Marketing/Advertising. Marketing Impacts Society

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Colin Roberts
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1 Marketing/Advertising Marketing Impacts Society

2 The Impact of Marketing Marketing Affects Businesses Through use of market research and marketing information systems, businesses are able to determine customer needs attitudes; likes, and dislikes businesses can meet needs of customers and earn profits.

3 Customer Satisfaction Manufacturers develop new brand of toothpaste and make better decisions if they are aware of what consumers like and dislike about current brand. Manager of clothing store will want to know what consumers are expecting in terms of styles and prices before purchasing new items for sale. Marketing helps business satisfy customer wants and needs Consumers more likely to be loyal and come back Businesses are more likely to make better decisions and operate more efficiently through effective marketing

4 Marketing Helps People Consumers benefit from marketing Many people do not recognize this Example - going to supermarket to purchase party supplies: If store is conveniently located, you do not have to worry about to get to and from it You want store to stack your favorite brands of decorations, drinks, and snacks There should be an adequate supply of items

5 Marketing Helps People Products should be easy to locate in store Prices should be clearly marked and affordable Store employee should be able to answer your questions and help you check out and bag your purchases Store should allow you to pay for purchases with cash, check, credit, or debit card

6 Marketing Helps People Each of these activities described at the supermarket is an example of marketing. The activities make it easier for you to shop and ensure that you get items you need for your party, quickly and at a reasonable price, and the business benefits because your purchase the products, and you benefit because the business is able to satisfy your needs.

7 Better Products at lower Cost Other contributions not so obvious Marketing continually determining consumers likes and dislikes and what needs not satisfied Improvements are made to products and services and new products developed As result of marketing activities, more products are available to meet needs, and it results in higher sales volume The increase in sales allows business to product products more efficiently and costs can decline.

8 Better Products at lower Cost Example - Because of technology and marketing: First personal computers, very basic and less powerful cost several thousand dollars Today, PCs are hundreds of times more powerful, have many features to make them easy to use, and can be purchased for less than $1,000.

9 Expanded Opportunities Another contribution of marketing to individuals is vast area of employment. Between ¼ and 1/3 of all jobs in United States are marketing jobs or have marketing as major job responsibility. Salespeople, customer service representatives, warehouse managers, inventory specialists, marketing research personnel and many others have interesting, financially rewarding careers because of marketing.

10 Marketing skills valuable to people not directly employed in marketing. By understanding marketing process and using marketing concept, a number of goals may be accomplished. Marketing can help you get elected to an office in a club, prepare for a job or for college, plan a fund-raising activity for organization, or start your own business.

Many are beneficial to society in general: More efficient automobiles use less gasoline and

11 New and Better Products Marketing helps identify and develop new and better products and services for consumers. Many are beneficial to society in general: More efficient automobiles use less gasoline and cause less pollution. Biodegradable products reduce growing need for landfill space. Air bags and motorcycle helmets reduce number and severity of injuries from accidents.

13 Marketing encourages businesses to provide products and services that consumers want. Helps consumers make more effective decisions about what to purchase, resulting in natural resources and raw materials of country being used more efficiently rather than being wasted on products consumers will not buy.

14 Better Standards of Living Standard of living based on products and services available to consumers, amount of resources consumers have to obtain products and services, and quality of life for consumers. Countries with well-developed marketing systems are able to make more and better products available to consumers, and have more jobs for their citizens and higher wage scales.

16 Promotes International Trade Marketing has been effective in improving international trade, contributing many benefits to participating countries and to consumers in those countries. Think of number of products you buy that were produced in another country. United States is large consumer of foreign products and many businesses in this country sell products internationally without marketing, these benefits would not be possible.

17 Marketers help determine where products can be sold and how to sell them in countries that may have very different business procedures, money systems, and buying practices. Methods of shipping and product handling must be identified or developed. Decisions about customer service must be made. Promotional methods appropriate for people in each country or region have to be developed to ensure customers understand products and their benefits. Pierre Liquidates in South America

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19 Common Complaints If not used properly, marketing can have negative effects, leading to criticisms and negative image for some marketing activities. Must take criticisms of marketing seriously. Criticisms often represent attitudes of many consumers. Marketers and other business people need to study marketing practices and be sure they result in effective exchanges and customer satisfaction. Customer Service Case

20 Marketing Causes Unneeded Purchases The many products available to consumers to purchase They are readily available in many stores Are displayed in ways that make them easy to purchase Are attractively packaged to attract attention Advertising used extensively to encourage people to consider specific brands of products Credit and special financing arrangements available for most expensive products making them seem more affordable

21 Marketing activities and promotion can increase sales of products and services. Business using marketing concepts should carefully consider potential impact of marketing activities on consumers. If product is bought because of marketing rather than because it is really needed - Good chance customer will be dissatisfied Many consumers return item and expect refund. Business has lost sale and has product worth much less than before, and may not even be resold

22 Even if consumer does not return product, likely to be quite dissatisfied, especially if product cost a lot. Business is left with returned merchandise, dissatisfied customer, possibly bad reputation among customer s friends. Response to this criticism: Business people must be very sensitive to needs and experiences of customers Products and services should be carefully matched to customers needs Products that do not sell should be evaluated to determine why customers do not want them Business can make better purchasing decisions in future in order to offer products and services customers want.

23 Marketing should start with good products and if product not meeting customer needs, business people should avoid using marketing strategies like promotion and price reductions to try to sell product This will often lead to dissatisfaction with product and business. Business must value long-term relationships with customers one sale is not enough. Business will be successful when customers return again and again because they are satisfied with business and believe business is concerned about their needs.

24 Myth - Marketing Wastes Money Average cost of all marketing activities is about 50% or price of products. For some products, much higher and may be very small percentage for others. Since many people think of marketing as only advertising and selling, they are upset to think that those activities double the price of their purchases.

25 In reality selling and promotion are small part of cost of marketing typically about 2-10% of product s price. Effective selling and promotion do increase value to customer. If salesperson helps you select best product for your needs instead of selling you something you do not want, you have spent your money more effectively. Advertising can provide product information so you can make best choice or informs you where product can be purchased and when it is on sale Advertising can result in savings because of information provided.

26 Economists who study impact of marketing activities on product prices demonstrate that marketing actually results in lower prices in long run. Because products can be sold to more customers, there is greater competition among businesses. When consumers have choices of products, they will usually buy those reasonably priced, encouraging businesses to keep prices as low as possible, to be competitive. Economists say the increased sales volume and competition result in lower prices for consumers.

Myth 2: Some Products Don t Need Marketing Many examples of businesses that rely on marketing to sell poor quality products Examples: used automobile with many defects, sold only because

27 Myth 2: Some Products Don t Need Marketing Many examples of businesses that rely on marketing to sell poor quality products Examples: used automobile with many defects, sold only because salesperson convinced unsuspecting customer that car was really in good condition. Buying land for home based on information in brochure or videotape, to discover land is in swamp or on side of steep mountain.

28 Example of high-quality product and why marketing is necessary: It would be responsibility of consumer to: Find out that product exists Gather information about it Locate product, pay cash for it, and transport it from where it was manufactured to where it was to be used Assume all risk in handling and moving product if it were damaged, customer would be responsible Marketing activities must be performed in every exchange. If business not responsible for marketing, consumers will have to complete activities themselves in order to purchase product or service.

29 Many social issues that are now receiving much attention because of effective marketing Eat low cholesterol products Quit smoking Contribute money to colleges Apply for scholarships Support research into cures for diseases like AIDS and cancer Encouraged people to vote and to avoid drinking and driving

30 Marketing Helps Match Supply with Demand Products and services not always available where needed most by consumers Example: If drought in one part of country, farmers and ranchers in that area may not have enough hay and grain to feed livestock and may be excess supply in other area. Effective distribution system can move hay and grain quickly from one part of country to another, matching supply and demand

31 Oil products and gasoline can be distributed throughout country using extensive network of pipelines, and if greater supply of natural gas or heating oil is needed in north during especially cold winter, can be routed away from areas that have less demand. Marketing helps to prevent or reduce impact of problems that could result in serious problems for society.

32 Consumer Protection Marketers must be willing to pay attention to society s needs to determine how businesses can contribute to solutions. Trend today is greater expectation for business to be socially responsible and aid in solving problems facing society. Social Responsibility concern about the consequences of actions on others.

33 Business people recognize they must make decisions that consider factors beyond what customers want and what is more profitable for business. Most business people recognize their businesses cannot be successful in long run if society is facing major problems. Increasing social responsibility of businesses occurring in 3 ways: Growth of consumerism Government regulation Improving business practices

34 The Growth of Consumerism Consumerism is organized actions of groups of consumers seeking to increase their influence on business practices. As individuals, they can have only small influence on activities of business When organized as group of consumers, have much greater impact by: Speaking out Meeting with business people to recommend changes Using money they spend on purchases to influence decisions

35 Consumers have always attempted to influence business practices, but consumerism became important influence on business practices in 1960s when President John F. Kennedy presented Consumer Bill of Rights. Consumer Bill of Rights identified four basic rights: All consumers should expect: The right to adequate and accurate information The right to safe products The right to product choices The right communicate their ideas and opinions to business and government

36 Result of attention focused on those rights, consumers have become very active in ensuring their rights are protected Some ways used to protect consumer rights are: Consumer education Consumer information Lobbying Product boycotts Consumer groups develop materials and educational programs to be used in schools and other places to help people become better consumers. Examples of materials: How to banking services Purchase insurance Apply for loans

37 A number of consumer organizations that test products to determine if safe and if they provide consumers with good value for price. They often publish results in books, magazines, and on Internet or have telephone service so people can call for product information before making purchase. Consumer lobbyists work with national and state legislators to develop laws to protect consumer rights. Some important consumer laws include:

38 Mail Fraud Act protects customers from businesses using mail to defraud. Sherman Antitrust Act, 1890 increase competition among businesses by regulating monopolies. Food and Drug Act, 1906 controls content and labeling of good and drug products by forming the Food and Drug Administration (FDA) Federal Trade Commission Act, 1914 Formed Federal Trade Commission (FTC) to protect consumer rights.

39 Robinson-Patman Act, 1914 Protects small businesses from unfair pricing practices between manufacturers and large businesses. Fair Packaging and Labeling Act, 1966 Requires packages to be accurately labeled and fairly represent the contents National Traffic and Motor Vehicle Safety Act, 1966 Set requirements for automobiles and automotive products. Consumer Credit Protection Act, 1968 Requires disclosures of credit requirements and rates to loan applicants.

40 Consumer Product Safety Act, 1972 Sets safety standards and forms Consumer Product Safety Commission (CPSC). Fair Debt Collection Act, 1980 Prevents harassment of people who owe money by debt collectors. Consumers have found they can influence business practices by way they spend their money their consumer vote. If group of consumer dissatisfied with actions or products of business, they can organize consumer boycott. Boycott an organized effort to influence a company by refusing to purchase its products. Consumer groups also reinforce positive business practices by encouraging their members to purchase products from businesses that respond to consumer needs.

41 Government Regulation United States government plays active role in business practices. Many of laws and regulations of government are designed to improve social impact of business practices and other are specifically developed to protect consumers.

42 Improving Practices Most businesses recognize their responsibility to consumers and society. If consumers dissatisfied with business practices - will soon stop buying company s products. Social problems often lead to increased government regulation of business or increases in taxes to pay for programs designed to solve problems. Businesses do not want increase regulation or taxes.

43 Individual businesses and business organizations are working to improve business practices in several ways and they include: Code of ethics Self-regulation Social action Code of Ethics statement of responsibilities for honest and proper conduct. Business people recognize the inappropriate or illegal behavior of one firm can have very negative effect on whole industry.

44 They attempt to influence that behavior by agreeing on standards of conduct business people encourage responsible behavior. In some groups, codes of ethics are enforced by penalties, established by industry, that are applied to businesses that violate standards. Self-Regulation taking personal responsibility for actions. Individual businesses and groups of businesses in same industry have developed procedures to respond to consumer problems and encourage customers to work directly with businesses in solving problems.

45 Better Business Bureau is consumer protection organization sponsored by businesses. It gathers information from consumers about problems provides information about improper business practices so consumers can make better decisions Attempts to solve problems between businesses and their customers Many businesses have consumer service departments working to solve consumer problems and provide consumers with information about company and its products.

46 General Electric Answer Center offers 24/7 tollfree telephone service so customers can get information, register complaints, and make suggestions. Chrysler developed Car Buyer s Bill of Rights and added position of Vice President for Consumer Affairs to ensure those rights are protected. Some homebuilders developed procedures that consumers can use to resolve problems with specific builder. Problems that cannot be resolved between customer and business are referred to independent panel who can help determine a fair solution.

47 Social Action Business people are concerned about world in which they live. Many are active in helping to solve some of society s serious problems. They use resources from their businesses to help. Members Only, a clothing manufacturer, spent more than $100 million on advertising messages directed at reducing drug abuse and increasing voter registration. More recently, it directed its efforts toward alleviating homeless problem. Nike committed about $5o million to literacy program. McDonalds sponsors Ronald McDonald Houses for families with children who are hospitalized with serious illnesses.

48 Ethics in Marketing Business ethics have received great deal of attention recently. Ethics decisions and behavior based on honest and fair standards. Most business people behave ethically actions of few people can cause customers to wonder if ethical behavior is really valued in business.

49 Responsibility to Customers Marketers have special responsibility to behave ethically They deal directly with customers They ask customers to spend money for products intended to satisfy needs and wants. People place high value on ethical business behavior Business people are expected to be honest and fair in dealings with customers, employees, and other businesses.

50 The American Marketing Association Code of Ethics describes specific responsibilities for marketers in areas of product planning, promotion, pricing, distribution, and marketing research.

51 Harm and Accountability May appear there is no real harm in unethical behavior. Marketers must remember that their emphasis must be on what is best for everyone involved in exchange. Their actions usually affect many others, both inside and outside business. Many unethical business practices are illegal. People have been fined and even imprisoned as result of unethical actions.

52 Some businesses are developing education programs and operating procedures to help employees understand how to make ethical decisions. Those businesses want to improve ethical image of all businesses and ensure customers believe they will be treated fairly by every employee. Ethics Case Problem

CE.11 The student will demonstrate knowledge of how economic decisions are made in the marketplace by

Objectives CE.11 The student will demonstrate knowledge of how economic decisions are made in the marketplace by a) applying the concepts of scarcity, resources, choice, opportunity cost, price, incentives,