-Political and Legal Factors -Competitive Factors [SLIDE 1] Business and government are always intertwined. Business needs government to provide protection for innovators, for guidelines for the interests of society, and to protect businesses from each other and consumers. The government needs business for a tax base and to produce what citizens require and want to purchase. Every aspect of the marketing mix is subject to laws and regulations. There are political and legal factors impacting legislation and regulations at every level of government. In addition, the digital age is making all levels look carefully at a new area – consumer privacy laws in the 21st century. [SLIDE 2] As mentioned, there are laws and regulations affecting every aspect of the marketing mix. Here are the primary laws that affect marketing -Sherman Act of 1890: Even though it has not been used in years, the anti-trust act has been used to break up monopolies to protect competition and support innovation. -Clayton Act of 1914: Outlaws discriminatory pricing, prohibits forcing a customer of one product to buy another and makes it illegal to pool ownership of stock between companies. -Federal Trade Commission Act of 1936: Created the Federal Trade Commission (FTC) to enforce fair competition. -Robinson-Patman Act of 1936: Adds prohibitions of discriminatory pricing based on volume and grade of products, and requires access for all customers to supplementary services. -Wheeler-Lea amendment to the FTC Act of 1938: Adds protection to consumers from product injury and from false advertising. -Lanham Act of 1946: Trademark protection. -Celler-Kefauer Antimerger Act of 1950: Strengthens the Clayton act to prevent anti-competitive acquisitions. -Hart-Scott-Rodino Act of 1976: Large companies must notify the government about merger plans. -Foreign Corrupt Practices Act of 1977: Prohibits bribery of foreign officials. [SLIDE 3] The federal government has passed laws and created regulations for all aspects of business and society. For instance, the Patient Protection and Affordable Care Act has an impact on marketing through provisions such as: -Workers cannot be denied coverage -Large employers must offer coverage to full-time workers -A person cannot have coverage dropped when sick -A worker cannot be denied for preexisting conditions -Young adults can stay on their parents’ plan until age 26 As a result of the Great Recession, the Restoring American Financial Stability Act of 2010 mandated major changes to regulations of the financial industry. The Consumer Financial Protection Bureaus (CFPB) was created to oversee financial products such as savings and checking accounts, student loans, and other products available to consumers. At the time of writing, the CFPB has recovered more than $4.6 billion from financial services firms for violations including unfair billing, illegal fees, kickbacks and discrimination. [SLIDE 4] State and local governments have laws that vary greatly, but all must be consistent with federal laws and regulations. Consistent does not mean identical. For instance, vehicle emissions laws cannot be weaker than federal law, but many states follow California’s stronger emissions regulations. State and local governments are also more likely to pass specific laws aimed at social good. For instance, the last decade has seen many laws intended to fight obesity. California and New York banned trans fats from restaurants and bakeries before the federal government set regulations. In other areas, states and cities are working on environmental issues such as banning plastic grocery bags and straws, Styrofoam containers, and other products deemed dangerous to the health of people and the world. [SLIDE 5] While there are many agencies in the federal and state governments, a few federal agencies have a very strong impact on business. Consumer Product Safety Commission (CPSC) The Consumer Product Safety Commission (CPSC) was established to protect the health and safety of consumers in an around their homes. The CPSC and set mandatory safety standards for almost all products. It can ban products, sentence officers of a company to up to a year in prison, and fine companies up to $500,000. In 2008, Congress passed the Consumer Product Safety Improvement Act aimed at children’s products (Children: 12 years and younger). Food and Drug Administration (FDA) The Food and Drug Administration (FDA) is charged with enforcing regulations against selling and distributing adulterated, misbranded or hazardous food and drugs. In 2009, it was given power to regulate tobacco products with specific focus on protecting children. Another recent action is to help healthcare providers and consumers to recognize misleading prescription drug promotions. Federal Trade Commission (FTC) The Federal Trade Commission (FTC) is empowered to prevent persons or corporations from using unfair methods of competition in commerce. Congress continues to expand FTC power. Two of the FTC’s most important bureaus are: -Bureau of Competition: evaluates mergers and acquisitions, challenges anti-competitive practices, and provides information to business, consumers and other policy makers about competition. -Bureau of Consumer Protection: Enforces laws to protect consumers, provides free information, listens to consumer complaints. [SLIDE 6] The internet changes not only how we communicate but also what information about us is available to businesses and criminals. Consumer privacy is beginning to get the attention many people demand. Email, web sites visited, and social media all provide avenues where both good and bad actors can gather information about individuals. Business wants that information to more finely tune the marketing mix and make sales and marketing expenditures more effective. Criminals want to steal not only your money but your personality to use while stealing from others. Corporate data collection is massive. One company, Acxiom, has more than 23,000 computer servers that collect, collate, and analyze consumer data. It has more than half a billion consumers worldwide defined and their information available for purchase by businesses. At the same time, 93% of adults say that controlling who can get information about them is important. 90% say that controlling what information is received is also important. Given that, the Federal Trade Commission and Congress have begun to look at laws and regulations to protect consumers. In that, they lag behind the European Union’s General Data Protection Regulation (GDPR). [SLIDE 7] As a market matures, there is less expansion so that competitors must look at how to maintain and expand profits by taking market share from competition. Another market share driver is global competition on the manufacturing side, something that drives down costs of imports, meaning price adjustments that can cut into profits. The web and the ecommerce giant that is Amazon is an example of that. Even before the internet, Walmart made inroads by taking market share from smaller stores that could not compete on price. The result was the failures of many previously successful businesses, from Circuit City to Sears. Best Buy, Barnes & Noble, Office Depot, Target, and other retailers are struggling to adapt, both changing how their stores operate and building an online presence. Global competition is not just on the price front. Airbus, Boeing’s main competitor, is a European company. However, in 2015 it opened a manufacturing facility in the US, providing domestic competition. Foreign company images can also change over time. Hyundai, a South Korean automobile manufacturer, initially entered the US market as a low price, low quality product. Through changing its marketing mix, Hyundai has changed its market position to a high-quality small car and has even added a luxury model.