Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-21
[ICA 3-2: The Ethics of Competitive Intelligence]
a. Economic espionage is the clandestine collection of trade secrets or
proprietary information about a company’s competitors. The practice:
• Is both illegal and unethical and carries serious criminal penalties.
MAKING RESPONSIBLE DECISIONS
Ethics: Corporate Conscience in the Cola War
• As a Pepsi senior executive, would you buy the marketing plan from a Coca-Cola for
a new Coke product at a modest price to gain a significant advantage in the cola war?
• Is this the norm? In an online survey of marketing and advertising executives:
a. 67 percent said they would buy the plan if there were no repercussions.
C. Corporate Culture and Expectations
Corporate culture is the set of values, ideas, and attitudes that is learned and shared
among the members of an organization.
• The dress, sayings, and manner of work demonstrate the culture of a company.
1. Codes of Ethics.
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-22
2. Ethical Behavior of Top Management and Co-Workers.
a. Workers sometimes violate ethics codes because of how they perceive the
behavior of top management and other co-workers.
• A study of executives reported that 45% had witnessed ethically troubling
D. Your Personal Moral Philosophy and Ethical Behavior
• Ethical choices are based on the personal moral philosophy of the decision maker.
• A person’s moral philosophy is:
a. Learned through the process of socialization with friends and family and by
formal education.
1. Moral Idealism.
a. Moral idealism is personal moral philosophy that considers certain individual
rights or duties as universal, regardless of the outcome.
b. This philosophy:
• Exists in the Consumer Bill of Rights.
2. Utilitarianism.
a. Utilitarianism is a personal moral philosophy that:
• Focuses on “the greatest good for the greatest number.”
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-23
b. This philosophy:
• Underlies the economic tenets of capitalism.
LEARNING REVIEW
3-10. What rights are included in the Consumer Bill of Rights?
3-11. Economic espionage includes what kinds of activities?
Answer: Economic espionage is the illegal and unethical clandestine collection of trade
3-12. What is meant by moral idealism?
VIII. UNDERSTANDING SOCIAL RESPONSIBILITY
FOR SUSTAINABLE MARKETING [LO 3-8]
• Social responsibility is the idea that organizations are part of a larger society and are
accountable to that society for their actions.
A. Three Concepts of Social Responsibility
1. Profit Responsibility.
a. Holds that companies have a simple duty—to maximize profits for their
owners or stockholders.
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-24
2. Stakeholder Responsibility.
a. Focuses on the obligations an organization has to those who can affect
achievement of its objectives, including consumers, employees, suppliers, and
3. Societal Responsibility.
a. Refers to obligations that organizations have to the preservation of the
ecological environment and to the general public.
b. Emphasizes the triple-bottom line:
• Recognition of the need for organizations to improve the state of people,
c. Green marketing consists of marketing efforts to produce, promote, and
reclaim environmentally sensitive products. Many green marketing efforts:
d. Companies also engage in cause marketing, which:
• Occurs when the charitable contributions of a firm are tied directly to the
customer revenues and produced through the promotion of one of its
products.
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-25
MARKETING MATTERS
Customer Value: Will Consumers Switch Brands for a Cause? Yes, If…
• American Express pioneered cause marketing when it:
a. Raised $1.7 million for the renovation of the Statue of Liberty.
• Cause marketing raised over $10 billion in 2012.
• Cause marketing benefits firms—and.
• Cause marketing may create a valued point of difference.
B. Sustainable Development: Doing Well by Doing Good
• Sustainable development involves conducting business in a way that protects the
natural environment while making economic progress.
a. Green marketing is an ecologically responsible initiative.
b. Other initiatives focus on working conditions at offshore manufacturing sites
• Companies that show societal responsibility have been rewarded for their efforts.
Research shows that these companies:
a. Benefit from favorable word-of-mouth among consumers.
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-26
LEARNING REVIEW
3-13. What is meant by social responsibility?
Answer: Social responsibility means that organizations are part of a larger society and
3-14. Marketing efforts to produce, promote, and reclaim environmentally sensitive
products are called __________.
3-15. What is sustainable development?
Answer: Sustainable development is conducting business in a way that protects the
natural environment while making economic progress. Ecologically responsible
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-27
APPLYING MARKETING KNOWLEDGE
1. For many years, Gerber has manufactured baby food in small, single-sized
containers. In conducting an environmental scan, (a) identify three trends or factors
that might significantly affect this company’s future business and (b) propose how
Gerber might respond to these changes.
a. An aging population. Gerber may want to develop food for seniors who live alone and
would like single-sized servings. Because Gerber foods often require only warming up,
b. Growing health concerns. Growing health concerns may require Gerber to
c. Environmental consciousness. Environmental concerns may lead Gerber to tout the
2. (a) Describe the new features you would add to an automobile designed for consumers
in the 55+ age group. (b) In what magazines would you advertise to appeal to this
target market?
Answer: Environmental scanning reveals that this market appreciates improvements aimed
at safety, security, and convenience.
3. New technologies are continuously improving and replacing existing products.
Although technological change is often difficult to predict, suggest how the following
companies and products might be affected by the Internet and digital technologies:
(a) Timex watches, (b) American Airlines, and (c) the Metropolitan Museum of Art.
Answer:
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-28
a. Timex watches. For Timex watches, connectivity and the possibility of real-time
b. American Airlines. New digital technology (fly-by-wire) may allow American to
automate its planes to the extent that the number of pilots needed will be reduced and
4. Why would Xerox be concerned about having its name becoming generic?
Answer: The problem for the Xerox Corporation would be serious. If the name consumers
5. Develop a “Code of Business Practices” for a new online vitamin store. Does your
code address advertising? Privacy? Use by children? Why is self-regulation
important?
Answer: The Better Business Bureau provides assistance to guide ethical business–to–
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-29
6. Compare and contrast moral idealism and utilitarianism as alternative personal
moral philosophies.
Answer: Moral idealism considers individual rights or duties as universal regardless of the
outcome. Utilitarianism focuses on the “greatest good for the greatest number” by assessing
7. How would you evaluate Milton Friedman’s view of the social responsibility of a
firm?
Answer: Friedman is a proponent of the profit responsibility concept of social
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-30
BUILDING YOUR MARKETING PLAN
Your marketing plan will include a situation analysis based on internal and external
factors that are likely to affect your marketing program.
1. To summarize information about external factors, create a table and identify three
trends related to each of the five forces (social, economic, technological, competitive,
and regulatory) that relate to your product or service.
2. When your table is completed, describe how each of the trends represents an
opportunity for or a threat to your business.
Your plan should also identify any ethical or social responsibility issues related to
potential stakeholders such as shareholders, suppliers, employees, customers, and society in
general.
Helping with Common Student Problems
As with the SWOT analysis activity for Chapter 2, students often end their analysis by
simply listing the environmental trends in their environmental scan. By having students add the
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-31
TEACHING NOTE FOR VIDEO CASE VC-3
Toyota: Where the future is available today
[Video 3-4: Toyota Video Case (kerin.tv/cr8e/v3-3)]
Synopsis
This case describes Toyota’s transition from an automobile company to a mobility
company. The shift is discussed in the context of two key business values: The Toyota Way and
Background
Kiichiro Toyoda started the company in Japan as a manufacturer of weaving looms. The
company’s first vehicle was the Toyopet, and a subsequent vehicle, the Toyota Corolla, became
The company’s corporate philosophy is “seeking harmony between people, society, and
the global environment, and sustainable development of society through manufacturing.” The
philosophy has been supported by two statements of business values: The Toyota Way and the
To guide Toyota’s environmental and sustainability efforts, Toyota’s current president,
Akio Toyoda, launched The Toyota Environmental Challenge 2050. The challenge specifies six
actions that seek to reduce the negative factors associate with automobiles and to create a net
Another example of Toyota’s focus on sustainability is its investment the hydrogen fuel
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-32
Teaching Suggestions
Most students will be familiar with some Toyota vehicles such as the Corolla, Camry,
RAV4, Tacoma, 4Runner, and the Prius. A good way to start discussion is to:
1. Ask the class to describe their perceptions of the company. Students may describe some
Answers to Questions
1. Describe Toyota’s transition from an automobile company to a mobility company.
Answers:
Akio Toyoda, president of Toyota Motor Corporation, recently announced “it is my goal to
transition Toyota from an automobile company to a mobility company.” This means that
2. How does Toyota’s corporate philosophy relate to the concepts of societal
responsibility, stakeholder responsibility, and profit responsibility?
Answer:
Toyota’s corporate philosophy is “seeking harmony between people, society, and the global
environment, and sustainable development of society through manufacturing.” This
a. Profit responsibility. Toyota has satisfied the profit expectations of its shareholders by
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-33
b. Stakeholder responsibility. Toyota’s recognition of its obligations to other
stakeholders is reflected in its statement of business values called “The Toyota Way.”
c. Societal responsibility. Toyota recognizes an obligation related the to preservation of
the ecological environment and to the general public. Specific examples include:
• Toyota Environmental Challenge 2050. This plan is structured around six key areas:
2. Eliminate emission from manufacturing.
4. Conserve and protect water resources.
6. Ensure environmental responsibility.
3. How does Toyota’s Mirai fit with the goals of the Challenge 2050 initiative?
Answers:
The Toyota Mirai fits directly with Goal #1: eliminate emissions from new vehicles. The
4. What new mobility products and service is Toyota considering for the future? What
activities would you recommend for Toyota as it prepares for the future?
Answer:
a. New Mobility Products and Services. Toyota is looking at all forms of mobility in the
future. In addition to investing in emerging forms of mobility such as ridesharing and
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
b. Preparing for the Future. Students may suggest many types of activities for Toyota as
it prepares for the future. Some examples might include:
• Monitor consumer opinions about important environmental issues and their
perceptions of the role of businesses in addressing the issues.
Epilogue
Global automobile sales recently reached 97 million vehicles and auto industry experts
predict total sales of 114 million vehicles by 2024. The growth in vehicle sales is anticipated due
to (a) significant growth in the China, Hong Kong, and Taiwan markets, and (b) the trend toward
the “electrification” of the automotive industry. Many consumers may purchase low/no emission
vehicles in anticipation of new regulations and possible bans related to fossil-fueled vehicles.
France and Britain, for example, have already decided to ban internal combustion engines by
2040. In response, Volvo recently announced that it would begin a transition to manufacturing
only hybrid and electric vehicles. In the U.S. automobile sales are at 16.5 million vehicles and
3-36
4. Give the following mini-lecture on environmental scanning:
“Changes constantly affect an organization and are a source of opportunities and
threats that its marketers must manage. Anticipating and then responding to these
5. Briefly explain the nature of this ICA:
“One of the growing concerns in the U.S. and elsewhere is the alarming rise in
obesity. Food and beverages account for about 60 percent of the sugar used annually
in the U.S.1 More and more consumers now demand food products that are healthier.
6. On discussion day, recap the nature of the environmental scan, possibly repeat some
7. Click on the “What is Truvía? Video” Internet icon [TRT = 1:35] to play a YouTube
8. Show “An Environmental Scan for Truvía” Handout and give the following
instructions:
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-37
“Spend the next 10 minutes in your groups and conduct a brief environmental scan
for Truvía. Based on the handout “An Environmental Scan for Truvía” and your
9. Call on several student teams to get their responses and discuss them. You may wish
10. OPTIONAL: Pass out copies of the An Environmental Scan for Truvía Answers
Handout to each student.
Marketing Lessons. When conducting an environmental scan, marketers consult a variety of
sources (company websites, government publications, industry reports) to identify the current
Chapter 03 – Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility
3-38
THE SWEETENER MARKET HANDOUT
INTRODUCTION
Stevia is an herb that is a member of the chrysanthemum plant family. In 1887, it was discovered in Paraguay,
whose Guarani natives used the plant’s leaves as a natural sweetener.2 It also grows natively in Brazil and
Argentina. During the 1980s, China began to cultivate stevia for export to Japan. During the 1990s, Paraguay and
Brazil produced stevia products and distributed them to international markets.
The natural sweetener comes from the outer edges of the leaves from the stevia plant. The leaves contain chemicals
called glycosides (glyco = glucose = sugar), which are from 250 to 400 times sweeter than table sugar (sucrose). Of
the four steviol glycosides in the stevia leaf, the sweetest and least bitter is rebaudioside A (Reb A). After the leaves
SOCIAL ENVIRONMENT
Consumers love things sweet. Until recently, table sugar (sucrose) was the only general-purpose sweetener. Natural
sugar (sucrose) comes from three primary sources: sugar cane, sugar beets, and honey. However, consumers are
demanding high intensity, low-/no-calorie sweeteners to replace sugar in their diets. The reasons are: (1) the rising
incidence of obesity, which correlates with a increase Type 2 diabetes; (2) a general trend toward healthier eating,
Consumers prefer sweeteners in granules or liquid forms and packaged in a variety of types: packets, which are
boxed in various count sizes, pouches/bags (to pour or spoon out), bottles (for drops), powder (to sprinkle), sticks (to
stir), and tablets (to dissolve slowly). Packets come in various sizes (40-count; 50-ct; 100-ct; 200-ct; 400-ct; 800-ct;
and promotional—such as 30 additional packets free!). Consumers obtain these sweeteners at their local grocery