Page 107 - Marketing Management

84 PART 2 CAPTURING MARKETING INSIGHTS

VARYING R&D BUDGETS A growing portion of U.S. R&D expenditures
goes to the development as opposed to the research side, raising concerns about
whether the United States can maintain its lead in basic science. Many
companies put their money into copying competitors’ products and making
minor feature and style improvements. Even basic research companies such as
Dow Chemical, Bell Laboratories, and Pfizer are proceeding cautiously, and
more consortiums than single companies are directing research efforts toward
major breakthroughs.

INCREASED REGULATION OF TECHNOLOGICAL CHANGE
Government has expanded its agencies’ powers to investigate and ban potentially
unsafe products. In the United States, the Food and Drug Administration (FDA)
must approve all drugs before they can be sold. Safety and health
regulations have increased for food, automobiles, clothing, electrical appliances,
and construction.

The Political-Legal Environment
The political and legal environment consists of laws, government agencies, and pres-
sure groups that influence various organizations and individuals. Sometimes these
laws create new business opportunities. Mandatory recycling laws have boosted the
recycling industry and launched dozens of new companies making new products
from recycled materials. Two major trends are the increase in business legislation
and the growth of special-interest groups.

INCREASE IN BUSINESS LEGISLATION Business legislation is intended to
Text messaging is profoundly
protect companies from unfair competition, protect consumers from unfair business practices,
changing how consumers choose
protect society from unbridled business behavior, and charge businesses with the social costs of
to communicate.
their products or production processes. Each new law may also have the unintended effect of
sapping initiative and slowing growth.
The European Commission has established new laws covering competitive behavior, product
standards, product liability, and commercial transactions for the 27 member nations of the
European Union. The United States has many consumer protection laws covering competition,
product safety and liability, fair trade and credit practices, and packaging and labeling, but many
countries’ laws are stronger. 49 Norway bans several forms of sales promotion—trading stamps,
contests, and premiums—as inappropriate or unfair. Thailand requires food processors selling na-
tional brands to market low-price brands also, so low-income consumers can find economy
brands. In India, food companies need special approval to launch duplicate brands, such as another
cola drink or brand of rice. As more transactions take place in cyberspace, marketers must establish
new ways to do business ethically.

GROWTH OF SPECIAL-INTEREST GROUPS Political action committees (PACs)
lobby government officials and pressure business executives to respect the rights of consumers,
women, senior citizens, minorities, and gays and lesbians. Insurance companies directly or
indirectly affect the design of smoke detectors; scientific groups affect the design of spray
products. Many companies have established public affairs departments to deal with these
groups and issues. The consumerist movement organized citizens and government to
strengthen the rights and powers of buyers in relationship to sellers. Consumerists have won the
right to know the real cost of a loan, the true cost per standard unit of competing brands (unit
pricing), the basic ingredients and true benefits of a product, and the nutritional quality and
freshness of food.
Privacy issues and identity theft will remain public policy hot buttons as long as con-
sumers are willing to swap personal information for customized products—from marketers
they trust. 50 Consumers worry they will be robbed or cheated; that private information will
be used against them; that they will be bombarded by solicitations; and that children will be
targeted. 51 Wise companies establish consumer affairs departments to formulate policies and
resolve complaints.