Unit IV Annotated Bibliography

DBA 7632, Business Ethics and Corporate Responsibility 1

Course Learning Outcomes for Unit IV Upon completion of this unit, students should be able to:

3. Examine ethical issues in marketing. 3.1 Summarize research concerning ethical issues in marketing. 3.2 Explore ethical marketing standards.

Course/Unit Learning Outcomes

Learning Activity

3.1

Unit Lesson Chapter 10, pp. 295–302 Chapter 11, pp. 343–347 Unit IV Annotated Bibliography

3.2

Unit Lesson Chapter 10, pp. 295–302 Chapter 11, pp. 343–347 Unit IV Annotated Bibliography

Reading Assignment Chapter 10: Ethical Marketing, Finance, Accounting, and Human Resource Management, pp. 295–302 Chapter 11: Promoting Organizational Citizenship, pp. 343–347

Unit Lesson We are at the halfway point of this course. The earlier three units addressed foundations in marketing as well as significant issues in financial accounting and ethics in the workplace. In this unit, we will branch out from focusing on how ethics impacts the internal organization and focus on how ethical behavior is perceived by society and consumers. We will begin to address some issues of corporate and social responsibility in the form of maintaining an ethical standard and what that looks like. By this point in the course, you should begin to see how the different areas tie together to create an ethical fabric within the organization. Consumer Perceptions How a company is perceived by its customers as well as by the general public can hold significant value at multiple levels within the organization. The image projected by the company can be the image believed. If the leadership of an organization exhibits greed or engages in unethical behavior, such as in the organizations discussed in previous units, the company can be viewed in this light. While a large organization may have many ethical individuals who do the job right and do it with integrity and a solid reputation, it only takes a few who are more visible to create a distorted image of the organization or operations. According to Wagner, Colley, and Linderman (2011), the ethics and social responsibility that the organization demonstrates may significantly contribute to the development of long-term and short-term relationships. There is perceived value through the image and through the information that is disseminated from the organization in its relationship with the public. According to Ferrell and Ferrell (2016), the relationship between the company and its customers represents shared values. This unit is not about social responsibility; that will be discussed later in the course. Marketing is often a reflection of how the organization is perceived. In 2007, incidents of lead paint poisoning were on the rise. Several of these cases led back to the manufacturing of children’s toys in China (Lipton & Barboza, 2007).

UNIT IV STUDY GUIDE

Marketing

DBA 7632, Business Ethics and Corporate Responsibility 2

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Steps were taken by U.S. corporations to avoid using lead-based paints in children’s toys. Using inferior or unsafe materials in products can reflect upon an organization’s reputation and compromise a company’s integrity. These issues may appear to be associated with social responsibility; however, how a product is perceived can reflect on the reputation of the organization. If a financial institution develops a highly successful product, such as a mutual fund that has exceptional returns, this could lead to a closer analysis by regulators to examine the accuracy of the claim. If the fund survives this investigation and is shown to be reporting accurately, this will speak well for the organization. The organization is striving to generate increased business by marketing a successful product. The product draws increased patronage and belief in the company. Patrons increase investment and success in a given product offering. However, if there is any discrepancy relating to the accuracy of the reporting, this can reflect poorly on the organization, perhaps leading consumers to believe that managers have compromised their ethics and integrity to increase investments. Marketing often holds value and significance within an organization. It is the integrity and reputation of the organization that is reflected through honesty in action. An organization may be viewed by consumers as less than reputable based on a product issue or perhaps because of a customer service experience. For example, if a consumer enters an automobile dealership and buys a new car from the sales department, this is one department within a much larger organization. If the salesperson who represents the organization gives information that is misleading or false, and that information had an impact on the customer making the decision to purchase the product, this can reflect poorly on the organization. The customer can also have an unsatisfactory sales experience if the salesperson provides correct information but presents it in a way that is not pleasing to the customer.

When a customer makes a purchasing decision based upon information provided by a representative of a company, and the customer finds out later that the purchasing decision resulted in additional fees that were not known, the reputation and integrity of the company is compromised. The issue may simply be that the customer did not understand the information that was presented. It could also be that the salesperson provided information that could be interpreted incorrectly and did not validate the customer’s understanding or provide any recourse of action. Such incidents happen in retail establishments daily.

Salespeople often share information with customers that could be potentially misconstrued unless one has a solid understanding of an industry. The same can happen in a discussion between two private individuals, where a seller may provide information that is not completely true, is false, or is misleading in order to persuade a buyer to complete the transaction. How one represents the organization and products has a strong impact on reputation and consumer belief in the organization. The advent of Internet technology, where information is available at one’s fingertips, also has led to increased social networking. An organization that is well-established and has had a well-respected reputation of integrity and ethical behavior for generations can be compromised in a matter of a few keystrokes should a consumer have a poor customer experience. A customer can take to the Internet and post a blog or a make a comment in his or her social media account, and the information can go viral. While not as simple, a consumer could also post on a company's customer site or social networking pages. A customer can also go to regulatory and advocacy sites such as Ripoff Report (www.ripoffreport.com), to post negative information. A customer can also file a complaint online with regulatory organizations such as the Better Business Bureau (www.bbb.org). A reputation can be damaged quickly and severely in this Internet age.

Marketing mind map (Giovannini, n.d.)

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Representation and Misrepresentation Misrepresentation is often a significant aspect in marketing for a company that has compromised its integrity or provided a product that is inferior to what was advertised. Misrepresenting a product in marketing can be extremely damaging. Recovering from episodes of misrepresentation can be long and difficult. An example of misrepresentation and its influence on U.S. consumers can be seen with the issue of quality control for U.S. automakers in the late 1970s through the mid-1980s. Japanese auto-manufacturers started to provide high- quality, low-cost alternatives to U.S. automakers, offering cars with greater economy and value to consumers. The Big Three automakers lost market share and gained a reputation of wanting profit over quality, which severely damaged their reputation. Almost 30 years later, these companies, though they have improved their quality and performance, still battle this reputation of being producers of low-quality products when compared to competitors from around the world. Take this to another level in the way of Internet sales. Customers can buy products online from the comfort of their computers or mobile devices. As such, competition within an industry is greatly increased as it is no longer just a matter of a battle of businesses on Main Street U.S.A. because organizations are competing with businesses from around the world. Customers may choose to buy products from another country and have products shipped to their homes in the United States or vice versa. Different countries have different standards for monitoring the quality and integrity of products being manufactured and shipped offshore. The product being advertised in an image may be completely different from the product that is actually being shipped. By buying online, there may be little recourse for the customer, depending on where the product is shipped from and where the company is based. As a result, organizations that offer a satisfaction guarantee, such as Amazon, work with companies that will adhere to their satisfaction guarantee policies, which specifically state that a refund or replacement of the product will be offered if a customer is dissatisfied. This type of offer has increased in popularity over recent years due to online customers not always getting what was promised or portrayed in the advertisement. The marketing of an organization represents the image of the organization. Marketing a product may only be one small piece of a much larger organization. For example, the iPhone is only one product that is offered by Apple. If Apple had an inferior product in this area, however, this could impact sales in other areas. An example of this would be the Samsung Note 7 debacle of 2016. For several years, Samsung developed excellent mobile technology devices in their electronics division. They had a very solid reputation. In regard to the Note 7, the company used a different battery to give greater performance at a lower price. The product was not thoroughly tested before its release. Due to the need for continuous innovation and customer-facing visibility, the product was released, only to learn that the batteries would overheat under certain conditions and create a situation where the phone could catch fire. Such incidents are very difficult to recover from quickly since it requires companies to correct the issue and then restore faith in the product and the organization. According to Chamary (2016), batteries typically have a failure rate of one in tens of millions. In the case of the Note 7, the batteries were unable to cool since mobile phones do not have a cooling system. Thus, under certain conditions, the battery would continue to increase in temperature and the materials would continue to breakdown, increasing the potential for explosion. Samsung's competitors (e.g., Apple) took this opportunity to capitalize on lost market share by Samsung in order to promote their own products (e.g., iPhone 7). Since Samsung had a history of releasing their products a few weeks before Apple would release their newest products, the timing could not have been worse for these incidents to occur, and the incident increased sales for Apple and hurt the reputation and sales for Samsung mobile technology. Market research is an integral part of the marketing department. Organizations find significant value in collecting information and data about products, services, and resources and collecting information about consumers for internal organizational purposes. How the information is acquired and how the information is used can have a strong impact on marketing as well as operations, production, logistics, and the supply chain. Marketing research must be reliable. False information can lead to expending resources in a manner that will not maximize profitability for the organization and can interfere with the effectiveness of the organization and/or its products or services. Such actions hurt the bottom line and reputation of the company.

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Marketing Channels Some products demonstrate a certain value or functionality through marketing such as infomercials, videos, or marketing sales letters. These products, when tested in real-life situations, may not be of the same quality or functionality as advertised. These actions damage the reputation of the products as well as the organization that provides these products. If a few infomercials go viral and become extremely popular, and it turns out that the product is of questionable value or the company goes bankrupt due to class-action lawsuits, such as with many dietary supplements over the years, this can speak ill of this marketing tool. For example, say there are a 100 infomercials out there that are very popular and constantly running on cable channels or late-night television. If even five of those infomercials are of questionable quality, it can be a law of diminishing returns for the other 95 top infomercials (Johnson, 2019). A need for protecting and advocating for marketing in this form is necessary. Self-regulation by companies is not sufficient. Competitors and consumers may address concerns with the company that has compromised its values, but the company may simply protect its assets by filing for bankruptcy. The damage is done. The reputation of that company as well as the reputation of the fellow advertisers using that forum is compromised. Consumer confidence is questioned, hurting profitability and the reputation of others that use this method. Marketing covers many aspects of an organization. It often is the customer-facing elements of an organization that bring in business. If marketing is flawed or misleading, the sales force will have its own challenges. The sales force responsible for marketing provides the incentives for customers to purchase the product or service. Customers may face controversy from the back end of the sales in the way of service and reliability or customer satisfaction and guarantees. Consistency is necessary throughout the organization to provide a quality customer experience that adheres to the ethical standards of the organization for which the organization wants to be known. Marketing can either be of significant value, or it can diminish the reputation of the organization. Strategic marketing is necessary to continually improve and grow the organization’s visibility and reputation. As an example, a minor recall and the way in which the company handles the recall can speak volumes as to the reputation of the company. Denial that there is an issue—especially if it is later released that the company or the manufacturer was knowingly at fault—can hurt an organization’s reputation significantly. An organization that chooses to acknowledge the issue may later find out that they were not at fault, but the organization will still maintain the quality and integrity in the eyes of consumers and society for doing the right thing by being transparent. It might cost the organization in the short-term, but the company will be able to build from the incident and establish a transparent relationship with consumers in the long-term.

References Chamary, J. V. (2016, September). Why are Samsung's Galaxy Note 7 phones exploding? Forbes. Retrieved

from https://www.forbes.com/sites/jvchamary/2016/09/04/samsung-note7-battery/#72ba3c1a37ca Ferrell, O. C., & Ferrell, L. (2016). Ethics and social responsibility in marketing channels and supply chains:

An overview. Journal of Marketing Channels, 23(1/2), 2–10. Retrieved from https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direct= true&db=a9h&AN=114192856&site=ehost-live&scope=site

Giovannini, R. (n.d.). ID 18139301 [Image]. Retrieved from www.dreamstime.com Johnson, C. E. (2019). Organizational ethics: A practical approach (4th ed.). Thousand Oaks, CA: Sage. Lipton, E., & Barboza, D. (2007, June 19). As more toys are recalled, trail ends in China. The New York

Times. Retrieved from https://www.nytimes.com/2007/06/19/business/worldbusiness/19toys.html Wagner, S. M., Coley, L. S., & Lindemann, E. (2011). Effects of suppliers’ reputation on the future of buyer-

supplier relationships: The mediating roles of outcome fairness and trust. Journal of Supply Chain Management, 47(2), 29–48. Retrieved from https://search-proquest- com.libraryresources.columbiasouthern.edu/docview/864752321?accountid=33337