Marketing plan 5

loib35789

Armstrong13e_MAI_Ch16.pptx

Home >Business & Finance homework help >Marketing homework help >Marketing plan 5

Marketing: An Introduction

Thirteenth Edition

Chapter 16

Sustainable Marketing: Social Responsibility and Ethics

Learning Objectives (1 of 4)

16-1. Define sustainable marketing and discuss its importance.

16-2. Identify the major social criticisms of marketing.

16-3. Define consumerism and environmentalism and explain how they affect marketing strategies.

This chapter defines sustainable marketing and discusses its importance. It identifies the major social criticisms of marketing, and also defines consumerism and environmentalism and explains how they affect marketing strategies.

Learning Objectives (2 of 4)

16-4. Describe the principles of sustainable marketing.

16-5. Explain the role of ethics in marketing.

This chapter also describes the principles of sustainable marketing and explains the role of ethics in marketing.

First Stop: Patagonia “Conscious Consumption”—Telling Consumers to Buy Less

A for-profit company telling consumers to buy less sounds crazy.

A for-profit company telling consumers to buy less sounds crazy. But it’s right on target with Patagonia’s conscious consumption mission, which urges consumers to buy only what they need and take only what the planet can replace.

Patagonia was founded on a mission of using business to help save the planet. Recently, the company has taken its sustainability mission to new extremes, actually telling customers, “Don’t buy our products.”

Learning Objective 16-1

Define sustainable marketing and discuss its importance.

Figure 16.1 - Sustainable Marketing

This figure compares the sustainable marketing concept with other marketing concepts.

The marketing concept recognizes that organizations thrive from day to day by determining the current needs and wants of target customers and fulfilling those needs and wants more effectively and efficiently than competitors do. It focuses on meeting the company’s short-term sales, growth, and profit needs by engaging customers and giving customers what they want now.

The societal marketing concept considers the future welfare of consumers.

The strategic planning concept considers future company needs.

The sustainable marketing concept calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company.

Sustainable Marketing

The McDonald’s “Plan to Win” strategy has created sustainable value for both customers and the company.

Under its “Plan to Win” strategy, McDonald’s has created sustainable value for both customers and the company. Now, 80 percent of the chain’s menu is under 400 calories, including this Egg White Delight McMuffin, which weighs in with eight grams of whole grain against only 250 calories and five grams of fat.

The McDonald’s “Plan to Win” strategy also addresses environmental issues. For example, it calls for food-supply sustainability, reduced and environmentally sustainable packaging, reuse and recycling, and more responsible store designs. McDonald’s has even developed an environmental scorecard that rates its suppliers’ performance in areas such as water use, energy use, and solid waste management. Thus, McDonald’s is now well positioned for a sustainably profitable future.

Learning Objective 16-1 Summary

Sustainable marketing – meeting present needs while preserving the ability of future generations to meet their needs.

Sustainable marketing calls for socially and environmentally responsible actions.

Sustainable marketing requires consumers, companies, public policy makers, and others to work together.

Sustainable marketing calls for meeting the present needs of consumers and businesses while preserving or enhancing the ability of future generations to meet their needs. Whereas the marketing concept recognizes that companies thrive by fulfilling the day-to-day needs of customers, sustainable marketing calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company. Truly sustainable marketing requires a smooth-functioning marketing system in which consumers, companies, public policy makers, and others work together to ensure responsible marketing actions.

Learning Objective 16-2

Identify the major social criticisms of marketing.

Social Criticisms of Marketing

Impact on Individual Consumers

Impact on Society as a Whole

Impact on Other Businesses

Marketing receives much criticism. Social critics claim that certain marketing practices hurt individual consumers, society as a whole, and other business firms.

Marketing’s Impact on Individual Consumers (1 of 2)

High prices

Deceptive practices

High-pressure selling

Shoddy, harmful, or unsafe products

Planned and perceived obsolescence

Poor service to disadvantaged consumers

Many critics charge that the American marketing system causes prices to be higher than they would be under more sensible systems. Critics point to three factors: high costs of distribution, high advertising and promotion costs, and excessive markups.

Deceptive pricing includes practices such as falsely advertising prices from a phony high retail list price. Deceptive promotion includes practices such as misrepresenting the product’s features. Deceptive packaging involves exaggerating package contents in misleading terms. Deceptive practices led to the Wheeler-Lea Act, which gave the Federal Trade Commission (FTC) power to regulate unfair or deceptive acts or practices.

Salespeople are sometimes accused of high-pressure selling that persuades people to buy goods they had no thought of buying. Too often, products and services are not made well or do not perform well. Also, many products deliver little benefit, or may even be harmful.

Critics also have charged that some companies practice planned obsolescence, causing their products to become obsolete before they need replacement. Other companies are charged with perceived obsolescence, that is, continually changing consumer concepts to encourage more and earlier buying. Critics also accuse major chain retailers of redlining, drawing a red line around disadvantaged neighborhoods and avoiding placing stores there.

Marketing’s Impact on Individual Consumers (2 of 2)

Lawsuits against 5-Hour Energy drink marketers allege that the brand's advertising is deceptive and misleading.

Marketers of the popular caffeine-charged 5-Hour Energy drink were recently sued by the Attorneys Generals in three U.S. states, whose lawsuits alleged that the brand’s advertising was deceptive and misleading.

Marketing’s Impact on Society as a Whole (1 of 2)

False Wants and Too Much Materialism

Too Few Social Goods

Cultural Pollution

Critics do not view the interest in material things as a natural state of mind but rather as a matter of false wants created by marketing. Marketers, they claim, stimulate people’s desires for goods and create materialistic models of the good life. In this view, marketing’s purpose is to promote consumption, and the inevitable outcome of successful marketing is unsustainable overconsumption. Many observers predict a new age of more sensible consumption. As a result, instead of encouraging today’s more sensible consumers to overspend their means, most marketers are working to help them find greater value with less.

Business has been accused of overselling private goods at the expense of public goods. As private goods increase, they require more public services that are usually not forthcoming. A way must be found to restore a balance between private and public goods. One option is to make producers bear the full social costs of their operations. A second option is to make consumers pay the social costs. For example, many cities around the world are now charging congestion tolls in an effort to reduce traffic congestion.

Critics charge the marketing system with creating cultural pollution. Marketers answer the charges of commercial noise with these arguments. First, they hope that their ads primarily reach the target audience. Second, because of ads, many television, radio, online, and social media sites are free to users. Thus, to hold consumer attention, advertisers are making their ads more entertaining and informative.

Marketing’s Impact on Society as a Whole (2 of 2)

The Center for a New American Dream urges people to reject “buy more” messages.

A marketing campaign by the Center for a New American Dream urges people to reject “buy more” messages and instead say “More fun! Less stuff!”

Marketing’s Impact on Other Businesses

Acquisitions of competitors

Marketing practices that create barriers to entry

Unfair competitive marketing practices

Critics charge that a firm’s marketing practices can harm other companies and reduce competition through acquisitions of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices. Firms are harmed and competition is reduced when companies expand by acquiring competitors rather than by developing their own new products. Acquisitions have caused concern that vigorous young competitors will be absorbed, thereby reducing competition. In some cases, acquisitions can be good for society. The acquiring company may gain economies of scale that lead to lower costs and lower prices. In addition, a well-managed company may take over a poorly managed company and improve its efficiency.

Some marketing practices bar new companies from entering an industry. Large marketing companies can use patents and heavy promotion spending or tie up suppliers or dealers to keep out or drive out competitors. Those concerned with antitrust regulation recognize that some barriers are the natural result of the economic advantages of doing business on a large scale. Existing and new laws can challenge other barriers.

Some firms have used unfair competitive marketing practices with the intention of hurting or destroying other firms. They may set their prices below costs, threaten to cut off business with suppliers, discourage the buying of a competitor’s products, or use their size and market dominance to unfairly damage rivals.

Learning Objective 16-2 Summary

Major social criticisms of marketing

Impact on individual consumer welfare

Impact on society

Impact on other businesses

Marketing’s impact on individual consumer welfare has been criticized for its high prices, deceptive practices, high-pressure selling, shoddy or unsafe products, planned obsolescence, and poor service to disadvantaged consumers. Marketing’s impact on society has been criticized for creating false wants and too much materialism, too few social goods, and cultural pollution. Critics have also denounced marketing’s impact on other businesses for harming competitors and reducing competition through acquisitions, practices that create barriers to entry, and unfair competitive marketing practices. Some of these concerns are justified, but some are not.

Learning Objective 16-3

Define consumerism and environmentalism and explain how they affect marketing strategies.

Traditional Rights

Seller’s rights	Buyer’s rights
To introduce any product in any size and style with proper warnings and controls, if necessary	To buy a product that is offered for sale
To charge any price for the product without any discrimination	To expect the product to be safe
To spend any amount to promote the product if competing fairly	To expect the product to perform as claimed
To use any product message that is not misleading or dishonest	blank
To use buying incentive programs that are not unfair or misleading	blank

Consumerism is an organized movement of citizens and government agencies designed to improve the rights and power of buyers in relation to sellers.

Traditional sellers’ rights include the right to introduce any product in any size and style, provided it is not hazardous to personal health or safety, or, if it is, to include proper warnings and controls; the right to charge any price for the product, provided no discrimination exists among similar kinds of buyers; the right to spend any amount to promote the product, provided it is not defined as unfair competition; the right to use any product message, provided it is not misleading or dishonest in content or execution; and the right to use buying incentive programs, provided they are not unfair or misleading.

Traditional buyers’ rights include the right not to buy a product that is offered for sale, the right to expect the product to be safe, and the right to expect the product to perform as claimed.

Proposed Consumer Rights

To be well informed

To be protected against questionable products and marketing practices

To influence products and marketing practices to improve “quality of life”

To consume in a way to preserve the world for future generations of consumers

Comparing these rights, many believe that the balance of power lies on the seller’s side. Critics feel that the buyer has too little information, education, and protection to make wise decisions when facing sophisticated sellers. Consumer advocates call for the following additional consumer rights: the right to be well informed about important aspects of the product; the right to be protected against questionable products and marketing practices; the right to influence products and marketing practices in ways that will improve “quality of life”; and the right to consume now in a way that will preserve the world for future generations of consumers.

Consumers who believe they got a bad deal have several remedies available, including contacting the company or the media; contacting federal, state, or local agencies; and going to small-claims courts.

Environmentalism

Protects and improves people’s current and future living environment

Concerned with

Damage to the ecosystem

Loss of recreational areas

Increase in health problems

Environmental sustainability: Generating profits while helping protect the environment

Environmentalism is an organized movement of concerned citizens, businesses, and government agencies designed to protect and improve people’s current and future living environment.

Environmentalists are concerned with marketing’s effects on the environment and the environmental costs of serving consumer needs and wants. They want people and organizations to operate with more care for the environment.

Environmentalism is concerned with damage to the ecosystem caused by global warming, resource depletion, toxic and solid wastes, litter, the availability of fresh water, and other problems. Other issues include the loss of recreational areas and the increase in health problems caused by bad air, polluted water, and chemically treated food.

Concerns related to the environment have resulted in federal and state laws and regulations governing industrial commercial practices impacting the environment.

In recent years, most companies have accepted responsibility for doing no harm to the environment. More and more companies are now adopting policies of environmental sustainability. Environmental sustainability is a management approach that involves developing strategies that both sustain the environment and produce profits for the company.

Figure 16.2 - Environmental Sustainability and Sustainable Value

Source: Stuart L. Hart, “Innovation, Creative Destruction, and Sustainability,” Research Technology Management, September–October 2005, pp. 21–27.

This figure shows a grid that companies can use to gauge their progress toward environmental sustainability. It includes both internal and external greening activities that will pay off for the firm and environment in the short run, and beyond greening activities that will pay off in the longer term.

At the most basic level, a company can practice pollution prevention. Pollution prevention means eliminating or minimizing waste before it is created. Companies emphasizing prevention have responded with internal green marketing programs such as, designing and developing ecologically safer products, recyclable and biodegradable packaging, better pollution controls, and more energy-efficient operations. At the next level, companies can practice product stewardship, which involves minimizing not only pollution from production and product design but also all environmental impacts throughout the full product life cycle, while at the same time reducing costs. Many companies are adopting design for environment (DFE) and cradle-to-cradle practices. This involves thinking ahead to design products that are easier to recover, reuse, recycle, or safely return to nature after usage, thus becoming part of the ecological cycle.

The beyond greening activities identified look to the future. First, internally, companies can plan for new clean technology. Finally, companies can develop a sustainability vision, which serves as a guide to the future. It shows how the company’s products and services, processes, and policies must evolve.

Major Marketing Decision Areas That May Be Called into Question under the Law (1 of 3)

Decision areas	Legal issues
Selling decisions	Bribing Stealing trade secrets Disparaging customers Misrepresenting Disclosure of customer rights Unfair discrimination
Advertising decisions	False advertising Deceptive advertising Bait-and-switch advertising Promotional allowances and services

This table describes legal issues related to selling decisions and advertising decisions.

Major Marketing Decision Areas That May Be Called into Question under the Law (2 of 3)

Decision areas	Legal issues
Channel decisions	Exclusive dealing Exclusive territorial distributorship Tying agreements Dealer’s rights
Competitive relations decisions	Anticompetitive acquisition Barriers to entry Predatory competition
Product decisions	Product additions and deletions Patent protection Product quality and safety Product warranty

This table describes legal issues related to selling decisions and advertising decisions.

Major Marketing Decision Areas That May Be Called into Question under the Law (3 of 3)

Decision areas	Legal issues
Packaging decisions	Fair packaging and labeling Excessive cost Scarce resources Pollution
Price decisions	Price fixing Predatory pricing Price discrimination Minimum pricing Price increases Deceptive pricing

This table describes legal issues related to selling decisions and advertising decisions.

Learning Objective 16-3 Summary

Citizen action movements

Consumerism

Environmentalism

Companies are adopting policies of environmental sustainability.

Concerns about the marketing system have led to citizen action movements. Consumerism is an organized social movement intended to strengthen the rights and power of consumers relative to sellers. Alert marketers view it as an opportunity to serve consumers better by providing more consumer information, education, and protection. Environmentalism is an organized social movement seeking to minimize the harm done to the environment and quality of life by marketing practices. Most companies are now accepting responsibility for doing no environmental harm. They are adopting policies of environmental sustainability – developing strategies that both sustain the environment and produce profits for the company. Both consumerism and environmentalism are important components of sustainable marketing.

Learning Objective 16-4

Describe the principles of sustainable marketing.

Sustainable Marketing Principles (1 of 2)

Consumer-oriented marketing

Viewing and organizing a company’s marketing activities from the consumer’s point of view

Customer value marketing

Putting most of a company’s resources into customer value-building marketing investments

Innovative marketing

Seeking real product and marketing improvements

Under the sustainable marketing concept, a company’s marketing should support the best long-run performance of the marketing system. It should be guided by five sustainable marketing principles, which are consumer-oriented marketing, customer value marketing, innovative marketing, sense-of-mission marketing, and societal marketing.

Consumer-oriented marketing means that the company should view and organize its marketing activities from the consumer’s point of view. It should work hard to sense, serve, and satisfy the needs of a defined group of customers, both now and in the future.

According to the principle of customer value marketing, the company should put most of its resources into customer value-building marketing investments. By creating value for consumers, the company can capture value from consumers in return.

The principle of innovative marketing requires that the company continuously seek real product and marketing improvements.

Sustainable Marketing Principles (2 of 2)

Sense-of-mission marketing

Defining a company’s mission in broad social terms

Societal marketing

Making marketing decisions by considering

Consumers’ wants

Company’s requirements

Consumers’ long-run interests

Society’s long-run interests

Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms. Brands linked with broader missions can serve the best long-run interests of both the brand and consumers.

By following the principles of societal marketing, a company makes marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests.

Figure 16.4 - Societal Classification of Products

This figure shows how products can be classified according to their degree of immediate consumer satisfaction and long-run consumer benefit.

Deficient products, such as bad-tasting and ineffective medicine, have neither immediate appeal nor long-run benefits.

Pleasing products give high immediate satisfaction but may hurt consumers in the long run. Examples include cigarettes and junk food.

Salutary products have low immediate appeal but may benefit consumers in the long run. Bicycle helmets or some insurance products are examples.

Desirable products give both high immediate satisfaction and high long-run benefits, such as a tasty and nutritious breakfast food.

Companies should try to turn all of their products into desirable products. The challenge posed by pleasing products is that they sell very well but may end up hurting the consumer. The product opportunity, therefore, is to add long-run benefits without reducing the product’s pleasing qualities. The challenge posed by salutary products is to add some pleasing qualities so that they will become more desirable in consumers’ minds.

Learning Objective 16-4 Summary

Five sustainable marketing principles:

Consumer-oriented marketing

Customer value marketing

Innovative marketing

Sense-of-mission marketing

Societal marketing

Most companies now recognize a need for positive consumer information, education, and protection. Under the sustainable marketing concept, a company’s marketing should support the best long-run performance of the marketing system. It should be guided by five sustainable marketing principles: consumer-oriented marketing, customer value marketing, innovative marketing, sense-of-mission marketing, and societal marketing.

Learning Objective 16-5

Explain the role of ethics in marketing.

Marketing Ethics (1 of 2)

Corporate marketing ethics policies should be developed by firms as guidelines for handling various issues and dilemmas.

Distributor relations

Advertising standards

Customer service

Pricing

Product development

General ethical standards

The sustainable marketing goals of long-term consumer and business welfare can be achieved only through ethical marketing conduct.

Not all managers have fine moral sensitivity and hence companies need to develop corporate marketing ethics policies – broad guidelines that everyone in the organization must follow. These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards.

Marketing Ethics (2 of 2)

Principles are needed to guide companies and marketing managers on issues of ethics and social responsibility.

The free market and the legal system should decide such issues.

Responsibility is in the hands of individual companies and managers.

Addressing ethics helps build strong customer relationships based on honesty and trust.

Managers need a set of principles that will help them figure out the moral importance of each situation and decide how far they can go in good conscience. One philosophy is that the free market and the legal system should decide such issues. Under this principle, companies and their managers are not responsible for making moral judgments. Companies can, in good conscience, do whatever the market and legal systems allow.

A second philosophy puts responsibility not on the system but in the hands of individual companies and managers. This more enlightened philosophy suggests that a company should have a social conscience. Companies and managers should apply high standards of ethics and morality when making corporate decisions, regardless of what the system allows.

Dealing with issues of ethics and social responsibility, in an open and forthright way, helps to build and maintain strong customer relationships based on honesty and trust. As with environmentalism, the issue of ethics presents special challenges for international marketers. Business standards and practices vary a great deal from one country to the next.

Ethical Norms Suggested by the American Marketing Association

Do no harm

Foster trust in the marketing system

Embrace ethical values

The American Marketing Association, an international association of marketing managers and scholars, developed a code of ethics that calls on marketers to adopt the following ethical norms. The first norm, which is to do no harm, means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make. The second norm, which is to foster trust in the marketing system, means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process, and avoiding deception in product design, pricing, communication, and delivery or distribution. The third norm is to embrace ethical values. This means building relationships and enhancing consumer confidence in the integrity of marketing by affirming core values such as, honesty, responsibility, fairness, respect, transparency, and citizenship.

Companies are also developing programs to teach managers about important ethical issues and help them find the proper responses. They hold ethics workshops and seminars and create ethics committees.

The Sustainable Company

Sustainable companies create value for customers through socially, environmentally, and ethically responsible actions.

Sustainable marketing provides the context in which companies can build profitable customer relationships.

Sustainable companies are those that create value for customers through socially, environmentally, and ethically responsible actions. Sustainable marketing goes beyond caring for the needs and wants of today’s customers. It means pursuing the mission of a triple bottom line which is people, planet, and profits.

Sustainable marketing provides the context in which companies can build profitable customer relationships by creating value for customers in order to capture value from customers in return, now and in the future.

Learning Objective 16-5 Summary

Company policies and guidelines for ethics utilize two principles:

The first principle states the free market and the legal system should decide such issues.

A more enlightened principle puts responsibility in the hands of individual companies and managers.

Sustainable marketing concept standards – personal integrity, corporate conscience, and long-term consumer welfare

Increasingly, companies are responding to the need to provide company policies and guidelines to help their managers deal with questions of marketing ethics. Of course, even the best guidelines cannot resolve all the difficult ethical decisions that individuals and firms must make. But there are some principles from which marketers can choose. One principle states that the free market and the legal system should decide such issues. A second and more enlightened principle puts responsibility not on the system but in the hands of individual companies and managers. Each firm and marketing manager must work out a philosophy of socially responsible and ethical behavior. Under the sustainable marketing concept, managers must look beyond what is legal and allowable and develop standards based on personal integrity, corporate conscience, and long-term consumer welfare.

Learning Objectives (3 of 4)

16-1. Define sustainable marketing and discuss its importance.

16-2. Identify the major social criticisms of marketing.

16-3. Define consumerism and environmentalism and explain how they affect marketing strategies.

This chapter defined sustainable marketing and discusses its importance. It identified the major social criticisms of marketing, and also defined consumerism and environmentalism and explained how they affect marketing strategies.

Learning Objectives (4 of 4)

16-4. Describe the principles of sustainable marketing.

16-5. Explain the role of ethics in marketing.

This chapter also described the principles of sustainable marketing and explained the role of ethics in marketing.