52 Part 1 Designing Customer-Oriented Marketing Strategies

Contemporary Marketing 17th Edition by Boone

Kurtz ISBN 1305075366 9781305075368
Download solution manual at:
https://testbankpack.com/p/solution-manual-for-contemporary-
marketing-17th-edition-boone-kurtz-isbn-1305075366-9781305075368/

Download full test bank at :

https://testbankpack.com/p/test-bank-for-contemporary-marketing-17th-
edition-boone-kurtz-isbn-1305075366-9781305075368/

CHAPTER 3
THE MARKETING ENVIRONMENT, ETHICS, AND SOCIAL RESPONSIBILITY

CHAPTER OVERVIEW

Change is a fact of life for all people, including marketers. Adapting to change in an environment is as
complex and unpredictable as the world’s energy usage is perhaps the supreme challenge. High energy
costs continue to affect the bottom line for the world.

Although some change may be the result of sudden crises, more often it is the result of gradual trend in
lifestyle, income, population, and other factors. But technology can trigger a sudden change in the
marketplace: in one fell swoop, Internet music downloads replaced traditional CDs. And within mere
months of offering its iPhone, Apple introduced the iPod Touch MP3 player, which borrowed touch-
screen technology from the iPhone.

So marketers learn to anticipate and plan for change. They set goals to meet the concerns of customers,
employees, shareholders, and members of the general public. Decision makers need to consider the
influence of the external environment together with the variables of the marketing mix while developing—
and occasionally modifying—marketing plans and strategies.

This chapter begins by describing five forces in marketing’s external environment—competitive, political-
legal, economic, technological, and social-cultural. It identifies them as the foundation for making
decisions that involve the four marketing mix elements and the target market. These forces provide the
frame of reference within which all marketing decisions are made.

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 53

Marketers also need to consider the effect their decisions would have on the environment and their
responsibilities to the business and the society. The second focus of this chapter is marketing ethics and
social responsibility.

Changes in the Updated Edition

The chapter has been updated and revised, with new features in several areas:

• The Opening Vignette and Evolution of a Brand discuss Aflac Incorporated, the number one
provider of supplemental life and health insurance in the United States and Japan. Represented
by a humorous white duck, whose name is actually Duck, Aflac has been selected as one of the
“world’s most ethical companies” for seven consecutive years by the Ethisphere Institute. Alfac
has also made Fortune’s list of the best 100 companies to work for every year for the last 15
years. Aflac is considered a top company as well as a top employer—for its consistently
outstanding job in promoting women and minorities into management positions, as well as
offering exceptional health benefits to its more than 8,400 employees.

• Solving an Ethical Controversy deals with the media’s revelation on the treatment of boneless
lean-beef trimmings with ammonium hydroxide to kill bacteria, including E. coli. The product was
dubbed “pink slime”. Although its maker, Beef Products, Inc. defended its product as safe,
nutritious, and 100% beef, many communities insisted it be taken off school-lunch menus
immediately. McDonald’s and Burger King announced they had stopped using ammonia-treated
beef, and Kroger, Safeway, and other grocery chains will stop carrying ground beef that includes
it. Consequently, Beef Products, Inc. suspended operations at three plants, affecting hundreds of
employees. So was the media looking for a sensational story to boost their ratings or
safeguarding people’s right to know what they’re eating and how safe it is?

• Marketing Success features IBM’s corporate social responsibility efforts. IBM is a 100-year-old
U.S. firm with more than 430,000 employees operating in almost 170 countries. It is constantly
looking for ways to make a real difference to all levels of its huge network of stakeholders. The
company’s challenges, strategies and outcome of their efforts to save the planet are highlighted in
“IBM’s CSR Initiatives.”

• Career Readiness features tips for people to turn their passion for environmental causes or
“green” technology into a career in corporate social responsibility. Making sure what CSR is and
promoting one’s efforts in the field are included. Developing and honing skills in leadership,
communication, and persuasion are critical.

• Chapter Case 3.1 General Mills and Its CSR strategies illustrates how the company lives its
mission of “nourishing lives” on a daily basis. In addition to producing millions of servings of food
every day, from iconic breakfast cereals such as Cheerios to Yoplait dairy products and from
Green Giant vegetables to Häagen-Dazs ice cream, General Mills has also donated hundreds of
millions of dollars to not-for-profit organizations for over 50 years.

• Collaborative Learning Exercises are provided in several areas related to the marketing
environment, business ethics, and social responsibility—Types of Competition, Government
Regulation, and Ethics and Legality.

• Video Case 3.2 Synopsis includes an overview of the marketing environment, ethics, and social
responsibility at Zappos.

LECTURE OUTLINE
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
54 Part 1 Designing Customer-Oriented Marketing Strategies

Opening Vignette and Evolution of a Brand—Alfac Insurance uses a humorous white duck as its
spokesperson to highlight its successful business and consistently is named one of the world’s
best companies and best employers. How does Aflac do business responsibly? How does its
ethical approach to business create a differentiator?

Chapter Objective 1: Identify the five components of the marketing environment.

Key Terms: environmental scanning, environmental management, strategic alliances
PowerPoint Basic: 4, 5
PowerPoint Expanded: 4-6
1. The five components of the marketing environment:
Figure 3.1 Elements a. The competitive environment
of the Marketing Mix b. The political-legal environment
Within an
c. The economic environment
Environmental
Framework. Choose d. The technological environment
one of the elements e. The social-cultural environment
and discuss its 2. Environmental scanning and environmental management
relationship to a. Environmental scanning is the process of collecting
decision making. information about the external marketing environment to
identify and interpret potential trends
i. The goal is to analyze the information and decide
whether these trends represent opportunities or
threats to the company
ii. The firm can then determine the best response to a
particular environmental change
b. Environmental management is the attainment of
organizational objectives by predicting and influencing the
five components of the marketing environment
c. Environmental scanning is a vital component of effective
environmental management
d. Strategic alliances—partnerships with other firms in which
resources and capital are combined—are often used to
create competitive advantages in a new market

Assessment check questions

1.1. Define environmental scanning. Environmental scanning is the process

of collecting information about the external marketing environment to
identify and interpret potential trends.

1.2. How does environmental scanning contribute to environmental

management? Environmental scanning contributes to environmental
management by providing current information about the five different
environments so marketers can predict and influence changes.

Chapter Objective 2: Explain the types of competition marketers face and the steps
necessary for developing a competitive strategy.
Key Terms: competitive environment, monopoly, temporary monopoly, antitrust, oligopoly, direct
competition, indirect competition, competitive strategy, time-based competition
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 55

PowerPoint Basic: 6-8

PowerPoint Expanded: 7-13
1. The competitive environment
a. The interactive exchange between organizations and
customers creates the competitive environment
b. Marketing decisions by each firm influence consumer
responses and also affect the marketing strategies of
competitors
c. All firms must continually monitor the marketing activities of
competitors (products, distribution channels, prices, and
promotional efforts)
2. Monopolies
a. Monopoly: market structure in which a single seller
dominates trade in a good or service for which buyers can
find no close substitutes
i. Monopolies are rare today—government regulators
carefully monitor monopolies
ii. The deregulation movement has ended total
monopoly protection for most public utilities (such as
long-distance telephone companies, cell phone
providers, and even electric utilities)
b. Some firms still can achieve temporary monopolies
i. Drug firms enjoy monopoly protection, during the life
of a patent
ii. An antitrust case may be filed to determine whether
a firm has become a monopoly. They are laws
Note: Ask students designed to prevent restraints on trade such as
for several examples business monopolies
of oligopolies—
automobiles, c. An oligopoly is an industry in which there are only a limited
airlines, etc.—and number of sellers and where entry costs deter newcomers
ask the question from entering the industry. Such a structure ensures that the
whether or not corporations remain innovative
students believe 3. Types of competition: marketers face three types of competition
oligopolies need to a. Direct competition occurs among marketers of similar
be regulated. products
b. Indirect competition involves products that are easily
substituted
c. The final type of competition occurs among all organizations
that compete for consumers’ purchases
i. Traditional economic analysis of competition views it
as a battle among firms in the same industry (direct)
or among substitutable goods and services (indirect)
ii. But marketers must be aware that all firms compete
for a limited amount of dollars that consumers can or
Note: Ask students will spend
to think of examples 4. Developing a competitive strategy
where firms were
able to establish
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
56 Part 1 Designing Customer-Oriented Marketing Strategies

strong competitive a. Developing a competitive strategy involves answering three

positions in the questions:
marketplace simply i. Should the firm compete?
by being first with an
ii. If so, in what markets should it compete?
innovative good or
service. iii. How should it compete?
b. The answer to the first question depends on the firm’s
resources, objectives, and expected profit potential
c. The answer to the second question requires the marketers
to acknowledge the firm’s limited resources
i. Resources should be allocated to the areas of
greatest opportunity
ii. Acquisitions or mergers often allow firms to gain
access to markets or new technologies
d. The answer to the third question requires that marketers
make product, pricing, distribution, and promotional
decisions that give the firm a competitive advantage in the
marketplace
5. Time-based competition
a. Time-based competition is the strategy of developing and
distributing products more quickly than competitors
b. The flexibility and responsiveness of time-based competitors
enables them to improve product quality, reduce costs, and
expand product offerings

Assessment check questions

2.1. Distinguish between direct and indirect competition, and give an

example of each. Direct competition occurs among marketers of similar
products, such as supermarkets or gas stations. Indirect competition
involves products that are easily substituted. Fried chicken could compete
with pizza or tacos. A baseball game could compete with a trip to a water
park.

2.2. What is time-based competition? Time-based competition is the

strategy of developing and distributing goods and services more quickly
than competitors.

Chapter Objective 3: Describe how marketing activities are regulated and how marketers
can influence the political-legal environment.
Key Terms: political-legal environment, antimonopoly period, protecting competitors, consumer
protection, industry deregulation, cyberspace
PowerPoint Basic: 9-10
PowerPoint Expanded: 14-19
1. The political-legal environment
a. The political-legal environment includes the laws and their
interpretations that require firms to operate under
competitive conditions and to protect consumer rights

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 57

b. Numerous laws and regulations—at the federal, state, and

local levels—exist, some of which are vaguely stated and
inconsistently enforced by different authorities
c. Federal, state, and local regulations affect marketing
practices, as do the actions of independent regulatory
agencies
2. Government regulation: the four phases
a. Antimonopoly period of the late 19th and early 20th centuries
i. The Sherman Antitrust Act, the Clayton Act, and the
Federal Trade Commission Act were all passed
during this period
ii. The purpose of these laws was to maintain a
competitive environment by reducing the trend
toward increasing concentration of industry power in
the hands of a small number of firms
Table 3.1 Major iii. These laws still affect business today (Microsoft was
Federal Laws guilty of crushing competition)
Affecting Marketing.
Think of one b. The second phase aimed at protecting competitors
consumer issue i. This phase emerged during the Depression and
(involving safety, attempted to protect independent merchants against
health, children, etc.) competition from larger chain stores
and determine which ii. One such act is the Robinson-Patman Act
law or laws may c. The third regulatory phase was a series of laws focused on
have an effect on it. consumer protection
i. Examples include the Sherman Act, FTC Act, and
Federal Food and Drug Act
d. The fourth phase involved industry deregulation
i. Began during the 1970s and continues even today
ii. The government has sought to increase competition
in industries such as telecommunications, utilities,
transportation, and financial services by
discontinuing many regulations
iii. Firms are permitted to expand service offerings to
new markets
e. The newest regulatory frontier is cyberspace
i. Federal and state regulators are looking for ways to
police the Internet and online services
ii. Issues of concern include privacy, child protection,
identity theft, and other online scams
3. Government regulatory agencies
a. The Federal Trade Commission (FTC)
i. (FTC) has the broadest power of any agency to
influence marketing activities
ii. It regulates unfair business practices and stops false
and deceptive advertising
iii. Along with the U.S. Justice Department, the FTC can
stop mergers
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
58 Part 1 Designing Customer-Oriented Marketing Strategies

iv. The latest round of deregulation began with the

passage of the Telecommunications Act of 1996 and
its 2003 amendment, the Do Not Call law
b. Other federal regulatory agencies:
i. Consumer Product Safety Commission
ii. Federal Power Commission
iii. Environmental Protection Agency (EPA)
iv. Food and Drug Administration (FDA)
4. Other regulatory forces
a. Public and private consumer interest groups that seek to
protect consumers in many areas—such as health, safety,
and credit scoring
b. Special interest groups that advance the rights of minorities,
senior citizens, and others—such as AARP
c. Self-regulatory groups that set guidelines for business
conduct—such as The Council of Better Business Bureau
and the Direct Marketing Association
5. Controlling the political-legal environment
a. Most marketers comply with laws and regulations
b. Smart marketers provide products which anticipate
customers’ future needs and address government rules

Assessment check questions

3.1. Identify the four phases of U.S. government regulation of business.

What is the newest frontier? The four phases of government regulation are
the antimonopoly period, protection of competitors, consumer protection,
and industry regulation. The newest frontier is cyberspace.

3.2. Which federal agency wields the broadest regulatory powers for
influencing marketing activities? The Federal Trade Commission has the
broadest regulatory authority.

Chapter Objective 4: Outline the economic factors that affect marketing decisions and
consumer buying power.
Key Terms: gross domestic product (GDP), economic environment, business cycle, inflation,
deflation, unemployment, discretionary income, demarketing
PowerPoint Basic: 11-15
PowerPoint Expanded: 20-26
1. The economic environment
a. The overall health of the economy influences how much
consumers spend and what they buy
b. This also works the other way—what consumers spend and
buy affects the status of the economy
c. The gross domestic product (GDP) is the sum of all goods
and services produced by a nation in a year

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 59

d. Consumer spending in the U.S. accounts for about 65

percent of the country’s total GDP
e. Marketing’s economic environment is made up of factors
that influence consumer buying power and marketing
strategies, including the stage of the business cycle, the
global economic crisis, inflation and deflation,
unemployment, income, and resource availability
Note: Cite some 2. Stages in the business cycle:
recent examples of a. The business cycle refers to the pattern of stages in the
firms that have level of economic activity: prosperity, recession, depression,
“downsized.” and recovery
b. Consumer buying differs in each stage of the business cycle
i. During periods of prosperity, consumer spending
maintains a brisk pace and buyers are willing to
spend more for premium versions of well-known
brands
ii. During times of recession, consumer spending
patterns emphasize basic, functional products with
low price tags
iii. Consumer spending sinks to its lowest level during a
depression
iv. In periods of recovery, purchasing power increases,
Note: What sectors but consumers remain cautious—businesses have to
were most hit in the earn profits while trying to gauge uncertain consumer
recent economic demand. Many cope by keeping costs low
downturn? 3. The global economic crisis
a. Sometimes business cycles affect consumers and
businesses across the globe
b. The recent recession is the worst economic downturn since
the Great Depression, with predictions such as the world
economy shrinking for the first time in 60 years
c. Marketers’ response varied from emphasizing value and
affordability, slashing prices, offering sales, assuring
customers with various options in case of job loss
i. Marketers needed to reevaluate strategies and focus
on their most promising products
Note: Ask students ii. Whether consumers will change their buying habits
how some once economy regains remains to be seen
companies were 4. Inflation and deflation
able to flourish a. Inflation refers to rise in prices and devaluation of money
despite turbulent making products less affordable
times? How were
these firms able to b. Causes of inflation:
positively influence i. Excess demand for goods and services
consumer buying ii. Increase in costs of raw materials, components
behavior amidst tight parts, or human resources
credit? c. Deflation means a fall in prices making products more
affordable. Deflation causes a freefall in business profits,

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
60 Part 1 Designing Customer-Oriented Marketing Strategies

lower returns on most investments, and widespread job

layoffs
5. Unemployment
a. Unemployment refers to the proportion of people in the
economy who are actively seeking work but do not have
jobs
b. Unemployment rises during recessions and declines in the
recovery and prosperity stage
c. As with inflation, unemployment tends to alter consumer
behavior (example: when people are worried about losing
their jobs, they tend to postpone “large” purchases such as
new cars)
6. Income
a. Income is an important determinant of marketing’s economic
environment because it influences consumer buying power
i. Through the study of income statistics and trends,
marketers can estimate market potential and develop
plans for targeting specific market segments
ii. Marketers are most interested in discretionary
income—the amount of money that people have
Career Readiness— available to spend after buying necessities
Getting a Job in b. Periods of major innovation have been accompanied by
CSR. Tips on how to dramatic increases in living standards and rising incomes
land a job in 7. Resource availability
corporate social a. Resources are not unlimited and shortages require
responsibility. marketers to reorient their thinking
b. Demarketing is the process of reducing consumer demand
for a product to a level that the firm can reasonably supply
(utilities often advertise methods for conserving energy)
c. A shortage requires that firms allocate limited supplies,
deciding whether to spread them over all customers or limit
purchases by some customers so that the firm can
completely satisfy others
8. The international economic environment
a. Marketers must monitor the economic environment of other
nations
b. Economic factors affecting marketing decisions
i. Changes in foreign currency rates compared with the
U.S. dollar also affect marketing decisions
ii. Lower labor costs in foreign nations—result in
cutbacks in U.S jobs due to offshoring
Note: Ask students iii. Politics in other countries affects the international
to mention some economic environment as well
benefits and
disadvantages of Assessment check questions
offshoring of jobs

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 61

4.1. Identify and describe briefly the four stages of the business cycle. The
four stages of the business cycle are prosperity, recession, depression,
and recovery.

4.2. Explain how inflation and income affect consumer buying decisions.
Inflation devalues money and therefore may restrict some purchasing,
particularly goods and services not considered necessary. Income also
influences consumer buying power—the more discretionary income a
household has, the more goods and services can be purchased.

Chapter Objective 5: Discuss the impact of the technological environment on a firm’s

marketing activities.
Key Terms: technological environment, VoIP
PowerPoint Basic: 16, 17
PowerPoint Expanded: 27-29
1. The technological environment
a. The technological environment represents the application to
marketing of knowledge based on discoveries in science,
inventions, and innovations
b. Some impacts of technology:
i. Technology can lead to new goods and services
ii. It can improve existing products and customer
service
iii. It can reduce prices through new production and
distribution methods
iv. It can rapidly make existing products obsolete and
open new opportunities in entirely new industries
(example: pets wearing radio-frequency identification
tags)
v. It can help address social concerns (example: the
development of more fuel-efficient cars)
c. Industry, government, colleges and universities, and other
not-for-profit institutions all play roles in the development of
new technology
d. The federal government, including the Department of
Defense, is often involved in the development of
technology—air bags, digital computers, the microwave,
even the Internet were initially created for military use
2. Applying technology
a. Creative applications of technology can give a firm a definite
competitive edge while benefiting society
b. VoIP (voice over Internet protocol) is an alternative to
traditional telecommunications, allowing phone service while
connected to a computer rather than a traditional phone jack
c. The Internet, cell phones, and Wi-Fi are allowing
communications in ways never before imagined, but their
networks aren’t yet compatible

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
62 Part 1 Designing Customer-Oriented Marketing Strategies

d. Engineers are working on a new standard to allow all new

technological networks to connect with a common interface,
called Internet Protocol Multimedia Subsystem (IMS)

Assessment check questions

5.1. What are some of the consumer benefits of technology? Technology

can lead to new or improved goods and services, offer better customer
service, and reduce prices. It can also address social concerns.

5.2. Why must marketers monitor the technological environment?

Marketers need to monitor the technological environment to stay at par
with—and possibly ahead of—competitors. If they don’t, they may wind up
with obsolete offerings.

Chapter Objective 6: Explain how the social-cultural environment influences marketing.

Key Terms: social-cultural environment, consumerism, consumer rights
PowerPoint Basic: 18
PowerPoint Expanded: 30-32
1. The social-cultural environment
a. As a nation, the U.S. is becoming older, more affluent, and
more culturally diverse
b. Many people express concerns about the environment,
pollution, and health and safety issues
c. They also value their time and have concerns about
balancing work and personal time
2. The social-cultural environment refers to the relationship between
the marketing, society, and culture
a. To remain competitive, marketers must be sensitive to
Note: Think about all society’s demographic shifts and changing values
the products now 3. An important social-cultural consideration is cultural diversity
targeted toward the
a. The U.S. is a diverse society composed of various
Hispanic market.
submarkets, each with its unique values, cultural
Bring in advertising
characteristics, consumer preferences, and purchasing
examples of
behaviors
products and
services aimed at b. Many firms specifically target these submarkets
Hispanic c. It is critical that marketers learn about cultural and societal
populations. differences among countries
d. Marketers must redesign packages and modify products and
advertising messages to suit the tastes and preferences of
different cultures
Solving an Ethical
Controversy: Was 4. Consumerism
“Pink Slime” a. Consumerism is defined as a social force within the
Coverage Fair or environment that aids and protects the consumer by
Foul? exerting legal, moral, and economic pressures on business
Ask students to and government
discuss how they b. In recent years, marketers have witnessed increasing
feel about the consumer activism
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 63

media’s coverage of c. The choice between pleasing all consumers and remaining
“pink slime” and profitable—thus surviving—defines one of the most difficult
whether the media dilemmas facing business.
was solely 5. President John F. Kennedy offered some rules of thumb that
responsible for Beef explain basic consumer rights. These rights have formed the
Products Inc.’s conceptual framework of much of the legislation passed in the first
downfall. 50 years of the consumer rights movement:
a. The right to choose freely
b. The right to be informed
c. The right to be heard
d. The right to be safe
6. Some firms have created a new position—manager of public policy
research—to study the changing societal environment’s future
impact on their organizations

Assessment check questions

6.1. Define consumerism. Consumerism is a social force within the

environment that aids and protects the buyer by exerting legal, moral, and
economic pressures on business.

6.2. Identify the four consumer rights. The four consumer rights are the
right to choose freely, the right to be informed, the right to be heard, and
the right to be safe.

Chapter Objective 7: Describe the ethical issues in marketing.

Key Terms: marketing ethics
PowerPoint Basic: 19, 20
PowerPoint Expanded: 33-41
1. Ethical issues in marketing
a. As marketing is closely connected with various public
issues, it invites constant scrutiny by the public
b. Marketing acts as an interface between an organization and
the society in which it operates, so marketers carry much of
the responsibility for dealing with social issues that affect
their firms
c. Marketing operates outside the firm—it reacts to that
Figure 3.2 Ethical environment and, in turn, is acted on by environmental
Issues in Marketing. influences
Discuss how each d. The diverse social issues faced by marketers can be divided
element of the into two major categories:
marketing mix raises
i. Marketing ethics
its own set of ethical
issues. ii. Social responsibility
2. Marketing ethics
a. Ethics refers to matters of right and wrong: the responsibility
of the individual and the firm to do what is morally right

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
64 Part 1 Designing Customer-Oriented Marketing Strategies

Figure 3.3 Ten b. Marketing ethics refers specifically to marketers’ standards

Steps for of conduct and moral values
Corporations to i. The U.S. Federal Sentencing Guidelines for
Improve Standards Organizations provides a framework for evaluating
of Business Ethics. misconduct in business activities
Choose one step
ii. Some firms have ethics officers who establish and
and discuss how it
enforce ethical protocols
would apply to a
familiar business or iii. Ensuring ethical practices means promising
product. customers and business partners not to sacrifice
quality and fairness for profit
c. People develop standards of ethical behavior based on their
Figure 3.4 Test Your
own systems of values
Workplace Ethics.
Discuss with other i. Values help people deal with ethical questions in
classmates any their personal lives
questions to which ii. However, the workplace may generate conflicts
you answered “yes.” between individual ethics and the employer’s ethical
standards
iii. Individuals may be influenced by a third basis of
ethical authority—a professional code of ethics that
transcends both organizational and individual value
systems
3. Ethics in marketing research
a. Invasion of personal privacy is a critical issue in marketing
research
b. A particularly problematic ethical issue is the promise of
cash rewards or gifts in return for information that can then
be sold to direct marketers
c. Privacy issues have grown rapidly with the growth of the
Internet, and several agencies offer assistance to Internet
consumers
4. Ethics in product strategy
a. Issues include product quality, planned obsolescence, brand
similarity, and packaging
b. Competitive pressures have often forced some marketers
into packaging practices that may be considered misleading,
deceptive, or unethical
5. Ethics in distribution
a. There are two ethical issues concerning a firm’s distribution
strategy:
i. What is the appropriate degree of control over the
distribution channel? (this typically arises in
relationships between manufacturers and franchise
dealers)
Note: Ask students ii. Should a company distribute its products in
to provide examples marginally profitable outlets that have no alternative
of misleading source of supply? (this concerns marketers’
advertisements responsibility to serve unsatisfied segments even if
profit potential is slight)
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 65

b. Although resolving such issues is difficult as they involve

individuals rather than the public, firms should consistently
enforce its channel policies
6. Ethics in promotion
a. Promotion raises many ethical questions because it is the
most direct link between a firm and its customers
b. Personal selling has always been a target of criticism
c. But promotion includes a broad range, including advertising
and direct marketing, giving rise to many ethical questions
d. Truth in advertising is the bedrock of ethics in promotion
e. Marketing to certain groups has led to some concerns
i. Marketing to children has been under close scrutiny
ii. Promoting certain products to college students can
also raise ethical questions
7. Ethics in pricing
a. Pricing is probably the most regulated aspect of a firm’s
marketing strategy
b. Unethical pricing behavior is often illegal
c. Other ethical issues concerning pricing:
i. Should some consumers pay more if distribution
costs are higher?
ii. Do marketers have an obligation to warn consumers
of impending price changes?
d. Certain laws allow companies to levy charges that
consumers are unaware of
i. Few acts curb abuses in the credit-card industry and
end many questionable practices of credit card
companies regarding interest rates, billing cycles,
finance charges, etc.

Assessment check questions

7.1. Define marketing ethics. Marketing ethics refers to the marketer’s

standards of conduct and moral values.

7.2. Identify the five areas in which ethics can be a problem. The five areas
of ethical concern for marketers are marketing research, product strategy,
distribution, promotion, and pricing.

Chapter Objective 8: Identify the four levels of the social responsibility pyramid.
Key Terms: social responsibility, green marketing
PowerPoint Basic: 21, 22
PowerPoint Expanded: 42-46
1. Social responsibility in marketing
a. Companies can do business in a way that everyone
benefits—the customers, the company, and society as a
whole
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
66 Part 1 Designing Customer-Oriented Marketing Strategies

b. Ethics are important, but social responsibility takes a

company’s behavior a step further
2. Social responsibility consists of marketing philosophies, policies,
procedures, and actions that have the enhancement of society’s
welfare as a primary objective:
a. It demands that marketers accept an obligation to give equal
weight to profits, consumer satisfaction, and social well-
being in evaluating their firm’s performance
b. Government legislation can mandate or promote socially
responsible actions
c. Consumer activism can also promote social responsibility.
d. The four dimensions of social responsibility:
i. Economic
ii. Legal
iii. Ethical
iv. Philanthropic
e. The first two dimensions have long been recognized, but
ethical obligations and the need for marketers to be good
corporate citizens have increased in recent years
3. Marketing’s responsibilities
Figure 3.5 The Four
Step Pyramid of a. The traditional concept of social responsibility only extended
Social to customers, employees, and stockholders—rarely did the
Responsibility. Think concept extend to the government or general public
of a company that b. Today, corporate responsibility has expanded to cover the
has been in the entire societal framework
news recently due to i. This extends domestically as well as internationally
a lapse in one of ii. Marketers must also take into account the long-term
these areas. Keep in effects of their decisions
mind that the
c. Methods through which marketers can help their companies
economic and legal
behave in a socially responsible manner:
areas have long
been recognized, i. Cause marketing is one channel through which
but the last two have companies can promote social causes
become important ii. Socially responsible marketing campaigns can be
only in recent years. used to encourage people to adopt socially beneficial
behaviors—such as conserving energy or protecting
the environment
iii. Communities can benefit from socially responsible
investing
4. Marketing and the Environment
Marketing Success:
a. The Environment
IBM’s CSR
Initiatives i. Environmental protection is a major challenge for
today’s businesses and ecological issues influence
all areas of marketing decision making
ii. One concern relates to products that incorporate
planned obsolescence—the practice of intentionally
designing products with limited life and durability

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 67

iii. Public concern about pollution has resulted in

recycling efforts; recycling can benefit society by
saving natural resources and energy as well as by
alleviating waste disposal
b. Green marketing
i. Green marketing deals with the production,
promotion, and reclamation of environmentally
sensitive products
ii. This movement has grown since the early 1990s and
consumers have responded by buying these goods
iii. Example: Several ballparks, including Busch
Stadium in St. Louis, Safeco Field in Seattle, and
Kauffman Stadium in Kansas City, employ solar
panels to reduce their energy costs.
5. Strategic Implications of Marketing in the 21st Century
a. Business in the 21st century is propelled by information
technology, but sustained by creative thinking and the
willingness of marketers to meet challenges
b. Ethics and social responsibility must underlie everything that
Note: Ask students marketers do
to come up with
examples of green Assessment check questions
products used in
everyday life. You 8.1. Identify the four levels of the social responsibility pyramid. The four
could direct students levels of social responsibility are economic, legal, ethical, and
to think of products philanthropic.
used in kitchen,
bathing, cleaning, 8.2. What are the benefits of green marketing? Green marketing, which
etc. popular responds to consumers’ growing concerns about ecological issues, offers
examples would consumers high-quality products without health risks or damage to the
include food, environment. Many industries, including appliances, consumer electronics,
disposables, construction, hospitality, and more, are finding that incorporating green
cleaners. practices rejuvenates their business.

ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES

Chapter 3 Assurance of Learning Review

1. Why is environmental scanning an important activity for marketers?

Answer: Environmental scanning is the process of collecting information about the external marketing
environment to identify and interpret potential trends. It is important to marketers because it helps them
analyze information and decide whether these trends represent opportunities or threats to the company.
They can then determine the best response to a particular climate change or environmental shift.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-1
Topic: A-head: Environmental Scanning and Environmental Management
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
68 Part 1 Designing Customer-Oriented Marketing Strategies

Bloom’s: Knowledge
Difficulty: Easy

2. What are the three different types of competition? Give an example of each.

Answer: Direct competition occurs among marketers of similar products (examples: GE vs. Sony clock
radios, Kenmore vs. Sharp microwaves, Time vs. Newsweek, Cannondale vs. Trek bicycles).
Indirect competition involves products that can be easily substituted (examples: designer apparel vs.
knock-off imitation, butter vs. margarine, copper pipe distributor vs. PVC pipe distributor).
The last type is competition among all organizations that compete for consumer purchases (examples:
frozen vs. canned sweet corn, Barcalounger recliner vs. Ikea chaise lounge, backyard swimming pool vs.
Disney World vacation).
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-2
Topic: A-head: The Competitive Environment
Bloom’s: Knowledge
Difficulty: Easy

3. What are the three questions marketers must ask before deciding on a competitive strategy?

Answer: They need to ask themselves these simple yet revealing questions: Should the firm compete? If
so, in which markets should it compete? And how should it compete?
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-2
Topic: A-head: The Competitive Environment
Bloom’s: Knowledge
Difficulty: Easy

4. What is the function of the Federal Trade Commission? The Food and Drug Administration?

Answer: The Federal Trade Commission (FTC) has the broadest powers of any agency to influence
marketing decisions—it regulates unfair business practices, stops false and deceptive advertising, can
require firms to provide additional information or give a refund to consumers, and (along with the U.S.
Justice Department) has the power to stop mergers. The Food and Drug Administration has the authority
and responsibility to regulate food, dietary supplements, drugs, and cosmetics, plus medical biological
devices.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-3
Topic: A-head: The Political-Legal Environment
Bloom’s: Knowledge
Difficulty: Easy

5. Describe an industry or firm that you think might be able to weather an economic downturn and explain
why.

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 69

Answer: During economic downturns, consumers usually focus on basic necessities and functional
products while putting off purchases related to travel, vacations, entertainment, or restaurant meals.
Though this is not a hard-and-fast rule, it would indicate that firms providing basic goods are more likely
to weather an economic storm than those offering high-end goods or nonessential services. Based on
this theory, firms that would maintain profits even during recessions might include certain grocery,
pharmaceutical, apparel, and hardware manufacturers and retailers, as well as those in industries that
supply basic necessities such as oil companies, gas and electric utilities, or transportation systems.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-4
Topic: A-head: The Economic Environment
Bloom’s: Knowledge
Difficulty: Easy

6. Why do marketers monitor the technological environment?

Answer: The technological environment affects marketing as it represents the application of knowledge
based on discoveries in science, inventions, and innovations. It can address social concerns and
environmental issues and allow for new design, increased speed, and improved efficiency in many areas
of manufacturing. Advances need to be monitored because technology can lead to new goods and
services or improve existing ones, create new marketing opportunities in new industries, and can reduce
prices through improved production and distribution—but it can also make existing products quickly
obsolete.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-5
Topic: A-head: The Technological Environment
Bloom’s: Knowledge
Difficulty: Easy

7. How might marketers make the most of shifts in the social-cultural environment?

Answer: The social-cultural environment influences marketing activities in many ways—the readiness of
society to accept a new marketing idea, the public’s trust and confidence in business as a whole, the
enactment of legislation and regulation, and the creation of trade barriers and international restrictions.
Marketers can benefit by monitoring these shifts, anticipating the future trends and consumer preferences
that may result from them, then rethinking target markets and adjusting marketing strategies based on
this information.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-6
Topic: A-head: The Social-Cultural Environment
Bloom’s: Knowledge
Difficulty: Easy

8. Describe the importance of consumer rights in today’s marketing activities.

Answer: Consumer rights are a result of consumerism—the social force within the environment that aids
and protects consumers by exerting legal, moral, and economic pressures on business and government.
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
70 Part 1 Designing Customer-Oriented Marketing Strategies

Consumer rights in the U.S. include the right to choose freely, to be informed, to be heard, and to be
safe. Marketers must consider all of these when making decisions or creating strategies, since they form
the legal and ethical framework for consumer protection and safety. Informing consumers, listening to
their concerns and ideas, giving them choices, and protecting their safety come into play in almost any
marketing strategy. But while worrying about satisfying consumers, marketers must also carefully weigh
their demands and wishes against profit objectives and the need to maintain a financially healthy
organization.
Point value: 1
BUSPROG: Analytic
DISC: Customer
Learning Objective: 3-6
Topic: A-head: The Social-Cultural Environment
Bloom’s: Knowledge
Difficulty: Easy

9. Why is it worthwhile for a firm to create an ethics program?

Answer: Marketing ethics refers to a firm’s standards of conduct and moral values in its decision making
and production of goods and services. Creating an ethics program can be complicated and time
consuming, but the final product provides a solid framework and set of realistic guidelines—both legal
and moral—for all employees to follow. It also informs partners, suppliers, and the public of the firm’s
intentions and beliefs. It spells out a company’s policies, provides support, and gives sound advice for
dealing with ethical dilemmas, weighing options, making decisions, and doing what’s right.
Point value: 1
BUSPROG: Analytic
DISC: Customer
Learning Objective: 3-7
Topic: A-head: Ethical Issues in Marketing
Bloom’s: Knowledge
Difficulty: Easy

10. How can social responsibility benefit a firm as well as the society in which it operates?

Answer: Social responsibility involves accepting the obligation to consider several broad and sometimes
conflicting elements—profit, customer satisfaction, and societal well-being—as being equal in value when
evaluating the performance of the firm. It allows a firm to demonstrate its philosophies and values by
supporting a not-for-profit firm, donating to a cause, or showing respect for the environment. While
contributing to society, social responsibility benefits a firm by building its reputation as a trusted
institution, creating positive PR and media attention, and winning public support.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-8
Topic: A-head: Social Responsibility in Marketing
Bloom’s: Knowledge
Difficulty: Easy

Projects and Teamwork Exercises

1. Answer: Students should be asked to conduct an extensive study of the two companies or brands they
select. The strategies developed by them should take into account all the five forces in the external
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 71

marketing environment: competitive, political-legal, economic, technological, and social-cultural. An easy

way to get started on this exercise is to first ask the students to answer the following questions:
• In what markets does the company compete?
• How do they compete?
Point value: 1
BUSPROG: Reflective Thinking
DISC: Strategy
Learning Objective: 3-2
Topic: A-head: The Competitive Environment
Bloom’s: Application
Difficulty: Challenging

2. Answer: Students’ answers will vary.

Point value: 1
BUSPROG: Reflective Thinking
DISC: Customer
Learning Objective: 3-4
Topic: A-head: The Economic Environment
Bloom’s: Application
Difficulty: Moderate

3. Answer: Students’ answers will vary. The strategy could include faster delivery times, mail tracking
facilities, and establishing customer service centers in the case of an emergency.
Point value: 1
BUSPROG: Reflective Thinking
DISC: Strategy
Learning Objective: 3-2
Topic: A-head: The Competitive Environment
Bloom’s: Application
Difficulty: Moderate

4. Answer: Students should be asked to conduct an extensive study on their chosen product. An easy
starting point for their research could be to identify the potential dangers associated with each of the
products. For example, lotteries are associated with scams while tobacco consumption leads to health
problems.
Point value: 1
BUSPROG: Reflective Thinking
DISC: Promotion
Learning Objective: 3-7
Topic: A-head: Ethical Issues in Marketing
Bloom’s: Application
Difficulty: Moderate

5. Answer: Students’ answers will vary. An example for the above mentioned research could be the
Sacramento Kings, a professional sports team in the NBA, run by the Maloof family.
BUSPROG: Reflective Thinking
DISC: Strategy
Learning Objective: 3-2
Topic: A-head: The Political-Legal Environment
Bloom’s: Application
Difficulty: Moderate

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
72 Part 1 Designing Customer-Oriented Marketing Strategies

Critical-Thinking Exercises
1. Suppose you and a friend want to start a company that markets frozen vegetarian dinners. What are
some of the questions about the competitive environment that you would like to have answered before
you begin production? How will you determine whom your customers are likely to be? How will you reach
them?

Answer: To complete the exercise students need to answer the three questions posed in the chapter.
First, do we compete? Consider the availability of firm resources; connect this activity to the firm’s overall
objectives, and project profit potential.
Second, in what markets do we compete? Consider the resources identified earlier and determine how
they can be most effectively allocated.
Finally, how do we compete? Determine which elements of the marketing mix are most critical to creating
competitive advantage.
Point value: 1
BUSPROG: Analytic
DISC: Research
Learning Objective: 3-3
Topic: A-head: The Competitive Environment
Bloom’s: Comprehension
Difficulty: Moderate

2. Emissions standards for motorcycles took effect in 2006 under rules adopted by the Environmental
Protection Agency. There were no previous emissions controls for motorcycles at all, but even under the
new laws, “dirt” bikes for off-road use will be exempt. The new standards add about $75 to the average
cost of a motorcycle according to the EPA, but $250 according to the Motorcycle Industry Council. Why
do you think motorcycle makers have not adopted voluntary emissions standards? Should they have
done so? Why or why not?

Answer: Student opinions will vary. Motorcycle companies were not likely wanting to increase the price of
their product and were equally unwilling to absorb the costs themselves.
Point value: 1
BUSPROG: Analytic
DISC: Product
Learning Objective: 3-7
Topic: A-head: Ethical Issues in Marketing
Bloom’s: Comprehension
Difficulty: Moderate

3. The social-cultural environment can have a strong influence on the decisions marketers must make. In
recent years, animal rights groups have targeted the manufacture and sale of foie gras, a European food
delicacy made from goose and duck liver. Activists cite the cruel treatment of these birds, while chefs and
restaurant owners claim otherwise. Animal rights groups are pressuring restaurants to stop serving foie
gras. Others argue that consumers should be allowed a choice. What aspects of the social-cultural
environment are affecting the marketing of foie gras? Which of the other components of the marketing
environment may come into play, and how?

Answer: The primary issue here seems to be a change in values—just like we see increased concerns
about the environment and pollution, we see increased concerns about the treatment of animals. Other
components of the marketing environment that can come into play here include the political-legal
environment and competitive environment. The social-cultural environment can sometimes influence the

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 73

political-legal environment. Competitors may be able respond to these social-cultural concerns in a way
that gives them a competitive advantage.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-6
Topic: A-head: The Social-Cultural Environment
Bloom’s: Comprehension
Difficulty: Moderate

4. Nearly 400 million rebates—worth about $6 billion—are offered to U.S. consumers by marketers every
year. But do consumers like them? Often rebates require more effort than a consumer is willing to make
to receive the cash back. Critics of the promotional effort say that marketers know this and are banking
on consumers not redeeming them, resulting in extra income for retailers and manufacturers. Do you
think rebate programs are ethical? Why or why not?

Answer: Student opinions will vary. Keep in mind that any sales promotion program has significant costs
associated with it. Also, retailers have started to better facilitate the rebate process by offering extra
copies of receipts and rebate forms to consumers right at the checkout line. Finally, firms stand to gain
significant insight into their customer base when rebates are actually redeemed.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-7
Topic: A-head: Ethical Issues in Marketing
Bloom’s: Comprehension
Difficulty: Moderate

5. The safe disposal of nuclear waste has been the topic of continuing public debate and an ongoing
issue for marketers who work for nuclear power companies. This material is currently stored at 75 sites
around the nation. To build a nuclear waste site, the U.S. Department of Energy must apply for and
obtain a license. Supporters of such sites argue that they are important to building America’s nuclear
power capacity, while critics question their safety and usefulness. As a marketer, how would you
approach this issue?

Answer: Student opinions will vary. The marketer should be able to focus on the top two stages of the
pyramid of corporate social responsibility. They should ensure that practices are in place to avoid
harming the surrounding area in any way and they should determine what kind of philanthropic role they
might be able to play in the surrounding community.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-8
Topic: A-head: Social Responsibility in Marketing
Bloom’s: Comprehension
Difficulty: Moderate

Ethics Exercises

Some retail firms protect their inventory against theft by locking their premises after hours even though
maintenance and other workers are inside the stores working all night. Employees have charged that
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
74 Part 1 Designing Customer-Oriented Marketing Strategies

they are forbidden to leave the premises during work hours and that during an emergency, such as
illness or injury, precious time is lost waiting for a manager to arrive who is authorized to unlock the
doors. Although workers could open an emergency exit, in some cases they claim that they will be fired
for doing so. Employers assert that managers with keys are on the premises (or minutes away) and that
locking employees in ensures their own safety as well as cutting down on costly “shrinkage.”
1. Under what circumstances, if any, do you think locking employees in at night is appropriate?
2. If you feel this practice is appropriate, what safeguards do you think should be put into effect? What
responsibilities do employers and employees have in such circumstances?

Answer: The situation described in the exercise is controversial. On the one hand, locking employees in
at night (and making it difficult for them to leave) seems unreasonable if not downright dangerous. On the
other hand, retail firms have the right to protect their inventory. Try to get students to see both sides and
see if some compromise can be worked out.
Point value: 1
BUSPROG: Analytic
DISC: Strategy
Learning Objective: 3-7
Topic: A-head: Ethical Issues in Marketing
Bloom’s: Comprehension
Difficulty: Moderate

Internet Exercises

1. Economic environment. The U.S. Census Bureau projects what the U.S. population will look like in
the next 15 to 25 years. Visit the Census Bureau's website and compare its projections of the U.S.
population to current figures. What will the U.S. population look like in the future? How is it different from
the current population? List two or three products or industries you feel will benefit from future population
trends.
http://www.census.gov/population/www/projections/index.html

Answer: Students are expected to visit the website and do a comprehensive study of the various links
provided by the Census Bureau. The “Reports” section on the website contains links to numerous
working papers, reports, and projection publications. Students are expected to understand and compile a
detailed report on the economic predictions due to growth in population. They should also list out the
industries that will benefit from future population trends.
Point value: 1
BUSPROG: Reflective Thinking
DISC: Research
Learning Objective: 3-2
Topic: A-head: The Competitive Environment
Bloom’s: Application
Difficulty: Moderate

2. Fair Trade Coffee. Go to the website listed below to learn about so-called fair trade coffee. Prepare a
brief report on the subject. How would a coffee manufacturer or retailer integrate fair trade products into
social responsibility efforts?
http://www.globalexchange.org/campaigns/fairtrade/coffee/

Answer: Students are expected to visit the website and do a comprehensive study of the various links
provided by fair trade. Students are expected to write a brief report on how fair trade can help farmers
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 75

and the conditions to become fair trade certified. They can also explore the website to come up with
ideas to integrate fair trade products into social responsibility efforts.
Point value: 1
BUSPROG: Reflective Thinking
DISC: Research
Learning Objective: 3-7
Topic: A-head: Ethical Issues in Marketing
Bloom’s: Application
Difficulty: Moderate

3. Building a brand. Visit the website for footwear maker Ugg to learn about its efforts at building its
brand. How has Ugg answered each of the three questions listed in the chapter concerning the
development of a competitive strategy?
www.uggaustralia.com

Answer: Students should visit the website to gather information, and then, visit various websites on the
net for information from other sources, and then answer the three questions concerning the development
of a competitive strategy by Ugg. Should we compete? If so, in what markets should we compete? How
should we compete?
Point value: 1
BUSPROG: Reflective Thinking
DISC: Research
Learning Objective: 3-2
Topic: A-head: The Competitive Environment
Bloom’s: Application
Difficulty: Moderate

Case 3.1 General Mills and Its CSR Strategies—Questions for Critical Thinking

1. Do you think General Mills’ rapid progress toward some of its goals means it has set appropriate
benchmarks for social responsibility achievement? Or should it set higher ones?

Answer: Students’ answers will vary. Companies can do business in such a way that everyone benefits—
customers, the companies themselves, and society as a whole. While ethical business practices are vital
to a firm’s long-term survival and growth, social responsibility raises the bar even higher.
Point value: 1
BUSPROG: Reflective Thinking
DISC: Customer
Learning Objective: 3-8
Topic: A-head: Social Responsibility in Marketing
Bloom’s: Application
Difficulty: Moderate

2. How can the company further improve the nutritional quality of some of its sugared cereals such as
Lucky Charms and Cocoa Puffs, which one critic likened to “junk food,” without risking profit or market
share?

Answer: Students’ answers will vary. In marketing, social responsibility involves accepting an obligation
to give equal weight to profits, consumer satisfaction, and social well-being in evaluating a firm’s
performance. In addition to measuring sales, revenues, and profits, a firm must also consider ways in
which it contributes to the overall well-being of its customers and society. One way would be to commit to

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
76 Part 1 Designing Customer-Oriented Marketing Strategies

lowering the sugar content of some of its best-selling brands as a way to assist consumers in improving
or maintaining a healthy lifestyle.
Point value: 1
BUSPROG: Reflective Thinking
DISC: Customer
Learning Objective: 3-8
Topic: A-head: Social Responsibility in Marketing
Bloom’s: Application
Difficulty: Moderate

Video Case 3.2 Zappos Employees Do More Than Sell Shoes—Questions for Critical Thinking

1. Describe how the economic environment may influence Zappos’ marketing efforts.

Answer: Zappos marketers must be aware of the different economic factors that influence consumer
buying power. For example, during the recent recession, consumers may have less discretionary income
with which to purchase shoes—so they may buy less expensive shoes, fewer pairs, and they certainly
won’t want to pay for shipping. Inflation and unemployment also may cause consumers to lean toward
less expensive goods. Zappos may decide to offer different promotions or pricing in order to attract and
keep consumers during tougher economic times.

2. Explain how Zappos’ move into downtown Las Vegas fulfills the four levels of the social responsibility
pyramid.

Answer: Zappos’ move into downtown Las Vegas fulfills the social responsibility pyramid by expanding
and ultimately increasing profitability; working with the city of Las Vegas to renovate a vacated public
building to code; recycling an old building rather than building a new one and committing to the
revitalization of a city; and contributing to that revitalization with money, employees, volunteer efforts, and
a boost to other local businesses.

COLLABORATIVE LEARNING EXERCISES

Types of Competition

Purpose:
To help students better understand different sources of competition

Background:
The ability to understand and identify direct and indirect competition can give students a key
competitive advantage in the job market. This exercise is designed to help them develop that skill.

Relationship to Text:
Types of Competition

Estimated Class Time:

About 10 minutes

Preparation/Materials:
None needed

Exercise:
©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 77

Divide your students into small teams. Challenge the teams to brainstorm examples of direct and
indirect competition, with a two-minute time limit on each category. After you call time, ask one
person from each group to bring the lists to the front and read them aloud. Here is the key rule: If
more than one group has the same example, everyone needs to cross that example from their
lists. After several moments, each group will have a unique list of examples. The winner in each
category, of course, is the team with the longest remaining list. A few extra credit points for the
winning teams will usually make the competition more engaging for everyone.

Questions for Reflection:

• Why does the source of competition matter?
• What are the risks of underestimating indirect competition?
• What companies (or industries) have been causalities of indirect competitors?

Government Regulation

Purpose:
To provide context for the current debate regarding governmental regulation on outsourcing

Background:
U.S. citizens do not like the idea of American jobs crossing their borders, yet they have come to
accept the outsourcing of jobs. Prominent officials have argued that their choices are limited with
the impact of globalization and they need to take advantage of the lower costs and unique skills of
the workforce outside their borders in order to stay competitive.

Relationship to Text:
Government Regulation, Ethical Issues in Marketing

Estimated Class Time:

About 10 minutes

Preparation/Materials:
None needed

Exercise:
Divide the students into two groups. One group can discuss the need for legislation on
outsourcing while the other group can elaborate on the disadvantages of government intervention
in this matter.

Discussion Questions: Does your class believe that outsourcing is good for the economy? What
precautions should be taken by the government to protect local interests? Finally, how can
businesses maintain a balance between the home country and the host country’s interests?

Question for Reflection:

• Given that the outsourcing is global, who should be responsible for fair trade practices? Why?

Ethics and Legality

Purpose:
To clarify the difference between ethical and legal behavior

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
78 Part 1 Designing Customer-Oriented Marketing Strategies

Background:
Many students have never thought about laws as the “floor” for ethical behavior; some, in fact,
regard laws as the standard rather than the base. This issue is especially important from a
marketing perspective, since marketing activities often affect the public far beyond the
organization itself. This exercise is designed to clarify the difference between legal and ethical
approaches, and in doing so, to help students articulate their own personal ethical standards.

Relationship to Text:
Ethical Issues in Marketing

Estimated Class Time:

About 10 minutes

Preparation/Materials:
None needed

Exercise:
Ask your class to identify examples of the following behaviors. You might find it helpful to present
the categories on the board as quadrants, and to fill each quadrant with the examples that your
students surface.
• Illegal and unethical behavior (e.g., embezzling money, price discrimination, sexual
harassment)
• Illegal and ethical behavior (e.g., providing rock-bottom prices only to struggling
wholesalers in an underserved rural area)
• Legal and unethical behavior (e.g., promoting R-rated movies to young teens, engaging in
employee favoritism)
• Legal and ethical behavior (e.g., leading by example, contributing to the local community,
protecting whistleblowers)
You may find that simply categorizing behaviors triggers a vibrant discussion.

Questions for Reflection:

• What tools could companies use to ensure that they market in an ethical manner?
• How involved should the government be in this arena? Are there limits to the effectiveness of
government regulation?
• What are examples of self-regulation (e.g., the movie rating system, alcohol advertising limits
in network TV)? How effective are these efforts? Why?

©2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.