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