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ST 520 Responsible Management

Session 8

CSR, marketing and consumers

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Ethical marketing – the 4

P'sProduct

Green marketingSocietal marketing

BOP marketing

Price

Place

PromotionAdvertising

Cause-related marketing

Consumer rights

Other marketing

topics

Agenda

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Product issues

Utility

Health, safety, green marketing

Liability

Planned obsolescence

Eco-conception

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Product issuesUtility

Is it needed? Will it improve people's lives? Does it provide lasting benefits to

society? Traditionally, the real marketing question

is…

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Product issuesUtility

Is it needed?

Is the product effective: will it do what it says it does?

Is "the promise" true?

Orgamism Inc. article: an indictment of big pharma

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Product issuesUtility - content

Is what's in the package…in the package?

The Kellogg's Corn Flakes surprise discovery

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Product issuesSafety

Is the product appropriate?

Is it adapted to the culture?

Ex: Nestle's infant formula African disaster Baby milk action group, UK "… one of the world’s most

widely criticized and boycotted companies."

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Product issuesSafety

Does it have the potential to harm people…or the environment?

Should companies market products that are potentially dangerous?

Or that send mixed messages in terms of values (utility)?

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Product issuesSafety

Does product content or use have the potential to harm ?

Diageo's drink responsibly Drink IQ test

What is responsible drinking?

Is it the company's role to promote it? Pro's and cons'

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Should tobacco companies be allowed to aggressively market cigarettes in Asian and third world countries when legislation and special interest group pressure in their countries makes it more difficult to sell in their own countries?

Do you see any other social responsibility issues regarding the sale of cigarettes?

Product issuesSafety

"Cigarettes are legal and no one forces people to smoke"

- Tobacco multinational spokesperson, late 1990s

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"If a business is managing products which pose health risks, it is all the

more important that it does so responsibly"

BAT sustainability page

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Are GMOs dangerous? U.S. vs. Europe The case for and against

Processed foods: weight, link to cancer?

Fast food nation

Product issuesHealth

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Green marketing AMA: the marketing of products which are considered

safe.

Involves changes in product modification process technology packaging promotion

Lack of standards and consensus as to what constitutes "green" slow growth of green products

In the U.S., according to market researcher Mintel 12% are TRUE GREENS – regularly seek out and buy green

products 68% are LIGHT GREENS - buy green sometimes

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Green marketingSome U.S. figures

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Product issuesLiability

Legal responsibility for damage caused by a product - consumers or manufacturers

"Caveat emptor" - buyer be aware

Warranties

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Product issuesConsumer rights

Consumer

• Buyer beware

• Means to an end

Consumer

• Entitled to respect

• Right to know

• An end in themselves

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Product issuesProtecting the consumer

Government regulations & watchdog organizations

Consumer rights To safety To choose To know, to have complete information To be heard, to complain To full value: get what you pay for, products

perform as advertised To recourse and redress To privacy

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Product issuesLiability and consumer rights

McDonald's hot coffee case

Who is liable?

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Product issuesPlanned obsolescence

Planned short life cycle inciting consumers to replace product

Some mobile phone operators offer incentives to KEEP phones longer.

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Product issuesEco-friendly products

Examples: Puma's clever little bag Waterless car wash

products Yours'?

Eco-conception

Breaking cyclic capitalism: take-make-waste

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Societal marketing

Marketing which aligns consumer satisfaction, company profits, and society's long-term welfare.

Suggests that focusing only on an exchange relationship with customers is probably not enough to sustain long term success.

A marketing strategy should deliver value to customers in a way that improves both consumer's and society's welfare.

SM activities improve companies' image among customers, shareholders, the financial community, and other relevant publics.

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Societal marketingTwo examples

Micro-credit

Responsible tourism

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Societal marketingMarketing financial services to the poor

Micro-financing: The Grameen Bank

What is micro-credit? Pro's and con's

Questions at end of case

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Societal marketingResponsible tourism

Some responsible tourism behaviors Buy local products Be aware of religious and social customs Pay a fair price Take an interest local culture Learn a few key words in local language Dress and behave respectively Limit environmental impact (water,

carbon) …

Responsibletravel.com

What is responsible tourism? (video)

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Pricing issues

Price fixing: a secret agreement between sellers or suppliers Exploits and misleads consumers who have

less power and information Illegal in the EU and the USA

What is a fair price, given operating costs?

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Fair pricingFair trade vs. BOP

FAIR TRADE

Focus: limited number of suppliers in developing countries

Objective: local development

Fair price

BOTTOM OF THE PYRAMID

Focus: maximum number of customers in developing countries

Objective: market share

Low price

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Fair pricing scenario A developing country has discovered some

valuable mineral reserves and is interested in selling exploration rights to its minerals.

This is the country's first international venture in mineral, and you may be able to negotiate a below-market price for its minerals. In all likelihood, your agreement will become the industry pattern for other MNC negotiations.

What will you do?

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Place – distribution

Rights conflict of: traditional small retailers to exist consumers to a low-priced product

Change Potential disruption of traditional distribution

patterns Toys 'R Us Japan example.

Bribery: payoff required to enter a market?

Transportation and logistics of distribution network

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Promotion Ethical issues in advertising

Content Shocking, controversial, indecent People as objects

Intrusive advertising telemarketing and junk mail that invade

personal privacy. Ex: selling advertising lists without

customer approval.

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Controversial content

Benneton ad using dead Bosnian soldier's clothes

Message? Ethical issues

"The photo of a bloody tee-shirt and pair of pants belonging to a young Bosnian soldier killed in battle really hurts. In a real battle, people were more professional - a bullet in the head was enough. I'm not trying to say that you wouldn't have found this kind of thing in a mass grave, but using a military uniform to advertise a product is like a bad war movie. Benetton, you're wrong here! " - Former Bosnian soldier

31Source: Google – Benneton pub

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Promotion Ethical issues in advertising

Psychological-appeal based advertising: Promising experiences which cannot be

delivered Ex: ideals of masculine or feminine

behavior

Reinforcement of stereotypes Use of children, women, and minorities in

advertising. Roles and life styles presented

Manipulative and coercive advertising Advertising to vulnerable consumers. Ex: targeting children, use of subliminal

messages

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Promotion Ethical issues in advertising

Concealment of facts from independent surveys

Deception Claims that are misleading, false, or not easily

understood Not necessarily harmful if consumers are aware of the

practice.

Exaggeration Claims that cannot be supported with evidence Ex: "low-calorie bread will lead to loss of weight"

(how?)

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Promotion Targeting children in advertising

Access to internet monitoring issue.

Children's vulnerability and inability To evaluate accuracy of information To distinguish between games and data collection To understand the potential dangers of interacting with

strangers To resist pressure to buy and make decisions w/o parents

Exposure to questionable content and terminology

One-to-one marketing and manipulation

Ambiguous frontier between learning, entertainment, and advertising

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Promotion Women in advertising

Emphasis on physical beauty and youth

Stereotype – women depicted: As weak, mindless, submissive, helpless As moms cleaning or taking care of

children. As permanently beautiful and slim sex

objects, not autonomous, rational people.

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Dove soap ads counter-attack

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Cause-related marketing

A mutually beneficial collaboration between a corporation and (often) a non-profit organization in which their respective assets are combined to:

create economic and social value connect with a range of stakeholders - consumers, employees, or

suppliers communicate the shared values of both organizations.

American Express preservation initiatives Pioneers in "cause-related marketing" in 1983 campaign to raise

money for the Statue of Liberty’s restoration. Donated one cent to the restoration every time someone used its

charge card. Number of new cardholders grew by 45 %, and card usage increased

by 28 %.

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Avon

The Avon foundation organizes walks to raise funds to fight breast cancer (video).

Also campaigns against domestic violence.

What does this have to do with marketing?

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Body Shop campaigns

Against sex trafficking of

children domestic violence

Finding a cure for HIV

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Tooting your own hornSelf-promotion of responsible behavior

Is it right for an organization to draw attention to its moral conduct?

NO, if the advertising…

… costs more than the action itself Example Philip Morris' "People Campaign": ads ($108 mn.) cost more than donations ($60 mn.) to charity organizations. Source Adbusters 2001

… of moral conduct is perceived as a means to reaching an end of lesser value (profits)