is often difficult to come by, given the diversity of values present in different societal, business, and corporate cultures - Three Concepts of Social Responsibility - Profit Responsibility - Profit responsibility holds that companies have a simple duty to maximize profits for their owners or stockholders - Stakeholder Responsibility - Criticism of the profit view has led to a broader concept of social responsibility - stakeholder responsibility focuses on the obligations an organization has to those who can affect achievement of its objectives - these constituencies include consumers, employees, suppliers, and distributors - failure to consider a company's broader constituencies when making decisions can have dire consequences - Societal Responsibility - Societal responsibility refers to obligations that organizations have to be preservation of the ecological environment and to the General Public - emphasis is placed on the triple bottom line - recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth - having braces title responsibility through sustainable marketing, which seeks to meet today's economic, environmental, and social needs without compromising the opportunity for future generations to meet theirs - green marketing, cause marketing, social Audits, and sustainable development reflect this recognition - green marketing a dash marketing efforts to produce, promote, and reclaim environmentally sensitive products – takes many forms - Sustainable marketing efforts on behalf of the general public are becoming more common - a formal practice is cause marketing, which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promo...