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Explain, with examples, the nonmarket positioning that takes place in public sentiment, political and legal spaces.
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Business and Its Environment
Edition: 7th
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Nonmarket positioning takes place in three interrelated spaces: public sentiment, political (lawmaking and rule making), and legal (enforcement of existing laws and regulation).
Public sentiment is determined by the diverse interests, viewpoints, and preferences of the individuals in a society. Public sentiment toward a company or industry can affect the public's response to a company's actions and whether social pressure is directed at the company. Favorable public sentiment can not only allow a company to avoid nonmarket issues, but also affect its reception in the market place. Chrysler and General Motors had to be bailed out by the government, whereas Ford avoided bankruptcy during the financial crisis and recession. Some car buyers favored Ford, and the company had more credibility with the public and government.
Lawmaking and rule making take place in political space, where the formal rules of the game are made. Positioning in political space can affect the opportunity to participate effectively in lawmaking and rule-making processes. Because of the importance of nonmarket issues to the profitability of the industry, the pharmaceutical industry has developed a position of strength in political space. The industry has positioned itself by building relationships with members of Congress and the executive branch. This positioned the industry well for the politics and negotiations over health care reform in 2009 and 2010. Major pharmaceutical companies were invited to the bargaining table, and the reforms were favorable to the industry, leading it to support the health care reform legislation. In contrast, the generic pharmaceutical companies were not invited to the bargaining table.
Positioning in legal space affects not only the liabilities to which a company is exposed but also a company's market and nonmarket strategies. eBay's positioning as an ISP provides protection in the United States under the CDA, but it also means that the company is limited in its ability to provide content on its Web site. In legal space, patents provide the most important protection for intellectual property for many industries, and perhaps nowhere are patents more important than in the pharmaceutical industry. The pharmaceutical industry regularly seeks stronger patent protection and was successful in obtaining a 6-month patent extension for approved drugs that were subsequently tested for use by children.
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