Lecture Principles of Marketing - Chapter 16: Marketing ethics and social responsibility

Chapter Sixteen
Marketing Ethics
and Social Responsibility


Roadmap: Previewing the Concepts
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.

Copyright 2007, Prentice Hall, Inc.

16-2


Case Study
Nike – Socially Responsible?
Background

Behavior

 Nike has been heavily
criticized for NOT being
socially responsible.
 Accusation: use of
sweatshops and child

labor overseas, and
horrible working
conditions.
 Accusation: targeting
low-income families by
making shoes an
expensive status symbol
for poor urban street kids.

 Code of conduct and sixpoint plan ensures more
socially responsible labor
practices & commissioned
an independent study of
Nike factories abroad.
 Created a huge social
responsibility department
and publishes CRS report.
 Donates more than $37
million to sports programs
and 3% of earnings to
charity.


Criticisms of Marketing







High prices
Deceptive practices
High-pressure selling
Shoddy, harmful, or unsafe products
Planned obsolescence
Poor service to disadvantaged
consumers


High Prices
 Caused by:
– High costs of distribution
– High advertising and promotion costs
– Excessive markups


Deceptive Practices
 Deceptive Pricing:
– Falsely advertising “factory” or “wholesale”
prices or large reductions from phony high retail
list prices.

 Deceptive Promotion:
– Overstating a product’s features or performance,
running rigged contests.

 Deceptive Packaging:
– Exaggerating package contents through subtle
design, using misleading labeling, etc.

High-Pressure Selling
 Salespeople are trained to deliver
smooth, canned talks to entice
purchase.
– High-pressure selling persuades people to
buy goods they had no intention of buying.
– High-pressure selling can occur because
of prizes going to top sellers.
– High-pressure selling is not good for longterm relationships.


Shoddy or Unsafe Products
 Includes:
– Products that are not made well or
services that are not performed well.
– Products that deliver little benefit or that
may even be harmful.
– Unsafe products due to manufacturer
indifference, increased production
complexity, poorly trained labor, and poor
quality control.


Planned Obsolescence
 Refers to:
– Products needing replacement before they
should because they are obsolete.
– Producers who change consumer

concepts of acceptable styles.
– Intentionally holding back attractive
functional features, then introducing them
later to make old model obsolete.


Poor Service to
Disadvantaged Consumers
 Disadvantaged consumers are served
poorly when:
– Poor are forced to shop in smaller stores
where they pay more for inferior goods.
– “Redlining” by national chain stores
occurs in disadvantaged neighborhoods.
• Redlining charges have also been
leveled against insurers, banking, health
care providers and other industries.
– Poor are targeted for “rapid refunds.”


Marketing’s Impact on
Society as a Whole





False wants and too much materialism
Producing too few social goods
Cultural pollution

Too much political power


Marketing’s Impact on Other
Businesses
 Critics charge that a firm’s marketing
practices can harm other companies
and reduce competition.
– Acquisitions of competitors.
– Marketing practices that create barriers to
entry.
– Unfair competitive marketing practices.


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


The right to . . .
1. 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. charge any price for the product, provided no

discrimination exists among similar kinds of
buyers.
3. spend any amount to promote the product,
provided it is not defined as unfair competition.
4. use any product message, provided it is not
misleading or dishonest in content or execution.
5. use any buying incentive schemes, provided they
are not unfair or misleading.


Buyers’ Rights


The right to:
1.
2.
3.
4.

not buy a product that is offered for sale.
expect the product to be safe.
expect the product to perform as claimed.
be well informed about important aspects of the
product.
5. be protected against questionable products and
marketing practices.
6. influence products and marketing practices in
ways that will improve “quality of life.”

Environmentalism
 An organized movement of concerned
citizens and government agencies to
protect and improve people’s living
environment.


Environmental Sustainability
 A management approach that involves
developing strategies that both sustain
the environment and produce profits
for the company.
 Levels of environmental sustainability:
– Pollution prevention
– Product stewardship
– New environmental technologies
– Sustainability vision


Enlightened Marketing
 A marketing philosophy holding that a
company’s marketing should support
the best long-run performance of the
marketing system.
– Customer-oriented marketing
– Innovative marketing
– Customer-value marketing
– Sense-of-mission marketing
– Societal marketing

Enlightened Marketing
 Consumer-Oriented Marketing:
– The philosophy of enlightened marketing
that holds that the company should view
and organize its marketing activities from
the consumer’s point of view.


Enlightened Marketing
 Innovative Marketing:
– A principle of enlightened marketing that
requires that a company seek real product
and marketing improvements.


Enlightened Marketing
 Customer-Value Marketing:
– A principle of enlightened marketing that
holds that a company should put most of
its resources into value-building marketing
investments.


Enlightened Marketing
 Sense-of-Mission Marketing:
– A principle of enlightened marketing that
holds that a company should define its
mission in broad social terms rather than
narrow product terms.

Enlightened Marketing
 Societal Marketing:
– A principle of enlightened marketing that
holds that a company makes marketing
decisions by considering consumers’
wants and interests, the company’s
requirements, and society’s long-run
interests.
• Seeks to introduce desirable products,
rather than those that are deficient,
displeasing, or salutary.


Marketing Ethics
 Corporate Marketing Ethics Policies:
– Broad guidelines that everyone in the
organization must follow.

 These should cover:
–
–
–
–
–
–

Distributor relations
Advertising standards

Customer service
Pricing
Product development
General ethical standards


Marketing Ethics
 What principle should guide companies
and marketing managers on issues of
ethics and social responsibility?
– Free market and legal system
– Responsibility falls to individual
companies and managers
– International marketers face special
challenges