Ch 3 - Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

Question 1

Explain the purpose of environmental scanning.

Answer 1

Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends. Environmental trends typically arise from five sources: social, economic, technological, competitive, and regulatory forces. A firm conducting an environmental scan of the marketplace might uncover key trends such as the growth of social networks, the increasing economic impact of Asia, and many others.

Question 2

Describe social forces such as demographics and culture.

Answer 2

The social forces of the environment include the demographic characteristics and the culture of the population. Three key demographic characteristics include a population profile, a description of generational cohorts (baby boomers, Generation X, and Generation Y), and a description of racial and ethnic diversity. Culture incorporates the set of values, ideas, and attitudes that is learned and shared among the members of a group.

Question 3

Discuss how economic forces affect marketing.

Answer 3

Two aspects of economic forces include macroeconomic conditions related to the marketplace and microeconomic factors such as consumer income. Indicators of marketplace conditions include GDP, unemployment, and price changes (inflation or deflation). Consumer income has gross, disposable, and discretionary components. The state of the economy and changes in income can influence consumers’ ability to buy products and services.

Question 4

Describe how technological changes can affect marketing.

Answer 4

Technological innovations can replace existing products and services. Changes in technology can also have an impact on customer value by reducing the cost of products, improving the quality of products, and providing new products that were not previously feasible. Electronic commerce is transforming how companies do business.

Question 5

Discuss the forms of competition that exist in a market.

Answer 5

There are four forms of competition: pure competition, monopolistic competition, oligopoly, and monopoly. While large companies are often used as examples of marketplace competitors, there are 27.5 million small businesses in the United States that have a significant impact on the economy.

Question 6

Explain how regulatory forces ensure competition and protect producers and consumers.

Answer 6

Regulation exists to protect companies and consumers. Legislation that ensures a competitive marketplace includes the Sherman Antitrust Act. Companies can protect their competitive position with patent and copyright laws. Consumers are protected by laws that address each of the four elements of the marketing mix. Laws such as the Lanham Act, which provides for the registration of trademarks, benefit both companies and consumers. Self-regulation through organizations such as the Better Business Bureau provides an alternative to federal and state regulation.

Question 7

Identify factors that influence ethical and unethical marketing decisions.

Answer 7

Four factors that influence ethical marketing behavior are: societal culture and norms, business culture and industry practices, corporate culture and expectations, and personal moral philosophy and ethical behavior.

Question 8

Describe the different concepts of social responsibility.

Answer 8

Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions. There are three concepts of social responsibility, profit responsibility, stakeholder responsibility, and societal responsibility.

Question 9

baby boomers

Answer 9

Includes the generation of 76 million among the U.S. population born between 1946 and 1964.

Question 10

cause marketing

Answer 10

Occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products.

Question 11

code of ethics

Answer 11

A formal statement of ethical principles and rules of conduct.

Question 12

competition

Answer 12

The alternative firms that could provide a product to satisfy a specific market’s needs.

Question 13

Consumer Bill of Rights (1962)

Answer 13

A law that codified the ethics of exchange between buyers and sellers, including the rights to safety, to be informed, to choose, and to be heard.

Question 14

consumerism

Answer 14

A grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.

Question 15

culture

Answer 15

The set of values, ideas, and attitudes that are learned and shared among the members of a group.

Question 16

demographics

Answer 16

Describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.

Question 17

economy

Answer 17

Pertains to the income, expenditures, and resources that affect the cost of running a business and household.

Question 18

environmental scanning

Answer 18

The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.

Question 19

ethics

Answer 19

The moral principles and values that govern the actions and decisions of an individual or group.

Question 20

Generation X

Answer 20

Includes the 15 percent of the population born between 1965 and 1976. Also called baby bust.

Question 21

Generation Y

Answer 21

Includes the 72 million Americans born between 1977 and 1994. Also called millennials, echo-boom, or baby boomlet.

Question 22

green marketing

Answer 22

Marketing efforts to produce, promote, and reclaim environmentally sensitive products.

Question 23

marketspace

Answer 23

Information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.

Question 24

moral idealism

Answer 24

A personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

Question 25

multicultural marketing

Answer 25

Combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races and ethic groups.

Question 26

regulation

Answer 26

Restrictions state and federal laws place on business with regard to the conduct of its activities.

Question 27

self-regulation

Answer 27

An alternative to government regulation where an industry attempts to police itself.

Question 28

social forces

Answer 28

The demographic characteristics and the culture of the population.

Question 29

social responsibility

Answer 29

The idea that organizations are part of a larger society and are accountable to that society for their actions.

Question 30

technology

Answer 30

Inventions or innovations from applied science or engineering research.

Question 31

utilitarianism

Answer 31

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.

Question 32

Describe three generational cohorts.

Answer 32

(1) Baby boomers are the generation of 76 million among the U.S. population born between 1946 and 1964. These Americans are growing older and will all be 65 or older by 2030. (2) Generation X are those among the 15 percent of the U.S. population born between 1965 and 1976. These well-educated Americans, also known as the baby bust cohort because of declining birth rates, are supportive of racial and ethic diversity. (3) Generation Y are the 72 million Americans among the U.S. population born between 1977 and 1994. The rising birth rate of this “baby boomlet” cohort is the result of baby boomers having children. A subset of this generational cohort are millennials, who are younger Americans born since 1994. Because each generational cohort has its distinct attitudes and behaviors, marketers have developed generational marketing programs for each of them.

Question 33

Why are many companies developing multicultural marketing programs?

Answer 33

Multicultural marketing programs consist of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races and ethnic groups. The reasons for developing these programs are: (1) The racial and ethnic diversity of the U.S. is changing rapidly due to the increases in the African American, Asian, and Hispanic populations, which increases their economic impact. (2) An accurate understanding of the culture of each group is essential if marketing efforts are to be successful. (3) Based on an analysis of population demographic data, racial and ethnic groups tend to be concentrated in specific geographic regions.

Question 34

How are important values such as sustainability reflected in the marketplace today?

Answer 34

Many Americans desire and practice sustainability to preserve the environment. Specifically, these consumers buy hybrid gas-electric cars and energy-efficient light bulbs. Consumers also prefer brands that have a strong link to social action (like Ben & Jerry’s—see Chapter 2). Companies are responding to this consumer trend by producing products that use renewable energy and less packaging.

Question 35

What is the difference between a consumer’s disposable and discretionary income?

Answer 35

Disposable income is the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation. Discretionary income is the money that remains after paying for taxes and necessities and is usually spent on luxury items.

Question 36

How does technology impact customer value?

Answer 36

(1) Consumers can now assess value on the basis of other dimensions, such as quality, service, and relationships, due to the decline in the cost of technology. (2) Technology provides value through the development of new products.

Question 37

In pure competition there are a number of sellers.

Answer 37

large

Question 38

The Act was punitive toward monopolies, whereas the Act was preventive.

Answer 38

Sherman Antitrust; Clayton

Question 39

The Federal Trade Commission (FTC) monitors .

Answer 39

unfair business practices

Question 40

How does the Better Business Bureau encourage companies to follow its standards for commerce?

Answer 40

The Better Business Bureau (BBB) uses moral suasion to get members to comply with its standards.

Question 41

What rights are included in the Consumer Bill of Rights?

Answer 41

The rights to safety, to be informed, to choose, and to be heard.

Question 42

Economic espionage includes what kinds of activities?

Answer 42

Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. This practice includes trespassing, theft, fraud, misrepresentation, wiretapping, searching competitors’ trash, and violations of written and implicit employment agreements with noncompete clauses.

Question 43

What is meant by moral idealism?

Answer 43

Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

Question 44

What is meant by social responsibility?

Answer 44

Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions. It comprises three concepts: (1) profit responsibility—maximizing profits for the organization’s shareholders; (2) stakeholder responsibility—the obligations an organization has to those who can affect the achievement of its objectives; and (3) societal responsibility—the obligations an organization has to preserve the ecological environment and to the general public.

Question 45

Marketing efforts to produce, promote, and reclaim environmentally sensitive products are called .

Answer 45

green marketing

Question 46

What is sustainable development?

Answer 46

Sustainable development involves conducting business in such a way that protects the natural environment while making economic progress. Green marketing is an ecological example of such an initiative.