was that competition
prices were lowered (sometimes below cost), and many
once-stable organizations suffered huge fi nancial losses.
As deregulation unfolded-new competition was permitted, rate regulation was lOOS-
ened or abandoned-the vicious cycle began to reverse itself. For example, AT&T had beeD
slow to adopt fiber-optic cable. In 1985, there were only 136,000 miles of it in AT&T's
system. Sprint and MCI had more. AT&T responded. By 1994, it had 1.3 million miles of
fiber cable (slightly more than MCI and Sprint). Airlines, freed of the CAB's routine restric-
tions, organized
and spoke" systems-routing passengers via major transfer points-
that provided more connections. In 1978, about 14% of all passengers had to change airlines
to reach their destination; by 1995, this number fell to about 1%.4
Consumer Protection
Since the beginning of the twentieth century, there has been a concerted effort to protect
the consu mer. For example , the Food, Drug, and Cosmetic Act
938) was aimed princi-
pally at preventing the adulteration or misbranding of the three categories of products. The
various federal consumer protection laws include more than 30 amendments and separate
laws relating to food,
and cosmetics, such as
Infant Fo rmula Act (1980) and the
Nutritional Labeling and Education Act
990). Perhaps
most significant period in con-
sumer protection was the 1960s, with the emergence of consumerism. This was a grass-
roots movement intended to increase the influence, power, and rights of consumers in dealing
with the insti tutions. The Consumer Product Safety Act (1972) established the Consumer
Product Safety Commission .
Ethics is generally referred to as the set of moral principles or values that guide behavior. There is a
recognition that many, if not most, business decisions involve some
ethical judgement. Consider the following dilemma. An athletic shoe company is consid-
ering whether to manufacture shoes
a country
a very poor record on human rights.
The new facility will improve the companys competitive position, but the host government
will also make a considerable profit, a
that will be enjoyed by the ruling elite, not by
the people of the country who will be employed at meager wages. Will the firm support a
COffilpt government in order to make higher profits?
Firms hope that a consideration of ethical issues during the decision-making process
will be helpful in preventing or at least decreasing the frequency of unethical behavior. Hav-
ing a corporate ethics policy also seems to facilitate
process of recovery after an ethi-
cal scandal-although firms may wish otherwise, unethical acts do occur and do not often
go unnoticed. The lack of respect many people feel towards business today, the press 's propen-
sity for investigative teportin g, and the willingness of many insiders to blow the whistle on
unethical corporate behavior increase the likelihood that such behaviors wiil eventually be
discovered . See Figure 5.2.
Ethical problems faced by marketing professionals stem from conflicts and dis-
agreements. They tend to be relationship problems. Each party in a marketing transaction
brings a set of expectations regarding how the business
will exist and how trans-
actions should be conducted. For example, when you as a consumer wish
purchase some-
thing from a retailer, you bring the following expectatio:ls about the transaction : (1) you
want to be treated fairly by the salesperson. (2) you want to pay a reasonable price,
(3) you want the product to be available as advertising says it will and in the indicated con-
dition, and (4) you want it to perform as promised. UrJortunately, your expectations might
not be in agreement with those of the retailer. The retail salesperson may not "have time
for you," or the retailer 's notion of a "reasonable" price may be higher than yours, or the advertising for the product may be misleading. A summary of ethic issues related to marketing is shown in Table 5.3 .
EXTERNAL FACTORS THAT AFFECT PLANNING
109
Business Week/Harris Poll
compan ies, the
Do you agree or disagree with
Gore's sentiments?
Survey of 1035 adults cond ucted Aug . 25-29, 2000, 1009
adults conducted June 29-July 5, 2000, 1010 adu lts
Strongly ag ree
39%
Strongly disagree . .. .. 13%
conducted Dec. 9-12, 1999, and 1004 adults on
23-26,
1996. Results should be accurate within 3 percentage
Som ewhat agree
35 %
Don 't Know/
points. Results for 2000 are from June un less otherwise
Somewhat disagree
9%
No answer
4%
noted .
SECTOR BY SECTOR
CORPORATE AMERICA: SOME
MORE BLAME
LOW MARKS FROM CONSUMERS
American business should be given most of the credit for
would you rate these industries in serving their
the prosperity that has prevailed during most of the 1990s.
consumers?
AGREE
SOMEWHAT
SOMEWHAT
DISAGREE
NOT SURE!
ONLY
PRETTY
DON'T KNOWI
STRONGLY
AGREE
DISAGREE
STRONGLY
NO ANSWER
POOR
FAIR
GOOD
EXC ELLENT
NO ANSWER
2000
26%
.42%
19%
10%
2%
HMOs
43%
28%
15%
3%
11 %
1996
55%*
44%*
Toba cco
co mpanies
43%
30 %
14%
5%
8%
Oil companies 39%
35%
16%
3%
7%
Business has gained too much power over too many
Insurance
aspects of American life.
companies
32%
.41 %
21 %
3%
3%
AGREE
SOMEWHAT
SOM EWHAT
DISAGREE
NOT SURE!
STRONGLY
AGREE
DISAGREE
STRONGLY
NO ANSWER
2000 (Aug.)
.40%
32%
15%
9%
.4%
43% think HMOs serve their customers POORLY
2000 (June)
52%
30%
12%
.4%
2%
1996
71%*
28%*
Ph armaceutical
companies
27%
37 %
26%
5%
5%
In general , what is good fo r business is good for most
Airlin es
22%
41 %
25%
3%
9%
Americans .
Tel ephone
SOMEWHAT
SOMEWHAT
DISAGREE
NOT SURE!
companies
20%
42%
31 %
6%
1%
STRONGLY
AGREE
DISAGREE
STRONGLY
NO ANSWER
2000 (Aug)
14%
33%
27%
22%
.4%
News
2000 (June )
17%
35%
23%
24%
1%
organizations
18%
38%
33%
6%
5%
1996
32 %
39%
20%
8%
1%
Hospitals
15%
35 %
38%
9%
3%
Entertainment
How much confidence do you have in those running big
companies
14%
33%
38%
9%
6%
business?
Automob ile
co mpan ies
12%
42 %
37 %
6%
3%
2000
1999
Financial
Great deal
19%
15%
services firms ... 12% .... 40% .... 34% . .. . 5% .. .. 9%
Only some
58%
69%
Computer
Hardly any
17%
companies
4%
30 %
40%
10%
16%
Not sure/No answer
5%
3%
GOOD PRODUCTS, POOR PRACTICES
Having large p ro fits is more important to big business than
developing safe, reliable, quality products for consumers.
WHAT CORPORATIONS DO WELL-AND NOT SO WELL
AGREE
SOMEWHAT
SOMEWHAT
OISAGREE
NOT SURE!
How would you rate large U.S. compa nies on each of the
STRONG LY
AGREE
DISAGREE
STRONGLY
NO ANSWER
(Aug.) ... ... 38% ........ 28% ....... .. 14% ........ 17%........ .. 3%
following?
Ma ki ng good products and competing in a global economy
*Question asked only agree or disagree
PRETTY
ONLY
DON'T KNOW!
EXCELLENT
GOO D
FAIR
POOR
NO ANSWER
GORE'S BIG SCORE
2000
18%
50%
26%
5%
1%
1996
14%
.44%
33 %
9%
At the recent Democratic convention , Vi ce-Presid ent AI Gore
criticized a wide range of large corporations, including " big
tobacco , big
the big polluters, the pharmaceutical
FIG URE 5.2
How business rates: by the numbers
110