Decisions in the New Era of Marketing: Enriching the Marketing Environment
Team 2: Decisions in the New Era of Marketing
How to Enrich the Marketing Environment
Welcome to the New Era of Marketing
The long-term viability of a business depends on making quality products and acting ethically and socially responsibly. Social benefit is the net benefit for both the company and society when a company practices ethical and socially responsible behavior. We call these efforts to do the right thing in business and doing well by society the New Age of Marketing.
Do It Properly: Ethical Behavior in the Market
Ethical behavior is guided by rules of conduct that reflect how most people in a culture judge what is right and what is wrong.
Business ethics is built on core values that guide a company’s conduct. These beliefs influence decisions made by managers about product development, advertising, sales, and even product disposal.
Codes of ethics are written rules of behavior that all company members must adhere to.
The High Costs of Unethical Market Behavior
Ethical business is good business. New-age marketing executives understand that unethical practices can be extremely costly in the long run, both financially and in terms of the company’s reputation.
Consumerism: The Counterattack
Consumerism is a social movement aimed at protecting consumers from harmful business practices. Consumers have organized to demand safer products and honest information, and to boycott companies that do not meet their demands. Consumerism has also been the impetus for the creation of government regulatory agencies.
Statement of Consumer Rights:
- The right to safety
- The right to be informed
- The right to be heard
- The right to free choice
Ethics in the Marketing Mix
The marketing mix strategies are crucial to a company’s success. Businesses should define the most ethical way to price, package, promote, and distribute their offerings.
Making a Safe Product
A key ethical decision concerns product safety. It can be tempting to cut corners in design and safety testing during production to hasten a product’s release to market.
Pricing Products Fairly
Many questionable pricing practices are illegal, such as price fixing. One pricing strategy that is unethical, but not always illegal, is price gouging, which involves increasing the cost of a product to take advantage of its popularity.
New-age companies set prices for their products fairly and are known to reduce them in times of need.
Promoting the Product Ethically
Marketers’ decisions about how to promote a company’s products tend to attract the most scrutiny and regulation. Some advertisements make misleading statements that can be verified as false. Other ads, while not illegal, create a false impression of products through exaggeration.
Corrective advertising involves messages that clarify or qualify previous statements.
Taking the Product Where It Belongs
Distribution channels can also create ethical dilemmas. Large wholesale chains may require manufacturers to pay slotting allowances for shelf space. This practice effectively prevents smaller manufacturers, who cannot afford the payments, from getting their products into the hands of consumers.
Do It Correctly: Focus on Social Responsibility
The second part of social benefit is social responsibility, the administrative process in which organizations engage in activities that have a positive impact on society and promote the public good.
The Environment
When new-age companies make socially responsible business decisions that also protect the environment, they are adopting a position of environmental orientation.
The term “green marketing” describes the efforts of companies to choose packaging, product designs, and other aspects of the marketing mix that are environmentally friendly and still profitable.
Service to Society: Cause-Related Marketing
Cause-related marketing is a strategy of joining forces with a nonprofit organization to address a social problem. However, consumers may see these programs as gimmicks and insincere.
Companies should make a genuine commitment to address social problems such as illiteracy or child abuse.
Community Service: Promoting Cultural Diversity
Promoting cultural diversity is the practice of actively seeking to include individuals of different sexes, races, ethnicities, and religions among a company’s customers, employees, suppliers, and distribution channel members.
Do It Right: Focus on Quality
Quality is the level of performance, reliability, durability, safety, cost, or other product characteristics that consumers expect to meet their needs and preferences.
Total Quality Management
Total quality management (TQM) is a philosophy that requires the dedication of the entire company to the development, maintenance, and continuous improvement of all aspects of its operations.
Adding a Dose of Quality to the Marketing Mix
Marketing is typically responsible for defining, through consumer research, which quality features consumers want and need and what price they are willing to pay. Companies must deliver quality to their customers across the following variables:
- Product
- Distribution
- Price
- Promotion
Internal Environment of an Enterprise
For new-era marketing executives, analysis of the internal environment is particularly important because it identifies the organization’s strengths and weaknesses and defines the company’s ability to create social and economic benefits.
Corporate Resources and Skills
Company resources include money, people, reputation, brand image, and facilities. Strengths relate to what the company does well.
Corporate Culture
Corporate culture refers to the ethical values, norms, and beliefs that influence the behavior of everyone in an organization.
Culture of Risk-Taking
These companies value individuality and creativity, recognizing that these traits usually lead to the creation of a competitive advantage.
Profit-Based Cultures vs. People-Centered Cultures
In new-era companies, where the business mission includes concern for employees, customers, and society, as well as shareholder returns, the internal atmosphere is quite different.
Public Relations
A company’s audiences are groups that have a current or potential interest in the organization and its goals. These audiences include suppliers, dealers, shareholders, partners, public agencies, the media, the general public, and even competitors.
Relationships with Suppliers and Intermediaries
New-era companies know that they cannot make quality products if they cannot obtain quality parts and materials from their suppliers.
Relationships with Competitors
Energetic competition is part of the game, but no company benefits from a nasty marketing war. At worst, it damages the reputation of both companies, and consumers lose confidence, believing that none of the parties involved is honest.
Relationships with the General Public
Companies must be sensitive to the concerns of consumer groups. Establishing good relations with these groups benefits a company. New-era marketing executives identify the strengths and weaknesses of a company that can generate or hinder economic and social benefit.
Exploration of the External Business Environment
New-era companies must also keep abreast of what is happening in their external environments and try to respond in ways that may lead to profit. These external environments include the economic, competitive, technological, legal, and cultural environments.
Economic Environment
Assessing the economic environment means evaluating the factors that influence consumer buying patterns and business, such as the amount of trust people have in the health of the economy.
Business Cycle: The business cycle involves changes in the direction of the economy.
Global patterns of changes in the economy, including periods of prosperity, recession, depression, and recovery, affect the purchasing power of consumers and businesses.
The Power of Expectations:
Consumer beliefs about what the future holds define consumer confidence, or the extent of people’s optimism or pessimism about the future welfare of the economy and their own personal finances.
Competitive Environment
Successful companies take the initiative to stay ahead of the competition by developing competitive strategies.
Competitive Analysis
A company must know what its competitors are doing. It should examine the competition according to their strengths and weaknesses, look at their marketing strategies, and try to predict their moves.
Business Intelligence: The process of gathering and analyzing publicly available information about rivals.
Competition in the Microenvironment
An alternative means a product that members of a target market can choose instead of another. There are three types of alternatives:
- Discretionary Income: The portion of income available to people after paying for basic necessities like housing, utilities, food, and clothing.
- Product Competition: When companies compete by offering different products to satisfy the same consumer desires and needs.
- Brand Competition: When companies offering similar products compete based on the reputation of their brand names or perceived benefits.
Competition in the Macroenvironment
Marketing executives must understand the big picture, the overall structure of their industry. Four structures describe different levels of competition:
- Monopoly: A market structure in which one company, the sole supplier of a specific product, has the power to control the price, quality, and supply.
- Oligopoly: A market structure in which a relatively small number of sellers, each holding a substantial market share, compete in a market with many buyers.
- Monopolistic Competition: A market structure in which many small sellers, all offering similar products, are unable to have an impact on the quality, price, or supply of a product.
Technological Environment
New-era companies view technology as an investment they cannot afford to ignore. They see it as the key to the future, even if it means making risky investments at the expense of short-term gains. A patent is a legal document that grants an individual or company the exclusive right to produce and sell a particular invention.
Legal Environment
The legal environment consists of local and national laws and regulations affecting domestic and global businesses. Legal controls and regulations can be key motivators for many business decisions.
Socio-Cultural Environment
The socio-cultural environment refers to the characteristics of a society, the people who live in it, and the culture that reflects the values and beliefs of that society. The first step toward understanding the characteristics of a society is to look at its demographics, which are statistics that measure observable aspects of a population, such as size, age, gender, ethnicity, income, education, occupation, and family structure.