Marketing Environment, Ethics, & Social Responsibility
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Stanford University
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Summary
This document covers key aspects of the marketing environment, including ethics and social responsibility. It explores the competitive landscape, types of competition, and government regulation, along with economic factors impacting marketing strategies. You will also learn about business cycles and ethical considerations in product strategy, distribution, and pricing. The document provides insights into developing competitive strategies.
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1 The Marketing Environment, Ethics, and Social Responsibility © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or dupl...
1 The Marketing Environment, Ethics, and Social Responsibility © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2 Let’s talk about the Competitive Marketing Environment… 3 Understanding the competitive environment is understanding Industry Trends… Collecting external marketing data to identify and interpret potential trends Trends represent significant opportunities or threats to the company -Example: Consumer insights shows internet growth continues at double digit annualized pace 4 What does this data tell you as a business entity? US e- commerce Sales Revenue growth… 5 What about the Competitive Environment?… Along with trends, companies must consistently assess: Marketers of products that can be substituted for one another Marketers competing for the consumer’s purchasing power Marketers of directly competitive products Why do they need to do that? Because every company in your competitive environment is trying to crush you. Period. 6 Let’s look at the Sprint Campaign directly aimed at Verizon… 7 Sometimes marketing campaigns are extremely successful… Do you remember this guy? What was the tag line? What year? Was this effective for Verizon? During the first year of ‘‘Can You Hear Me Now?’’ Verizon sales grew 10 percent. Two main goals: increasing the subscriber base and establishing itself as a premium service provider Consumers were just as concerned about quality as they were about price. 8 Sometimes, well, they’re not… Paul Marcarelli was the pitchman for Verizon It was extremely successful in building Verizon’s brand and market share BUT, what happened?: -He switched… 9 Sprint’s Marketing Campaign… “We will cut your bill in half” - just switch to Sprint The National Advertising Division of U S Govt investigated the claims: -Found Sprint’s claims Not possible -Sprint did not include activation and tax fees Sprint market share fell from 13.9% to 10.5% at the time of Tmobile aquiring them in 2019. Attacks rarely work ! -AND, customers are angry after realization that claims are false. What did Sprint gain? Absolutely nothing ! 10 The bottom line is… A company’s marketing decisions influence their bottom line What does bottom line mean? Is Verizon worried about Sprint at this point? -They never were Brand awareness / recognition / loyalty should be fiercely protected Sprint’s efforts are now focused on what? Damage control – “We are within 1% of Verizon’s total coverage” – WEAK !!! So, with all the $$ they’re 11 spending, how is Sprint doing?... 12 So, with all the $$ they’re spending, how is Sprint doing?... T-Mobile acquired Sprint July 26, 2019 for $26 B… -Q1 ‘22, T-Mobile’s M/S is 24.1%, lower than Q3 of 2018!! -Q2 ‘23, M/S was 23.4% 13 Okay, let’s look at types of Competition… Direct -Happens among marketers of similar products -Example: -Cell phone carrier market -Verizon, AT&T, T-Mobile, Sprint Indirect -Involves products that are easily substituted -Example: -Fast food -Pizza competes with chicken, 14 Developing a Competitive Strategy… Competitive strategy -Methods through which a company deals with its competitive environment Must ask 3 questions when developing strategy Should we compete? -Depends on companie’s resources, objectives, and expected profit potential In what markets should we compete? -Requires clear knowledge of your company’s resources How should we compete? -Requires companies to make product, distribution, promotion, and pricing decisions 15 Let’s talk about Government Regulation, Stages of Business, and Terms you need to know… 16 Government FallsRegulation… into four historical phases: Anti-monopoly period of the late 19th and early 20th centuries -Barrier to entry for mass production, car production was monstrous Protecting competitors during the Great Depression of the 1930’s -Business wanted decreased government regulation The third phase focused on consumer protection starting around 1950. -Why? -Plastics began being produced – so what? Industry deregulation began in the late 1970’s and continues to the present -Capitalism works – the focus is on allowing company’s to 17 Government Regulation… Newest regulatory frontier is cyberspace Is regulation of the internet really necessary? Privacy and child protection issues are at the forefront of the difficult enforcement challenge Federal and state regulators are constantly investigating ways to police the Internet and online services Cybercrime is alive and well -Exploitation of children and stealing of identities rampant 18 Stages in the Business cycle… Depression - Consumer spending sinks to its lowest level (what years?) Recession - Consumers focus on basic, functional products (what years?) Recovery - Consumer purchasing power increases (what years?) Prosperity - Consumer spending is brisk; growth in services sector (what years?) 19 Other Government Regulatory Agencies… The Federal Trade Commission (FTC) -Enforces laws regulating unfair business practices -Stops (or certainly mitigates) false and deceptive advertising Other federal regulatory agencies: -Consumer Product Safety Commission -Federal Communication Commission -Environmental Protection Agency -Food and Drug Administration 20 What about Economic factors impacting Competitive Strategies? … 21 The Economic Environment… Gross domestic product (GDP) -Sum of all goods and services produced by a nation in a 12-month cycle Economic environment -Factors that influence consumer buying power and marketing strategies -You can’t change them but you better monitor them Business cycle -Stages in the product life cycle of a company -Also includes levels of economic activity -Outside elements that affect the companies profitability and decision-making 22 What about Inflation and Deflation?… Inflation: -Devaluation of currency -Reduces the products that can be purchased due to rapidly rising price increases Deflation can cause: -A freefall in business profits -Lower returns on most investments -Widespread job layoffs -Higher crime rates -Low morale -Deflation occurs, generally, after recessionary periods 23 Inflation and Deflation… Unemployment -Proportion of people in the economy actively seeking, but not finding employment -Rises during recession and declines during recovery and prosperity Income -Companies focus on discretionary income, the amount of money people have to spend after buying necessities -Influences consumer buying power -Changes consumer buying preferences throughout their lives 24 What about Ethics in Business… 25 Ethics in Product Strategy… Product quality (or lack thereof), planned obsolescence, brand similarity, and packaging ALL raise ethical issues Packaging strategy -Oddly sized packages make price comparison difficult -Bottles with concave bottoms appear to have more liquid in them than actually available -Larger packages are more noticeable on the shelf but contents are not 100% Bag of chips that is 50% full – why do companies do that? 26 Ethics in Distribution (Place)… Remember, Distribution is the total number and classes of trade where your products are sold What is an organizations degree of control over their distribution channel? -Can a company control their distribution 100%? MAP, UPP, etc. are examples of trying to control Companies look at their distribution “mix” just as they do their product “mix” 27 Ethics in Promotions… Truth in advertising is the bedrock of ethics in promotions -If I am told my car has an 18 month warranty bumper to bumper, am I pleased if the dealer finds a reason NOT to repair my vehicle? Marketing to children has come under increased scrutiny (google Brooke Shields Calvin Klein jeans) -She was 15 years old Promoting specific products to college students can raise ethical questions -This is one area that companies are increasingly litigated against 28 Ethics in Pricing… Pricing is, by far, the most regulated element of a firm’s marketing activities How does a higher interest rate help consumers already with high credit card debt? -Example: Credit-card companies target consumers with poor credit ratings Offer these consumers a “subprime” interest rate credit card Much higher interest rates – who does that help? The consumer that’s having financial issues? No, the credit card company – they DO NOT care…