Chapter 3: The Marketing Environment, Ethics and Social Responsibility
Environmental Scanning and Environmental Management
Environmental scanning: Process of collecting information about the external marketing
environment to identify and interpret potential trends. Goal of this process is to determine
if the trends are a significant opportunity to the company or pose major threats to it.
Environmental management: Attainment of organizational objectives by predicting and
influencing the competitive, political-legal, economic, technological and social-cultural
Strategic alliance: Partnership in which two or more companies combine resources and
capital to create competitive advantages in a new market.
The Competitive Environment
Competitive environment: Interactive process that occurs in the marketplace among
marketers of directly competitive products, marketers of products that can be substituted
for one another, and marketers competing for the consumer’s purchasing power.
Monopoly: Market structure in which a single seller dominates trade in a good or service
for which buyers can find no close substitutes.
Oligopoly: Market structure in which relatively few sellers compete and where high start-
up costs form barriers to keep out new competitors. I.e. airplane manufacturers.
Types of Competition
The most direct form occurs among marketers of similar products – i.e. Petro and Esso.
A second type of competition is indirect and involves products that are easily substituted.
I.e. fast-food industry.
The final type of competition occurs among all organizations that compete for consumers’
Developing a Competitive Strategy
Competitive strategy: Methods through which a firm deals with its competitive
environment. Answers 3 questions:
1. Should we compete?
2. If so, in what markets should we compete?
3. How should we compete?
Time-based competition: Strategy of developing and distributing goods and services
more quickly than competitors.
The Political-Legal Environment
Political-legal environment: Component of the marketing environment consisting of laws
and interpretations of laws that require firms to operate under competitive conditions and
to protect consumer rights. Government Regulation
Competition act: The most comprehensive legislation in Canada, desig