Learning Outcomes

(Chapter 4)

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The Marketing Environment & Marketing Ethics

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Chapter 4

A concise review of the concepts presented in the chapter; the Chapter Summary is the perfect place to begin your study of the material.

Discuss the external environment of marketing and explain how it affects a firm. The external marketing environment consists of social, demographic, economic, technological, political and legal, and competitive variables. Marketers generally cannot control the elements of the external environment. Instead, they must understand how the external environment is changing and the impact of change on the target market. Then marketing managers can create a marketing mix to effectively meet the needs of target customers.

Describe the social factors that affect marketing. Within the external environment, social factors are perhaps the most difficult for marketers to anticipate. Several major social trends are currently shaping marketing strategies. First, people of all ages have a broader range of interests, defying traditional consumer profiles. Second, changing gender roles are bringing more women into the workforce and increasing the number of men who shop. Third, a greater number of dual-career families has led to a poverty of time, creating a demand for timesaving goods and services.

Explain the importance to marketing managers of current demographic trends. Today, several basic demographic patterns are influencing marketing mixes. Because the U.S. population is growing at a slower rate, marketers can no longer rely on profits from generally expanding markets. Marketers are also faced with increasingly experienced consumers among the younger generations, many of whom are "turned off" by traditional marketing mixes. And because the population is also growing older, marketers are offering more products that appeal to middle-aged and elderly markets.

Explain the importance to marketing managers of multiculturalism and growing ethnic markets. Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented. Growing multiculturalism makes the marketer's task more challenging. Niches within ethnic markets may require micromarketing strategies. An alternative to a niche strategy is maintaining a core brand identity while straddling different languages, cultures, ages, and incomes with different promotional campaigns. A third strategy is to seek common interests, motivations, or needs across ethnic groups. E-commerce companies are increasingly targeting America's minority groups.

Identify consumer and marketer reactions to the state of the economy. Marketers are currently targeting the increasing number of consumers with higher discretionary income by offering higher-quality, higher-priced goods and services. During a time of inflation, marketers generally attempt to maintain level pricing in order to avoid losing customer brand loyalty. During times of recession, many marketers maintain or reduce prices to counter the effects of decreased demand; they also concentrate on increasing production efficiency and improving customer service.

Identify the impact of technology on a firm. Monitoring new technology is essential to keeping up with competitors in today's marketing environment. For example, in the technologically advanced United States, many companies are losing business to Japanese competitors, who are prospering by concentrating their efforts on developing marketable applications for the latest technological innovations. In the United States, many R&D expenditures go into developing refinements of existing products. U.S. companies must learn to foster and encourage innovation. Without innovation, U.S. companies can't compete in global markets.

Discuss the political and legal environment of marketing. All marketing activities are subject to state and federal laws and the rulings of regulatory agencies. Marketers are responsible for remaining aware of and abiding by such regulations. Some key federal laws that affect marketing are the Sherman Act, Clayton Act, Federal Trade Commission Act, Robinson-Patman Act, Wheeler-Lea Amendments to the FTC Act, Lanham Act, Celler-Kefauver Antimerger Act, and Hart-Scott-Rodino Act. The Consumer Product Safety Commission, the Federal Trade Commission, and the Food and Drug Administration are the three federal agencies most involved in regulating marketing activities.

Explain the basics of foreign and domestic competition. The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry. Declining population growth, rising costs, and shortages of resources have heightened domestic competition. Yet with an effective marketing mix, small firms continue to be able to compete with the giants. Meanwhile, dwindling international barriers are bringing in more foreign competitors and offering expanding opportunities for U.S. companies abroad.

Describe the role of ethics and ethical decisions in business. Business ethics may be viewed as a subset of the values of society as a whole. The ethical conduct of business people is shaped by societal elements, including family, education, religion, and social movements. As members of society, businesspeople are morally obligated to consider the ethical implications of their decisions.

Ethical decision making is approached in three basic ways. The first approach examines the consequences of decisions. The second approach relies on rules and laws to guide decision making. The third approach is based on a theory of moral development that places individuals or groups in one of three developmental stages: preconventional morality, conventional morality, or postconventional morality.

Many companies develop a code of ethics to help their employees make ethical decisions. A code of ethics can help employees identify acceptable business practices, can be an effective internal control on behavior, can help employees avoid confusion when determining the ethicality of decisions, and can facilitate discussion about what is right and wrong.

Discuss corporate social responsibility. Responsibility in business refers to a firm's concern for the way its decisions affect society. There are several arguments in support of social responsibility. First, many consumers feel business should take responsibility for the social costs of economic growth. A second argument contends that firms act in their own best interest when they help improve the environment within which they operate. Third, firms can avoid restrictive government regulation by responding willingly to societal concerns. Finally, some people argue that because firms have the resources to solve social problems, they are morally obligated to do so.

In contrast, there are critics who argue against corporate social responsibility. According to one argument, the free enterprise system has no way to decide which social programs should have priority. A second argument contends that firms involved in social programs do not generate the profits needed to support the business's activities and earn a fair return for stockholders. In spite of the arguments against corporate social responsibility, most businesspeople believe they should do more than pursue only profits. Although a company must consider its economic needs first, it must also operate within the law, do what is ethical and fair, and be a good corporate citizen.

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This page last updated January 8, 2004