66 Part 1 Designing Customer-Oriented Marketing Strategies
has been in the
news recently due to
a lapse in one of
these areas. Keep in
mind that the
economic and legal
areas have long
Marketing Success:
IBM’s CSR
Initiatives
Note: Ask students
to come up with
examples of green
products used in
everyday life. You
could direct students
to think of products
b. Today, corporate responsibility has expanded to cover the
entire societal framework
i. This extends domestically as well as internationally
ii. Marketers must also take into account the long-term
effects of their decisions
c. Methods through which marketers can help their companies
behave in a socially responsible manner:
4. Marketing and the Environment
a. The Environment
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
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
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
marketers do
Assessment check questions
8.1. Identify the four levels of the social responsibility pyramid. The four
levels of social responsibility are economic, legal, ethical, and
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 67
used in kitchen,
bathing, cleaning,
etc. popular
examples would
philanthropic.
8.2. What are the benefits of green marketing? Green marketing, which
responds to consumers’ growing concerns about ecological issues, offers
consumers high-quality products without health risks or damage to the
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.
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.
3. What are the three questions marketers must ask before deciding on a competitive strategy?
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
5. Describe an industry or firm that you think might be able to weather an economic downturn and explain
why.
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
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
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
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.
Consumer rights in the U.S. include the right to choose freely, to be informed, to be heard, and to be
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
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
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
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?
2. Answer: Students’ answers will vary.
Point value: 1
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
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 71
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.
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
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.
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?
72 Part 1 Designing Customer-Oriented Marketing Strategies
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
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
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
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 73
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
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
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
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
74 Part 1 Designing Customer-Oriented Marketing Strategies
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
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
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
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
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.
2. Explain how Zappos’ move into downtown Las Vegas fulfills the four levels of the social responsibility
pyramid.
76 Part 1 Designing Customer-Oriented Marketing Strategies
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:
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
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
Relationship to Text:
Government Regulation, Ethical Issues in Marketing
Estimated Class Time:
About 10 minutes
Chapter 3 The Marketing Environment, Ethics, and Social Responsibility 77
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.
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
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
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)
