Marketing and Society: Social Responsibility and Marketing Ethics

1
Chapter 2

• Marketing and Society Social Responsibility and
  Marketing Ethics
• Performance business

2
objectives

1. Identify the major social criticisms of
   marketing.
2. Define consumerism and environmentalism and
   explain how they affect marketing strategies.
3. Describe the principles of socially responsible
   marketing.
4. Explain the role of ethics in marketing.

3
CHAPTER OVERVIEW
This chapter examines the social effects of
private marketing practices. A marketing system
should sense, serve, and satisfy consumer needs
and improve the quality of consumers lives. In
working to meet the consumers needs, marketers
may take some actions that are not approved of by
all the consumers or publics within the social
sector. Marketing managers must understand the
criticism that the marketing function may
encounter. By understanding the criticism, the
manager is better prepared to respond to it in a
proactive manner. Some of the criticism is
justified, some is not.
4
CHAPTER OVERVIEW
The primary criticisms of the marketing function
with respect to the impact on individual
consumers has been categorized as being (1)
high prices (2) deceptive practices (3)
high-pressure selling (4) shoddy or unsafe
products (5) planned obsolescence and (6)
poor service to disadvantaged consumers. These
criticisms have come from a failure to meet
individual consumer welfare needs.
5
CHAPTER OVERVIEW
A separate set of criticisms are directed at the
marketing function by society in general.
Criticism from this larger public body includes
comments on creating (1) false wants and too
much materialism (2) too few social goods (3)
cultural pollution and (4) too much political
power. In addition, critics have also pointed
out that marketings impact on businesses may not
be good either. Marketing is accused of harming
competitors and reducing competition by
acquisition of competitors, creating barriers to
entry, and using unfair marketing practices.
6
CHAPTER OVERVIEW
Concerns about the marketing function have led
action groups to participate in consumer and
environmental movements and to form protest
organizations. Marketings response to action
groups and social criticism has largely been
positive and proactive. Many companies that were
originally opposed to social movements and
legislation that was created to address consumer
complaints have now recognized a need for
positive consumer information, education, and
protection. The most successful of these firms
have reorganized their companies to follow
enlightened marketing. This concept is based on
the principles of consumer orientation,
innovation, value creation, social mission, and
social orientation.
7
CHAPTER OVERVIEW
Also, companies are increasingly responding to
the need to provide company policies and
guidelines to help their managers deal with
questions and issues in marketing ethics. These
policies generally cover issues in distributor
relations, advertising standards, customer
service, pricing, product development, and
general ethical standards. Companies that are
able to harness social change, understand it, and
develop meaningful policies that help create new
values in a socially responsible way will have
dynamic growth and receive the sales reward from
the consumer in the future.
8
CHAPTER OUTLINE

1. Introduction
2. Social Criticisms of Marketing
3. Citizen and Public Actions to Regulate Marketing
4. Business Actions Toward Socially-Responsible
   Marketing

9
Gear up Exerxcises

• 1.Marketing is often criticized for increasing
  the costs of distribution, high advertising and
  promotion costs, and for causing large markups in
  the price of goods and services.
• a.True
• b.False

• These three issues are commonly noted as
  criticisms of marketing. You'll read more about
  this topic in the section entitled "Social
  Criticisms of Marketing."

10
Gear up Exerxcises

• 2.Marketers work to create needs for products
  that consumers might not otherwise think to buy.
• True
• b.False

• Marketers insist that they do not create needs
  and cannot control demand as much as this charge
  suggests. You'll read more about this topic in
  the section entitled "Social Criticisms of
  Marketing."

11
Gear up Exerxcises

• 3.It is difficult for international companies to
  develop standard environmental practices that
  work around the world.
• a.True
• b.False

• Environmental policies and needs vary from
  country to country, and this necessitates
  customization of environmental practices to local
  needs and requirements. You'll read more about
  this topic in the section entitled
  "Environmentalism."

12
Gear up Exerxcises

• 4.Environmental sustainability policies, while
  favorable to the environment, do not permit
  companies to make profits.
• a.True
• b.False

• Environmental sustainability strategies are aimed
  at sustaining the environment while
  simultaneously producing profits for the company.
  You'll read more about this topic in the section
  entitled "Environmentalism."

13
Gear up Exerxcises

• 5.A legal action is not always the same as an
  ethical action.
• a.True
• b.False

• For example, a U.S. company that moves its
  operations to Southeast Asia in order to profit
  from less-rigorous labor standards may not be
  doing anything illegal. However, that company may
  arguably be doing something unethical. You'll
  read more about this topic in the section
  entitled "Marketing Ethics."

14
CHAPTER OUTLINE
1. Introduction a. Responsible marketers
discover what consumers want and respond with the
right products, priced to give good value to
buyers and profit to the producer. 1).
The marketing concept is a philosophy of customer
satisfaction and mutual gain. 2). Its
practice leads the economy by an invisible hand
to satisfy the many and changing needs of
millions of consumers.
15
CHAPTER OUTLINE
1. Introduction b. Not all marketers follow
the marketing concept, however. 1).
Private transactions may involve larger questions
of public policy (i.e., the illustration of the
sale of cigarettes). 2). The social
effects of private marketing practices is the
subject of this chapter.
16
Marketings Impact on Individual Consumers
c. Consumers have many concerns about how well
the American marketing system serves their
interests. d. There are six primary
criticisms leveled at the marketing function by
consumers, consumer advocates, and government
agencies. 1). Harming consumer through
high prices. 2). Deceptive practices.
3). High-pressure selling.
4). Shoddy or unsafe products. 5).
Planned obsolescence. 6). Poor service
to disadvantaged consumers.
17
Marketings Impact on Individual Consumers

18
Marketings Impact on Individual Consumers High
Prices
High Prices Caused by the Following Factors
High Costs of Distribution
High Advertising And Promotion Costs
Excessive Markups
19
Marketings Impact on Individual Consumers
e. Many critics charge the American marketing
system causes prices to be higher than need be.
Some factors to which these critics point are as
follows 1). High costs of
distribution. Greedy intermediaries mark up
prices beyond the value of their services. There
are too many intermediaries and they duplicate
services. a). Resellers have responded by
saying that 1. The work performed by
the intermediaries is necessary and takes away
the responsibility from the consumer or the
manufacturer. 2. The rising markup is
really the result of improved services.
20
Marketings Impact on Individual Consumers
3. Operating costs are what is driving up
prices. 4. In reality, profit margins
are low because of intense competition. b).
Strong retailers (such as Wal-Mart) pressure
their channel members to keep prices low.

21
Marketings Impact on Individual Consumers
2). High advertising and promotion costs.
a). Marketing is accused of driving up
promotion and advertising costs. b).
Marketers respond by saying that
1. Consumers want more than the merely
functional qualities of products, they want
psychological benefits. 2.
Branding, even though it may cost more, gives
buyers confidence. 3. Heavy
advertising is needed to inform millions of
potential buyers of the merits of a brand.
4. Heavy advertising and promotion may
be necessary for a firm to match competitors
efforts. Companies are cost-conscious and try to
spend their promotional dollars wisely.
22
Marketings Impact on Individual Consumers
3). Excessive markups. a). Critics
charge that some companies mark up goods
excessively. b). Marketers respond by
saying that 1. Most businesses try
to deal fairly with consumers because they want
the repeat business. 2. Most
consumer abuses are unintentional. 3.
When shady marketers do take advantage of
consumers, they should be reported to the
authorities. 4. Consumers often do
not understand the reason for the high markup.
23
Marketings Impact on Individual Consumers High
Prices
High Prices Caused by the Following Factors
High Costs of Distribution
High Advertising And Promotion Costs
Excessive Markups
24
Marketings Impact on Individual Consumers

25
Marketings Impact on Individual Consumers
Deceptive Practices
Deceptive Pricing
Falsely Advertising Factory or Wholesale
Prices, Large Reduction From Phony High List
Price
Deceptive Promotion
Overstating the Products Features, Luring
Customers to the Store for Out-of-Stock Bargains,
etc.
Deceptive Packaging
Exaggerating Package Contents, Not Filling
Package to the Top, Using Misleading Labeling
26
Marketings Impact on Individual Consumers
f. Marketers are sometimes accused of
deceptive practices that lead consumers to
believe that they will get more value than they
actually do. Three groups exist 1).
Deceptive pricing includes such practices as
falsely advertising factory or wholesale
prices, or a large reduction from a phony high
list price. 2). Deceptive promotion
includes such practices as overstating the
products features or performance, luring the
customer to the store for a bargain that is out
of stock, or running rigged contests.
27
Marketings Impact on Individual Consumers
3). Deceptive packaging includes
exaggerating package contents through subtle
design, not filling the package to the top, using
misleading labeling, or describing size in
misleading terms. 4). Deceptive practices
have led to legislation and other consumer
protection actions. The Wheeler-Lea Act was
enacted to give the Federal Trade Commission
(FTC) the power to regulate unfair or deceptive
acts or practices. a). Marketers
argue that most companies avoid deceptive
practices because such practices harm their
business in the long run. b).
According to some experts, some puffery, however,
will always occur
28
Marketings Impact on Individual Consumers
Deceptive Practices
Deceptive Pricing
Falsely Advertising Factory or Wholesale
Prices, Large Reduction From Phony High List
Price
Deceptive Promotion
Overstating the Products Features, Luring
Customers to the Store for Out-of-Stock Bargains,
etc.
Deceptive Packaging
Exaggerating Package Contents, Not Filling
Package to the Top, Using Misleading Labeling
29
Marketings Impact on Individual Consumers

30
Marketings Impact on Individual Consumers
g. High-pressure selling is another
criticism of marketing. 1). Laws
require door-to-door salespeople to announce that
they are selling a product. 2). Also,
buyers have a three-day cooling-off period in
which they can cancel a contract after
rethinking it.
31
Marketings Impact on Individual Consumers

32
Marketings Impact on Individual Consumers
h. Shoddy or unsafe products is another
criticism leveled against marketers.
Complaints include 1). Complaints
about products not being made well or services
were not performed well. 2). Products
deliver little benefit. 3). Product
safety has been a problem for several reasons
a). Manufacturer indifference.
b). Increased production complexity.
c). Poorly trained labor.
d). Poor quality control. 4).
Responses to these complaints from marketers are
positive. Marketers in general want to make
beneficial and safe products.
33
Marketings Impact on Individual Consumers

34
Marketings Impact on Individual Consumers
i. Planned obsolescence is a strategy of
causing products to become obsolete before they
actually need replacement and is a criticism
leveled by consumers. 1). Fashion is
often cited as an example. 2).
Marketers respond that consumers like lifestyle
changes they get tired of old goods and want a
new look. 3). Much of so-called
planned obsolescence is actually the normal
interaction of competitive and technological
forces in a free society.
35
Marketings Impact on Individual Consumers

36
Marketings Impact on Individual Consumers
j. In contemporary society poor service to
disadvantaged consumers is another criticism
against marketing. 1). Clearly better
marketing systems must be built in low-income
areas. Critics believe the poor have been
exploited by marketers. 2). The
Federal Trade Commission has taken action against
merchants who advertise false values, sell old
merchandise as new, or charge too much for
credit.
37
Discussion Connections

• Think back over the past three months or so and
  list the instances in which youve suffered a
  marketing abuse such as those just discussed.
  Analyze your list
• What kinds of companies were involved?
• Were the abuses intentional?
• What did the situations have in common?
• Pick one of the instances you listed and describe
  it in detail. How might you go about righting
  this wrong?

38
Marketings Impact on Society as a Whole
Producing Too Few Social Goods
False Wants Too Much Materialism
Marketing Perceived Negative Impact on Society
as a Whole
Cultural Pollution
Too Much Political Power
39
Marketings Impact on Society as a Whole
k. Some criticisms have also been leveled at
marketing because of its perceived negative
impact on society as a whole. l.
Criticisms include marketing creating
1). False wants and too much materialism.
People are judged by what they own rather than
who they are. a). This criticism
perhaps overstates the power of business to
create needs. b). Our needs are
influenced by other forces than just marketing
ones. c). Some even see
materialism as a positive force.
40
Marketings Impact on Society as a Whole
2). Producing too few social goods. There
needs to be more of a balance between social
(public) and private goods. Options include
a). The government could require
more safety be built into products (autos for
example). b). Make consumers pay
social costs.
41
Marketings Impact on Society as a Whole
3). Cultural pollution--constant assaults on
privacy by advertising and noise clutter.
Marketing answers by saying a).
Marketers hope that their ads reach primarily the
target audience. b). Ads make
much of television and radio free to users and
keep down the costs of magazines and
newspapers. c). Consumers have
alternatives. They can zap or zip through
commercials.
42
Marketings Impact on Society as a Whole
4). Too much political power.
a). American companies do promote and protect
their own interests. They have a right to.
b). Counterforces are in place to
offset business promotional and political power.
43
Marketings Impact on Society as a Whole
Producing Too Few Social Goods
False Wants Too Much Materialism
Marketing Perceived Negative Impact on Society
as a Whole
Cultural Pollution
Too Much Political Power
44
Marketings Impact on Other Businesses

• All Can Harm Other Companies Reduce Competition

45
Marketings Impact on Other Businesses
m. Critics charge that a companys marketing
practices can harm other companies and reduce
competition. Three problems are involved.
1). Acquisitions of competitors. There may
be too many of these according to some. However,
acquisition is a complex subject and sometimes
acquisition may be good for society.
2). Marketing practices create barriers to
entry. Patents and heavy promotional spending
are often cited 3). Unfair
competitive marketing practices. Predatory
competition is dangerous to the overall
well-being of the economy. To distinguish
between what is predatory and what is healthy
competition is often difficult.
46
Marketings Impact on Other Businesses

• All Can Harm Other Companies Reduce Competition

47
Concept Check

• 1.Critics charge the marketing system with
  creating cultural pollution. a.True b.False

• This is a common criticism of the marketing
  system.

48
Concept Check

• 2.Planned obsolescence is a strategy in which a
  product is designed to become obsolete before it
  needs to be replaced. a.True b.False

• Planned obsolescence occurs when a product
  becomes obsolete before it needs to be replaced.

49
Concept Check

• 3.Which of the following are common product
  complaints? a.poorly made products b.products
  that deliver little benefit c.unsafe
  products d.all of the above

• These are all product issues raised by critics.

50
Concept Check

• 4.Among the deceptive marketing practices cited
  by critics are _____. a.deceptive
  packaging b.deceptive pricing c.deceptive
  promotion d.all the above

• All these are cited as deceptive practices.

51
Concept Check

• 5.Deceptive practices have led to legislation,
  such as the _____ Act. a.Robinson-Patman b.FTC c.C
  onsumer Product Safety d.Wheeler-Lea

• The Wheeler-Lea Act was passed as a result of
  deceptive practices.

52
3. Citizen and Public Actions to Regulate
Marketing

• a. Because some people view business as
  the cause of many economic and social ills,
  grass-roots movements have arisen from time to
  time to keep business in line. Two major
  movements have emerged.
• Consumerism
• Environmentalism

53
Consumerism
Consumerism is an Organized Movement of Citizens
and Government Agencies to Improve the Rights and
Power of Buyers in Relation to Sellers.
Sellers Rights
54
3. Citizen and Public Actions to Regulate
Marketing
Consumerism b. American business firms
have been the target of organized consumer
movements on three occasions (the early 1900s,
the mid-1930s, and the 1960s). c.
Consumerism is an organized movement of citizens
and government agencies to improve the rights and
power of buyers in relation to sellers. d.
Traditional sellers rights include
55
3. Citizen and Public Actions to Regulate
Marketing
1). 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.
2). Right to charge any price for the product,
provided no discrimination exists among similar
kinds of buyers. 3). Right to spend
any amount to promote the product, provided it is
not defined as unfair competition. 4).
Right to use any product message, provided it is
not misleading or dishonest in content or
execution. 5). Right to use buying
incentive schemes, provided they are not unfair
or misleading.
56
3. Citizen and Public Actions to Regulate
Marketing
e. Traditional buyers rights include
1). Right not to buy a product that is
offered for sale. 2). Right to expect
the product to be safe. 3). Right to
expect the product to perform as claimed.
57
3. Citizen and Public Actions to Regulate
Marketing
f. Consumer advocates call for the
following additional consumer rights
1). Right to be well-informed about important
aspects of the product. 2). Right to
be protected against questionable products and
marketing practices. 3). Right to
influence products and marketing practices in
ways that will improve the quality of life.
58
Consumerism
The Right to Be Safe Protected
The Right to Choose Be Informed
Basic Consumer Rights
The Right to Be Heard About Quality of Life
Issues
The Right to Choose Expect the Product to
Perform
59
3. Citizen and Public Actions to Regulate
Marketing
Environmentalism h. Environmentalists are
concerned with marketings effects on the
environment and with the costs of serving
consumers needs and wants. Environmentalism is
an organized movement of concerned citizens and
government agencies to protect and improve
peoples living environment.
60
3. Citizen and Public Actions to Regulate
Marketing
Environmentalism j. Environmentalists are
not against marketing and consumption. They
simply want people and organizations to operate
with more care for the environment. k. The
marketing systems goal should be to maximize
life quality.
61
3. Citizen and Public Actions to Regulate
Marketing
l. Three waves of environmentalism have
occurred 1). The first wave was
driven by environmental groups and concerned
consumers in the 1960s and 1970s. They were
concerned with loss and damage to the
environment and recreational spaces.
2). The second wave was driven by government,
which passed laws and regulations during the
1970s and 1980s. This wave hit some industries
very hard. 3). The third wave is beginning in
the last few years of the twentieth century.
This wave is one where companies are accepting
responsibility for doing no harm to the
environment.
62
3. Citizen and Public Actions to Regulate
Marketing
a). Companies are adopting policies of
environmental sustainability--developing
strategies that both sustain the environment and
produce profits for the company. The challenge
is to develop a sustainable global economy.
63
3. Citizen and Public Actions to Regulate
Marketing
a). Companies are adopting policies of
environmental sustainability--developing
strategies that both sustain the environment and
produce profits for the company. The challenge
is to develop a sustainable global economy.
b). Environmental sustainability has several
strategies 1. Pollution prevention--this
involves more than pollution control (cleaning up
waste after it has been created). It means
eliminating or minimizing waste before it is
created. a. Green marketing programs
have helped.
64
3. Citizen and Public Actions to Regulate
Marketing
2. Product stewardship--minimizing not
just pollution from production but all
environmental impacts throughout the full product
life cycle. a. Many companies are
adopting design for environment (DFE) practices,
which involve thinking ahead in the design stage
to create products that are easier to recover,
reuse, or recycle. 3. New environmental
technologies--new technologies. 4.
Sustainability vision--serves as a guide to the
future. It shows how the companys products and
services, processes, and policies must evolve and
what new technologies must be developed to get
there.
65
Environmentalism
Have a Sustainability Economy
Practice Pollution Prevention
Plan for New Environmental Technologies
Practice Product Stewardship
Adopt Design for the Environment
66
3. Citizen and Public Actions to Regulate
Marketing
Public Actions to Regulate Marketing m.
Citizen concerns about marketing practices
usually lead to public attention and legislative
proposals. n. The task for the marketer is
to translate laws into the language that
marketing executives understand as they make
decisions about competitive relations, products,
price, promotion, and channels of distribution.
67
Concept Check

• 1.Consumerism is the organized movement of
  citizens and government agencies to improve the
  rights and power of buyers in relation to
  sellers. 
• a.True 
• b.False

• Consumerism is an organized movement to help the
  position of buyers.

68
Concept Check

• 2.The question, "What aspects of our production
  process create the most pollution?" is likely to
  come out of what practice of environmental
  sustainability? 
• a. Pollution prevention  
• b. Product stewardship  
• c. Sustainability vision
• d. New environmental technology

• A company that is focused on pollution prevention
  seeks to alter its internal operations to create
  less pollution.

69
Concept Check

• 3.The question, "Would making our products
  recyclable add value for our customers?" is
  likely to come out of what practice of
  environmental sustainability? 
• a. Sustainability vision 
• b. New environmental technology 
• c. Pollution prevention 
• d. Product stewardship

• Companies focused on product stewardship try to
  add value for their customers, while reducing the
  impact of their products on the environment.

70
Concept Check

• 4.The statement, "Our mission is for our company
  to evolve in ways that help solve social and
  environmental problems" is likely to come out of
  what practice of environmental sustainability? 
• a. Pollution prevention
• b. New environmental technology 
• c. Sustainability vision
• d. Product stewardship

• Companies focused on a long-term goal of creating
  a socially and environmentally responsible
  organization are committed to a sustainability
  vision.

71
Concept Check

• 5.Consumer advocates would like to expand
  buyers?rights to include all the following
  except 
• a. the right to be well informed about important
  aspects of the product. 
• b. the right to be protected against questionable
  products and marketing practices. 
• c.  the right to influence products and marketing
  practices in ways that will improve the "quality
  of life."
• d. the right to a full refund if the buyer is
  unsatisfied, no questions asked.

• Consumer advocates would like to add all other
  rights.

72
4. Business Actions Toward Socially-Responsible
Marketing
a. Many companies have responded
positively to consumerism and environmentalism in
order to serve the consumer needs better.
73
3. Citizen and Public Actions to Regulate
Marketing
Enlightened Marketing b. Enlightened
marketing is a philosophy holding that a
companys marketing should support the best
long-run performance of the marketing system. It
has five principles 1).
Consumer-oriented marketing. A principle of
enlightened marketing which holds that the
company should view and organize its marketing
activities from the consumers point of view.
2). Innovative marketing. A principle of
enlightened marketing which requires that a
company seek real product and marketing
improvements. 3). Value marketing. A
principle of enlightened marketing which holds
that a company should put most of its resources
into value-building marketing investments.

74
3. Citizen and Public Actions to Regulate
Marketing
4). Sense-of-mission marketing. A principle of
enlightened marketing which holds that a company
should define its mission in broad social terms
rather than narrow product terms. 5). Societal
marketing. A principle of enlightened marketing
which holds that a company should make marketing
decisions by considering consumers wants, the
companys requirements, consumers long-run
interests, and societys long-run interests. a).
A societally-oriented marketer wants to design
products that are pleasing and beneficial. b).
Products can be classified according to their
degree of immediate consumer satisfaction and
long-run consumer benefit.
75
3. Citizen and Public Actions to Regulate
Marketing
Degree of satisfaction might include
1. Deficient products are products that have
neither immediate appeal nor long-term benefits.
Ex. bad-tasting medicine. 2. Pleasing
products are products that give high immediate
satisfaction but may hurt consumers in the
long-run. Ex. cigarettes. 3. Salutary
products are products that have low appeal but
may benefit consumers in the long-run. Ex. seat
belts and air bags. 4. Desirable
products are products that give both high
immediate satisfaction and high long-run
benefits. Ex. a tasty and nutritious food.
76
Enlightened Marketing
Consumer-Oriented Marketing
Innovative Marketing
Enlightened Marketing Holds That a Companys
Marketing Should Support the Best Long-Run
Performance of the Marketing System.
Value Marketing
Sense-of-Mission Marketing
Societal Marketing
77
Societal Classification of Products
Immediate Satisfaction
Low
High
High
Long-Run Consumer Benefit
Low
78
Marketing Ethics
c. Conscientious marketers face many
moral dilemmas. d. Companies need to
develop corporate marketing ethics
policies--broad guidelines that everyone in the
organization must follow. Areas of concern
include 1). Distributor relations.
2). Advertising standards. 3).
Customer service. 4). Pricing.
5). Product development. 6).
General ethical standards.
79
Marketing Ethics
Do you think it would be proper to give a "gift"
in order to win the account?  57.89Yes
 42.11No Did the results of this poll
surprise you? The way you answered depends
largely on what you think about the cultural
context of ethics. If you think that an action is
objective, in that it is either is or is not
ethical regardless of the reason, then you
probably answered no. Some people believe that
paying bribes ("gifts") is unethical under any
circumstances. If you think that an action is
subjective, meaning it is ethical if a culture's
value system makes it so, then you probably
answered yes. Some people believe that if a
particular culture permits the giving and
receiving of bribes, then giving the "gift" to
win the account is a legitimate act.
Before you begin reading about marketing ethics,
consider this scenario. Assume you are the chief
marketing officer of a company that operates in a
developing country. You have a chance to win a
big account that will mean a lot to you and your
firm. The purchasing agent hints that a "gift"
would influence the decision. It is fairly common
in that country to give such "gifts," and you
know for a fact that your competitors consider
this a normal business practice.
Do you think it would be proper to give a "gift" in order to win the account? Do you think it would be proper to give a "gift" in order to win the account?
Yes
No
80
Marketing Ethics
Companies Need to Develop Corporate Marketing
Ethics Policies Broad Guidelines That Everyone
in the Organization Must Follow and Should
Address

• Pricing
• Product Development
• General Ethical Standards

• Distributor Relations
• Advertising Standards
• Customer Service

81
Marketing Ethics
e. The finest guidelines cannot resolve all
the difficult ethical situations a marketer
faces. f. What principle should guide
companies and marketing managers on issues of
ethical and social responsibility? Two general
philosophies are used 1). Issues are
decided by the free market and legal system.
Under this system companies and their managers
are not responsible for making moral judgments.
Companies can do whatever the system allows.
2). Issues are the responsibility of
individual companies and managers. This approach
says that the company should have a social
conscience that guides action. This is a more
enlightened philosophy.
82
Marketing Ethics
g. Each company and marketing manager must
work out a philosophy of socially-responsible and
ethical behavior. Remember that written codes do
not ensure ethical behavior. h. The issue
of ethics provides special challenges for
international marketers.Bribery may be socially
acceptable in one country and completely illegal
in another. 1). Companies must commit
to a single ethical standard that can be applied
worldwide.
83
Marketing Ethics
i. Many industrial and professional
associations have suggested codes of ethics, many
companies are now adopting their own codes.
1). Companies are developing programs to
teach managers about important ethics issues and
help them find the proper responses.
2). Over 200 major U.S. companies now have
high-level ethics officers to champion ethics
issues and to help resolve ethics problems and
concerns facing employees.
3). Still, written codes and ethics programs
do not ensure ethical behavior. j. Given
the challenges of the next century, companies
that are able to create new values in a
socially-responsible way will have a world to
conquer.
84
Marketing Ethics
Principles That Should Guide Companies and
Marketing Managers On Issues of Ethics and Social
Responsibility
Decided by the Free Market and Legal System
Responsibility of Individual Companies And
Managers
85
Review of Concept Connections

• Identify the major social criticisms of
  marketing.
• Define consumerism and environmentalism and
  explain how they affect marketing strategies.
• Describe the principles of socially responsible
  marketing.
• Explain the role of ethics in marketing.

86
Concept Check

• 1.Enlightened marketing is a philosophy that
  promotes the best long-run performance of the
  marketing system. 
• a.True b.False

• This philosophy has at its core the best long-run
  performance of the marketing system.

87
Concept Check

• 2.A delicious and nutritious salad is an example
  of a ___________. 
• a.pleasing product 
• b.desirable product 
• c.salutary product 
• d.deficient product

• A delicious and nutritious salad is an example of
  a desirable product, a product that provides both
  immediate satisfaction and long-run benefits.

88
Concept Check

• 3.Junk food is an example of a ____________. 
• a.pleasing product 
• b.desirable product 
• c.salutary product 
• d.deficient product

• Junk food is an example of a pleasing product, a
  product that provides immediate satisfaction but
  that may be harmful in the long run.

89
Concept Check

• 4.The best way for a company to ensure that its
  employees behave ethically is to publish a clear
  code of ethics. 
• a.True b.False

• Although publishing such a code would be an
  important step, it alone would not ensure ethical
  behavior unless all sectors of the organization
  helped to build a larger corporate culture of
  ethics. Without such broad commitment, the effort
  would probably fail.

90
ISSUES FOR DISCUSSION
1. Marketing receives much criticism, some
justified and much not. Which of the major
criticisms of marketing discussed in the chapter
do you think are most justified? Which are least
justified? Explain.
91
ISSUES FOR DISCUSSION
Marketings Impact on Individual Consumers
(a) High Prices (high costs of distribution,
high costs of advertising and promotion, and
excessive markups), (b) Deceptive Practices, (c)
High Pressure Selling, (d) Shoddy or Unsafe
Products, (e) Planned Obsolescence, and (f) Poor
Service for Disadvantaged Consumers. According
to the discussion in the chapter, a case could be
made that s b, c, d, e, and f above can be
valid criticisms of marketing a (and its
parts) are less justified. Students should be
pressed to explain their choices and provide a
justification that would make sense.
Marketings Impact on Society as a Whole (a)
False Wants and Too Much Materialism, (b) Too Few
Social Goods, (c) Cultural Pollution, and (d) Too
Much Political Power. According to the
discussion in the chapter, students could make a
case for all of the above as being justified
criticisms.
92
ISSUES FOR DISCUSSION
This question makes for excellent group
discussion. Try formulating groups with a pro
and con slant to the issues--consumer rights
versus business rights and interests. After that
discussion has been made, demonstrate how a
middle ground must be found by appointing a
mediator between the pro and con groups. What
compromises can be reached? Is this a model that
should be followed by marketing and consumer
interests?
93
ISSUES FOR DISCUSSION
2. You have been invited to appear along
with an economist on a panel assessing
marketing practices in soft-drink industry. You
are somewhat surprised when the economist
opens the discussion with a long list of
criticisms (focusing especially on the
unnecessarily high marketing costs and deceptive
promotional practices). Abandoning your
prepared comments, you feel the need to defend
marketing in general and the beverage
industry in particular. How would you respond to
the economists attack?
94
ISSUES FOR DISCUSSION
This question asks students to put
themselves in the position of an industry
spokesperson that does not have an easy task.
First, the rules of the discussion just changed.
Second, you are not prepared for a discussion in
the area (even though your opponent is). Third,
the audience would probably prefer to hear the
negative argument (because it is inflammatory and
interesting) instead of a prepared speech.
Fourth, what ever you say will probably make no
difference to those who wish to protest and, in
fact, may even make your situation worse.
Especially, if it is reported (perhaps out of
context) by the press. What do you do? One
answer is to always be prepared. Another is to
practice thinking on your feet.
95
ISSUES FOR DISCUSSION
Students should be encouraged to really think
about this (especially, in light of the
difficulties mentioned above). Their creative
response should be interesting. The instructor
might also wish to assign roles (consistent with
the roles described in the question) to members
of the class and let them present their cases.
Use material from the text as a beginning point.
Answers to typical criticisms of marketing and
advertising are clearly presented in the first
section of the chapter. Lastly, remember that
the beverage industry is the one under fire.
Students might wish to research the industry so
they will be prepared to field questions.
Consider such issues as pollution due to plastic
containers that are often thrown away rather than
recycled, partial addiction to the products and
their often high caffeine content, and excessive
marketing to youth. If the instructor so
chooses, this assignment might be prepared (with
advance notice to the students) as a debate.
Assign the pro and con roles well in advance for
best results.
96
ISSUES FOR DISCUSSION
3. Comment on the state of consumer rights on the
Internet and in e-commerce. Design a Bill of
Rights that would protect todays consumer while
they shop for products and services on the
Internet. Consider such issues as government
regulation, ease and convenience of use,
solicitation, privacy, and cost-efficient
commerce.
97
ISSUES FOR DISCUSSION
Students are free to be creative with this
question. It is recommended that they examine
the various consumer rights suggested in the
chapter before beginning the construction of
their manifesto. See chapter section entitled
Consumerism. Notice that rights in this section
are divided into sellers rights and buyers
rights. Would the same apply to the Internet and
e-commerce? What should be added?
98
ISSUES FOR DISCUSSION
Students should be asked to do research on the
Internet. Think about rights (such as the right
to privacy, the right to access, freedom of
speech, security, childrens rights and
protection, et cetera) and the consequences
associated with maintaining or violating those
rights. For example, everyone is for free
speech. However, free speech and free and
unrestrained access to the Internet also protects
the rights of pornographers. The average e-mail
box on AOL receives four pornographic
solicitation e-mail offers per day. If
the instructor would like to have additional
information about a a computer users
manifesto, refer to Stephen H. Wildstroms
article by the same title found in Business Week,
September 28, 1998, page 18. This article lists
ten (10) possible statements for a computer
users bill of rights. These rights might be
compared to those that are generated by the
students. Additionally, these rights can be
incorporated into a set of rights that might be
pertinent to the Internet and e-commerce. Ask
students to prioritize the set of rights--what is
a must and what would just be good to have?
99
ISSUES FOR DISCUSSION
Students should list their desired rights on the
board and then discuss how to achieve, maintain,
and protect those rights. They should be
reminded that rights are for everyone--not just
those we prefer. This assignment is a good
completion assignment for the course. It should
also demonstrate how much the students have
learned about ethical business practice and
consumerism.
100
ISSUES FOR DISCUSSION
4. Figure 2.1 shows a grid that companies can
use to measure their progress toward
environmental sustainability. Where most firms
begin on the grid? Which cells are most
difficult to achieve? Give an example of a firm
that has moved from one cell to another in the
grid.
101
ISSUES FOR DISCUSSION
Environmental sustainability may be thought of
as the process of developing strategies that both
sustain the environment and produce profits for
the company. The grid shown in Figure 20.1
allows a company to gauge their progress toward
environmental sustainability. At the
most basic level, a company can practice
pollution prevention. This involves more than
pollution control. It means eliminating or
minimizing waste before it is created. Green
marketing programs often emerge from this stage
(see Marketing Highlight 20-2). In a practical
sense, this is often the first stage of
development because problems must be recognized
before they can be fixed.
102
ISSUES FOR DISCUSSION
At the next level, companies can practice
product stewardship--minimizing not just
pollution from production but all environmental
impacts throughout the full product life cycle.
Many companies are adopting design for
environment (DFE) practices, which involve
thinking ahead in the design stage to create
products that are easier to recover, reuse, or
recycle. This practice can be profitable as
well. At the third level, companies look
to the future and plan for new environmental
technologies. Existing technologies can be
limiting to the environmentally-oriented firm.
to develop fully sustainable strategies, they
will need to develop new technologies.
103
ISSUES FOR DISCUSSION
Finally, companies can develop a sustainability
vision, which serves as a guide to the future.
It shows how the companys products and services,
processes, and policies must evolve and what new
technologies must be developed to get there.
This vision of sustainability provides a
framework for pollution control, product
stewardship, and environmental technology.
To generate an example have students refer to
the chapter opening (Ben Jerrys) before
beginning. The student should be sure to explain
how their designated company has made the
movement they have specified.
104
ISSUES FOR DISCUSSION
5. Which of the following firms, if any,
practice the principle of enlightened
marketing (a) McDonalds, (b) Proctor Gamble,
(c) General Motors, and (d) Johnson
Johnson?
105
ISSUES FOR DISCUSSION
The philosophy of enlightened marketing holds
that a companys marketing should support the
best long-run performance of the marketing
system. Enlightened marketing consists of five
principles consumer-oriented marketing,
innovative marketing, value marketing,
sense-of-mission marketing, and societal
marketing. McDonalds is generally referred to
as an enlightened marketing because of its views
on recycling, social activities (the Ronald
McDonald House program), its low cost approach to
what they perceive of as value meals, their
innovativeness in the fast food business (most
major changes in menu items in the industry have
come from McDonalds), and the companys
sense-of-mission by mandating that all
franchisees follow the McDonalds philosophies
and practices.
106
ISSUES FOR DISCUSSION
Procter Gamble is clearly an "enlightened
marketer," practicing consumer-oriented
marketing. It is also one of the best examples of
an innovative marketer. PG has long emphasized
advertising over sales promotion as a way of
building customer loyalty. Its official Statement
of Purpose describes the company's mission
"We'll provide products of superior quality and
value that best fill the needs of the world's
consumers." And it follows the principle of
societal marketing. PG withdrew its highly
successful Rely tampons after evidence linked the
product to the sometimes fatal toxic-shock
syndrome, a strong demonstration of corporate
social responsibility.
107
ISSUES FOR DISCUSSION
General Motors should probably receive a mixed
review. The company is innovative (especially in
new model design), they have a sense-of-mission,
and, in some respects, are socially active.
However, GMs record of reform is not especially
good. Their reputation as a value marketer,
being consumer aware, and socially responsible is
not the same as Saturns reputation. GM seems to
do things because they are forced by the
government or it is politically correct rather
than because it is the right thing to do.
Students will have mixed opinions about
GM. Lastly, is Johnson and Johnson. Similar to
Proctor Gamble, Johnson and Johnson is
generally considered to be an enlightened
marketer. All of the aforementioned principles
of enlightenment are usually followed by this
company. In addition, this company is often
mentioned as one that is liked by its employees
and stockholders alike. Most consumers trust
this company and its products.
108
ISSUES FOR DISCUSSION
6. Compare the principle of sense-of-mission
marketing with the principle of societal
marketing. How do these two concepts relate to
the marketing concept and societal marketing
presented in Chapter 1?
109
ISSUES FOR DISCUSSION
Sense-of-mission marketing means that the
company should define its mission in broad social
terms rather than narrow product terms.
Following the societal marketing principle, an
enlightened company makes marketing decisions by
considering consumers wants and interests, the
companys requirements, and societys long-run
interests. The primary difference may be on
focus--products versus social terms. The
marketing concept can be expressed as "find a
need and fill it, at a profit." The societal
marketing concept is more elaborate "find a need
and fill it, at a profit, taking into account the
consumer's and society's long-run interests." On
the surface, the societal marketing concept
appears so reasonable that every company should
immediately adopt it. Yet, there are both
philosophical and pragmatic objections to this
concept.
110
ISSUES FOR DISCUSSION
The philosophical objection is that this practice
has businesspeople substituting their perceptions
of what is in the societys good, for consumers'
perceptions or the views of elected policymaking
officials. The pragmatic objection is that
marketing managers have no special expertise in
defining and acting in the public interest.
Marketers may not foresee the unintended
consequences of their "socially responsible"
actions. For example, when a cereal manufacturer
reduces a product's sugar content to save
children's teeth, the result may be a
substitution of even sweeter and less nutritious
breakfast products rather than a reduction in
cavities.
111
ISSUES FOR DISCUSSION
Unfortunately, like most matters of social
responsibility in marketing, this question is not
as clear-cut as arguments suggest. Are marketers
supposed to ignore consumers' and society's
long-run interests? Even if consumers are willing
to ignore product hazards, is it moral to sell
the products to them? Is the correct philosophy
give em what they want or let the buyer
beware? It is always interesting to
see how much societal interest students have.
Are they more product-oriented or
social-oriented? What type of firm do they want
to work for?
112
ISSUES FOR DISCUSSION
7. Products can be classified according to their
degree of immediate consumer satisfaction and
long-run consumer benefit. Give an example of a
product in each of the four cells of Figure 20.3.
Prepare a brief strategy statement for marketing
each of the examples you give.
113
ISSUES FOR DISCUSSION
A societally oriented marketer wants to design
products that are not only pleasing but also
beneficial. 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. An example is
cigarettes. Salutary Products have low
appeal but benefit consumers in the long run, for
instance seat belts and air bags.
Desirable Products give both high immediate
satisfaction and high long-run benefits--a tasty
and nutritious breakfast food.
114
ISSUES FOR DISCUSSION
8. You are the marketing manager for a small
firm that makes kitchen appliances. While
conducting field tests, you discover a design
flaw in one of your most popular models that
could potentially cause harm to a small number of
consumers. However, a product recall would
likely bankrupt your company, leaving all
employees (including you) jobless. What would
you do?
115
ISSUES FOR DISCUSSION
Students will find answering this question a
difficult task. Most instructors prefer to make
the assignment and then discuss the answers in
class. The unusual fact about this question is
the number of students who will recommend doing
nothing or covering up. The question is
presented in a difficult way just to demonstrate
this fact. As indicated in the chapter (and as a
general philosophy in this textbook), there is
always one right answer--even if the answer is
very difficult. Is saving a life worth a
bankruptcy? Only the student and their personal
moral and ethical values can answer that
question. For additional thought situations see
Table 20.1. For insights into how the American
Marketing Association views ethical
responsibility see Table 20.2.
116
Practice Quiz

• 1.The first consumer movement took place in the
  1960s. 
• a.True  b.False

2.Environmentalism is a movement among people and
businesses aimed at improving our living
environment.  a.True b.False
117
Practice Quiz

• 3.Green marketing is popular only in Europe. 
• a.True  b.False

4.A company's sustainability vision is its guide
to the future.  a.True  b.False
118
Practice Quiz

• 5.Product stewardship tries to generate more
  profit for the firm at the expense of consumers
  and the environment. 
• a.True  b.False

119
Practice Quiz
6.Which of the following is not one of the
factors that critics cite as leading to higher
consumer prices?  a.high costs of
distribution  b.high advertising and promotion
costs  c.excessive markups  d.new product
development costs
120
Practice Quiz

• 7.Critics charge that marketers regularly change
  their products in order to enforce a policy of
  _____. 
• a.planned product deletion 
• b.planned obsolescence 
• c.new product introduction 
• d.none of the above

121
Practice Quiz
8.The drive for wealth and possessions hit new
highs in the _____.  a.1960s  b.1970s  c.1980s  d.
1990s
122
Practice Quiz

• 9.Social critics claim that marketing hurts 
• a.individual consumers. 
• b.society as a whole. 
• c.other businesses. 
• d.all the above.

123
Practice Quiz
10.When a company overstates a product's
attributes, it is engaging in  a.deceptive
pricing.  b.deceptive promotion.  c.deceptive
distribution.  d.deceptive packaging.
124
Practice Quiz

• 11.Contrary to the claims of marketers, research
  indicates that consumer needs are in fact
  determined by advertising. 
• a.True b.False

12.Under the societal marketing concept,
businesses try to deliver greater value to
consumers by turning deficient products into
pleasing products.  a.True b.False
125
Practice Quiz

• 13.A computer chip that is intended to become
  undesirable before it actually wears out is an
  example of ______________. 
• a.a shoddy product 
• b.planned obsolescence 
• c.a deceptive practice 
• d.an unsafe product

126
Practice Quiz
14.Traditional buyers?rights include  a.the
right not to buy a product that is offered for
sale.  b.the right to expect a product to be
safe.  c.the right to expect the product to
perform as claimed.  d.all the above.
127
Practice Quiz

• 15.Environmentalists are against marketing and
  consumption and are fundamentally anti-business. 
• a.True b.False

16.Sense-of-mission marketing means that the
company should define its mission in _________
terms.  a.social  b.product  c.market  d.politic
al
128
Practice Quiz

• 17.According to critics, the overselling of
  private goods results in _____. 
• a.deferred gratification 
• b.environmentalism 
• c.inflation 
• d.social costs

129
Key to Practice Quiz

• BABAB DBCDB
• BBBDB AD

130
Study Guide

• Multiple Choice
• Select the correct answers for each of the
  questions below. When you are finished.

131
Study Guide

• 1 According to your text, socially responsible
  marketing is important because
• consumer complaints just aren't worth the effort
  it takes to resolve them.
• it makes the employees of the company feel good
  about their marketing activities.
• the marketing concept is a philosophy of service
  and mutual gain.
• it makes consumers feel good about the company.

132
Study Guide

• 2
• Pointing out the high cost of research and
  development efforts for new products like
  prescription drugs or high technology items is
  among the responses marketers provide in answer
  to which of the following criticisms of
  marketing?
• High costs of distribution.
• High advertising and promotion costs.
• Excessive markups.
• Excessive demand.

133
Study Guide

• 3
• In the USA the Wheeler-Lea Act gives the FTC the
  power to regulate
• interstate commerce.
• marketing ethics.
• unfair and deceptive acts or practices.
• competitive advertising of objective product
  benefits.

134
Study Guide

• 4
• When marketing practices are criticized for
  reducing competition, the criticism falls under
  which general area of societal marketing issues?
• Marketing's impact on the company.
• Marketing's impact on the individual.
• Marketing's impact on society as a whole.
• Marketing's impact on other businesses.

135
Study Guide

• 5
• The organized movement of citizens and government
  agencies to improve the rights and power of
  buyers in relation to sellers is called
• Consumerism.
• Liberalism.
• Fascism.
• Individualism.

136
Study Guide

• 6
• In addition to traditional buyer's rights,
  consumer advocates call for all of the following
  consumer rights except
• 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