Principles of Marketing Chapter 3 +4
Codes of Conduct
(also called codes of ethics) consist of formalized rules and standards that describe what the company expects of its employees
Depression
- Unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy
Oligopoly
A competitive structure in which a few sellers control the supply of a large proportion of a product
Monopolistic Competition
A competitive structure in which a firm has many potential competitors and tries to develop a marketing strategy to differentiate its product
Monopoly
A competitive structure in which an organization offers a product that has no close substitutes, making that organization the sole source of supply
False
A good example of a government regulatory group at the local level is the Better Business Bureau. True or False?
Pure Competition
A market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply Does not exist in the real world, although some industries come close
The Business Cycle
A pattern of economic fluctuations that has four stages
False
A recession is characterized by extremely high unemployment, very low wages, minimal total disposable income, and lack of consumer confidence in the economy. True or False?
National Advertising Review Board (NARB)
A self-regulatory unit that considers challenges to issues raised by the National Advertising Division (an arm of the Council of Better Business Bureaus) about an advertisement
Better Business Bureau (BBB)
A system of nongovernmental, independent, local regulatory agencies supported by local businesses that help settle problems between customers and specific business firms
Disposable Income
After tax income
False
All marketers interpret laws and regulations conservatively and strictly to avoid violating a vague law. True or False?
True
Although openness is not the solution to ethics issues, it does create trust and facilitates learning relationships. True or False?
Federal Trade Commission (FTC)
An agency that regulates a variety of business practices and curbs: False advertising Misleading pricing Deceptive packaging and labeling
Ethical Issue
An ethical issue is an identifiable problem, situation or opportunity requiring a choice among several actions that must be evaluated as right or wrong, ethical or unethical
Willingness to Spend
An inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces
True
Any time an activity causes managers or consumers to feel manipulated or cheated, a marketing ethics issue exists, regardless of the legality of that activity. True or False?
Economic Responsibility
At the most basic level, all companies have an economic responsibility to be profitable so they can Provide a return on investment to their owners and investors Create jobs for the community Contribute goods and services to the economy
Community Relations Issue
Being a good community citizen means avoiding harmful actions that could damage the community
Demographic and Diversity Characteristics
Changes in a population's demographic characteristics lead to changes in how people live and consume products Increasing market of retired Baby Boomers Generation Y Growing Hispanic/Latino market in the U.S.
Cultural Values
Changes in cultural values alter people's needs/desires for products
True
Changes in general economic conditions affect (and are affected by) supply and demand, buying power, willingness to spend, consumer expenditure levels, and intensity of competitive behavior. True or False?
False
Codes of conduct (ethics) must be detailed enough to take every situation into account. True or False?
Environmental Forces
Competitive, Political, Technological, Sociocultural, Legal and Regulatory, Economic
Consumerism Issue
Consumerism is the efforts of independent individuals, groups, and organizations to protect the rights of consumers
True
Credit increases current buying power at the expense of future buying power. True or False?
Discretionary Income
Disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter
False
Employees can easily determine what behavior is acceptable even in organizations that do not have ethics compliance programs and policies on conduct. True or False?
Political Forces
Enactment of legislation Legal decisions interpreted by courts through civil and criminal cases
False
Environmental analysis is the process of collecting information about forces in the marketing environment. True or False?
Advantages of self regulatory Forces
Establishment and implementation are usually less expensive Guidelines are generally more realistic and operational Effective self-regulatory programs reduce the need to expand government bureaucracy
Total Budget Competitors
Firms that compete for the limited financial resources of the same customers ex. anything else
Product Competitors
Firms that compete in the same product class but market products with different features, benefits, and prices ex. iPad vs. Kindle Fire
Brand Competitors
Firms that market products with similar features and benefits to the same customers at similar prices ex. Pizza Hut vs. Dominoes
Generic Competitors
Firms that provide very different products that solve the same problem or satisfy the same basic customer need ex. Audio Cassettes vs. CDs
Income
For an individual, the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period
True
If political officials have positive feelings toward particular firms or industries, they are less likely to create or enforce laws and regulations that are unfavorable for business organizations. True or False?
Social Responsibility
Is an organization's obligation to maximize its positive impact and minimize its negative impact on society
Social Responsibility and Ethics
It is important to distinguish between Ethics and Social Responsibility Ethics relates to individual and group decisions, judgments about right and wrong, in a particular decision-making situation Social Responsibility relates to the total effect of marketing decisions on society
Improving Marketing Ethics
It is possible to improve ethical conduct by Hiring ethical employees Eliminating unethical employees The greatest decrease in ethical risks for an organization involve A well-implemented ethics program A strong corporate culture
Prosperity
Low unemployment and relatively high total income, which together ensure high buying power (provided the inflation rate stays low)
Legal Responsibility
Marketers are expected to follow all laws and regulations designed to keep U.S. companies' actions within the range of acceptable conduct and fair competition Economic and legal responsibilities are the most basic levels of social responsibility for a good reason
False
Marketing citizenship refers to an organization's obligation to maximize its positive impact and minimize its negative impact on society. True or False?
Marketing Ethics
Marketing ethics is a dimension of social responsibility that involves principles and standards that define acceptable conduct in marketing
Impact of Technology
Mobile devices and consumers' increasing use of the Internet have changed: How people communicate How marketers reach consumers Can improve productivity and opportunities for e-commerce
Disadvantages of self regultory Forces
Nonmember firms do not have to abide Lack the tools/authority to enforce guidelines Often less strict than those established by government agencies
True
Opportunity is a favorable set of conditions that limit barriers or provide rewards. True or False?
Opportunity and Ethics
Opportunity is conditions that limit barriers to provide rewards An employee that acts unethically and is rewarded or suffers no penalty may repeat such acts as other opportunities arrive
Competition
Other organizations that market products that are similar to or can be substituted for a marketer's products in the same geographic area
Marketers take two approaches to environmental forces:
Passive - Accepting them as uncontrollable Proactive - Attempting to influence and shape them
Individual Factors and Ethics
People learn values and principles through Socialization by family members Social groups Religion Formal education Because of different levels of personal ethics in an organization, there will be significant ethical diversity among employees An organization's culture often has more influence on marketing decisions than an individual's own values
Philanthropic Responsibility
Philanthropic responsibilities are not required of a company, but they promote human welfare or goodwill
False
Political forces are beyond the control of marketers, and so they can only react to them. True or False?
Procompetitive Legislation
Preserves competition Laws have been created to prevent businesses from gaining an unfair advantage through bribery
Marketing Ethics (Ethical Responsibility)
Principles and standards defining acceptable conduct in marketing as determined by various stakeholders including: The public Government regulators Private-interest groups Consumers Industry The organization itself
Legal and Regulatory Forces
Pro-competitive legislation, customer protection legislation, encouraging compliance with laws and regulation, regulatory agencies, self-regulatory forcs
Ethics and the Marketing Mix
Product ethical issues arise when: Marketers fail to disclose risks associated with a product or Fail to disclose information regarding the function, value or use of a product Marketers fail to inform customers about existing conditions or changes in product quality
Customer protection Legislation
Protects people from harm Prohibits hazardous products Requires information disclosure Aimed at particular marketing activities
Buying Power
Resources, such as money, goods, and services, that can be traded in an exchange
False
Strategic philanthropy involves linking a firm's products to a particular social cause on a sort-term basis. True or False?
True
Technological developments have a direct impact on creating and maintaining a marketing mix. True or False?
Wealth
The accumulation of past income, natural resources, and financial resources Global wealth is increasing Like income, wealth is unevenly distributed
Marketing Citizenship
The adoption of a strategic focus for fulfilling the economic, legal, ethical and philanthropic social responsibilities expected by stakeholders
Recovery
The economy moves from depression or recession to prosperity
Sociocultural Forces
The influences in a society and its culture(s) that change people's: Attitudes Beliefs Norms Customs Lifestyles Determine what, where, how, and when people buy products
True
The number of firms that control the supply of a product may affect the strength of competition. True or False?
Consumerism
The organized efforts of individuals, groups, and organizations to protect consumers' rights Lobbying government officials and agencies Letter-writing/e-mail sending campaigns
Environmental Analysis
The process of assessing and interpreting the information gathered through environmental scanning How you deal with the information collected during scanning
Environmental Scanning
The process of collecting information about forces in the marketing environment
False
There are few costs associated with being socially responsible and satisfying society's demands. True or False?
True
Top management sets the ethical tone for the entire organization. True or False
Stakeholder Orientation
Understanding and addressing the needs of all stakeholders, including communities and special-interest groups
Recession
Unemployment rises and total buying power declines, stifling both consumer and business spending
True
When marketing activities deviate from accepted standards, the exchange process can break down, resulting in customer dissatisfaction, lack of trust, and lawsuits. True or False?
Credit
enables people to spend future income now or in the near future Credit increases current buying power at the expense of future buying power
Organizational (Corporate) Culture
is a set of values, beliefs, goals, norms and rituals that members of an organization share
Sustainability
is the potential for the long-term well-being of the natural environment, including all biological entities, as well as the interaction among nature and individuals, organizations and business strategies
Cause-related Marketing
the practice of linking products to a particular social cause on an ongoing or short-term basis
Strategic Philanthropy
the synergistic use of organizational core competencies and resources to address key stakeholders' interests and achieve both organizational and social benefits