LEARNING OBJECTIVESAfter reading this chapter, students should:

Know what are the components of a modern marketing information system

Know what are useful internal records

Know what is involved with a marketing intelligence system

Know what are the key methods for tracking and identifying opportunities in the macroenvironment

Know what are some important macroenvironment developments

CHAPTER SUMMARY To carry out their analysis, planning, implementation, and control responsibilities, marketing managers need a marketing information system (MIS). The role of the MIS is to assess the manager’s information needs, develop the needed information, and distribute that information in a timely manner.

An MIS has three components: (a) an internal records system that includes information on the order-to-payment cycle and sales reporting systems; (b) a marketing intelligence system, a set of procedures and sources used by managers to obtain everyday information about pertinent developments in the marketing environment; and (c) a marketing research system that allows for the systemic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation.

Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and megatrends (major social, economic, political, and technological changes that have long-lasting influence).

Within the rapidly changing global picture, marketers must monitor six major environmental forces: demographic, economic, social-cultural, natural, technological, and political-legal.

In the demographic environment, marketers must be aware of worldwide population growth; changing mixes of age, ethnic composition, and educational levels; the rise of nontraditional families; large geographic shifts in population; and the move to micromarketing and away from mass marketing.

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In the economic arena, marketers need to focus on income distribution and levels of savings, debt, and credit availability.

In the social-cultural arena, marketers must understand people’s views of themselves, others, organizations, society, nature, and the universe. They must market products that correspond to society’s core and secondary values, and address the needs of different subcultures within a society.

In the natural environment, marketers need to be aware of raw material shortages, increased energy costs and pollution levels, and the changing role of governments in environmental protection.

In the technological arena, marketers should take into account the accelerating pace of technological change, opportunities for innovation, varying R&D budgets, and the increased governmental regulation brought about by technological change.

In the political-legal environment, marketers must work within the many laws regulating business practices and with various special-interest groups.

OPENING THOUGHT Students new to the discipline of marketing will probably be surprised at the level of marketing information, intelligence, and arenas that marketing managers must operate within. The instructor is encouraged to stress that the marketing of products/services and the processes of making marketing decisions do not operate without careful consideration to the environments identified in this chapter. Today, marketers must be cognizant of “how” their product or service is perceived as much as “how” it functions.

In many cases, the chief marketing executive of the firm can sometimes see himself/herself as a player in the game of chess. Each move must be carefully chosen for subsequent moves by competition and public scrutiny for acceptance or rejection. Products marketed must meet both the consumers’ needs as well as the publics’ acceptances of the product.

The instructor’s challenge for this chapter is to communicate to the students the complexity of and sometimes the conflicting forces impacting marketing managers in the 21st century.

TEACHING STRATEGY AND CLASS ORGANIZATION PROJECTS1. Semester-long marketing plan: Competitive information and environmental scanning

project(s) completed and presented for instructor’s review

2. Commission a marketing research study on topic(s) of interest to the students at your institution. During the course of the semester (15–16 week), have the students develop the questionnaire, collection method, conduct the survey, and tabulate the results. The students can be divided into groups for this project. Suggested topics can include the school or university students’ opinions of campus issues such as the athletic program, sale

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of alcohol, use of and availability of technology, or students’ perceptions of their current education experiences.

3. Sonic PDA Marketing Plan Marketing information systems, marketing intelligence systems, and marketing research systems are used to gather and analyze data for various parts of the marketing plan. These systems help marketers examine changes and trends in markets, competition, customer needs, product usage, and distribution channels. Some changes and trends may turn up evidence of opportunities or threats.

Sonic has developed information about the competition and competitive situation, but Jane Melody believes more information is needed in preparation for launching the first PDA. Based on the marketing plan contents discussed in Chapter 2, how can you use MIS and marketing research to support the marketing planning for the new PDA.

For which sections of the plan will you need secondary data? Primary data? Why do you need information for each section?

Where can you find secondary data that will be useful? Identify two Internet sources and two non-Internet sources. Describe what you plan to draw from each source, and indicate how you will use the data in your marketing plan.

What primary research will Sonic need to support its marketing strategy, including product management, pricing, distribution, and marketing communication? What questions or issues should Sonic seek to resolve using primary data?

What technological, demographic, and/or economic changes can potentially affect PDA development, buyer acceptance of PDAs, and development of substitute or enhanced products?

Enter your answers about Sonic’s use of marketing research in a written marketing plan or in the Marketing Research, Market Analysis, Market Trends, and Macroenvironment sections of Marketing Plan Pro.

ASSIGNMENTSSmall Group Assignments1. Obesity has been officially called an epidemic as cited in the opening vignette of the

chapter. In small groups, have the students collect, from the university or college administrators, information about the students eating habits (on campus students would be one group; commuting students another group), exercise, and lifestyle. For example, how many students (as a percentage of the total student population) regularly take advantage of the available exercise facilities? How many students presently on campus are clinically obese? This is a very good project to demonstrate the skill of data mining and the use of secondary data.

2. To illustrate the concept of marketing intelligence, select a different group of students to conduct similar research to # 1 above but from universities and colleges of similar size. These findings should then be presented to class as a comparison to the findings prepared from the group(s) researching your own university or college. Challenge the students to

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suggest the factors that differentiate the two studies and ways to reverse or to continue the trend.

Individual Assignments1. Select or suggest a current “fad” or “trend” exhibited by students on campus. Each student

is to select either a fad or trend and then research this fad and trend in light of the marketing opportunities present. Would a firm be successful in capitalizing on this “fad”? If so, why? Should companies capitalize on this “trend”—What are the “upsides” for producing products that are currently “trendy”? What are the “downsides”? What generation do these fads and trends appeal to? How large is the potential market for the fad and/or trend? Students should prepare a report with as much detail into the specific characteristics of these markets as is available. This is a good secondary data and data mining assignment.

2. Each student is a member of an identifiable ethic and demographic segment of society. As an individual assignment, ask each student to describe their sub-segment in terms of population, age distribution, growth potential, income, education levels, and other demographic characteristics. The conclusion of their report should explain the marketing implications of their findings in terms of potential market, over-saturated market, declining market, or hidden or ignored market with potential.

Think-Pair-Share1. Global forces and macroenvironment factors continually challenge marketers. Selecting one

of the macroenvironmental factors from Table 3.3 challenge the students to prepare a report on how they see that global force affecting, influencing, and limiting marketers in the near future. For example, point # 2 states that “the movement of manufacturing capacity and skills to lower-cost countries” is one of the forces affecting marketing. How will this statement affect multi-nationals in their marketing plans for the future? Suggested responses might point out that the multi-nationals must consider the low cost of wages in these countries when pricing their products; that the increase in manufacturing in lower-cost countries may increase the countries resident’s standard of living, thus open up markets for new products such as time saving and labor saving devices. Open up the class for discussion regarding how these global forces will affect (positively and negatively) marketing practices in the 21st century.

2. The marketing insight, Ten Megatrends Shaping the Consumer Landscape illustrates those megatrends predicted to affect the consumer in the coming years. Select a particular product or service (medical devices for example as a product; insurance sales as a service) split the class into ten equal sections and ask each section to comment on how their particular megatrend will affect the product and/or service.

MARKETING TODAY—CLASS DISCUSSION TOPICS“Green Marketing” has been a challenge to firms producing environmentally friendly products. The obstacles stated range from overexposure and lack of credibility, to the consumer not willing to pay a premium prices for “green” products, to poor implementation on the part of companies engaged in the practice.

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Question: When faced with a decision to market its products as “environmentally safe” or to market its products along conventional lines (matching competitive positioning), does the company have a responsibility to choose the more socially responsible manner or should the dictates of the marketplace (i.e. consumer) decide its marketing strategy?

END-OF-CHAPTER SUPPORT MARKETING DEBATE—Is Consumer Behavior More of a Function of a Person’s Age or Generation?

One of the widely debated issues in developing marketing programs that target certain age groups is how much consumers change over time. Some marketers maintain that age differences are critical and that the needs and wants of a 25-year-old in 2002 are not that different from those of a 25-year-old in 1972. Others dispute that contention and argue that cohort and generational effects are critical and that marketing programs must therefore suit the times.

Take a position: Age differences are fundamentally more important than cohort effects versus cohort effects can dominate age differences.

Suggested ResponsePro: People are the “age” they think they are. We have experienced some fundamental changes in consumer lifestyles and the definition of “family.” These changes suggest that people are and can adapt to different products regardless of their chronological age. Today a vast number of aging baby boomers, for example, do not think of themselves as approaching middle age; as a result represent a growing market for age defeating products. This is true with other age groups, as the advances in medicine, technology, and income have redefined what the “age” number really means to people. In marketing today, the marketing of a product or service can be designed to fit differing age groups by its positioning and advertising. Key examples include cruise line advertising and marketing to “active adults” encompassing a wide range of activities and locations previously thought of for the “youth” market.

Conversely, with the delay in child bearing and child rearing by some generations, activities that were once thought of as for middle age or empty nesters can be remarketed to appeal to these groups as well. Some generations have decided to explore the world before settling down with children and a mortgage. All of these changes open up vast amounts of marketing opportunities to enterprising firms and individuals. Marketing to one’s perception of “age” rather than to the physical definition of age is an exciting new arena for marketers.

Con: Age and cohorts are more important than age differences. People still pass through life as part of a “group” and experience the newness of life through cohort experiences and relate to others within their identifiable group. Marketing to cohorts extends the ability of the marketer to capitalize on share emotions, experiences, trends, and fads that have or had made lasting impressions on the cohort. Technology has changed so much in the last few decades and has influenced subsequent generations about expectations and potential, that one must market to the cohorts in order to identify with their experiences. People within a particular

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cohort seek information for purchase decisions from influencers within their cohort. Marketers must identify these influencers and tailor messages that affect their review of products and gain favor with them.

MARKETING DISCUSSIONWhat brands and products do you feel successfully “speak to you” and effectively target your age groups? Why? Which ones do not? What could they do better?

Suggested ResponseIndividual student answers will depend upon the products chosen, however these answers should refer to and include some of the key concepts presented in the chapter.

MARKETING SPOTLIGHT—Budweiser

Discussion Questions (suggested responses):

1)What have been the key success factors for Anheuser-Busch?

a. Decision to become a leader in mining customers’ buying patterns.

b. Timely data: getting information back from wholesalers and retailers on what is selling where and when.

c. Creating BudNET and WEARS.

d. Tracking consumer-purchasing behavior using IRI data.

e. Using store data, creating targeted marketing material.

f. Demographic data allows them to know what products sell better in each location.

g. Use of the EIA to guide product assortment decisions

2)Where is Anheuser-Busch vulnerable?

a. Changes in governmental regulations concerning alcoholic products

b. Changes in diet preferences/consumer preferences for alcoholic products

c. Competitive activities that mimic or improve upon technological processes

3)What should it watch out for?

a. Identifying trends and megatrends in the alcoholic industry

b. Monitor the six major environmental forces of:

(i) Demographic.

(ii) Economic.

(iii)Social-cultural .

(iv)Natural.

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(v) Technological.

(vi)Political-legal.

4)What recommendations would you make to senior marketing executives going forward?

a. Understand people’s views of themselves, others, organizations, society, nature, and the universe as it pertains to alcoholic consumption.

b. Continue to present a positive corporate education awareness program regarding responsibility toward alcoholic consumption.

5)What should they be sure to do with their marketing?

a. Work closely with local and national governments, pressure groups and other environmental arenas to position the company as being socially responsible to these concerns.

b. Continue to present their advertising showing alcoholic consumption in a responsible manner.

DETAILED CHAPTER OUTLINEDeveloping and implementing marketing plans involves a number of decisions. Making those decisions is both an art and a science. To provide insight into and inspiration for marketing decision making, companies must possess comprehensive, up-to-date information on both macro trends as well as more micro effects particular to their business. Holistic marketers recognize that the marketing environment is constantly presenting new opportunities and threats, and they understand the importance of continuously monitoring and adapting to that environment.

COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM

The major responsibility for identifying significant marketplace changes falls to the company’s marketers. More than any other group in the company, they must be the trend trackers and opportunity seekers. Although every manager in an organization needs to observe the outside environment, marketers have the following advantages:

A) They have disciplined methods for collecting information.

B) Additionally, they spend more time interacting with customers and observing competition.

C) Some firms have developed marketing information systems that provide management with rich detail about buyer wants, preferences, and behavior.

D) Marketers also have extensive information about how consumption patterns vary across countries.

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E) Many business firms are not sophisticated about gathering information.

1) Many do not have a marketing research department.

F) Every firm must organize and distribute a continuous flow of information to its marketing manager.

G) A marketing information system (MIS) consists of:

1) People.

2) Equipment.

3) Procedures to:

a. Gather.

b. Sort.

c. Analyze.

d. Evaluate.

e. Distribute needed, timely, and accurate information to marketing decision makers.H) A marketing information system is developed from:

1) Internal company records.

2) Marketing intelligence activities.

3) Marketing research.

I) The company’s marketing information system should be a cross between what managers think they need, what managers really need, and what is economically feasible.

Table 3.1 displays some useful questions. Review Key Definition here: marketing information system

Internal Records and Marketing IntelligenceMarketing mangers rely on internal reports on orders, prices, costs, inventory levels, receivables, payables, and so on. By analyzing this information, they can spot important opportunities and problems.

Order-to-Payment CycleThe heart of the internal records systems is the order-to-payment cycle.

A) Sales representatives, dealers, and customers send orders to the firm.

B) The sales department prepares invoices and transmits copies to various departments.

C) Shipped items are accompanied by shipping and billing documents that are sent to the various departments.

D) Today companies need to perform these steps quickly and accurately.

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E) An increasing number of companies are using the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle.

Sales Information Systems Marketing managers need timely and accurate reports on current sales.

A) Companies must carefully interpret the sales data so as not to get the wrong signals.

B) Technological gadgets are revolutionizing sales information systems and allowing representatives to have up-to-the second information.

Databases, Data Warehouses, and Data-MiningToday companies organize information in databases—customer databases, product databases, salesperson databases—and then combine data from the different databases.

A) Companies warehouse these data for easy accessibly to decision makers.

B) By hiring analysts skilled in sophisticated statistical methods, companies can “mine” the data and garner fresh insights into:

1) Neglected customer segments.

2) Recent customer trends.

3) Other useful information.

C) The customer information can be cross-tabbed with product and salesperson information to yield still deeper insights.

Marketing Intelligence SystemThe internal records systems supplies results data, but the marketing intelligence system supplies happenings data.

A) A marketing intelligence system is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.

B) Marketing managers collect marketing intelligence by:

1) Reading books, newspapers, and trade publications.

2) Talking to customers, suppliers, and distributors.

3) Meeting with other company managers.

C) A company can take several steps to improve the quality of its marketing intelligence:

1) A company can train and motivate the sales force to sport and report new developments.

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2) A company can motivate distributors, retailers, and other intermediaries to pass along important intelligence.

3) A company can network externally.

4) A company can set up a customer advisory panel.

5) A company can take advantage of government data resources.

6) A company can purchase information from outside suppliers.

7) A company can use online customer feedback systems to collect competitive intelligence.

Review Key Definition here: marketing intelligence system

Table 3.2 shows some secondary commercial data sources.

ANALYZING THE MACROENVIRONMENTSuccessful companies recognize and respond profitably to unmet needs and trends.

Needs and Trends Enterprising individuals and companies manage to create new solutions to unmet needs.A) A fad is “unpredictable, short-lived, and without social, economic, and political

significance.”

B) A trend is a direction or sequence of events that has some momentum and durability.

C) Trends are more predictable and durable than fads.

1) A trend reveals the shape of the future and provides many opportunities.

D) Megatrends have been described as “large social, economic, political, and technological changes [that] are slow to form, and once in place, they influence us for some time—between seven and ten years, or longer.

E) Trends and megatrends merit close attention.

F) To help marketers’ spot cultural shifts that might bring new opportunities or threats, several firms offer social-cultural forecasts.

Review Key Definitions here: fad, trend, and megatrend

Identifying the Major ForcesCompanies and their suppliers, marketing intermediaries, customers, competitors, and publics, all operate in an macroenvironment of forces and trends that shape opportunities and pose threats.

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A) These forces represent “noncontrollables” to which the company must monitor and respond.

Table 3.3 shows Global Forces Affecting Marketing.

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B) Within the rapidly changing global picture, the firm must monitor six major forces:

1) Demographic.

2) Economic.

3) Social-cultural.

4) Natural.

5) Technological.

6) Political-legal.

C) Marketers must pay attention to the interactions of these forces, as these will lead to new opportunities and threats.

DEMOGRAPHIC ENVIRONMENTDemographic trends are highly reliable for the short and intermediate run.

A) The main demographic force that marketers monitor is population because people make up markets.

B) Marketers are keenly interested in the:

1) Size and growth rate of populations in cities, regions, and nations.

2) Age distribution and ethnic mix.

3) Educational levels.

4) Household patterns.

5) Regional characteristics and movements.

Worldwide Population GrowthThe world’s population is showing explosive growth: It totaled 6.1 billion in 2000 and will exceed 7.9 billion by the year 2025.

A) The population explosion has been a source of major concern.

B) Explosive population growth has major implications for business.

C) A growing population does not mean growing markets unless these markets have sufficient purchasing power.

Population Age Mix A) National populations vary in their age mix.

B) There is a global trend toward an aging population.

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C) A population can be subdivided into six age groups:

1) Preschool

2) School-age children

3) Teens

4) Young adults age 25 to 40

5) Middle-aged adults age 40 to 65

6) Older adults ages 65 and up

D) For marketers, the most populous age groups shape the marketing environment.

Ethnic and Other MarketsCountries vary in ethnic and racial makeup.

A) A frequently noted megatrend, the increase in the percentage of Hispanics in the total population, represents a major shift in the nation’s center of gravity.

B) Ethnic groups have certain specific wants and buying habits.

C) Marketers must be careful not to overgeneralize about ethnic groups.

D) Within each ethnic group are consumers who are quite different from each other.

E) Diversity goes beyond ethnic and racial markets.

1) More than 50 million Americans have disabilities and they constitute a market for home delivery products.

Educational GroupsA) The population in any society falls into five educational groups:

1) Illiterates.

2) High school dropouts.

3) High school degrees.

4) College degrees.

5) Professional degrees.

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Household PatternsA) The “traditional household” consists of a husband, wife, and children (sometimes

grandparents).

B) In the United States today, one out of eight households is "diverse” or “nontraditional” and includes:

1) Single live-alones.

2) Adult live-togethers of one or both sexes.

3) Single-parent families.

4) Childless married couples.

5) Empty-nesters.

C) Each group has a distinctive set of needs and buying habits.

D) Marketers must increasingly consider the special needs of nontraditional households, because they are now growing more rapidly than traditional households

E) Single does not necessarily mean “alone,” “friends are the new family.”

F) “Neo tribes” of twenty-somethings living communally.

G) This emphasis on friendship can influence marketers in everything from whom they target to how they craft their marketing messages.

H) The gay market is a particularly lucrative segment.

Geographical Shifts in PopulationThis is a period of great migratory movements between and within countries. Forward-looking companies and entrepreneurs are taking advantage of the growth in immigrant populations and marketing wares specifically to these new members of the population.

A) Within countries, population movement occurs as people migrate from rural to urban areas, and then to suburban areas.

B) Location makes a difference in goods and service preferences.

C) There are also regional differences.

D) Suburban growth and a disdain for commuting has helped those business that cater to the growing SOHO (small office-home office) segment.

E) Marketers also look at where consumers are flocking.

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OTHER MAJOR MACROENVIRONMENTSOther macroenvironment forces profoundly affect the fortunes of marketers.

Economic EnvironmentA) Markets require purchasing power as well as people.

B) The available purchasing power in an economy depends upon:

1) Current income.

2) Prices.

3) Savings.

4) Debt.

5) Credit availability.

C) Marketers must pay careful attention to trends affecting purchasing power because they can have a strong impact on business, especially for companies whose products are geared to high-income and price-sensitive consumers.

Income DistributionA) There are four types of industrial structures:

1) Subsistence economies.

2) Raw material exporting economies.

3) Industrializing economies.

4) Industrial economies.

B) In a global economy, marketers need to pay attention to the shifting income distribution in countries around the world, particularly in countries where affluence levels are rising.

C) Marketers often distinguish countries with five different income-distribution patterns:

1) Very low incomes.

2) Mostly low incomes.

3) Very low, very high incomes.

4) Low, medium, high incomes.

5) Mostly medium incomes.

D) Over the past three decades in the United States, the rich have grown richer, the middle class has shrunk, and the poor have remained poor.

Review Key Definitions here: subsistence economies, raw material exporting economies, industrializing economies, industrial economies

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Savings, Debt, and Credit Availability A) Consumer expenditures are affected by:

1) Savings.

2) Debt.

3) Credit availability.

Outsourcing and Free TradeA) An economic issue of increasing importance is the migration of manufacturers and

service jobs off-shore.

B) Outsourcing is seen as a competitive necessity by many firms, but as a cause of unemployment by many domestic workers.

Social-Cultural EnvironmentPurchasing power is directed toward certain goods and services and away from others according to people’s tastes and preferences.

A) Society shapes the beliefs, values, and norms that largely define these tastes and preferences.

B) People absorb a worldview that defines their relationships to themselves, others, organizations, society, nature, and to the universe.

1) Views of themselves, people vary in the relative emphasis they place on self-gratification.

2) View of others, people are concerned about the homeless, crime and victims, and other social problems.

3) Views of organizations, people vary in their attitudes toward corporations, government agencies, trade unions, and other organizations.

4) Views of society, people vary in their attitudes toward their society.

5) View of nature, people vary in their attitudes toward nature.

6) View of the universe, people vary in their beliefs about the origin of the universe and their place in it.

C) Every trend seems to breed a countertrend.

D) Here are some other cultural characteristics of interest to marketers:

1) The persistence of core cultural values.

2) The existence of subcultures.

3) Shifts of values through time.

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High Persistence of Core Cultural ValuesThe people living in a particular society hold many core beliefs and values that tend to persist.

A) Core beliefs and values are passed on from parents to children and are reinforced by major social institutions.

B) Secondary beliefs and values are more open to change.

C) Marketers have some chance of changing secondary values but little chance of changing core values.

Existence of SubculturesA) Each society contains subcultures, groups with shared values emerging from their

special life experiences or circumstances.

B) Members of subcultures share common beliefs, preferences, and behaviors.

C) To the extent that subcultural groups exhibit different wants and consumption behavior, marketers can choose particular subcultures as target markets.

D) Marketers sometimes reap unexpected rewards in targeting subcultures.

Review Key Definitions here: core beliefs, secondary beliefs, and subcultures

Shifts of Secondary Cultural Values Through TimeA) Although core values are fairly persistent, cultural swings take place.

Natural EnvironmentA) The deterioration of the environment is a major global concern.

B) In many world cities, air and water pollution have reached dangerous levels.

C) There is great concern about “greenhouse gases.”

D) New regulations have hit certain industries very hard.

E) Consumers often appear conflicted about the natural environment.

F) Marketers need to be aware of the treats and opportunities associated with four trends in the natural environment:

1) Shortage of raw materials, especially, water.

2) Increased cost of energy.

3) Increased pollution levels.

4) Changing role of governments.

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Shortage of Raw MaterialsThe earth’s raw materials consist of the infinite, the finite renewable, and the finite nonrenewable.

A) Infinite resources, such as air and water.

B) Finite renewable resources, such as forests and foods.

C) Finite nonrenewable resources, such as oil and minerals.

Increased Energy CostsA) One finite nonrenewable resource, oil, has created serious problems for the world

economy.

B) Companies are searching for practical means to deliver alternative energy forms.

Anti-Pollution PressuresA) Some industrial activities will inevitably damage the natural environment.

B) A large market has been created for pollution-control solutions.

Changing Role of GovernmentsA) Governments vary in their concern and efforts to promote a clean environment.

Technological EnvironmentA) One of the most dramatic forces shaping peoples’ lives is technology.

B) Every new technology is a force for “creative destruction.”

C) The economy’s growth rate is affected by how many major new technologies are discovered.

D) New technologies also creates major long-run consequences that are not always foreseeable.

E) The marketer should monitor the following trends in technology:

1) Pace of change.

2) Opportunities for innovation.

3) Varying R&D budgets.

4) Increased regulation.

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Accelerating Pace of ChangeA) Many of today’s common products were not available 40 years ago.

B) The time between the appearance of new ideas and their successful implementation is all but disappearing.

1) So is the time between introduction and peak production.

Unlimited Opportunities for InnovationsA) Scientists today are working on a startling range of new technologies that will

revolutionize products and production processes.

B) Companies are already harnessing the power of virtual reality (VR) , the combination of technologies that allows users to experience three-dimensional, computer-generated environments through sound, sight, and touch.

Varying R&D BudgetsA) A growing portion of the U.S. R&D expenditures are going into the development side

of R&D.

1) Many companies are content to put their money into copying competitors’ products and making minor feature and style improvements.

Increased Regulation of Technological ChangeA) As products become more complex, the public needs to be assured of their safety.

1) Government agencies’ powers to investigate and ban potentially unsafe products have been expanded.

2) Marketers must be aware of these regulations when proposing, developing, and launching new products.

Political-Legal EnvironmentMarketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies, and pressure groups.

A) Sometimes these laws also create new business opportunities.

B) Two major trends deal with the increase in business legislation and the growth of special interest groups.

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Increase in Business Legislation A) Business legislation has three main purposes:

1) To protect companies from unfair competition.

2) To protect consumers from unfair business practices.

3) To protect the interests of society from unbridled business behavior.

B) A major purpose of business legislation and enforcement is to charge businesses with the social costs created by their products or production processes.

1) At what point do the costs of regulation exceed the benefits?

C) Legislation affecting business has increased steadily over the years.

D) The United States has many laws on its books covering such issues as:

1) Competition.

2) Product safety and liability.

3) Fair trade and credit practices.

4) Packaging and labeling.

E) Several countries have gone further than the United States in passing strong consumer protection legislation.

F) Marketers must have a good working knowledge of the major laws protecting competition, consumers, and society.

Growth of Special Interest GroupsA) The number and power of special interest groups have increased over the past three

decades.

B) Many companies have established public affairs departments to deal with these groups.

C) An important force affecting business is the consumerist movement—an organized movement of citizens and government to strengthen the rights and powers of buyers in relation to sellers.

D) With consumers increasingly willing to swap personal information for customized products from firms, privacy issues will continue to be a public hot button.

E) Several companies have established consumer affairs departments to help formulate policies and respond to consumer complaints.

F) Clearly, new laws and growing numbers of pressure groups have put more restraints on marketers.

G) Marketers have to clear their plans with the company’s:

1) Legal departments.

2) Public-relations departments.

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3) Public-affairs departments.

4) Consumer-affairs departments.

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