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ADMS 2200 (123)
Kim Snow (26)
Chapter 3

ADMS 2200 Chapter 3 Notes.docx

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Administrative Studies
ADMS 2200
Kim Snow

Chapter 3: The Marketing Environment, Ethics, and Social Responsibility Chapter Objective 1: Identify the five components of the marketing environment. Environmental Scanning – Collecting external marketing environment information to identify and interpret potential trends - Trends may represent significant opportunities or threats to the company Environmental Management – Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social- cultural environments Strategic Alliance – Partnership in which two or more companies combine resources and capital to create competitive advantages in a new market Chapter Objective 2: Explain the types of competition marketers face and the steps necessary for developing a competitive strategy. Competitive Environment Process that occurs in marketplace among: o Marketers of directly competitive products (Direct – similar products)  E.g. Bell vs Rogers vs Telus for cell phone services o Marketers of products that can be substituted for one another (Indirect – Easily substituted)  E.g. Fast food industry: pizza competes with chicken and tacos o Markets competing for the consumer’s purchasing power  All firms compete with one another for this  E.g. Honda competes with a vacation to Europe Marketing decisions by individual firms influence: o Consumer responses in the marketplace o Marketing strategies of competitors Monopoly – Single seller dominates in a good or service; buyers can find no close substitutes o Few organizations have this position o E.g. Some pharmaceutical firms have temporary monopolies provided by patents on drugs Oligopoly – Few number of sellers in an industry with high start-up costs that keep out new competitors Competitive Strategy – Methods a firm deals with its competitive environment o Answers the three questions: 1. Should we compete? a. Depends on resources, objectives and expected profit potential 2. In what markets should we compete? a. Allocate limited resources to the areas of greatest opportunity 3. How should we compete? a. Includes product, promotion, distribution, and pricing decisions that maximize competitive advantage Time-based competition – Strategy of developing and distributing goods more quickly than competitors Chapter Objective 3: Describe how marketing activities are regulated and how marketers can influence the political-legal environment. Political-Legal Environment Consists of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights. - Ignorance or non-compliance can result in fines, negative publicity and civil damage suits Competition Act – Comprehensive legislation administered designed to help both consumers and businesses by promoting a healthy competitive environment - Laws roughly categorized in three marketing areas: o Pricing o Promotion o Distribution Provincial Laws: - Generally focused on protection of buyers and sellers with respect to direct sales contracts - Consumer Protection Act or Direct Seller’s Act Government regulatory agencies: - CRTC: regulates and supervises all aspects of the Canadian broadcasting system - National Energy Board – regulates construction and operation of interprovincial and international pipelines and power lines Other Regulatory Forces: - Consumer interest organization – e.g. PETA - Other groups attempt to advance rights of minorities, other causes – e.g. MADD - Self regulatory groups set guidelines for responsible business conduct – e.g. Advertising Standards Canada Chapter Objective 4: Outline the economic factors that affect marketing decisions and consumer buying power. Economic Environment GDP – Sum of all goods and services produced by a nation in a year Economic environment – Factors that influence consumer buying power and marketing strategies Business Cycle – Pattern of stages in the level of economic activity - Prosperity: consumer spending is brisk; growth in services sector - Recession: consumers focus on basic, fundamental products - Depres
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