MKTG2005 AY24-25 Marketing Management Class 2 _ Student PDF

1 MKTG2005 Marketing Management 2024/25 Semester 1 Class 2 CHAPTER 3: Scanning the Marketing Environment CHAPTER 4: Ethical and Social Responsibility for Sustainable Marketing  2 CHAPTER 3 Scanning the Marketing Environment  Lesson...

1 MKTG2005 Marketing Management 2024/25 Semester 1 Class 2 CHAPTER 3: Scanning the Marketing Environment CHAPTER 4: Ethical and Social Responsibility for Sustainable Marketing  2 CHAPTER 3 Scanning the Marketing Environment  Lesson Plan 1. Class 1 Revision 2. Assignment Group Reformation 3. Class 2 content review 4. Exercise 5. 1st assignment Discussion 3  LEARNING OBJECTIVES (LO) 1 After reading Chapter 3, you should be able to: 1. Explain how environmental scanning (= external environment scanning) provides information about social (including demographics), economic, technological, competitive, and regulatory forces. 2. Describe how social forces such as demographics and culture can have an impact on marketing strategy. 3. Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing. 4  LEARNING OBJECTIVES (LO) 2 After reading Chapter 3, you should be able to: 4. Describe how technological changes can affect marketing. 5. Discuss the forms of competition that exist in a market and the key components of competition. 6. Explain the major legislation that ensures competition and regulates the elements of the marketing mix. 5  Easily confused terms in Chapter 3 Easily confused terms in Chapter 3 1 Market intermediaries 5 Discretionary income 2 Multicultural marketing 6 Marketspace 3 Value consciousness 7 Electronic commerce 4 Disposable income 8 5-force analysis (Competition) 6 The Whole Marketing Environment 7  Scanning of Micro Marketing Environment The external environment constitutes factors and forces coming from external environment at which marketer has little or no control. 2 types: micro and macro environment Micro-environment is composed of external forces and factors Micro Environment: directly related to the business. Customers, Competitors Market Intermediaries, Market intermediaries: involves parties in distributing the Partners, Suppliers, product and services (e.g. distributors, wholesalers and retailers) Public, Shareholder, Government Policies Partners: all entities such as market research, advertising agencies, transportation and logistic company, bank, insurance company, etc. Public: group having interest in the company and may affect the company’s ability to serve its customers. E.g. green groups Government policy: Some government departments’ policies that may influence on the marketing strategies. 8  Scanning of Macro Marketing Environment Demographic: people which are segregated according to size, density, age distribution, gender, race and occupation that constitute the market. Political: laws and government’s policies, pressure groups, etc. Macro Environment: Economic: customers’ purchasing power, spending patterns. Demographic, Political, GDP, GNP, inflation, income distribution, and other major Economic, Social & Cultural, economic variables. Technological, Social-cultural: lifestyle, values, culture, beliefs and welfare of Regulatory people. Technological: product innovation, research and development Regulatory: For consumers, the focus of legislation is to protect them from unfair trade practices and ensure their safety. 9  ENVIRONMENTAL SCANNING Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends. E.g. One geography Threads won’t be rolled out is in the European Union, which has strict data privacy rules. What trends might affect marketing in the future? Personalized marketing Increased emphasis on reusing products & resources. Visual search AI and blockchain technologies. New ecommerce purchasing alternatives. 10  FIGURE 3-1 Environmental forces affect the organization, its suppliers, and its customers. Textbook version of Environmental forces 11 FIGURE 3-2 An Environmental Scan of Today’s Marketplace Shows Important Trends These five forces can have a dramatic impact on marketing strategy Textbook version of Environmental forces 12 Social Force 13  SOCIAL FORCES DEMOGRAPHICS — WORLD POPULATION Social forces are the demographic characteristics of the population and its culture. E.g. Café de Coral introduced its first Plant-based Pork Rice option in 2021 to bring a new vegetarian experience for health conscious customers. It is now expanding its market demographic reach with a new vegetarian product, Omnipork Claypot Rice, a “meat-free” option created in collaboration with OmniFoods, to support and promote healthy eating trends. Demographics describe a population according to selected characteristics such as age, gender, ethnicity, income, and occupation. World population–7.8 billion, growing to 9.9 billion by 2050! India will have largest population in 2050–1.66 billion people. China will have 1.36 billion people. Declining populations in 38 countries, including Spain, Japan, Russia, and Germany. 14  Demographics Demographics: includes age, education level, ethnicity, gender, Analyzing customer income, marital status, number of children, occupation, residence, demographic would household size, religion, generation, nationality and even social class. provide insights to E.g., classify customer age as 18 to 24, 25 to 34, 35 to 54, 55 to 65, business owners. It and 65+ age groups shapes their Psychographic information: include interests, activities, opinions, marketing and values and attitudes. Shopping habits and preferences. E.g., “mother” promotion strategies magazines target to parents who interested in caring for a baby. to meet expectations Behavioral characteristics: come from marketing research to know of their existing and consumers’ product usage rates, brand loyalty, or user status. potential clients. Geographic Characteristics: market size, region, population density and even climate 15  SOCIAL FORCES WORLD POPULATION What are the implications of changes in world Shifting age structure of the world population: population? People 60+ will double to 2.1 billion by 2050. Global income and living standards have been increasing. Elderly populations are likely to save less, but spend more on health care. World population trends: 1. U.S. population trends Larger population, older and more diverse. Niche markets will become more important. Term minority will become obsolete as ethnic groups increase. 2. Other countries population trends 38 countries including China, Japan, Poland, Spain and Taiwan are declining 16  SOCIAL FORCES GENERATIONAL COHORTS (群體) Implications: Baby Boomers: 76 million (1946 to 1964) Generational marketing is a strategy for understanding how 10,000 retiring every 24 hours. a certain age group behaves as Wealthiest generation in U.S. history. consumers by considering their upbringing shaped by trends, Generation X: (Baby Bust) 55 million (1965 to 1980) developments and events. It gives you a better understanding Self-reliant, support diversity. of your audience, allowing you to engage with them effectively Generation Y (Millennials): 62 million (1983 to 1996) and increase brand awareness. Return to slide Strong-willed, passionate, optimistic. Generation Z: (1997 to 2010) LinkedIn Broadest diversity, independent, increasingly digital. Learning 17  Baby Boomers Baby Boomers include the generation of 76 million children born between 1946 and 1964. They are the wealthiest generation in U.S. history, accounting for an estimated 50% of all consumer spending. Special K cereal targets to baby homers with its good source of vitamins A and D and an excellent source of vitamin C, iron, thiamin, riboflavin, niacin, folic acid, and vitamins B12 and B6, and can be consumed as part of a healthy, well-balanced diet. Return to slide 18  Generation X Generation X includes the 50 million people born between 1965 and 1976. Also called the baby bust. This generation of consumers are self-reliant, supportive of racial and ethnic diversity, and better educated than any previous generation. Generation X is more interested in Family-Oriented Travel: One study, it was found that 74% of Gen X’s travel planning and booking was performed on travel booking sites (David and Gelfeld, 20). They are more likely to book a world cruise on a luxury cruise line and visit multiple countries on a single Return to slide sailing. 19  Generation Y Generation Y includes the 72 million Americans born between 1977 and 1994. Also called the echo- boom. Members are interested in distinctive, memorable, and personal experiences. The term millennials is often used to refer to this generation. Delta Airline targets millennials, emerging high value customers (EHVCs), with Wi-Fi and boomers with pricey seats as they account for 50% of the sales of business flights. They are Return to slide frequent business travelers. 20  Generation Z Generation Z includes those born between 1995 and 2010. They embrace the broadest definitions of diversity and inclusivity to include race, ethnicity, the LGBT community, different body types, and those with physical challenges. Return to slide https://morningconsult.com/gen-z-favorite-brands-2022/ 21  SOCIAL FORCES THE AMERICAN HOUSEHOLD The changing American household structure: 1960: 75% were married couples. Today: 48% are married; 25% may never marry. Fastest-growing demographic: Households with adult child, unmarried partners, same- sex partners. Blended families: 1 in 3 adults is step- parent/child/sibling. Reason: One factor contributing to this circumstance is that many young people are postponing, or eschewing marriage and parenthood. Kristoffer Tripplaar/Alamy Stock Photo 22  SOCIAL FORCES POPULATION SHIFTS IN THE USA The changing American household structure: Growing state populations – Nevada, Idah, Utah, Arizona & Florida Biggest gain in population – Texas (Texas offers a business-friendly climate—with no corporate or personal income tax—along with a highly skilled and diverse workforce, easy access to global markets, robust infrastructure and a reasonable regulatory environment.) Declining state populations – Illinois (The Illinois Tax rate, the highest in US, drive away people and business) Most populous cities are in the 7 states that border Mexico. Shifts in population to Central cities 30%; to Suburbs – 50%; to Rural – 20%. US Census Bureau has developed a classification system: Metropolitan statistical areas have 50,000+ people. Micropolitan statistical areas have 10,000 - 50,000 people. Note to student: You can benchmark on this approach to evaluate the population shift in assignment if this demographic factor is relevant (in the chosen country). 23  SOCIAL FORCES POPULATION SHIFTS IN THE USA – Different Tax System Illinois (伊利諾伊州) Note to student: You can benchmark on this approach to evaluate the population shift in assignment if this demographic factor is relevant (in the chosen country). https://www.illinoispolicy.org/illinois-tax-rates-rank-no-1-highest-in-u-s/ 24  FIGURE 3-3 Racial and ethnic groups (excluding whites) are concentrated in geographic regions of the United States 48% of Asian American live in LA, New York City and San Francisco 2/3 of Hispanics live in Florida, Texas, and California. Implications: Marketers need to creates campaigns for multicultural background. Note to student: You can benchmark on this approach to evaluate the population shift in assignment if this demographic Access the text alternative for slide images. factor is relevant (in the chosen country). 25  SOCIAL FORCES RACIAL AND ETHNIC DIVERSITY Changing ethnic composition of U.S. 5+ million people report they are more than a single race. Increasing diversity by 2030: Hispanic: Growing to 21% of U.S. population. African-American: Growing to 14% of U.S. population. Asian: 7% of U.S. population 26  Ethnic and Regional Marketing By 2044, less than 50% of Americans will be white. Return to slide Multicultural Marketing Consumers with many racial and ethnic identities. Click here to view video. Diverse television programming. 27  Multicultural Marketing Multicultural marketing consists of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races. Return to slide 28  SOCIAL FORCES CULTURE—CHANGING VALUES Culture: Calvin Klein’s CK2 taps into the Values, ideas, and attitudes shared by gender-neutral members of a group. once again: Notable cultural changes: A new set for Attitudes and roles. (e.g. CK2 for gender- #the2ofus neutral) Gender stereotypes. (e.g. Sunlight detergent) Fashion. Return to slide Careers. Sports. Retro AdArchives/Alamy Stock Photo 29  Culture Culture consists of the set of values, ideas, and attitudes that are learned and shared among the members of a group. Culture includes beliefs, behaviors, and material objects shared by a society. The Collectivism culture in Asia strives Coca-cola to devise advertising appeal to the group belongingness and conformity. Return to slide 30  SOCIAL FORCES CULTURE Changing values, over time and between countries: Equality. Sustainability. Environment. (e.g. 82% shoppers consider themselves as environmental friendly) Consumer values. Social action. Patagonia’s Worn Financial transactions. Wear Return to slide WornWear.com is an online store for used Patagonia clothing– helping clothes that Value consciousness Click here to view video. sit idle in closets make their way back into the field, instead of the landfills. 31  Value Consciousness Value consciousness, closed to cost–performance ratio (勝價比), is the concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior. In Aug 2023, Tesla reduced the starting prices of both models by 14,000 yuan ($1,935). The Model Y Long Range: -4.5% to 299,900 yuan The Model Y Performance -3.8% to 349,900 yuan CP ratio of the Model Y Long Range win out. Return to slide https://www.motortrend.com/features/tesla-model-y-long-range-vs-model-y-performance-which-is-the-better-buy/ 32  Group Exercise: What types of consumer demographics should be analyzed? Discuss the significance of considering these demographic factors when targeting university students with new electronic gadgets. Stay with your assigned group. Discuss the questions provided. Develop bullet points outlining your discussion. Each group should select one representative to present the discussion summary in 3 minutes. 33 Economic Force 34  ECONOMIC FORCES: MACROECONOMIC CONDITIONS The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household. E.g. Income, expenditures, resources that affect costs of running business & households Macroeconomics: Performance of the economy (Ex: GDP, inflation, deflation) Inflation (2022): Inflation rate 8%; Production costs and prices increase. Recession (2008-2009): GDP -4.3%, home price -30% and S&P 500 was down 57%. Periods of declining economic activity. 35  FIGURE 3-4 The Index of Consumer Sentiment (ICS) - Closely Related to Economic Conditions THE ICS asks “Looking ahead, do you think that a year from now you will be - better off financially, - worse off, - or just about the same as now?” The higher the index, the more favorable are consumer expectations. This survey are closely monitored by manufacturer and retailers of cars, furniture, and major appliances. Access the text alternative for slide images. 36 ECONOMIC FORCES: MICROECONOMIC CONDITIONS Consumer income: Ability of consumers to buy goods and services Gross income – total amount of income Disposable income – amount of money left over after necessities Discretionary income – amount of money left over after taxes and necessities Return to slide Courtesy of Cunard Line 37  Gross Income Gross income is the total amount of money made in one year by a person, household, or family unit. Also known as money income at the Census Bureau. Return to slide. 38 https://www.nerdwallet.com/article/finance/median-household-income  Disposable Income Average annual per capita disposable income of urban and rural households in China from 1990 to 2022 Disposable income is the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation. Return to slide. 39  Discretionary Income Discretionary income is the money that remains after paying for taxes and necessities. It is usually used for luxury item. Return to slide. 40  MARKETING INSIGHTS ABOUT ME The Census Bureau: Your Source for Economic Information Marketers use environmental information to better understand consumers: Environmental scan to compare data about a segment. What does your hometown look like? Key variables such as population size, household income, education, number of businesses, and more. 41  MC _________ is the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation. a) Gross income b) Net income c) Disposable income d) Discretionary income 42 Technological Force 43  TECHNOLOGICAL FORCES TECHNOLOGY OF TOMORROW Technology – Innovations from applied science Facial and fingerprint recognition – new authentication technology (e.g. Bank or insurance company APP) Blockchain digital ledger – facilitate efficient digital advertising by Return to slide connecting advertisers directly with media platforms Smart speakers. Combine to become convenient, knowledgeable, and Digital assistants. always-available purchase influencers. Artificial intelligence. Wearable Technology – fitness monitor and wellness device. https://builtin.com/wearables 44  Technology Technology consists of the inventions or innovations from applied science or engineering research. The adChain protocol leverages the immutability of blockchain to prevent pay-per-click providers from accessing the benefits of fraudulent traffic and ad clicks. Blockchain can also improve trust and transparency by fighting against malicious marketing for counterfeit products, which affect the intellectual property or IP rights pertaining to original manufacturers. The interactive and ubiquitous features of blockchain help marketers in communicating advertising content to customers. The applications of blockchain technology in decentralized marketing could help in removing the activities which don’t add any value Return to slide to the marketing process. https://101blockchains.com/blockchain-in-marketing/ 45  Technology – Palm Recognition Tencent’s new palm- recognition service for WeChat Pay allows users to pay at designated metro turnstiles operating on Beijing’s airport express line by placing their hands over a scanner. Photo: Handout The technology relies on recognition of both surface-level palm https://www.scmp.com/tech/big- prints and the hand’s veins. Making new technology more tech/article/3221377/tencent-launches-palm- user-friendly for the elderly and accessible to people payments-beijing-allowing-metro-passengers- pay-wave-hand with disabilities 46  TECHNOLOGICAL FORCES TECHNOLOGY’S IMPACT ON CUSTOMER VALUE Impact on customer value: Plummeting costs of technology → New focus on quality, service, relationships. Technology provides value through the development of new products. (e.g. Consumer Electronic Show (CES) in Las Vegas) Changes production of existing products. (e.g. Precycling – avoid creating waste. Manufacturer – reduce packaging use; Consumer – avoid excessive packaging and reuse.) Recycling. 47  TECHNOLOGICAL FORCES TECHNOLOGY ENABLES DATA ANALYTICS Marketspace Electronic commerce Internet of Things Return to slide Askold Romanov/Getty Images 48  Marketspace Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings. Return to slide 49  Electronic Commerce Electronic commerce is any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of products and services. Return to slide. 50  Internet of Things Internet of Things (IoT) is the network of products embedded with connectivity-enabled electronics. The information generated by IoT has led to an advanced analytics that can predict consumer preference and behavior. IoT devices send user data to third-parties including Netflix, Spotify, Microsoft, Akamai, and Google, including location data and IP addresses. Through analyzing subscriber’s personal taste, it generates personalized recommendations and new movies offer. Netflix makes use of Machine Learning /Artificial Intelligence/Data to study the watch history of a particular Return to slide. user and matches it with the movie preferences of others with similar movie tastes. https://www.globaltechcouncil.org/info/how-netflix-uses-ai-data-science-and-machine-learning/ 51  Fill in the blank Blockchain can also ___________________ by fighting against malicious marketing for counterfeit products, which affect the intellectual property or IP rights. 52 Competitive Force 53  COMPETITIVE FORCES ALTERNATIVE FORMS OF COMPETITION Competition Four forms of competition: Pure competition: Many sellers with similar products. (e.g. wheat, rice & grain) Monopolistic competition: Many sellers with substitutable products in a price range. (e.g. If price of coffee rises too much, consumers may switch to tea) Coupon and sales are frequently use marketing tactics. Oligopoly: Few sellers control majority of sales. (e.g. wireless telephone industry dominated by a few carriers Deutsche Telekom & Vodafone, CSL & China Mobile in HK, or water company like Veolia Water in Europe) Pure monopoly: Only one Seller. (e.g. Water Supplies Department in HK, HK Return to slide Electric in HK Island) 54  Competition (The 5-force analysis helps determine an industry's weaknesses and strengths, adjust the strategy, boost company profit and stay ahead of competition) Competition consists of the alternative firms that could provide a product to satisfy a specific market’s needs. Several factors drive competition: a) new entrant: you need to know how easy it is for new players to enter your market and what can/will happen when they do. b) the bargaining power of buyers: can buyers impact price/drive price down? Cost per customer, customer count, average purchase, the strength of buyer power. c) the bargaining power of suppliers: identifying potential suppliers, uniqueness of goods or services, comparing price points/cheaper alternatives. d) existing rivalries: how many rivals does your business have and how do their goods and services compare with your own? e) substitution possibilities: can customers easily find an alternative to you? How accessible are substitutions? Return to slide 55  COMPETITIVE FORCES COMPONENTS OF COMPETITION Entry to a market Barriers to entry are business practices or conditions that make it difficult for new firms to enter the market. e.g. capital requirement, advertising expenditures, product identity, distribution access, patent, economy of scale, government policy, or the cost to customers of switching suppliers. Need competitive analysis on: Power of buyers and suppliers. Existing competitors and substitutes. Small businesses as competitors. rvlsoft/Shutterstock 56 Regulatory Force 57  REGULATORY FORCES: PROTECTING COMPETITION Regulation consists of the restrictions state and federal laws place on business with regard to the conduct of its activities. For consumers, the focus of legislation is to protect them from unfair trade practices and ensure their safety. Laws placed on business with respect to its conduct and activities Protecting competition: Sherman Antitrust Act (1890) – Forbids conspiracies (合謀) in restraint (限制) of trade. Clayton Act (1914) – Forbids acts likely to lessen competition. Robinson–Patman Act (1936) – Unlawful to discriminate in prices. “US specific details for illustration purpose.” 58  REGULATORY FORCES 1 PRODUCT-RELATED LEGISLATION Product-related legislation: To Protect company and/or consumer Patent Law. Copyright Law. Digital Millennium Copyright Act (1998). Infant Formula Act (1980). Nutritional Labeling and Education Act (1990). Fair Packaging and Labeling Act (1966). Monitor product safety and Child Protection Act (1966). establish uniform product safety Consumer Product Safety Act (1972). standard “US specific details for illustration purpose.” 59  REGULATORY FORCES 2 PRODUCT-RELATED LEGISLATION Consumerism (消費主義) is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions. Now the movement continues and is reflected in the growing consumer demand for ecologically safe products and ethical and socially responsible business practices. Lanham Act (1946). (registration of company trademarks) Trademark Law Revision Act (1988). (secure the right to the name before actual use) Madrid Protocol Treaty (2003). (protect US trademarks rights throughout the world, It has 114 members, covering 130 countries, >80% of world trade) Federal Trademark Dilution Act (1995, 2006). “US specific details for illustration purpose.” 60  REGULATORY FORCES PRICING-RELATED LEGISLATION Pricing-related legislation: Affects price fixing and price discounting Price fixing – Illegal. (e.g. Pricing fixing by oil and gas companies) Price discounting – Certain forms are allowed. 61  REGULATORY FORCES DISTRIBUTION-RELATED LEGISLATION Distribution-related legislation: Exclusive dealing - Illegal Requirement contracts – require a buyer to purchase all or part of its need for a product from one seller for a time period. Not always illegal and depend on the court’s interpretation of their impact on distribution. Exclusive territorial distributorships – it often under regulatory scrutiny. Tying arrangement – a seller requires the purchaser one another item in the same line. These contracts may be illegal. 62  63 End of Chapter 3 Let’s go to Chapter 4 Let’s go to Chapter 4  64 CHAPTER 4 Ethical and Social Responsibility for Sustainable Marketing  LEARNING OBJECTIVES (LO) After reading Chapter 4, you should be able to: 1. Explain the difference between legal and ethical behavior in marketing. 2. Identify factors that influence ethical and unethical marketing decisions. 3. Describe the different concepts of social responsibility. 4. Recognize unethical and socially irresponsible consumer behavior. 65  Difficult terms in Chapter 4 Difficult terms in Chapter 4 1 Caveat emptor 5 Utilitarianism 2 Economic espionage 6 Triple bottom line 3 Code of ethics 7 Cause Marketing 4 Moral idealism 8 66  FIGURE 4-1 Four ways to classify marketing decisions according to ethical and legal relationships Ethics are the moral principles and values that govern the actions and decisions of an individual or group. Laws are society’s values and standards that are enforceable in the courts. Ethical/legal framework for marketing: 1. Ethical-Legal 2. Ethical-Illegal 3. Unethical-Illegal 4. Unethical-Legal Critical Perceptions of Ethical Behavior: Careers with a high level of ethics vs. low level of ethical behavior? Access the text alternative for slide images. 67  NATURE AND SIGNIFICANCE OF MARKETING ETHICS 2 Which cell from Figure 4-1 fits these situations? 1. Physicians agree to establish a max fee schedule for health services. 2. Computer program for car dealers omits key information for buyers. 3. China legally restricts tobacco imports. 4. College students record movies at theater, then upload to Internet. 68  FIGURE 4-2 A framework for understanding ethical behavior 1 Four factors Affect Ethical 4 Marketing 2 Behavior 3 Access the text alternative for slide images. 69  1 ETHICAL MARKETING BEHAVIOR SOCIETAL CULTURE AND NORMS Culture: Values, ideas, and attitudes that are learned and shared among members of a group. Societal values and attitudes: Are relative. Affect ethical and legal relationships. E.g. Unauthorized use, reproduction, or distribution of another people copyright, trademark, or patent is illegal in the US. 70  2 ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES 1 Business Culture – Rules, boundaries, and behavior Ethics of Exchange Caveat Emptor (買者自負) Consumer Bill of Rights (1962) The right to safety. The right to choose. The right to be informed. Return to slide The right to be heard. FG Trade/E+/Getty Images 71  Caveat Emptor Caveat emptor (買者自負) is the legal concept of “let the buyer beware” that was pervasive in the American business culture before the 1960s. Return to slide 72  Consumer Bill of Rights (1962) The Consumer Bill of Rights (1962) is a law that codified the ethics of exchange between buyers and sellers, including Click here to view video. The right to safety. – industry and federal safety standards for most Consumer Product products in the US. Safety Commission Click here to view video. The right to be informed. – marketers have an obligation to give Federal Trade consumer complete and accurate information of product and services. Commission The right to choose. – Supermarket chains demand “slotting allowances” from manufacturer violates “the right the choose”. Do Not Call The right to be heard. – consumers have access to policymakers Registry regarding complaints about product and services. Return to slide 73  2 ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES 4 Ethics of Competition Most Common Unethical Behavior: 1. Economic espionage (經濟間諜活動) 2. Corruption Bribes, kickbacks (回扣), graft (貪污). 15% of companies in industrialized countries pay bribes to win or retain business. Return to slide 40% in Asia; 60% in Eastern Europe. 74  Economic Espionage Economic espionage (經濟間諜活動) is the clandestine collection (秘密收藏) of trade secrets or proprietary information about a company’s competitors. This practice is illegal and unethical and carries serious criminal penalties for the offending individual or business. E.g. illegal trespassing (非法侵入), theft (盜竊), fraud (欺詐), misrepresentation (失實陳 述), electronic hacking (電子黑客), the search of a competitor’s trash (搜索 競爭對手的垃圾), and violation of written and implicit employment agreements with noncomplete clauses (違反條款不完整的書面和默示僱傭協議). Return to slide 75  2 MAKING RESPONSIBLE DECISIONS CORPORATE CONSCIENCE IN THE COLA WAR Situation: You are an executive at Pepsi. Coke employee offers to sell the marketing plan and sample of new product. What would YOU do? A survey of marketing and advertising executives had 67 percent say they would buy sample if there were no repercussion. ©Cliff Tew 76  2 MARKETING INSIGHTS ABOUT ME HOW COMMON IS CORRUPTION IN MY COUNTRY? Corruption to win or retain business varies widely by country. Transparency International ranks countries on perceived level of corruption. How does the U.S. compare to Canada and Mexico? Click here to view video. Bribe Payers Index Atstock Productions/iStock/Getty Images 77  3 ETHICAL MARKETING BEHAVIOR CORPORATE CULTURE AND EXPECTATIONS Corporate culture: Values, ideas, and attitudes shared among an organization. Code of ethics – Formal statement of rules of conduct. Ethical behavior of top management and co-workers. Observing peers and top management responses and roles. Whistle-blowers (舉報人) are employees who report unethical or illegal actions of their employers. Click here to view video. Return to slide American Marketing Association 78  Code of Ethics A code of ethics is a formal statement of ethical principles and rules of conduct. Our Global Code of Conduct We believe acting ethically and responsibly is not only the right thing to do, but also the right thing for our business. In today’s hyper-connected and transparent world, how we do things is just as important as what we do. PepsiCo’s Code is the foundation of our commitment to ethical excellence and provides the policies and guidelines that define how we do business. The Code provides guidance on and reflects PepsiCo’s commitment to Act with Integrity: In our workplace Return to slide In our marketplace In business relationships and In our world 79  3 American Marketing Association Statement of Ethics (Abridged) General Norms 1. Marketers must do no harm. 2. Marketers must foster trust in the marketing system. 3. Marketers must embrace, communicate, and practice fundamental ethical values. Ethical Values 1. Honesty – to be truthful and forthright in our dealings with customers and stakeholders. 2. Responsibility – to accept the consequences of our marketing decisions and strategies. 3. Fairness – to try to balance justly the needs of the buyer with the interests of the seller. 4. Respect – to acknowledge the basic human dignity of all stakeholders. 5. Openness – to create transparency in our marketing operations. 6. Citizenship – to fulfill the economic, legal, philanthropic, and societal responsibilities that serve stakeholders in a strategic manner. 80  4 ETHICAL MARKETING BEHAVIOR PERSONAL MORAL PHILOSOPHY AND ETHICS Two Prominent Personal Moral Philosophies: 1. Moral idealism (道德理想主義) is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. (do no harm) Example: 3M’s Scotchgard stopped production due to harmful chemicals even though resulting in a loss of $200 million in annual sales. 2. Utilitarianism (功利主義) is a personal moral philosophy that focuses on the “greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. – The greatest good for the greatest number Example: Nestlé’s Gerber Good Start infant formula kept producing stating nothing is effective 100% of the time. Mike Hruby/McGraw Hill 81 4 SOCIAL RESPONSIBILITY IN MARKETING THREE CONCEPTS OF SOCIAL RESPONSIBILITY 1 Social responsibility 3 concepts of Social Responsibility Profit responsibility: Maximize profits for stockholders. Stakeholder responsibility: Obligations to those who can affect achievement of company objectives. Return to slide (consumer, employees, suppliers, and distributors) Societal responsibility: Obligations to the environment and public. (triple bottom line) 82  Social Responsibility Social responsibility is the idea that organizations are part of a larger society and are accountable to that society for their actions. Social responsibility is also a means of achieving sustainability. Adopting key social responsibility principles, such as accountability and transparency, can help ensure the long-term viability and success of any organization or system. Return to slide 83  4 SOCIAL RESPONSIBILITY IN MARKETING THREE CONCEPTS OF SOCIAL RESPONSIBILITY 2 Social responsibility of organizations Triple Bottom Line – People, plant, and profit for long-term growth. Sustainable Marketing – Meet today’s needs without sacrificing the future. Green Marketing – Environmentally sensitive products. Return to slide Cause Marketing – Firm’s charitable contributions tied to its revenue. 84  Triple Bottom Line The triple bottom line is the recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth. Return to slide 85  Sustainable Marketing Sustainable marketing is the effort to meet today’s (global) economic, environmental, and social needs without compromising the opportunity for future generations to meet theirs. Green marketing, cause marketing, social audit, and sustainable development reflect “sustainable marketing”. Return to slide 86  Green Marketing Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products. Return to slide 87  Cause Marketing Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. TOMS shoes company is an excellent example on applying cause marketing into its’ brand. By using the cause marketing, TOMS introduced ‘one for one’ concept model, which the company will donate a pair of shoes for every sale that they made to children in need. This model not only successfully improves the reputation and sales of TOMS shoes but also leaves a positive image of TOMS company to consumers. Return to slide 88  Cause Marketing Source: https://www.youtube.com/watch?v=N6SV2ioRSlQ 89  4 MARKETING MATTERS Will Consumers Switch Brands for a Cause? Yes, if … Cause marketing benefits companies as well as causes. Estimated $12 billion raised in cause marketing in 2018. 85% of U.S. consumers have more favorable opinion of companies that support causes. 80% of consumers will switch to brand that Click here to view video. supports a cause. Engage for Good 90  4 SOCIAL RESPONSIBILITY IN MARKETING THE SOCIAL AUDIT Social audit – Assessments of performance in terms of social responsibility. 5-step: 1. Recognize firm’s social expectations. 2. Identify causes consistent with mission. 3. Determine objectives and priorities. 4. Specify resources. Corporate Greenwashing 5. Evaluate programs. Return to slide Click here to view video. Sustainable development Jason DeCrow/AP Images 91  Social Audit A social audit consists of a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility. Return to slide 92  Sustainable Development Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. Return to slide 93  4 SOCIAL RESPONSIBILITY IN MARKETING CONSUMER ETHICS AND SOCIAL RESPONSIBILITY Consumers should act ethically. Unethical practices of consumers such as purchase of counterfeit products. “Everyone does it.” But consumers purchase environmentally sensitive products. Greenwashing – When companies make a misleading claim about environmental Click here to view video. benefits of product. FTC Guidelines Source: National Crime Prevention Council 94  Group Discussion What aspects of cause marketing do you find most appealing? Why do these specific elements resonate with you? 95  96 End of Chapter 3 & 4 See you tomorrow