106 CHAPTER 5 EXTERNALCONSIDERATIONSINMARKETING
IninduSll"iessuchassteel, automobiles,anacomputers,thepowerofbuyersandsup-
plierscanbeveryhigh.Powerfu:buyersexistwhentheyarefewinnumber, therearelow
switchingcosts,ortheproductrepresentsa significantshareofthebuyer'stotalcosts.This
is commonforlargeretailers suchasWal-MartandHomeDepot.Asuppliergainspower
whentheproductiscriticaltothebuyerandwhenit has builtuptheswitchingcosts.Exam-
plesincludeMicrosoftandBMW.
Existingcompetitorsandpossiblesubstitutesalsoinfluencethedynamicsofthecom-
petition.Forexample,inslow-growthmarkets,competitionismoresevereforanypossi-
blegainsinmarketshare.Highfixedcostsalsocreatecompetitivepressure:::forfirmsto
fillproductioncapacity.Forexample,hospitalsare increasingtheiradvertisingina battle
tofillbeds, whichrepresentsa highfixedcost.Legal/EthicalFactors
Everymarketingorganization's activitiesareinfluencedbyethicalandlegalfactorsth at
establishtherulesofthegame.Theselaws,agencies,policies,andbehavioralnormsare
establishedtoensurethatmarketerscompetelegallyandethicallyintheireffortstopro-
videwantandneedsatisfyingproductsandservices.ThevariouslegalissueswithwhiCh
marketersmustbeknowledgeableincludethefollowing:- Monetaryandfiscalpolicy-Marketingdecisionsareaffectedbyfactorsliketax
legislation,themoneysupply,andthelevel ofgovernmentspendiag.Thetendency
ofa RepublicanCongresstospendondefensematerialsandnotontheenviron-
mentisanexample. - Federallegislation-Federallegislationexiststoensuresuchthingsasfaircom-
petition,fairpricingpractices,andhonestyinmarketingcommunications.Anti-
tobaccolegislationaffectsthetobaccoandrelatedindustries. - Government/industryrelationships-Agriculture,railroads,shipbuilding, andother
industriesaresubsidizedbygovernment.Tariffsandimportquotasimposedby
governmentaffectcertainindustries(e.g.,automobile).Other industriesarereg-
ulated(ornolongerregulated)bygovernment(e.g.,rail,trucking,andairlines).
Deregulatingtheutilitiesindustryhada tremendousnegativeeE"ectontheCali-
forniapowerindustryin2001. - Sociallegislation-Marketers'activitiesareaffectedbybroadsociallegislation
likethecivilrightslaws, programstoreduceunemployment,andlegislationthat
affectstheenvironment(e.g.,waterandairpollution).Themeatprocessingindus-
tryhasspentbillionsofdollarstryingtocomplywithwaterpollutionlegislation. - Statelaws-Statelegislationaffectsmarketersindifferentways.Forexample,util-
itiesinOregoncanspendonlyY1%oftheirnetincomeonadvertising.California
hasenactedlegislationtoreducetheenergyconsumptionofrefrigerators andair
conditioners.AndinNewJersey,ninedairieshavepaidthe stateover$2million
dollarstosettlea price-fixinglawsuit. - Regulatoryagencies--Stateregulatoryagencies(e.g.,theAttorneyGeneral's Office)
activelypursuemarketingviolationsofthelaw.ButfederalagenciesliketheFed-
eralTradeCommissionandtheConsumerP:'oductSafetyconcernthemselveswith
allfacetsofbusiness.
Literallyeveryfacetofbusinessis affectedbyoneormorelaws.Itwouldbeimpos-
sibletoadequatelycoverthemallinthespaceallotted.However,wewillbrieflydiscuss