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ETHICS AND SOCIAL

RESPONSIBILITY IN MARKETING

CHAPTER

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

1. Explain the differences between legal and ethical behavior in marketing.

2. Identify factors that influence ethical and unethical marketing decisions.

3. Describe the different concepts of ethics and social responsibility.

4. Recognize unethical and socially irresponsible consumer behavior.

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THERE IS MORE BREWING AT ANHEUSER-BUSCH THAN BEER

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NATURE AND SIGNIFICANCE OF MARKETING ETHICS

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• Ethics

Laws

• Ethical/Legal Framework in Marketing

• Current Perceptions of Ethical Behavior

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FIGURE 4-1FIGURE 4-1 Classifying marketing decisions according to ethical and legal relationships

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Concept Check

1. What are ethics?

A: Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.

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Concept Check

2. What are four possible reasons for the present state of ethical conduct in the United States?

A: (1) Pressure on businesspeople to make decisions in a society with diverse value systems. (2) Business decisions being judged publicly by groups with different values and interests. (3) The public’s expectations of ethical business behavior has increased.(4) Ethical business conduct may have declined.

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FIGURE 4-2FIGURE 4-2 A framework for understanding ethical behavior

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UNDERSTANDING ETHICAL MARKETING BEHAVIOR

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• Societal Culture and Norms

Culture

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MARKETING NEWSNET

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Internet Piracy and Campus Pirates

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UNDERSTANDING ETHICAL MARKETING BEHAVIOR

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• Business Culture and Industry Practices

Business Cultures

Ethics of Exchange

• Caveat Emptor

• Consumer Bill of Rights

• Federal Trade Commission (FTC)

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Federal Trade CommissionIs your online privacy protected?

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UNDERSTANDING ETHICAL MARKETING BEHAVIOR

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• Business Culture and Industry Practices

Ethics of Competition

• Economic Espionage

• Bribes

• Kickbacks

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WEB LINK

The Corruption Perceptions Index

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UNDERSTANDING ETHICAL MARKETING BEHAVIOR

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• Corporate Culture and Expectations

Corporate Culture

• Whistle-blowers

Code of Ethics

Ethical Behavior of Top Management and Co-workers

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FIGURE 4-3FIGURE 4-3 American Marketing Association Code of Ethics

Click on the icon for theAMA Code of Ethics

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UNDERSTANDING ETHICAL MARKETING BEHAVIOR

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Moral Idealism

Utilitarianism

• Personal Moral Philosophy and Ethical Behavior

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FIGURE 4-AFIGURE 4-A Personal moral philosophies

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Concept Check

1. What rights are included in the Consumer Bill of Rights?

A: The rights to safety, to be informed, to choose, and to be heard.

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Concept Check

2. Economic espionage includes what kinds of activities?

A: Economic espionage includes trespassing, theft, fraud, misrepresentation, wiretapping, searching competitors’ trash, and violations of written and implicit employment agreements with noncompete clauses.

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Concept Check

3. What is meant by moral idealism?

A: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

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UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING

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• Concepts of Social Responsibility

Profit Responsibility

• Green Marketing

Stakeholder Responsibility

Societal Responsibility

• ISO 14000

• Cause Marketing

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FIGURE 4-4FIGURE 4-4 Three concepts of social responsibility

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Avon Why do companies engage in cause marketing?

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MARKETING NEWSNET

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Will Consumers Switch Brandsfor a Cause? Yes, if…

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UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING

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Social Audit

Sustainable Development

• The Social Audit: Doing Well by Doing Good

• Turning the Table: Consumer Ethicsand Social Responsibility

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Ronald McDonald House How do companies ‘do well by doing good’?

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ReebokWhy is sustainable development important?

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Concept Check

1. What is meant by social responsibility?

A: Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions.

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Concept Check

2. Marketing efforts to produce, promote, and reclaim environmentally sensitive products are called _____________.green marketing

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Concept Check

3. What is a social audit?

A: A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in the domain of social responsibility.

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DOING WELL BYDOING GOOD

GOING ONLINE

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1. Visit the BSR website. Can you update at least one example in the text related to your chosen topic?

Going Online

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THE FIVE MOST COMMON KINDS OF ECONOMIC

ESPIONAGE

SUPPLEMENTALLECTURE NOTE 4-1

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WHISTLE-BLOWERS:TRUTH AND

CONSEQUENECES

SUPPLEMENTALLECTURE NOTE 4-2

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STARBUCKS CORPORATION: SERVING MORE THAN

COFFEE

VIDEO CASE 4

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VIDEO CASE 4Starbucks

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VIDEO CASE 4Starbucks

FIGURE 1FIGURE 1 Starbucks Mission Statement and Guiding Principles

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1. How does Starbucks’ approach to social responsibility relate to the three concepts of social responsibility described in the text?

VIDEO CASE 4Starbucks

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2. What role does sustainable development play in Starbucks’ approach to social responsibility?

VIDEO CASE 4Starbucks

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FORD AND FIRESTONE: WHO’S TO BLAME?

APPENDIX D CASE D-4

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1. What moral philosophy appeared to guide the decision making at Ford? At Bridgestone/Firestone? Is there any evidence that either company changed its decision-making model as lawsuits mounted?

APPENDIX D CASE D-4Ford and Firestone

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2. Do you see Ford’s handling of the situation surrounding the development, marketing, and subsequent recall as ethical but illegal, ethical and legal, unethical but legal, or unethical and illegal? Why?

APPENDIX D CASE D-4Ford and Firestone

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3. What actions would you recommend Ford take to deal with the aftermath of this situation?

APPENDIX D CASE D-4Ford and Firestone

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Ethics

Ethics are the moral principles and values that govern the actions and decisions of an individual or group.

Ethics are the moral principles and values that govern the actions and decisions of an individual or group.

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Laws

Laws are society’s values and standards that are enforceable in the courts.Laws are society’s values and standards that are enforceable in the courts.

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Caveat Emptor

Caveat emptor is the legal concept of “let the buyer beware” that was pervasive in American business culture prior to the 1960s.

Caveat emptor is the legal concept of “let the buyer beware” that was pervasive in American business culture prior to the 1960s.

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Consumer Bill of Rights (1962)

The Consumer Bill of Rights (1962)is a law that codified the ethics of exchange between buyers and sellers, including the rights (1) to safety,(2) to be informed, (3) to choose, and(4) to be heard.

The Consumer Bill of Rights (1962)is a law that codified the ethics of exchange between buyers and sellers, including the rights (1) to safety,(2) to be informed, (3) to choose, and(4) to be heard.

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Economic Espionage

Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors.

Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors.

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Code of Ethics

A code of ethics is a formal statement of ethical principles and rules of conduct.A code of ethics is a formal statement of ethical principles and rules of conduct.

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Whistle-blowers

Whistle-blowers are employees who report unethical or illegal actionsof their employers.

Whistle-blowers are employees who report unethical or illegal actionsof their employers.

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Moral Idealism

Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

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Utilitarianism is a personal moral philosophy that focuses on “the greatest good for the greatest number,” by assessing the costs and benefits of the consequences of ethical behavior.

Utilitarianism is a personal moral philosophy that focuses on “the greatest good for the greatest number,” by assessing the costs and benefits of the consequences of ethical behavior.

Utilitarianism

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Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions.

Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions.

Social Responsibility

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Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products.

Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products.

Green Marketing

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ISO 14000 consists of worldwide standards for environmental quality and green marketing practices developed by the International Standards Organization (ISO).

ISO 14000 consists of worldwide standards for environmental quality and green marketing practices developed by the International Standards Organization (ISO).

ISO 14000

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Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of oneof its products.

Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of oneof its products.

Cause Marketing

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A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility.

A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility.

Social Audit

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Sustainable development involves conducting business in a way that protects the natural environment while making economic progress.

Sustainable development involves conducting business in a way that protects the natural environment while making economic progress.

Sustainable Development