Transcript Marketing

Marketing: Real People, Real Decisions
Decision Making in the
New Era of Marketing
Chapter 3
Lecture Slides
Solomon, Stuart,
Carson, & Smith
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Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter,
you should be able to:
• Explain why organizations have
adopted a New Era marketing focus on
ethics and social responsibility
• Describe the New Era emphasis on
quality
• Discuss some of the important aspects
of an organization’s internal
environment.
• Explain why marketers scan an
organization’s external business
environment.
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Marketing: Real People, Real Decisions
Introduction to the Topic
• Social profit: the benefit an organization and society receive from
the organization’s ethical practices, community service, efforts to
promote cultural diversity, and concern for the natural environment.
• Many organizations
have come to recognize
that the value of doing
the right thing goes
beyond the short term
public relations benefits
that may be gained.
• But what does “doing
the right thing” mean in
an organizational
context?
Figure 3.1
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Marketing: Real People, Real Decisions
Ethical Behaviour in the Marketplace
• Business ethics: rules of conduct for an organization. These are
the basic values that guide a firm’s behaviour.
• The difference between what is right and wrong is a very subjective
thing, which is why there is so much variation in this area.
• Code of ethics: written standards of
behavior to which everyone in the
organization must subscribe.
• “The fish stinks from the head” would
suggest that employees take their direction
from senior managers when considering
ethical issues.
• Shareholder’s rights, and the behaviour of
senior management has come under intense
media scrutiny in early 2002, for good reason.
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Marketing: Real People, Real Decisions
AMA Code of Ethics
• The American Marketing Association (AMA) publishes a
code of ethics for marketers on its web site, which consists of four
different categories of responsibilities.
• To accept responsibility for the consequences of
their activities
• To not knowingly do harm
• To adhere to all applicable laws and regulations
• Be honest and fair in all dealings with consumers,
clients, employees, suppliers, distributors, and the
public.
• Avoid participation in conflict of interest situations
without prior notice to all parties involved.
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Marketing: Real People, Real Decisions
Consumerism: Fighting Back
• Consumerism: a social movement that attempts to protect
consumers from harmful business practices.
• The Consumers’ Association of Canada (CAC) was created to inform,
educate, and advocate on behalf of consumers.
• Their seven (plus one) consumer rights are:
– The right to safety
– The right to be informed
– The right to be heard
– The right to redress
– The right to choose
– The right to a healthy environment
– The right to a consumer education
– The right to privacy
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Marketing: Real People, Real Decisions
Ethics in the Marketing Mix
• Product safety is an important issue to protect consumers from harm
or loss due to defective or dangerous products. Safety standards for
products are established and monitored by independent organizations
such as the Canadian Standards Association (CSA).
• Price fixing: an illegal business practice in
which firms decide in advance on a common price
for their product.
• Price discrimination: charging lower prices
to larger customers. This is legal when it can be
shown that cost savings are available to the
manufacturer or it is necessary to meet
competitors’ pricing.
• Price gouging: charging excessive prices in
response to a high demand/low supply situation.
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Marketing: Real People, Real Decisions
Ethics in the Marketing Mix (continued)
• Product promotion can be a problem in terms of misleading or
false advertising. The advertising industry in Canada is self-regulating
through the Advertising Standards Canada (ASC).
• Advertising to children and gender stereotyping are two areas of concern
• Slotting allowance: a fee paid by a
manufacturer to a retailer in exchange for
agreeing to place products on the retailer’s
shelves.
• This is standard practice in the grocery trade,
which has been aided by the widespread use of
private label brands.
• The danger is that consumers may not have
access to the products of smaller manufacturers
who cannot afford to pay these fees.
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Marketing: Real People, Real Decisions
A Focus on Social Responsibility
• Social responsibility: a management practice in which
organizations seek to engage in activities that have a positive effect on
society and promote the public good.
• Environmental stewardship: a
position taken by an organization to protect
or enhance the natural environment as it
conducts its business activities.
• Green marketing: a marketing strategy
that supports environmental stewardship by
creating an environmentally founded
differential benefit in the minds of
consumers.
• This effort has been hampered by a lack of
consensus on what it means to be “green”
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Marketing: Real People, Real Decisions
Serving Society and Community
• Cause marketing: a marketing strategy
in which an organization serves its
community by promoting and supporting a
worthy cause or by allying itself with a notfor-profit organization to tackle a social
problem.
• Consumers will respond to this if they
believe the organization to be sincere.
• Cultural diversity: a management
practice that actively seeks to include
people of different sexes, races, ethnic
groups, and religions in organization’s
employees, customers, suppliers, and
distribution channel partners.
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Marketing: Real People, Real Decisions
A Focus on Quality
• Quality: The level of performance, reliability, features, safety, cost,
or other product characteristics that consumers expect to satisfy their
needs and wants.
• The National Quality Institute surveys
customers and companies on quality issues.
• Total Quality Management (TQM):
a management philosophy that focuses on
satisfying customers through empowering
employees to be an active part of continuous
quality improvement.
• ISO 9000: criteria developed by the
International Standards Organization (ISO) to
regulate product quality internationally.
• The ISO 9000 program is administered in
Canada by the Standards Council of Canada.
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Marketing: Real People, Real Decisions
The Internal Business Environment
• The internal environment of the organization includes its resources
and competencies.
• Corporate culture: the set of values, norms, and beliefs that are
held by an organization’s managers and that influence that behavior of
everyone in the organization.
• Organizational culture will vary in its
attitude towards risk taking, as well as
individuality and creativity.
• Organizations will also vary in their
attitude towards the pursuit of profits
versus satisfying the needs of stakeholders,
such as employees, customers, suppliers,
and the public.
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Marketing: Real People, Real Decisions
The Internal Business Environment
• Publics: groups of people- including
suppliers, channel intermediaries,
customers, employees, shareholders,
financial institutions, government, the
media, and public interest groups- that
have an interest in an organization.
• Competition within an industry can
become destructive as intensity builds, as
seen in the battle for the long distance
market since de-regulation of this
industry.
• In the long run, nobody wins in a price
war. Who wins in the short run?
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Marketing: Real People, Real Decisions
The External Business Environment
• The economic environment has a big influence on the success
of an organization’s marketing strategy.
• Business cycle: the overall patterns of change in the economyincluding periods of prosperity, recession, depression, and recoverythat affect consumer and business purchasing power.
• Consumer confidence: an indicator
of future spending patterns, measured by
the extent to which people are optimistic or
pessimistic about the state of the economy.
• The concept of derived demand tells
us that all economic activity is derived
from sales at retail, which is why we keep
track of consumer spending levels.
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Marketing: Real People, Real Decisions
The Competitive Environment
• Competitive intelligence (CI): the process of gathering and
analyzing public information about rival firms. While still a relatively
new concept to most firms, CI can assist decision makers in
developing superior marketing strategies.
• Competition within the microenvironment
includes all product alternatives that a
consumer may choose to spend their
discretionary income on.
• Discretionary income: the portion of
income people have left over after paying
for such necessities as housing, utilities,
food, and clothing.
• We can differentiate between types of
competition.
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Marketing: Real People, Real Decisions
Competition in the MicroEnvironment
• Product competition: very different products competing to
satisfy the same consumer needs and wants.
• Vacation resorts compete against cruise lines, bus tours, adventure
tours, and RV camping to satisfy the need for relaxation.
• Brand competition: similar products
or services that compete based on the
brand’s reputation or perceived benefits.
• Brand names are used by consumers as an
indicator of quality or positioning.
• Successful brand names can use this
equity to introduce new products that have
a higher rate of acceptance due to their
association with the brand.
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Marketing: Real People, Real Decisions
Competition in the Macroenvironment
• Monopoly: a market situation in which one firm, the only supplier
of a particular product, is able to control the price, quality and supply
of that product.
• Oligopoly: a market structure in a which
relatively small number of sellers, each holding a
substantial share or the market, compete in a
market with many buyers.
• Monopolistic competition: a market
structure in which may firms, each having
slightly different products, offer consumer
unique benefits.
• Perfect competition: a market structure in
which many small sellers, all of which offer
similar products, are unable to have impact on
the quality, price, or supply of a product.
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Marketing: Real People, Real Decisions
The Technological Environment
• Rapidly changing technology can create both opportunities and threats
to organizations attempting to develop competitive marketing
strategies.
• Organizations may use their investment in
technology as the basis of their competitive
advantage, but this can be an ever-moving
target.
• Proprietary technology is a valuable asset for
an organization and needs to be protected.
• Patent: legal document granting an
individual or firm exclusive right to produce
and sell a particular invention.
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Marketing: Real People, Real Decisions
The Legal Environment
• The legal environment includes all laws-municipal, provincial, federal,
and global-that affect businesses. Businesses ignore this area at their
peril as some of their actions can pose serious risks of liability.
• The main federal law governing business activity
is the Competition Act, which is intended to
promote competition and efficiency in the
marketplace.
• Other laws affecting business in Canada:
– Consumer Packaging and Labelling Act
– Food and Drug Act
– Canadian Environmental Protection Act
– Motor Vehicle Safety Act
– Trade-marks Act
– Tobacco Act
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Marketing: Real People, Real Decisions
The Sociocultural Environment
• An understanding of how social and cultural factors influence
business activity is important to developing effective marketing
strategies.
• Marketers need to know what is happening
to their target markets in terms of size and
trends affecting them.
• Demographics: statistics that measure
observable aspects of population, including
age, gender, ethnic group, income,
education, occupation, and family structure.
• North American culture in the past 50 years
has been dominated by the influence of its
skewed population distribution, also known
as the Baby Boomers.
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Marketing: Real People, Real Decisions
Famous Last Words…
• The New Era of Marketing
focuses on ethics and social
responsibility.
• Firms who subscribe to this
philosophy consider
economic and social profit
as objectives to be achieved.
• Decision makers in the New
Era of Marketing need to
monitor both their internal
and external environments
to identify trends that may
affect their operations.
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