Chapter 3 Review

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

pure competition

A market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply

business cycle

A pattern of economic fluctuations that has four stages: prosperity, recession, depression, and recovery

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

prosperity

A stage of the business cycle characterized by low unemployment and relatively high total income, which together ensure high buying power (provided the inflation rate stays low)

Better Business Bureau (BBB)

A system of nongovernmental, independent, local regulatory agencies supported by local businesses that helps settle problems between customers and specific business firms

Explain how competitive factors affect an organization's ability to compete.

All businesses compete for customers' dollars. A marketer, however, generally defines competition as other firms in the same geographic area that market products that are similar to or can be substituted for its products. These competitors can be classified into one of four types: brand competitors, product competitors, generic competitors, and total budget competitors.

Federal Trade Commission (FTC)

An agency that regulates a variety of business practices and curbs false advertising, misleading pricing, and deceptive packaging and labeling

Explain how laws, government regulations, and self-regulatory agencies affect marketing activities.

Federal legislation affecting marketing activities can be divided into procompetitive legislation—laws designed to preserve and encourage competition—and consumer protection laws, which generally relate to product safety and information disclosure. Actual effects of legislation are determined by how marketers and courts interpret the laws. Federal guidelines for sentencing concerning violations of these laws represent an attempt to force marketers to comply with the laws.

total budget competitors

Firms that compete for the limited financial resources of the same customers

product competitors

Firms that compete in the same product class but market products with different features, benefits, and prices

brand competitors

Firms that market products with similar features and benefits to the same customers at similar prices

generic competitors

Firms that provide very different products that solve the same problem or satisfy the same basic customer need

Articulate how economic factors influence a customer's ability and willingness to buy products.

General economic conditions, buying power, and willingness to spend can strongly influence marketing decisions and activities. The overall state of the economy fluctuates in a general pattern known as the business cycle, which consists of four stages: prosperity, recession, depression, and recovery.

consumerism

Organized efforts by individuals, groups, and organizations to protect consumers' rights

competition

Other organizations that market products that are similar to or can be substituted for a marketer's products in the same geographic area

Outline the sociocultural issues marketers must deal with as they make decisions.

Sociocultural forces are the influences in a society and its culture that result in changes in attitudes, beliefs, norms, customs, and lifestyles. Major sociocultural issues directly affecting marketers include demographic and diversity characteristics, cultural values, and consumerism.

Describe how new technology impacts marketing and society.

Technology is the application of knowledge and tools to solve problems and perform tasks more efficiently. Consumer demand, buyer behavior, product development, packaging, promotion, prices, and distribution systems are all influenced directly by technology. The rapid technological growth of the last few decades is expected to accelerate. Revolutionary changes in communication technology have allowed marketers to reach vast numbers of people; however, with this expansion of communication has come concern about privacy and intellectual property. And while science and medical research have brought many great advances, cloning and genetically modified foods are controversial issues in many segments of society. Home, health, leisure, and work are all influenced to varying degrees by technology and technological advances. The dynamics of technology involves the constant change that challenges every aspect of our society. Reach refers to the broad nature of technology as it moves through and affects society.

sociocultural forces

The influences in a society and its culture(s) that change people's attitudes, beliefs, norms, customs, and lifestyles

Summarize why its important to examine and respond to the marketing environment.

The marketing environment consists of external forces that directly or indirectly influence an organization's acquisition of inputs (personnel, financial resources, raw materials, and information) and generation of outputs (goods, services, and ideas). The marketing environment includes competitive, economic, political, legal and regulatory, technological, and sociocultural forces.

Identify the types of political forces in the marketing environment.

The political, legal, and regulatory forces of the marketing environment are closely interrelated. Political forces may determine what laws and regulations affecting specific marketers are enacted, how much the government purchases, and from which suppliers.

environmental analysis

The process of assessing and interpreting the information gathered through environmental scanning

environmental scanning

The process of collecting information about forces in the marketing environment

buying power

The size of the resources, such as money, goods, and services that can be traded in an exchange, that enable the individual to make purchases