Assignment 3

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Ch4SocialResponsibilityandEthics1.ppt

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Social Responsibility and Ethics in Marketing

Chapter 4

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The Nature of Social Responsibility

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Social Responsibility

It’s an organization’s obligation to maximize its positive impact and minimize its negative impact on society

Social responsible activities can:

Improve employee performance
Improve customer loyalty to the organization
Generate positive publicity
Boost sales

Socially responsible efforts:

Attract goodwill, publicity, and potential customers and employees
Generate indirect long-term benefits such as greater employee commitment and improved business performance

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Dimensions of Social Responsibility

Marketing Citizenship

Is the adoption of a strategic focus that fulfills the economic, legal, ethical and philanthropic social responsibilities expected by shareholders.

Stakeholder orientation – Understanding and addressing the needs of all stakeholders, including communities and special-interest groups

All companies have an economic responsibility to be profitable. Why?

Provide a return on investment to their owners and investors
Create jobs for the community
Contribute goods and services to the economy
Engage in fair competition

Firms need to find a balance in stakeholder interests while recognizing that a firm must make a profit to be sustainable in the long run.
Pyramid of Corporate Social Responsibility…

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THE PYRAMID OF CORPORATE SOCIAL RESPONSIBILITY

Walmart?

figure 4.1

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Corporate Philanthropy

Philanthropic responsibilities are not required of a company, but they promote human welfare or goodwill
Cause Related Marketing
The practice of linking products to a particular social cause on an ongoing or short term basis.
Yoplait’s “Save the Lids” campaign
Tom’s Shoes
Strategic Philanthropy
Using organizational core competencies and resources to address stakeholders interests to achieve both organizational and social benefits.

Strategic Philanthropy

Home Depot pairs with Peter Facinelli, of Twilight fame, and MasterCard to raise money for Habitat for Humanity

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Social Responsibility Issues

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Sustainability

Sustainability – The potential for the long-term well-being of the natural environment, including all biological entities, as well as the interaction among nature and individuals, organizations, and business strategies
Companies are adopting eco-friendly business practices
Products have been certified “green” by environmental organizations

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Green Marketing

It’s understanding what the “customer” (stakeholder) wants to create meaningful long-term relationships while maintaining, supporting, and enhancing the natural environment

Consumerism and Community Relations

Consumerism is the efforts of independent individuals, groups, and organizations to protect the rights of consumers
Being a good community citizen means avoiding harmful actions that could damage the community
A marketer can significantly improve a community’s quality of life through:
Employment opportunities
Economic development
Financial contributions to educational, health, cultural, and recreational causes

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Ethical Dimensions

Marketing Ethics
Principles and standards that define acceptable marketing conduct as determined by various stakeholders
Ethical Issue
An identifiable problem, situation, or

opportunity

requiring a choice among

several actions

that must be evaluated

as right or wrong, ethical or unethical.

Marketing Ethics

When marketing activities deviate from accepted standards, the exchange process can break down, resulting in customer dissatisfaction, lack of trust, and lawsuits
Trust is an important concern for marketers because it is the foundation for long-term relationships
Consumer lack of trust has increased in recent years due to the financial crisis and deep recession
Once trust is lost, it can take a lifetime to rebuild
The way to deal with ethical issues is proactively during the strategic planning process, not after major problems materialize

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Marketing Mix Ethical Issues

Product related ethical issues arise when marketers fail to disclose risks associated with a product or information regarding the function, value, or use of a product.
Misleading brand names…orange juice made from concentrate is not “fresh orange juice.”
Products can be dangerous…diet pills
Use of antibiotics on animals used for food
Product recalls occur when companies ask customers to return defective products

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In 2008 J&J tried to secretly recall a batch of Motrin that had failed quality tests but still had been released for sale. J&J hired contractors to secretly go into stores that sold Motrin and had them buy up all of the Motrin that they could find. This is unethical because J&J failed to alert the public to the potentially harmful effects of their mistake. Chobani – mold growing in yogurt – product criticized for not having adequate quality control.

In 2008, Johnson and Johnson tried to secretly recall a batch of Motrin that had failed quality tests but still had been released for sale. Johnson and Johnson hired contractors to secretly go into stores that sold Motrin and had them buy up all of the Motrin that they could find. This is unethical because Johnson and Johnson failed to alert the public to the potentially harmful effects of their mistake.

Read more: http://healthmad.com/home-health/johnson-johnsons-unethical-product-recall-headache/#ixzz26Aii89Ru

Pricing Issues

Common ethical issues in pricing are price fixing (collusion), predatory pricing, and failure to disclose the full price of a product.
Examples include raising prices during peak sales periods…pricing low to drive competitors out of business…fictitious pricing.
Price gouging – exorbitant drug prices for Hepatitis C: $84,000/yr.
Kymriah and made by Novartis - $475,000

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DOJ Looking into Possible Airline Collusion to Keep Fares High

Possible Airline Collusion
Some of America’s biggest airlines may have colluded to keep airfares high while limiting routes and affordable seats.

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Promotion Issues

False or misleading advertising and manipulative or deceptive sales promotions, tactics, and publicity are examples.
Greenwashing – Occurs when products are promoted as being more environmentally friendly than they really are
Insurance scams…aggressive telemarketing of questionable production…bait and switch. Others?

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Tyson Foods Injects Chickens with Antibiotics Before They Hatch to Claim "Raised without Antibiotics”

Read more: http://healthmad.com/home-health/johnson-johnsons-unethical-product-recall-headache/#ixzz26Aii89Ru

Promotion Issues…

What about promoting violent video games? Is it ethical?

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Distribution Issues

Ethical issues in distribution involve relationships among producers and marketing intermediaries
Manipulating a product’s availability for purposes of exploitation
Using coercion to force intermediaries to behave in a specific manner
Channel surfing – Shipping surplus inventory to wholesalers and retailers at an excessive rate

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Counterfeiting

Ethical Dimensions of Managing Supply Chain Relationships

Good supply chain ethics ensures the integrity of the product and the firm’s operations in serving customers
It is essential for all companies that work with global suppliers to adopt a Global Supplier Code of Conduct and ensure that it is communicated to suppliers
Lawsuits were filed against Costco because it was alleged to have sold farmed prawns from Thailand that made use of slave labor.

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FACTORS THAT INFLUENCE THE ETHICAL DECISION-MAKING PROCESS IN MARKETING

figure 4.4

Individual Factors

People base decisions about right and wrong on values and principles learned in the family, at school, at church, and in social groups. What about the media?

46% of employees have stolen from his or her organization.

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Opportunity

Conditions that limit barriers or provide rewards.
If a marketer takes advantage of an opportunity to act unethically and is rewarded or suffers no penalty, he or she may repeat such acts as other opportunities arise.
The larger the rewards and the milder the punishment for unethical conduct, the greater is the likelihood that unethical behavior will occur.

Organizational Relationships

Marketers resolve ethical issues on the basis of what they learn from others in the organization.
Superiors, peers, and subordinates influence the ethical decision making process.
Corporate culture is the set of values, beliefs, goals, norms, and rituals that members of an organization share.
Therefore…

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Organizational Relationships

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An organization’s culture gives its members meaning and suggests behavioral rules. “How do I solve difficult problems here?”	Top management sets the tone for the entire organization!
The more a person is exposed to unethical activity by others the more likely it is that he or she will behave unethically. Moral relativism - if everybody does it…	Organizational pressure plays a key role in creating ethical issues.

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TYPES AND INCIDENCES OF OBSERVED MISCONDUCT

figure 4.4

Improving Ethical Conduct in Marketing

1. Hire ethical employees

2. Eliminate unethical employees

3. Improve screening techniques and enforce the firm’s ethical standards.

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Improving Ethical Conduct In Marketing

Codes of
Conduct

Ethics
Officers

Implementing Ethical
and

Legal Compliance

Programs

Ethical Conduct

Improving Ethical Conduct in Marketing

Codes of conduct are rules and standards that describe what the company expects of its employees.
They reduce opportunities for unethical behavior and employees know what is expected of them and what kind of punishment they face if they violate the rules.
See AMA Code of Ethics.

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It is unacceptable for managers to punish those who report ethical misconduct

However, research shows that approximately one-third of whistle-blowers experience some type of retaliation

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Social Responsibility and Ethics Improve Marketing Performance

Overall Strategic Marketing Planning

Ethics
Individual and

group decisions

Social Responsibility

The total effect of marketing decisions on society

Consumers want to buy from companies associated with ethical practices and socially responsible causes

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IMPORTANT TERMS

Social responsibility

Marketing citizenship

Marketing ethics

Cause-related marketing

Strategic philanthropy

Green marketing

Ethical issue

Organizational (corporate) culture

Codes of conduct