L

The Company's Maeroenvtronment

cent, while the United States will drop to 18 per cent from 23 per cent.7 However, in June 1997, Asia's economic miracle came to an end. Economic and financial turmoil struck some of the fastest-grow ing countries in the region.

The roots of the Asian economic crisis van' from country to country. Generally, the seeds of trouble lay in headlong economic growth and policies and practices that resulted in over-burdened financial systems. The Asian 'tiger' economies attracted floods of foreign investment which increased land and asset prices. Lending soared. Authorities embarked on huge, often economically questionable, infrastructure projects - new cities, railroads, highways, power stations - which brought little return on investment. The region's currencies were pegged to the US dollar, which had been appreciating in recent years. Country after country saw their currency depreciate as the crisis unfolded. Moreover, the region's exporters were gradually becoming uncompetitive. Many countries suffered from 'crony capitalism' in which authorities encouraged banks to lend to politically well connected businesses. Close neighbour, Japan, and the world's second biggest economy, has also become vulnerable to the crisis, as its financial institutions are big lenders to the rest of the region.s

Before the Asian financial crisis developed, it hod become almost an article of faith that the region would maintain perpetual growth. Business analysts believe that, where authorities are committed to appropriate reforms, recovery will be possible. Meanwhile, authorities must adopt measures to arrest further decline and to prevent the turmoil from spreading even wider.

Although there has been a narrowing of the wealth and living standards gap between the developed western and rising Asian countries in recent decades, the uncertain economic climate in the Asian economies has important implications for international marketers. They must determine how changing incomes affect purchasing power and how they translate into marketing threats and opportunities for the firm.

Where consumer purchasing power is reduced, as in countries experiencing economic collapse or in an economic recession, value-far-money becomes a key purchasing criterion. Marketers must pursue vaktv-based marketing to capture and retain price-conscious customers during lean economic times, unlike boom periods when consumers become literally addicted to personal consumption.''Rather than offering high quality at a high price, or lesser quality at very low prices, marketers have to look for ways to offer the more financially cautious buyers greater value -just the right combination of product quality and good service at a fair price.10

Consumers with the greatest purchasing power are likely to belong to the higher sociocconomic groups, whose rising incomes mean that their spending patterns are 5ess susceptible to economic downturns than lower-income groups. So, marketers must determine a population's mcome distribution. The upper economic strata of a society become primary targets for expensive luxury goods, the middle income groups are more careful about spending, but can usually afford some luxuries sometimes, while the lower strata will afford only basic food, clothing and shelter needs. In some countries, an underclass exists - people permanently living on state welfare and/or below the poverty line - which has little purchasing power, often struggling to make even the most basic purchases.

Changing Consumer Spending Patterns

Table 4.1 shows how European consumer expenditure on different products varies. Generally, the total expenditures made by households tend to van' for

Table 4.1

European consumer expenditure by product, 1990 (% of total expenditures

Table 4.1

FOOD

AiXJOHOLIC DRINK

NON-ALCOHOLIC

DRINK

TOBACCO

CLOTHING

FOOTWEAR

HOUSING

EU members

Austria

16.8

2.3

0.7

1.9

8.8

2.3

17.8

Belgium

16.0

2.8

1.0

1.4

4.9

1.0

12.1

Denmark

14.8

3.1

0.6

2.9

4.7

0.7

19.7

Finland

16.6

3.3

0.5

1.7

4.1

0.8

14.3

France

15.1

1.9

0.5

1.0

5.5

1.1

12.2

Germany E

25.4

10.0

1.5

3.8

10.2

2.3

1.5

Germany W

17.3

2.3

0.6

1.7

7.5

1.6

15.6

Greece

41.8

2.2

1.0

2.5

6.4

0.8

10.3

Ireland

22.3

12.1

1.5

4.9

5.1

1.3

5.3

Italy

18.8

1.2

0.4

1.6

6.8

2.0

10.6

Luxembourg

13.7

1.4

0.6

4.7

5.6

0.6

11.9

Netherlands

15.1

1.1

0.4

1.8

5.0

1.7

11.7

Portugal

34.6

L5

0.2

1.3

4.9

1.5

8.9

Spain

24.4.

1.1

0.4

1.3

5.3

1.5

12.6

Sweden

15.2

2.7

0.4

1.9

5.4

1.0

17.6

United Kingdom

11.1

6.3

1.0

2.6

4.9

1.0

10.2

EfTA members

Iceland

29.0

2.1

0.5

2.4

8.5

10.9

Liechtenstein

11.5

6.Q

1.1

2.0

6.1

1.0

18.3

Norway

18.4

3.4

1.1

2.3

6.2

1.3

12.2

Switzerland

19-2

4.7

0.8

1.6

3.9

0.9

13.5

Eastern Europe

Albania

24.0

5.0

1.8

2.2

12.4

1.4

4.8

Bulgaria

18.7

11.6

1.0

2.6

7.4

2.6

2.0

Czechoslovakia

29.9

9.5

1.9

5.8

6.3

1.4

3.1

Hungary

26.2

9.5

2.5

2.1

6.9

1.2

4.8

Poland

25.1

11.2

1.7

8.1

1.6

16.3

Romania

22.7

6.4

1.8

2.3

7.9

2.1

2.0

USSR

27.8

12.2

0.9

2.4

15.6

3.6

3.2

Yugoslavia

47.2

3.6

1.0

2.0

8.5

2.0

2.4

Others

Cyprus

19.7

1.4

1.3

1.3

14.8

1.1

6.2

Gibraltar

31.0

1.1

1.0

9.8

2.0 2.2

13.5 4.3

Malta

26.1

4.5

3.7

3.4

R.I

Monaco

17.7

2.3

0.5

1.3

7.2

1.6

12.5

Turkey

32.9

1.2

2.7

9.5

4.7

1.8

9.0

The Company's Macroenvironmcnt • 161

household

household

GOODS &

FUELS

SERVICES

health

transport

communications

LEISURE

OTHERS

total

5.8

7.5

5.2

14.5

1.9

5,9

8.8

100,0

4.2

12.4

11.2

11.8

1.0

10.2

10.0

100.0

6.3

6.7

1.7

13.8

1.3

9.3

14.4

100.0

3.4

7.1

3.6

15.9

9.5

19.2

100.0

6.8

8-2

9.3

14.8

2.1

7.4

14.1

100.0

0-8

12.1

4.0

2.G

6.2

20.2

100.0

4.1

9.8

5.2

15.0

1.7

10.5

7,2

100.0

3.2

8.3

3.1

9.9

1.7

4,0

4.7

100,0

5.4

7.1

1.5

10.0

1.3

9.9

12,3

100.0

3,8

8.9

6.4

11.9

1.1

9.2

17.2

100.0

7.5

8.5

6.7

16.4

3.0

19.5

100.0

5,5

8.0

12.2

9.7

1.3

9.9

16.6

100.0

6.2

3.0

11.0

3.0

2.4

21.5

100.0

3.]

6.8

3.8

12.5

1.G

5.7

20.6

100.0

4.G

6,3

1.6

16.8

7.2

19.8

100.0

3.2

5.3

1.2

12.8

1.5

8.4

30.4

100.0

11.4

6.7

8.8

9.0

10.8

100.0

3.6

6.0

12.6

11.8

14.0

5.9

100.0

7.G

7.0

4.1

12.5

1.8

9.2

13.5

100.0

4.5

5.0

11,2

11.3

9.9

13.4

100.0

4.0

9.8

3,6

6.9

5.2

18.9

100,0

2.6

14.1

3.0

8.3

6.9

19.2

100.0

3.2

16.2

6.7

8.6

4.6

2.7

100.0

2.6

6.8

6.1

9.G

13.5

8.7

100.0

2.5

6.6

7.7

8.4

G.3

8.6

2.G

100.0

0.9

5.5

4.0

4.1

6.4

33.9

100.0

3.8

8.0

2.7

2.9

8.3

8.6

100.0

9.0

4.4

4.1

8.6

4.8

2.4

100.0

2.0

11.1

2.4

17.1

5.4

16.2

100.0

9.1

8.3

9.7

9.1

5.0

100.0

2.4

10.2

3.8

17.0

7.0

7.5

100.0

6.9

13.9

15.3

10.6

7.3

3,0

100.0

5.7

10.6

11.1

6.0

1.6

3.1

Differences nfited over a century ago by Ernst

Engel in haw people shift thcii ,spen mg across load, housing, transportation, health cure, and other goodis and services categories as family income rises.

essential categories of goods and services, with food, housing and transportation often using up most household income. Marketers also want to identify how spending patterns of consumers at different income levels vary. Some of these differences were noted over a century ago by Ernst Engel, who studied how people shifted their spending as their income rose. He found that as family income rises, the percentage spent on food declines, the percentage spent on housing remains constant (except for such utilities as gas. electricity and public services, which decrease), and both the percentage spent on other categories and that devoted to savings increase. Engel's laws have generally been supported by later studies.

Changes in major economic variables such as income, cost of living, interest rates, and savings and borrowing patterns have a large impact on the mar he t-place. Companies watch these variables by using economic forecasting. Businesses do not have to be wiped out by an economic downturn or caught short in a boom. With adequate warning, they can take advantage of chanees m the economic environment.

Natural Environment natural environment Natural resources that are needed us inputs by affected by marketing

The natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Environmental concerns have grown steadily during the past two decades. Protection of the natural environment will remain a crucial worldwide issue facing business and the public. In many cities around the world, air and water pollution have reached dangerous levels. Concern continues to mount about the depletion of the earth's ozone layer and the resulting 'greenhouse effect', a dangerous warming of the earth. And many of us fear that we will soon he buried in our own rubbish. Marketers should be aware of four trends in the natural environment,

• Shortages of Raw Materials

Air and water may seem to be infinite resources, hut some groups sec long-run dangers. They warn of the potential dangers that propellants used in aerosol cans pose to the ozone layer. Water shortage is already a big problem in some parts of the world. Renewable resources, such as forests and food, also have to be used wisely. Companies in the forestry business are required to reforest timberlands in order to protect the soil and to ensure enough wood supplies to meet future demand. Food supply can be a critical problem because more and more of our limited farmable land is being developed for urban areas.

Non-renewable resources, such as oil, coal and various minerals, pose a serious problem. Firms making products that require these increasingly scarce resources face large cost increases, even if the materials do remain available. They may not find it easy to pass these costs on to the consumer. However, firms engaged in research and development and in exploration ean help by developing new sources and materials.

• Increased Cost of Energy

One non-renewable resource - oil - has created the most serious problem for future economic growth. The large industrial economies of the world depend heavily on oil. and until economical energy substitutes can be developed, oil will continue to dominate the world political and economic picture. Big increases in the price of oil during the 1970s, and dramatic events like the 1991 Gulf War that affect oil availability, have spurred the search for alternative forms of energy.

The Company's Maeruenvironmcnt • 163

Different countries vary in their concern/or the environment. For example, partly because of ecological devastation like [hat shnvan here informer East Germany, the German government TIOTO vigorously pursues environment quality.

Many companies are searching for practical ways to harness solar, nuclear, wind and other forms of energy. In fact, hundreds of firms already offer products that use solar energy for heating homes and other uses. Others are directing their research and development efforts to produce high energy-efficient technologies to meet customers' needs. For example, the tyre company Michelin recently introduced its energy low-resistance tyres that are said to offer a 5 per cent reduction in fuel consumption. Car makers Ford, Volkswagen, Opel and Peugeot-Citroen have all produced a new generation of sophisticated eompact cars whose small dimensions and low weight make them the front-runners in the race towards the environmentalists' 'year-2000 holy grail" - fuel consumption of just 3 litres per 100km.11

• increased Pollution

Industry has been largely blamed for damaging the quality of the natural environment. The 'green' movement draws attention to industry's 'dirty work': the disposal of chemical and nuclear wastes, the dangerous mercury levels in the ocean, the quantity of chemical pollutants in the soil and food supply, and the littering of the environment with non-biodegradable bottles, plastics and other packaging materials.

Many companies, especially those at the 'grubbier' ends of manufacturing, often complain about the cost of fulfilling their obligations to 'clean up' regulations or to produce new greener technologies. On the other hand, more alert managers have adapted quickly to rising public environmental concerns, which have created marketing opportunities for firms (see Marketing Highlight 4.3).

Many firms are responding to public environmental concerns with more ecologically sensitive goods, recyclable or biodegradable packaging, improved pollution controls and more energy-efficient operations. Niche green markets, where environmentally sensitive consumers are prepared to pay a premium price for green benefits, have emerged in sectors ranging from cosmetics, toiletries and detergents to passenger cars. However, most consumers worldwide are more likely to make trade-offs between green advantages and product quality and

Filthy Lucre

Some firms complain that Europe's tough environmental regulations are driving them out of business. Many others, however, are cleaning up. Environmental pressures are one firm's expensive obligation, hut another's chance for profit. Back in 1992, the San Diego (US)-based Environmental Business Journal reported that die market in western Europe for environmental goods and services was worth around 894 billion, only MO billion less than the market in the United States. But Europe's environmental industry is growing at 7 per cent a year. There are now over 16,000 environmental firms in Europe. The industry is attracting big players, including America's Waste Management, Asea Brown Boveri's Flakt, and Lurgi. which is part of Germany's Metallgesellschaft.

Germany is Europe's largest and toughest "environmental state'. Germany's environmental laws have often ended up as the EU's environmental policy. Germany spends 1.55 per cent of its GDP on environmental investment. It is also the world's leading exporter of environmental technology. The United States comes a close second. Every time the EU adopts a German-sponsored 'green' law, it creates export opportunities for both German and their rival environmental firms elsewhere in Europe. For example, a European directive will force Europe's big towns to have sewage treatment plants by

Marketing

Highlight 4.3

2000, with its small towns to follow by 2005, The primitive state of sewage treatment in some parts of Europe means lots of orders for new plants. Some big operators like France's Generates des Eaux, Lyonnaise des Eaux Dumez and Saur. Bouygues's subsidiary, have successfully expanded abroad, including the cough German market, by giving public authorities in European countries a one-stop sliop: that is, they finance, build and operate water-treatment plants.

Waste management - collecting, transporting and disposal of solid rubbish - accounts for just under .13 per cent of the total western Europe environment market, and is the biggest single market for environmental firms in the European Union. New recycling laws, particularly in Germany, are creating fresh opportunities for many companies.

The complexity of EU green directives and national laws also makes for a booming business in environmental consultancy, particularly in the areas of environmental auditing and risk management. Analysts predict that the green business will keep growing over the remaining decade. With it will grow clever companies that have learnt to turn trash into cash!

SOURCE: Adapted from 'Pollution: the money in Europe's muds', TheEcantimist (20 November 1993), pp. 109-10.

performance benefits in their purchasing decision. So, although environmental pressures upon businesses in the decade ahead are expected to escalate, firms must seek to balance both the ecological and performance benefit expectations of the mass of consumers.!-

• Government Intervention in Natural Resource Management

In most countries, industry has been pressured rather than persuaded to 'go green'. Environmental legislation has toughened up in recent years and businesses can expect this to continue in the foreseeable future. Recession in leading world economies over the early 1990s, however, forced governments to look at the potential of voluntary agreements with industry. The idea is to help industry meet environmental standards cost-effectively.

The Company's Macroenvironment • 165

A successful case is Holland's National Environmental Policy Plan (NEPP), which was first introduced in J 989 and set tight targets for pollution reduction. Some industries agreed to tougher pollution controls in return for greater government flexibility over their implementation. Although firms knew that failure to co-operate meant harsher laws would follow, the NEPP did provide a channel for government-industry dialogue and co-operation. Detailed plans were agreed with seetors accounting for 6070 per cent of Holland's environmental pollution. Deals with oil refineries in Rotterdam helped to cut smog and sulphur dioxide emissions. Agreements with packaging firms led to a decline in the volume of municipal waste in 1992, the first time since 1945. Ammonia output also declined sharply,u

In most developed western nations, well-organized seetors, such as oils, chemicals, pharmaceutical^ and food, are more likely to reach common agreements with government agencies and their plans for environmental control. The joh, many argue, is still incomplete. Smaller firms and the least organized sector -households - are generally a long way away from signing up to total 'greenery'. For businesses and industries, environmental issues and government intervention are unlikely to vanish. Clever marketers should remain alert and proactive in the search for new green solutions to meet the world's environmental and natural resource dilemmas. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world.

Technological Environment

The technological environment is perhaps the most dramatic force now shaping our destiny. Technology has released such wonders as penicillin, organ transplants and notebook computers. It has also released such horrors as the nuclear bomb, nerve gas and the machine gun, and such mixed blessings as cars, televisions and credit cards. Our attitude towards technology depends on whether we are more impressed with its wonders or its blunders.

Every new technology replaces an older technology. Transistors decimated the vacuum-tube industry, xerography killed the carbon-paper business, ears and roads hurt the railways, and compact discs hurt vinyl records. When old industries fought or ignored new technologies, their businesses declined.

New technologies create new markets and opportunities. The marketer should watch the following trends in technology.

Fast Pace of Technological Change

Many of today's common products were not available a hundred years ago: televisions, home freezers, automatic dishwashers, electronic computers, contraceptives, earth satellites, personal computers, compact disc players, videoeassette recorders, facsimile machines, mobile phones. The list is unending! Companies that fail to anticipate and keep up with technological change soon find their products outdated. But keeping pace with technological change is becoming more challenging for firms today. Technology life cycles are getting shorter. Take the typewriter. The firstgeneration modern mechanical typewriter dominated the market for 25 years. Subsequent generations had shorter lives - 15 years for electromechanical models, 7 years for electronic versions and 5 years Tor first-generation microprocessor-based ones. Other examples of fast technological change are found. The average life of some computer software products, for example, is now well under one year.

Firms must track technological trends and determine whether or not these changes will affect their products' continued ability to fulfil customers' needs.

technological environment Forces tliat create new technologies, creating jictc product and market opportunities.

As t/ii's Siemens ad suggests, research and development has changed considerably over [he years. Lone inventors have been replaced by research teams employed by large companies or other organizations.

SIEMENS

1895. That was then.

yvbrîJrtg h 3 s/!>51 Wjora&y Wäheirr. Biemsen ri3:ío t-e VvO-Vfs iiisr yray ÍTicpSs. WAxJíjrí '',1,ri hi""'. Stnwns pîtciïnd artf manufactured Ihnwo^di; fits: Si'av tgfces.

1993. This is now.

This maoncfc resonance inage l=ts rteKxs me ;tm huron Jxxfr' mow c^tssriy íhan e>w twtoe. * s- a p<\x»Ki ol veaii of Stenwtss inveaniTtcnt n ^osearcfi aoa'dewítípiTíin^ KOTV. you tfco't haw id iie s scwiUst 1o áppmcjt thi results. Doctoii. hospitars and Gimes llraughou; Arnica IrO gwrg thtw FOticrvs fceUer car« tecau» ol Siemuns jdwmces in rrcny forn« of diagncSí»;

inugnf}, (induing titrasoond, .lldgrcrs- resm«», rMdpjr n^ng ¡jrd

«d ttxnoflnfjhy, Ar<d ¡hpt's 5he ml tf res^i vw> can & fwi aocut

This maoncfc resonance inage l=ts rteKxs me ;tm huron Jxxfr' mow c^tssriy íhan e>w twtoe. * s- a p<\x»Ki ol veaii of Stenwtss inveaniTtcnt n ^osearcfi aoa'dewítípiTíin^ KOTV. you tfco't haw id iie s scwiUst 1o áppmcjt thi results. Doctoii. hospitars and Gimes llraughou; Arnica IrO gwrg thtw FOticrvs fceUer car« tecau» ol Siemuns jdwmces in rrcny forn« of diagncSí»;

inugnf}, (induing titrasoond, .lldgrcrs- resm«», rMdpjr n^ng ¡jrd

«d ttxnoflnfjhy, Ar<d ¡hpt's 5he ml tf res^i vw> can & fwi aocut

Technologies arising in unrelated industries can also affect the firm's fortunes. The mechanical watch industry was overtaken by manufacturers of electronic components seeking new applications and growth opportunities for their quartz technology. Businesses must assiduously monitor their technological environment to avoid missing new product and market opportunities.

Technology and innovations require heavy investments in research and development. It is not uncommon for pharmaeeutieals companies, for example, to spend £150-200 million to develop a new drug. High R & I) spending is also a feature of many industries including cars, communications, computers, aerospace, engineering, entertainment and consumer electronics. Some companies spend billions on R & D each year. A recent study showed that the international top 200 companies devoted an average 4,85 per cent of 1993 sales to R & D, General Motors of the United States was the world's biggest spender with a budget of more than $4 billion (£2.6 billion), followed by German engineering group DaimlerBenz, Ford Motor of the United States and Japan's Hitachi.14

In recent years, there has been a marked increase in collaborative technological research efforts between western governments and industries. In Europe, this niood spawned subsidized programmes, such as Esprit. Eureka and Jessi, and in the USA schemes such as Sematech and MCC. These programmes stemmed from two nifu'n concerns; first, the soaring cost of R & D and the difficulty, even for big companies, of mastering a wide range of technologies; and second, the increasing international competition, mainly from Japan, in electronics and related industries. There are mixed views on the success of these programmes, although collaboration has helped break down barriers between rival firms and stimulated the dissemination of know-how.13

• Concentration on Minor Improvements

As a result of the high cost of developing and introducing new technologies, many companies are tinkering - making minor product improvements - instead of

Tlie Company's Macroenvironnmnt

gambling on substantial innovations. The high costs and risks of commercialization i'ailure make firms take this cautious approach to their R & D investment. Most companies arc content to put their money into copying competitors' products, making minor feature and style improvements, or offering simple extensions of current brands. Thus much research is in danger of being defensive rather than offensive.

• Increased Regulation

As products become more complex, people need to know that they are safe. Thus, government agencies investigate and ban potentially unsafe products. In the EU and America, complex regulations exist for testing new drugs. The US Federal Food and Drug Administration, for example, is notorious for its strict enforcement of drug testing and safety rules. Statutory and industry regulatory bodies exist to set safety standards for consumer products and penalize companies that fail to meet them. Such regulations have resulted in much higher research costs and in longer times between new-product ideas and their introductions. Marketers should be aware of these regulations when seeking and developing new products.

Marketers need to understand the changing technological environment and the ways that new technologies can serve customer and human needs. They need to work closely with R & D people to encourage more market-oriented research. They must also be alert to the possible negative aspects of any innovation that might harm users or arouse opposition.

Political Environment

Marketing decisions are strongly affected by developments in the political environment. The political environment consists of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society.

• Legislation Regulating Business

Even the most liberal advocates of free-market economies agree that the system works best with at least some regulation. Well-conceived regulation can encourage competition and ensure fair markets for goods and services. Thus governments develop public policy to guide commerce - sets of laws and regulations that limit business for the good of society as a whole. Almost ever;' marketing activity is subject to a wide range of laws and regulations.

Understanding the public policy implications of a particular marketing activity is not a simple matter. First, there are many laws created at different levels: for example, in the EU, business operators are subject to European Commission, individual member state and specific local regulations; in the USA, laws are created at the federal, state and local levels, and these regulations often overlap.

Second, the regulations are constantly changing - what was allowed last year may now be prohibited. In the single European market, deregulation and ongoing moves towards harmonization are expected to take time, creating a state of flux, which challenges and confuses both domestic and international marketers. They must therefore work hard to keep up with these changes in the regulations and [heir interpretations.

In many developed economies, legislation affecting business has increased steadily over the years. This legislation has been enacted for a number of reasons.

political environment Lewes, government agencies and pressure groups that influence and limit various organizations and individuals in a given society.

The first is to protect companies from each other. Although business executives may praise competition, they sometimes try to neutralize it when it threatens them. So laws are passed to define and prevent unfair competition. Anti-trust agencies and monopolies and mergers commissions exist to enforce these laws.

The second purpose of government regulation is to protect consumers from unfair business practices. Some firms, if left alone, would make shoddy products, tell lies in their advertising and deceive consumers through their packaging and pricing. Unfair business practices have been defined and are enforced by various agencies.

The third purpose of government regulation is to protect the interests of society against unrestrained business behaviour. Profitable business activity does not always create a better quality of life. Regulation arises to ensure that firms take responsibility for the social costs of their production or products.

New laws and their enforcement are likely to continue or increase. Business executives must watch these developments when planning their products and marketing programmes. Marketers need to know about the main laws protecting competition, consumers and society. International marketers should additionally be siware of regional, country and local laws that affect their international marketing activity.

• Growth of Public Interest Groups

The number and power of public interest groups have increased during the past two decades. In Chapter 2 we discussed a broad range of societal marketing issues. The pioneering efforts of Ralph Nader's Public Citizen group in the United States raised the importance of the role of public interest groups as watchdogs on consumer interests and lifted consumerism into a powerful social force. Consumerism has spilled over to countries in western Etirope and other developed market economies such as Australia. Hundreds of other consumer interest groups, private and governmental, operate at all levels - regional, national, state/county and local levels. Other groups that marketers neect to consider are those seeking to protect the environment and to advance the rights of various groups such as women, children, ethnic minorities, senior citizens and the handicapped. As we saw in the case of Nutricia's failed biotechnology project (see Marketing Highlight 4.1), companies cannot afford to ignore the views of powerful public interest groups.

• Increased Emphasis on Ethics and Socially Responsible Actions

Written regulations cannot possibly cover all potential marketing abuses, and existing laws are often difficult to enforce. However, beyond written laws and regulations, business is also governed by social codes and rules of professional ethics. Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply to 'do the right thing'. These socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment.

Increased concerns about the environment have created fresh interest in the issues of ethics and social responsibility. Almost every aspect of marketing involves such issues. Unfortunately, because these issues usually involve conflicting interests, well-meaning people can disagree honestly about the right course of action in a particular situation. Thus many industrial and professional trade associations have suggested codes of ethics, and many companies are now developing policies and guidelines to deal with complex social responsibility issues.

In Chapter 2, we discussed in greater depth public and social responsibility issues surrounding key marketing decisions, the legal issues that marketers should understand, and the common ethical and societal concerns that marketers face.

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