Strategy, Ethics, and Social Responsibility: Harcourt, Inc

Strategy, Ethics, and Social Responsibility
chapter 2
Harcourt, Inc.
Objectives
Discuss
the six components of the marketing environment and their impact on marketing strategy Name and discuss the three dimensions of marketings social responsibility
Dr. Rosenbloom
Objectives
Understand
the real issues behind the belief that marketing creates unneeded and unwanted products Develop and understanding of the possible unintended consequences of too much marketing
Dr. Rosenbloom
Objectives
Understand
that the most important ethic in marketing is honesty Explain the principles of ethics and the difficulties encountered in creating a code of ethics for global trading
Dr. Rosenbloom
Objectives
Appreciate
the challenges involved in cause-related marketing campaigns
Dr. Rosenbloom
The Marketing Environment
Dr. Rosenbloom
Political - Legal Considerations
Component of the marketing environment consisting of laws and interpretations of laws that require firms operate under competitive conditions and to protect consumer rights
Dr. Rosenbloom
Political-Legal Considerations
Regulatory Agencies
FTC FCC
FDA EPA
CPSC
Federal Trade Commission Federal Communication Commission Federal Drug Administration Environmental Protection Agency Consumer Product and Safety Commission
Dr. Rosenbloom
Regulatory Agencies
Federal Trade Commission
Has broadest powers to influence marketing activities Has authority to enforce laws regulating unfair business practices Can take action to stop false and deceptive advertising
Dr. Rosenbloom
Regulatory Agencies
Federal Communications Commission
Regulates
communication by wire, radio, and television
Dr. Rosenbloom
Regulatory Agencies
Food And Drug Administration
Created
in 1906 to set product standards ensuring consumer safety and to require disclosure of product contents
Dr. Rosenbloom
Regulatory Agencies
Environmental Protection Agency
Federal
agency empowered to enforce anti-pollution standards that can affect product design, production, and distribution
Dr. Rosenbloom
Regulatory Agencies
Consumer Product Safety Commission
Created
in 1972 Is the federal agency with the responsibility for product safety
Dr. Rosenbloom
Government Regulation
Procompetitive
Laws Consumer Protection Laws Deregulation Laws
Dr. Rosenbloom
Procompetitive Laws
Procompetitive
laws have been enacted to end unsavory business practices and to preserve competition
Dr. Rosenbloom
Procompetitive Laws
Dr. Rosenbloom
Consumer Protection Laws
Laws enacted to protect consumers against unscrupulous producers Many of major consumer protection laws enacted during past 40 years
Dr. Rosenbloom
Dr. Rosenbloom
Dr. Rosenbloom
Dr. Rosenbloom
Deregulation Laws
In the 1980s, the federal government deregulated some industries in an effort to cut costs, administrative paperwork, and regulatory agencies
Dr. Rosenbloom
Deregulation Laws
Dr. Rosenbloom
Dr. Rosenbloom
Competitive Forces
The competitive forces environment includes the number and type of competitors, along with the market share each holds
Dr. Rosenbloom
Competitive Forces
First Union
Dr. Rosenbloom
Hal Riney and Partners
Four Types of Competition
Pure competition
Monopolistic competition
Oligopoly
Monopoly
Dr. Rosenbloom
Pure Competition
Many
firms selling the same basic products
Dr. Rosenbloom
Monopolistic Competition
A large
number of sellers producing and selling similar products that are only slightly differentiated
Dr. Rosenbloom
Oligopoly
A few firms controlling the majority of the industrys sales
Dr. Rosenbloom
Monopoly
One
firm producing and selling a product to an entire market
Dr. Rosenbloom
Competitive Forces
Anticipating&Analyzing Competition
Research
the Market Identify Current Competition Anticipate Competitive Action
Dr. Rosenbloom
Competitive Forces
Research The Market
How old is the market What are the technological changes? What are the pricing trends? Why did early market leaders fail?
Dr. Rosenbloom
Competitive Forces
Identify Current Competition
Who are the competitors? What are the market shares? Have market shares fluctuated? What are the strengths and weaknesses of competitors?
Dr. Rosenbloom
Competitive Forces
Anticipate Competitive Action
How will the competition respond to? How will potential competitive responses affect sales?
Dr. Rosenbloom
Dr. Rosenbloom
Social Forces
The social forces environment requires marketers to stay abreast of demographic developments, changes in consumer values, and social trends
Dr. Rosenbloom
Social Forces
Population Growth
U.S. Population Growth 1980-2035
360 340 320 300 280 260 240 220 200
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Dr. Rosenbloom
2035
Social Forces
Changing Age Structure

Median Age of Resident Population 1980-2050
40 35 30 25 20 1980 1985 1990 1995 2000 2005 2010 Dr. Rosenbloom 30 31.4 32.8 34.3 35.7 38.5 39.3
Social Forces
Changing Family Structure

Percent of Families With Father, Mother, and Children
90 90 85 80 75 70 65 60 55 50 1955
72 68
1985
Dr. Rosenbloom
2000
Social Forces
Levis Marketing
Dr. Rosenbloom
Social Forces
Changing Minorities
30 25 20 15 10 5 Black Hispanic Asian Am. Indian
1980
1985
1989
1990
1991
1995
Dr. Rosenbloom
2000
Dr. Rosenbloom
Objectives And Resources
Objectives
Guide
efforts Must fit into company objectives
Dr. Rosenbloom
Objectives And Resources
Resources
Financial Technological Production Managerial Others
Dr. Rosenbloom
Dr. Rosenbloom
Marketing Environment
Economic Conditions
Economic factors that influence consumer buying power and marketing strategies
Business Cycles Inflation
Resource Available
Income
Dr. Rosenbloom
Economic Conditions
Business Cycles
Prosperity
Recovery

Low unemployment High income
Declining unemployment Increased consumer spending
Increased business opportunity
Recession

Increasing unemployment Reduced consumer spending

Dr. Rosenbloom Reduced business opportunity
Economic Conditions
Economic Conditions
Resource Available
Income
Dr. Rosenbloom
Economic Conditions
Inflation
Consumer Price Index 1980-1998
200 150 100 50 0
1980
1982
1984
1986
1988
1990
1992
1994
1996
Dr. Rosenbloom
1998
Economic Conditions
Economic Conditions
Economic factors that influence consumer buying power and marketing strategies.
Resource Availability
Income
Dr. Rosenbloom
Economic Conditions
Resource Availability
If resources are available
Prices decrease Demand increases
If resources are not available

Prices increase Demand decreases
Dr. Rosenbloom
Economic Conditions
Economic Conditions
Resource Available
Income
Dr. Rosenbloom
Economic Conditions
Economic Conditions
Monitoring income levels
Opportunity for market development
Resource Available
Income
Dr. Rosenbloom
Dr. Rosenbloom
Technological Developments
New manufacturing process New ingredients New distribution New advertising medium New eCommerce strategies
Dr. Rosenbloom
Marketings Social Responsibilities

Social responsibility is the collection of marketing philosophies, policies, and procedures, and actions intended primarily to enhance societys welfare.
Dr. Rosenbloom
First
Responsibility: Efficiency and Effectiveness
Dr. Rosenbloom
Criticisms of Marketing
Too many new unneeded products are marketed that fail Too many unneeded products are marketed that succeed
Dr. Rosenbloom
Built-in obsolescence - Gateway
Dr. Rosenbloom

Too many new unneeded products are marketed that fail Too many unneeded products are marketing that succeed
Market distribution systems are inefficient A lot of advertising is wasteful expenditure Supply-side market failure
Dr. Rosenbloom
Conservation Marketing - Ford
Dr. Rosenbloom
Conservation Marketing
Mercedes-Benz
Dr. Rosenbloom
Leo Burnett and Company, Incorporated

Too many new unneeded products are marketed that fail Too many unneeded products are marketing that succeed
Demand-side market failure

Market distribution systems are inefficient A lot of advertising is wasteful expenditure Supply-side market failure
Dr. Rosenbloom
First
Responsibility: Efficiency and Effectiveness Second Responsibility: Ethical Codes of Behavior

Dr. Rosenbloom
General Ethical Rules

Choose
to do the most good for most people What if everyone did it? Where do our basic values come from? Ethical vigilance
Dr. Rosenbloom
Ethics
Issues addressed by company ethics statements
Dr. Rosenbloom
Ethics
American Marketing Association Code of Ethics
Dr. Rosenbloom

First
Responsibility: Efficiency and Effectiveness Second Responsibility: Ethical Codes of Behavior Third Responsibility: Cause-related Marketing
Dr. Rosenbloom
Cause-related Marketing - Allstate
Allstate Insurance
Dr. Rosenbloom
Cause-related Marketing - Chevron
Dr. Rosenbloom
Meshing Planned Marketing Program to Environment
Major new programs
New design New promotion program New service program New advertising theme New telemarketing program
Unique competitive advantage Fit is fine Some uncertainty Problem
Dr. Rosenbloom
The Perpetual Motion Machine

Buyers preferences and wants are always being changed by changes in supply
The variation in supply offering is constantly changing
Free Market Efficiency
The variation in consumer offering is constantly changing
Suppliers products Dr. and processes are always Rosenbloom being changed by changes in demand
An Ethical Marketing Decision Making Process

Cultural and corporate values
Mental model of ethical principles as expressed in a checklist of questions Perception and recognition of an ethical dilemma in proposed goal, strategy, or action
Meshing of strategy and program to market environment, including the ethical dilemma Decision to proceed:
Effects on customers Effects on firms Effects on other employees Effects on other stakeholders Personal consequences
Goal, strategy, or implementation program
Firm Behavior
Personal factors:
Emotions Ideological beliefs Personality Traits Dr. Rosenbloom Personal upbringing and history
Source: Craig J. Thompson, A Contextualist Proposal for the Conceptualization and Study of Marketing Ethics, Journal of Public Policy and Marketing, 14, no. 2 (fall 1995); 177-91.
What to do?
Nike says it does what it can to keep the military police out of its factories. Thats tough in Indonesia, where police help keep workers under control
Nikes,....maybe not so comfortable if we knew the abuses workers endure

Dr. Rosenbloom
Source: Business Week, July 29, 1996, p. 46-47.

Strategy, Ethics, and Social Responsibility: Harcourt, Inc

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Strategy, Ethics, and Social Responsibility: Harcourt, Inc

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Strategy, Ethics, and Social Responsibility

the challenges involved in cause-related marketing campaigns

The Marketing Environment

Political - Legal Considerations

communication by wire, radio, and television

Laws Consumer Protection Laws Deregulation Laws

The Marketing Environment

Hal Riney and Partners

Four Types of Competition

firms selling the same basic products

A few firms controlling the majority of the industrys sales

firm producing and selling a product to an entire market

the Market Identify Current Competition Anticipate Competitive Action

The Marketing Environment

Changing Age Structure

Changing Family Structure

The Marketing Environment

Objectives And Resources

efforts Must fit into company objectives

Objectives And Resources

The Marketing Environment

Business Cycles Inflation

Low unemployment High income

Declining unemployment Increased consumer spending

Increased business opportunity

Increasing unemployment Reduced consumer spending

Business Cycles Inflation

Business Cycles Inflation

If resources are not available

Business Cycles Inflation

Monitoring income levels

Opportunity for market development

Business Cycles Inflation

The Marketing Environment

The Marketing Environment

Marketings Social Responsibilities

Marketings Social Responsibilities

Responsibility: Efficiency and Effectiveness

Built-in obsolescence - Gateway

Conservation Marketing - Ford

Leo Burnett and Company, Incorporated

Demand-side market failure

Marketings Social Responsibilities

Responsibility: Efficiency and Effectiveness Second Responsibility: Ethical Codes of Behavior

General Ethical Rules

Issues addressed by company ethics statements

American Marketing Association Code of Ethics

Marketings Social Responsibilities

Cause-related Marketing - Allstate

Cause-related Marketing - Chevron

Meshing Planned Marketing Program to Environment

Major new programs

The Perpetual Motion Machine

The variation in supply offering is constantly changing

Free Market Efficiency

The variation in consumer offering is constantly changing

An Ethical Marketing Decision Making Process

Goal, strategy, or implementation program

Nikes,....maybe not so comfortable if we knew the abuses workers endure

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