FUNDAMENTALS OF MARKETING

CHAPTER 2 MARKETING ENVIRONMENT AND MARKETING ETHICS

The Marketing Environment

The marketing environment includes the actors and forces outside marketing that affect marketing management s ability to build and maintain successful relationships with customers Microenvironment
Includes the factors close to the company that affect its ability to serve its customers

 Microenvironment
Includes the factors close to the company that affect its ability to serve its customers

 Macroenvironment
Involves larger societal forces that affect the microenvironment

Microenvironment
The Company
Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting Marketing decisions must relate to broader company goals and strategies

Suppliers
Provide the resources to produce goods and services Treated as partners to provide customer value

Microenvironment
Marketing Intermediaries
Help the company to promote, sell and distribute its products to final buyers Include resellers, physical distribution firms, marketing services agencies and financial intermediaries Effective partner relationship management is essential

Customers
The five types of customer markets: Consumer, Business, Reseller, Government, International Each market type has special characteristics

Microenvironment
Competitors
Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors offerings to create strategic advantage

Publics
A group that has an actual or potential interest in or impact on an organization Seven publics include: Financial, Media, Government, Citizen-action, Local, General, Internal

Macroenvironment
Demographic Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics Demographic environment is important because it involves people, and people make up markets Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity
Changing age structure of the population Geographic shift in population - Moving from rural to metropolitan areas Increasing diversity

Changes in the Workforce - More educated, More white collar

Macroenvironment
Economic Economic environment consists of factors that affect consumer purchasing power and spending patterns:
Changes in income Inflation Recession Changes in Consumer Spending Patterns

Natural Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities
Shortages of raw materials Increased pollution Increase government intervention Environmentally sustainable strategies

Macroenvironment
Technological Most dramatic force in changing the marketplace Rapidly changing force which creates many new marketing opportunities but also turns many existing products extinct Cultural Cultural environment consists of institutions and other forces that affect a society s basic values, perceptions, and behaviors Persistence of cultural values
Core beliefs and values are persistent and are passed on from parents to children Secondary beliefs and values are more open to change and include people s views of themselves, others, organization, society, nature, and the universe

Macroenvironment
Political Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Legislation regulating business
Increased legislation Changing government agency enforcement

Increased emphasis on ethics and socially responsible actions

Socially responsible behavior Cause-related marketing

Responding to the Marketing Environment

Reactive
React and adapt to forces in the environment

Proactive
Aggressive actions to affect forces in the environment

Ethical Decision Making

Morality and Business Ethics Ethics
refers to moral principles or values that generally govern the conduct of an individual or a group. The standard of behavior by which a conduct is judged.

Morals
rules or habits, typically stated as good or bad, that people develop as a result of cultural values and norms.

Business ethics are actually a subset of the values held by society as a whole. Those values are acquired through family, and through educational and religious institutions. Ethics can be very situation-specific and time-oriented.

Levels of Morality
Preconventional morality is childlike in nature, calculating, self-centered, and selfish. Conventional morality is concerned with the expectations of society. Loyalty and obedience are paramount. Postconventional morality represents the morality of the mature adult. People at this level are concerned with how they see and judge themselves and their acts over the long run.

Factors influencing ethical decision making and judgments

The extent of ethical problems within the organization Top-management actions on ethics Potential magnitude of the consequences Social consensus within managerial peers Probability of a harmful outcome Length of time between the decision and the onset of consequences Number of people to be affected

Ethical Guidelines
Many firms have developed a specific code of ethics to help employees make better decisions. The American Marketing Association has such a code. An explicit code helps:
Identify acceptable business practices Internally control behavior Reduce employee confusion in decision making Facilitate discussion about right and wrong in issues that may arise

Although many companies have issued policies on ethical behavior, marketing managers must put them into effect. Managers must address the "matter of degree" issue in many situations.

Corporate Social Responsibility

Corporate social responsibility is business's concern for society's welfare. Specifically, this concern is demonstrated by managers who consider the long-range best interests of the company and the company's relationship to the society within which it operates. Despite arguments to the contrary, most large corporations feel that their social responsibility extends beyond simply earning profits. Today a firm must also develop environmental controls, provide equal employment opportunities, create a safe workplace, produce safe products, and do much more.

 Four types of social responsibility make up the pyramid of corporate social responsibility:
Philanthropic
Be a good citizen. Contribute resources to the community; improve quality of life
Philanthropic Ethical Legal Economic

Ethical
Be ethical. Do what is right, just, and fair. Avoid harm.

Legal
Obey the law. Law is society s codification of right and wrong. Play by the rules of the game.

Economic
Be profitable. Profit is the foundation on which all other responsibilities rest.