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Principles of Marketing

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Principles of Marketing ­ MGT301
VU
Lesson ­ 43
Lesson overview and learning objectives:
This Lesson examines the social effects of private marketing practices. A marketing system should
sense, serve, satisfy consumer needs and improve the quality of consumers' lives. In working to
meet the consumer's needs, marketers may take some actions that are not approved of by all the
consumers or publics within the social sector. Marketing managers must understand the criticism
that the marketing function may encounter. By understanding the criticism, the manager is better
prepared to respond to it in a proactive manner. Some of the criticism is justified; some is not.
After this Lesson students should be able to Identify the major social criticisms of marketing.
Describe the principles of socially responsible marketing. Explain the role of ethics in marketing.
MARKETING AND SOCIETY
Responsible marketers discover what consumers want and respond with the right products at right
price to give good value to buyers, and profit to the producer. The marketing concept is a
philosophy of customer satisfaction and mutual
gain.  Its practice leads the economy by an
invisible hand to satisfy the many and changing needs of millions of consumers. Not all marketers
follow the marketing concept; however private transactions may involve larger questions of public
policy (i.e., the illustration of the sale of cigarettes). Two major issues in marketing are ethics and
Social responsibilities which we will be discussing today.
A. Social Criticisms of Marketing
Marketing receives much criticism. Some of this is justified and some is not. Social critics claim
that certain marketing practices hurt individual consumers, society as a whole, and other business
firms.
a. Marketing's Impact on Individual Consumers:
Consumers have many concerns about how well the marketing system serves their interests. There
are six primary criticisms leveled at the marketing function by consumers, consumer advocates,
and government agencies.
i.
Harming consumers through high prices.
ii.  Deceptive practices.
iii.  High-pressure selling.
iv.  Shoddy or unsafe products.
v.  Planned obsolescence.
vi.  Poor service to disadvantaged consumers.
i.
Harming consumers through high prices: Many critics charge the marketing system
causes prices to be higher than need be. Some factors to which these critics point are as
follows:
 High costs of distribution. Greedy intermediaries mark up prices beyond the value of
their services. There are too many intermediaries and they duplicate services. Resellers have
responded by saying that: the work performed by the intermediaries is necessary and takes
away the responsibility from the consumer or the manufacturer, the rising markup is really
the result of improved services, operating costs are driving up prices, in reality, profit
margins are low because of intense competition. Strong retailers pressure their channel
members to keep prices low.
 High advertising and promotion costs. Marketing is accused of driving up promotion
and advertising costs. Marketers respond by saying that: consumers want more than the
merely functional qualities of products, they want psychological benefits, branding, even
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Principles of Marketing ­ MGT301
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though it may cost more, gives buyers confidence, heavy advertising is needed to inform
millions of potential buyers of the merits of a brand, Heavy advertising and promotion
may be necessary for a firm to match competitors' efforts. Companies are cost-conscious
and try to spend their promotional dollars wisely.
 Excessive markups. Critics charge that some companies mark up goods excessively. This
charge is responded by the marketers respond by saying as: most businesses try to deal
fairly with consumers because they want the repeat business, most consumer abuses are
unintentional, When shady marketers do take advantage of consumers, and they should be
reported to the authorities, Consumers often do not understand the reason for the high
markup.
ii.  Deceptive Pricing: Marketers are sometimes accused of deceptive practices that lead
consumers to  believe that they will get more value than they actually do. Three groups
exist with respect to these alleged practices:
1). Deceptive pricing includes such practices as falsely advertising "factory" or "wholesale"
prices, or a large reduction from a phony high list price.
2). Deceptive promotion includes such practices as overstating the product's features or
performance, luring the customer to the store for a bargain that is out of stock, or running rigged
contests.
3). Deceptive packaging includes exaggerating package contents through subtle design, not
filling the package to the top, using misleading labeling, or describing size in misleading terms.
Deceptive practices have led to legislation and other consumer protection actions. Marketers argue
that most companies avoid deceptive practices because such practices harm their business in the
long run. According to some experts, some puffery, however, will always occur.
iii.  High-pressure selling: High-pressure selling is another criticism of marketing. Laws
require door-to-door salespeople to announce that they are selling a product. Also, buyers
have a "three-day cooling-off period" in which they can cancel a contract after rethinking
it.
iv.  Shoddy and Unsafe products: Shoddy or unsafe products are another criticism leveled
against marketers.  Complaints include: 1). Complaints about products not being made
well or services were not performed well. 2). Products deliver little benefit. 3). Product
safety has been a problem for several reasons:
a). Manufacturer indifference.
b). Increased production complexity.
c). Poorly trained labor.
d). Poor quality control.
Responses to these complaints from marketers are positive. Marketers in general want to make
beneficial and safe products.
v.  Planned obsolescence: Planned obsolescence is a strategy of causing products to become
obsolete before  they actually need replacement and is a criticism leveled by consumers.
Fashion is often cited as an example. Marketers respond that consumers like lifestyle
changes; they get tired of old goods and want a new look. Much of so-called planned
obsolescence is actually the normal interaction of competitive and technological forces in
a free society.
vi.  poor service: In contemporary society poor service to disadvantaged consumers is another
criticism against marketing. Clearly, better marketing systems must be built in low-income
areas. Critics believe the poor have been exploited by marketers.
b. Marketing's Impact on Society as a Whole
Some criticisms have also been leveled at marketing because of its perceived negative impact on
society as a whole. Criticisms include marketing creating:
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Principles of Marketing ­ MGT301
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i.
False wants and too much materialism. People are judged by what they own rather than
who they are. This criticism perhaps overstates the power of business to create needs. Our
needs are influenced by other forces than just marketing needs. Some even see materialism
as a positive force.
ii.  Producing too few social goods. There needs to be more of a balance between social
(public) and private goods. Options are the government could require more safety be built
into products (autos for example), or make consumers pay social costs.
iii.  Cultural  pollution.  Constant  assaults  on  privacy  by  advertising  and  noise
clutter. Marketing answers by saying: Marketers hope that their ads reach primarily the
target audience; ads make much of television and radio free to users and keep down the
costs of magazines and newspapers.
iv.  Too much political power.
companies do promote and protect their own interests. They have a right to. Counter forces are in
place to offset business promotional and political power.
c. Marketing's Impact on Other Businesses
Critics charge that a company's marketing practices can harm other companies and reduce
competition. Three problems are involved:
1). Acquisitions of competitors. There may be too many of these according to some
acquisition is a complex subject, however, and sometimes acquisition may be good for
society.
2). Marketing practices that create barriers to entry. Patents and heavy promotional spending
are often cited
3). Unfair competitive marketing practices. Predatory competition is dangerous to the
overall well-being of the economy. To distinguish between what is predatory and what is
healthy competition is often difficult.
B. Marketing Ethics
Marketing Ethics are marketers' standards of conduct and moral values. People develop standards
of ethical behavior based on their own systems of values and that may differ from employer's
organizational ethics, which produces conflicts Conscientious marketers face many moral
dilemmas. Companies need to develop corporate marketing ethics policies--broad
guidelines
that everyone in the organization must follow. Areas of concern include:
1). Distributor relations.
2). Advertising standards.
3). Customer service.
4). Pricing.
5). Product development.
6). General ethical standards.
The finest guidelines cannot resolve all the difficult ethical situations a marketer faces. What
principle should guide companies and marketing managers on issues of
ethical and social
responsibility? Two general philosophies are used:
1). Issues are decided by the free market and legal system. Under this system companies and
their managers are not responsible for making moral judgments. Companies can do whatever the
system allows.
2). Issues are the responsibility of individual companies and managers. This approach says
that the company should have a "social conscience" that guides action. This is a more enlightened
philosophy.
Each company and marketing manager must work out a philosophy of socially responsible and
ethical behavior. Remember that written codes do not ensure ethical behavior. The issue of ethics
provides special challenges for international marketers. Bribery may be socially acceptable in one
country and completely illegal in another. Companies must commit to a single ethical standard
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that can be applied worldwide. Many industrial and professional associations have suggested codes
of ethics;  many companies are now adopting their own codes. Companies are developing
programs to teach managers about important ethics issues and help them find the proper
responses. Still, written codes and ethics programs do not ensure ethical behavior. Given the
challenges of this century, companies that are able to create new values in a socially-responsible
way will have a world to conquer.
a. Consumerism:
Business firms have been the target of organized consumer movements Traditional sellers'
rights include:
1). Right to introduce any product in any size and style, provided it is not hazardous to
personal health or safety; or, if it is, to include proper warnings and controls.
2). Right to charge any price for the product, provided no discrimination exists among
similar kinds of buyers.
3). Right to spend any amount to promote the product, provided it is not defined as unfair
competition.
4). Right to use any product message, provided it is not misleading or dishonest in content
or execution.
5). Right to use buying incentive schemes, provided they are not unfair or misleading.
Traditional buyers' rights include:
1). Right not to buy a product that is offered for sale.
2). Right to expect the product to be safe.
3). Right to expect the product to perform as claimed.
4). Right to be well informed about important aspects of the product.
5). Right to be protected against questionable products and marketing practices.
6). Right to influence products and marketing practices in ways that will improve the
"quality of life."
Consumers have the right but also the responsibility to protect themselves instead of leaving this
function to someone else.
b. Environmentalism
Environmentalists are concerned with marketing's effects on the environment and  with the costs
of serving consumers needs and wants. Environmentalism is an organized movement of concerned
citizens and government agencies to protect and improve people's living environment.
Environmentalists are not against marketing and consumption. They simply want people and
organizations to operate with more care for the environment. The marketing system's goal should
be to maximize "life quality." Companies are adopting policies of environmental sustainability
developing strategies that both sustain the environment and produce profits for the company. The
challenge is to develop a sustainable global economy. Environmental sustainability has several
strategies:
 Pollution prevention--this involves more than pollution control (cleaning up waste after it
has been created). It means eliminating or minimizing waste before it is created. Green
marketing programs have helped.
 Product stewardship--minimizing not just pollution from production but all
environmental impacts throughout the full product life cycle a]. Many companies are
adopting design for environment (DFE practices, which involve thinking ahead in the
design stage to create products that are easier to recover, reuse, or recycle.
 New environmental technologies--new technologies.
 Sustainability vision--serves as a guide to the future. It shows how the company's
products and services, processes, and policies must evolve and what new technologies must
be developed to get there. Environmentalism creates special challenges for global
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marketers because environmental policies vary widely between countries. There are no
uniform standards.
C. Enlightened Marketing
Enlightened marketing is a philosophy holding that a company's marketing should support the best
long-run performance of the marketing system. It has five principles:
a. Consumer-oriented marketing. A principle of enlightened marketing which
holds that the company should view and organize its marketing activities from the
consumer's point of view.
b. Innovative marketing. A principle of enlightened marketing that requires that a
company seek real product and marketing improvements.
c. Value marketing. A principle of enlightened marketing which holds that a
company should put most of its resources into value-building marketing
investments.
d. Sense-of-mission marketing. A principle of enlightened marketing that holds
that a company should define its mission in broad social terms rather than narrow
product terms.
e. Societal marketing. A principle of enlightened marketing which holds that a
company should make marketing decisions by considering consumer's wants, the
company's requirements, consumer's long-run interests, and society's long-run
interests. A societal oriented marketer wants to design products that are pleasing
and beneficial. Products can be classified according to their degree of immediate
consumer
satisfaction and long-run consumer benefit. Degree of satisfaction
might include:
 Deficient products are products that have neither immediate appeal nor
long-term benefits. Example: bad-tasting medicine.
 Pleasing products are products that give high immediate satisfaction but
may hurt consumers in the long-run. Example: cigarettes.
Salutary products are products that have low appeal but may benefit
consumers in the long-run. Example: seat belts and air bags.
 Desirable products are products that give both high immediate satisfaction
and high long-run benefits. Example: a tasty and nutritious food.
Key Principles for Public policy towards Marketing:
Certain public policy principles can be used to make the marketing more effective these principles
include full consumer and producer freedom, potential harms should be eliminated, producers
should meet the basic needs of the
Consumer and
Consumer and
Pr oducer Free dom
Producer Free dom
consumers, there should be economic
efficiency consumers and producers both
Curbiing Pottenttiial
Cur bn g Po en al
Harm
Harm
should be on beneficent in practicing the
Meettiing Bas iic
Mee ng Bas c
exchange  process,  producer  should
Ne eds
Ne eds
ensure the innovation , consumer should
Ke y Priinciiplle s
Econom iic
Econom c
Ke y Pr nc p e s
Effffiiciency
E cien cy
for a Publliic Polliicy
for a Pub c Po cy
be provided full knowledge about the
Tow a rd Ma rke tiing
Tow a rd Ma rke t ng
IInnovattiion
n nova o n
products and should be protected against
any sort of unethical and illegal practices
Consumer
Consumer
Educattiion
Educa on
by the producers,
Consumer
Consumer
Prottecttiion
Pr oe c o n
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Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE