Examining and Responding to the

Marketing Environment
Environmental Scanning
The process of collecting information about forces in the
marketing environment
Observation
Secondary sources
Market research
Environmental Analysis
The process of assessing and interpreting the
information gathered through environmental scanning
Accuracy
Consistency
Significance
Copyright Houghton Mifflin Company. All rights reserved. 31
 Examining and Responding to the
Marketing Environment (contd)
Responding to Environmental Forces
Reactive approach
Passive view of environment as uncontrollable
Current strategy is cautiously adjusted to accommodate
environmental changes
Proactive approach
Actively attempts to shape and influence environment
Strategies are constructed to overcome market challenges
and take advantage of opportunities

Copyright Houghton Mifflin Company. All rights reserved. 32

 TABLE 3.1
Copyright Houghton Mifflin Company. All rights reserved. 33
 Competitive Forces (contd)
Monitoring Competition
Helps determine competitors strategies and their
effects on firms strategies
Guides development of competitive advantage and
adjusting firms strategy
Provides ongoing information about competitors
Assists in maintaining a marketing orientation

Copyright Houghton Mifflin Company. All rights reserved. 34

 Economic Forces
Business Cycle
A pattern of economic fluctuations that has four stages:

Prosperity
Positive Economic Indicators

Recession Recovery

Depression

Time
Copyright Houghton Mifflin Company. All rights reserved. 35
 Economic Forces (contd)

Stages in the Business Cycle

Prosperity Low unemployment and high total income
create high buying power
Recession Rising unemployment reduces total buying
power; consumer and business spending
decline
Depression Unemployment extremely high, wages and
total disposable income are very low, and
there is a lack of consumer confidence
Recovery Economy is moving out of recession or
depression towards prosperity

Copyright Houghton Mifflin Company. All rights reserved. 36

 Economic Forces (contd)
Buying Power
Resources, such as money, goods, and services, that
can be traded in an exchange
Income
Disposable income
Discretionary income
Wealth

Copyright Houghton Mifflin Company. All rights reserved. 37

 Economic Forces (contd)
Willingness to Spend
An inclination to buy because of expected satisfaction
from a product, influenced by the ability to buy and
numerous psychological and social forces
Expectations influencing the willingness to spend:
Future employment
Income levels
Prices
Family size
General economic conditions (e.g., rising prices)

Copyright Houghton Mifflin Company. All rights reserved. 38

 Political Forces
Reasons for Maintaining Relations with Elected
Officials and Politicians
To influence the creation of laws and regulations
affecting industries and specific businesses
Governments are potentially large customers
Political officials can assist in securing foreign markets
Campaign contributions of corporate-related individuals
and political action committees may provide influence
Lobbyists work to communicate businesses concerns
about issues affecting their industries and markets

Copyright Houghton Mifflin Company. All rights reserved. 39

 Legal and Regulatory Forces (contd)
Procompetitive Legislation
Laws designed to:
preserve competition
prevent the restraint of trade and the
monopolizing of markets
prevent illegal competitive trade practices
Consumer Protection Legislation
Laws enacted to protect customers from:
adulterated and mislabeled food and drugs
deceptive trade practices and the sale of hazardous
products
the invasion of personal privacy and the misuse of
personal information by firms

Copyright Houghton Mifflin Company. All rights reserved. 310

 Social Responsibility and Ethics in
Marketing
Social Responsibility

An organizations obligation to maximize its positive

impact and minimize its negative impact on society
Marketing citizenship
The adoption of a strategic focus for fulfilling the economic,
legal, ethical, and philanthropic social responsibilities
expected by stakeholders
Stakeholders
Constituents who have a stake or claim in some aspect of
the companys products, operations, markets, industry, and
outcomes

Copyright Houghton Mifflin Company. All rights reserved. 311

 The Pyramid of Corporate Social
Responsibility

Source: Archie B. Carroll,

The Pyramid of Corporate
Social Responsibility: Toward
the Moral Management of
Organizational Stakeholders,
adaptation of Figure 3, p. 42.
Reprinted from Business
Horizons, July/Aug. 1991.
Copyright 1991 by the
Trustees at Indiana University,
Kelley School of Business. Used
with permission.

FIGURE 3.3

Copyright Houghton Mifflin Company. All rights reserved. 312

 Ethical Dimension
Marketing Ethics
Principles and standards that define acceptable
marketing conduct as determined by various
stakeholders
Ethical Issue
An identifiable problem,
situation, or opportunity
requiring a choice among
several actions that must be
evaluated as right or wrong,
ethical or unethical

Copyright Houghton Mifflin Company. All rights reserved. 313

 Influence Factors of Ethical Standards

Company
Industry
Government
Customers
Interest Groups
Society

Influence Ethical
Factors Standards

Copyright Houghton Mifflin Company. All rights reserved. 314

 Green Marketing
The specific development, pricing, promotion,
and distribution of products that do not harm
the natural environment

Copyright Houghton Mifflin Company. All rights reserved. 315

 Incorporating Social Responsibility and
Ethics into Strategic Planning

Social
Social
Ethics
Ethics Responsibility
Responsibility
Individual
Individualand
and The
Thetotal
totaleffect
effectof
of
group
groupdecisions
decisions marketing
marketingdecisions
decisions
on
onsociety
society

Overall
Overall Strategic
Strategic Marketing
Marketing Planning
Planning

Copyright Houghton Mifflin Company. All rights reserved. 316

 Technological Forces
Technology
The application of knowledge and tools to solve
problems and perform tasks more efficiently
Impact of Technology
Dynamic means constant change
Reach refers to how technology
quickly moves through society.
The self-sustaining nature of
technology as the catalyst
for even faster development

Copyright Houghton Mifflin Company. All rights reserved. 317

 Technological Forces (contd)
Adoption and Use of Technology
Failing to adopt new technology can cause a loss of
market leadership.
Protecting the firms inventions is critical.
Using a technology assessment allows
the firm to foresee the effects
of new products and
processes on the firm.

Copyright Houghton Mifflin Company. All rights reserved. 318

 Sociocultural Forces
Sociocultural Forces
The influences in a society and its culture(s) that
change peoples attitudes, beliefs, norms, customs, and
lifestyles
Demographic Diversity and Characteristics
Increasing proportion of older consumers
Rising number of single adults
Entering another baby boom
Increasingly multicultural U.S. society

Copyright Houghton Mifflin Company. All rights reserved. 319

 Sociocultural Forces (contd)
Cultural Values
Primary source of values is the family
Values influence:
Eating habits (healthier foods)
Alternative health and medical treatment choices
Attitudes toward marriage
Concern for the natural environment
Consumerism
Organized efforts by individuals, groups, and
organizations to protect consumers rights

Copyright Houghton Mifflin Company. All rights reserved. 320