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DOCUMENT DE TRAVAIL 2007-010 ON RESPONSIBLE MARKETING, QUANTUM CONSUMERS AND SOCIAL CANARIES

Stéphane GAUVIN

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ISBN – 2-89524-290-9

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03-2007

On responsible marketing, quantum consumers and social canaries

Stéphane Gauvin Professeur titulaire

Département de Marketing, Université Laval, Ste-Foy, Québec, Canada G1K 7P4 +1 418 656 2131 x2158 (voix) / +1 (418) 656 2624 (fax)

stephane.gauvin@fsa.ulaval.ca

Abstract: Responsible marketing has two meanings. When we mean marketing as a set of managerial tools, responsible marketing refers to the instrumental responsibility of a discipline, i.e. that the tools do not cause predictable harm in the hands of a well intentioned organization. When we mean marketing as a managerial activity, responsible marketing means that the organisation manages the tension between its proximate and distant stakeholders, making sure that the value delivered to proximate stakeholders is not merely taken from distant ones.

In this paper I also argue that marketing, as an instrument, may be flawed. While the essence of marketing is to deliver value to consumers, our fixation on the concept of customer satisfaction neglects the potential for tension in the mind of ‘quantum consumers’ facing conflicting needs. Similar neglect of distant stakeholders’ interests may compromise the organizations’ ability to deliver sustainable value to its targeted stakeholders.

KEYWORDS: RESPONSIBLE MARKETING, SOCIETAL MARKETING, MODELS OF CONSUMER, MODELS OF SOCIAL ACTIVISM

Sommaire: L’expression marketing responsable a deux significations. Lorsque le mot marketing est utilisé pour désigner un ensemble d’outils de gestion, marketing responsable fait allusion à la responsabilité instrumentale de la discipline, i.e. que ces outils ne provoquent pas de dommages prévisibles lorsqu’ils sont utilisés par une entreprise bien intentionnée. D’autre part, lorsque le mot marketing est utilisé pour désigner une activité de gestion, marketing responsable veut alors dire qu’une organisation gère activement la tension qui peut exister entre ses parties prenantes proximales et distantes, faisant en sorte que la valeur qui est offerte aux parties prenantes proximales n’a pas tout simplement été prise chez les parties prenantes distantes.

Dans cet article j’indique que le marketing, considéré comme un instrument, est vraisemblablement vicié. Bien que l’essence même de notre discipline soit de créer de la valeur à l’intention des clients d’une organisation, notre fixation sur une conception étroite de la satisfaction du client néglige l’existence d’une tension potentielle dans l’esprit du ‘consommateur quantique’ qui fait face à des besoins conflictuels. De même, ignorer les intérêts des parties prenantes distantes peut compromettre la capacité d’une organisation de livrer durablement de la valeur aux parties prenantes ciblées.

MOTS-CLÉS : MARKETING RESPONSABLE, MARKETING SOCIETAL, MODÈLES DE CONSOMMATION, MODÈLES D’ACTIVISME SOCIAL

December 2006

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1 INTRODUCTION

Every semester students ask me about the nature of marketing. Can marketing create needs? Is it contributing to the destruction of our environment? Every semester I explain that marketing is value neutral: our objective is to provide consumers with value – consumers decide what has value. I have a slide with the definition of what marketing is, “officially”:

Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. (AMA 2004)

I usually add the standard textbook (e.g. Shapiro et al. 2005) argument that freedom of choice is a basic value of our society; that we must not confuse unethical behaviour by rogue organizations who will defraud, deceive or otherwise sell the illusion of value, with the essence of marketing; that we must provide all relevant information and education to ensure that consumers make the best decisions possible – part of this task belongs to marketing organizations, part to society and part to consumers themselves.

In fact, one can argue that marketing provides pragmatic ethical guidance to organizations that are driven by their profit obligations. Maximizing profit without the marketing imperative is an invitation to unethical behaviour. Delivering value for a profit, however, is a good thing for the consumer as an individual, and assuming that society has properly arbitraged tensions between individual freedom and collective well-being, socially desirable as well.

Yet, questions are becoming more insistent. The explanation outlined above may not be a proper answer to concerns such as those raised by the fear of global warming (e.g. Gore 2006) or by the obesity epidemics (e.g. Flegal et al. 1998) for reasons I will introduce later. The essential question I consider in this paper is whether marketing is ‘responsible’ or if, instead, there is a fundamental flaw in being focused on the desires of individual consumers without explicit care being given to self-destructive behaviours and externalities.

First, I examine the question of normative ethics and the ideas that are behind the concept of societal marketing. Then I review the meanings of responsibility. I conclude that the literature is essentially concerned with normative issues relevant to the moral responsibility of actors while giving very little if any consideration to the instrumental responsibility of marketing as a discipline consisting of a theoretical body, a set of techniques and tools, and the role it plays in shaping the morals of economic agents. I then examine the concept of ‘value’ and of its problematic determination, as it is provided to consumers and to society. I argue that marketing, as a discipline, bears an instrumental responsibility which may explain why a morally responsible organization can become a morally liable organization nonetheless. I outline two ideas: ‘quantum consumers’ to underline the conceptual problems surrounding the idea of offering value to a consumer; and ‘social canaries’ to capture the process by which a society will impact the responsibility of an organization.

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2 SHAREHOLDERS, STAKEHOLDERS, CONSUMERS AND SOCIETY

Any consideration of ideas such as corporate social responsibility (CSR), corporate ethics, societal marketing and related questions is a difficult undertaking. Innumerable perspectives can be used to advocate on several disjoint planes. While scholars are genuinely concerned by the welfare of all members of our societies they obviously disagree on the means to achieve this goal. Simply put, when we hope for responsible marketing, we mean responsible to whom and for what?

In their review on past conceptualizations of CSR, Maignan and Ferrell (2004) infer four perspectives: CSR as social obligation, CSR as stakeholder obligation, CSR as ethics driven and CSR as a managerial process. It is, perhaps, a useful taxonomy of the extant literature, but a taxonomy does not provide a sound foundation unto which the normative ethics of CSR can rest. According to Hasnas (1998), only three normative ethical frameworks are real contenders for the attention of business managers: the shareholder framework, the stakeholder framework and the social contract framework.

2.1 The Shareholder Framework for CSR

The shareholder framework is grounded on the theory of free markets and mostly concerned with mechanisms by which inefficiencies can be fought in modern economies. The basic argument revolves around the assumption that central planning is generally less efficient than the allocation of resources relying on price signals. Firms compete to create value at least cost, consumers indicate what they want through their purchases, which is assumed to be socially desirable. Regulations will set boundaries to the behaviour of profit maximizing enterprises, making it illegal to use force, deception, expose consumers, employees or members of our society to hazards, etc. and take care of the negative externalities (i.e. costs borne by third parties) such as the cost of pollution control.

The key feature of the shareholder framework is that management’s fiduciary obligations are exclusively towards the shareholders. Management is hired to maximize shareholders’ wealth and should not be concerned with the welfare of other constituents when interests collide, unless the law imposes a constraint. If and when management is concerned by the wellbeing of their employees, their customers or other constituents, it would be because they made the determination that it was in the best interest of their shareholders.

This framework is simple to understand but the idea that selfish behaviour bounded by law contributes to the harmonious development of society is a tough sell in academic circles. Gaski (1985, 1999) is one of the rare examples in our field to make such an attempt, which earned him the adjective “startling” from Abratt and Sachs (1988) for his first paper and a brutal critique, on his second attempt, from Smith (2001: 3) “It is tempting to simply dismiss Gaski’s claims as bizarre or in jest. How could marketing ethics possibly be “totally redundant?”

However distasteful it may look on the surface, the shareholder view of CSR should not be dismissed offhand. It is implicit in the vast majority of the published empirical work in marketing, where the impact of whatever tactical or strategic orientation on financial performance is modeled, even in CSR related applications in which the researchers state their adhesion to a competing normative framework (e.g. Sen and Bhattacharya 2001). Business school students are told countless

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number of times, in particular by their professors of finance, that the purpose of the firm is to maximize value to the shareholders. The behaviour of management is strongly biased towards the welfare of their shareholders via incentive packages (i.e. stock options) and by law:

The Anglo-American {legal] model takes the view that the exclusive focus of corporate governance should be to maximize shareholder value. To the extent that shareholder wealth maximization conflicts with the interests of other corporate constituencies, those other interests should be ignored, unless management is legally required to take those other interests into account. (Macey and O’Hara 2003: 91)

2.2 The Stakeholder Framework for CSR

It is probably fair to say that academia is more inclined towards a stakeholder model of the firm. The tradition originates in Freeman’s seminal book (1984) which conceived of the firm as a contractual nexus of a variety of interests – shareholders, employees, suppliers, customers, the local community and so on. This perspective created such an enthusiasm that it the span of a decade it became difficult to tell what exactly was meant by “stakeholder approach.” In 1995, Donaldson and Preston greatly contributed to sharpen the theory.

An important contribution of Donaldson and Preston has been to make the distinction between different facets of the stakeholder view of the firm (descriptive, instrumental, normative, etc.) As a descriptive theory, the stakeholder approach highlights the fact that “the corporation is a constellation of cooperative and competitive interests possessing intrinsic value (p. 66)”. As an instrumental theory, “it establishes a framework for examining the connections, if any, between the practice of stakeholder management and the achievement of various corporate performance goals (p.67).” This is how, for instance, academia started developing rich models of corporate performance as a function of the support received from various stakeholders, and how management could influence performance, through these stakeholders’ allegiances, these being influenced by various means and moderated by the dance of interrelated interests.

More importantly for our purposes, Donaldson and Preston argued quite convincingly that the stakeholders view is on course to overtake the shareowners (sic) view of the firm, both because a stakeholders view has been shown to be descriptively superior, as it provides a richer modeling context, but on moral grounds as well. The essence of the normative argument is that all stakeholders contribute their own resources and have their own vested interests in relation to the corporation such that one could not argue convincingly that the shareowners’ resources and interests dominate others’. If shareowners have property rights on the capital they bring, the stakeholder view argues that other stakeholders also have legitimate rights.

Donaldson and Preston show that this view is having an impact on legal doctrine:

The relevant portion of [Principles of Corporate Governance, published by the American Law Institute] begins by affirming the central corporate objective of "enhancing corporate profit and shareholder gain," but it immediately introduces qualifications: "Even if corporate profit and shareholder gain are not thereby enhanced." the corporation must abide by law and may "take into account ethical

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considerations" and engage in philanthropy (Sec.2.0l(a)(b); 1992:69). (Donaldson and Preston 1995: 82)

This being said, the stakeholders view provides ambiguous guidance. First, one may agree that stakeholders have rights, but various stakeholders may well disagree on what these rights may be and someone has to arbiter these views, eventually. Second, there are no clear boundaries on the definition of stakeholders. If the designation belongs to the stakeholder himself, chaos will follow. If anyone, including management, may define an arbitrary consideration set, normative applications become suspicious. If the answer is determined empirically by applying the rule of power, unfair resolutions are certain to arise.

This is why tenants of the stakeholders view ground their normative analysis on more stable footing. Because the utilitarian approach is all but fatally wounded by a wide array of criticisms, an extension of the social contract theory has emerged as the most promising avenue.

2.3 The Social Contract Framework for CSR

Social contract theory has been shaped by figures such as Hobbes and Rousseau, who considered the question of the legitimacy of governments. According to their analyses, a social contract had to exist between the government and citizens in order to determine the rights and duties of both in modern societies.

Donaldson and Dunfee (1999) applied a similar approach, considering corporations instead of governments, and asking the rhetorical question of what are the terms of the social contract by which society gives certain rights to corporations in exchange for certain benefits. The short answer is that corporations are given the right to exist and prosper in exchange for the additional welfare that they provide to society.

One crucial difference between the social contract framework and the stakeholder framework is that the relevant stakeholders are clearly identified.

[W]hen fully specified, the social welfare term of the social contract requires that businesses act so as to 1) benefit consumers by increasing economic efficiency, stabilizing levels of output and channels of distribution, and increasing liability resources; 2) benefit employees by increasing their income potential, diffusing their personal liability, and facilitating their income allocation; while 3) minimizing pollution and depletion of natural resources, the destruction of personal accountability, the misuse of political power, as well as worker alienation, lack of control over working conditions, and dehumanization. (Hasnas 1998: 30)

The social contract framework is becoming the dominant paradigm because of its considerable intuitive appeal, of its grounding in related work, and the real possibility of unravelling the complexities of normative ethics. In addition to the welfare consideration, Donaldson and Dunfee develop the basic ideas of the fairness model constituted of moral-free spaces where the terms of the social contract between society and corporations may be whatever seems acceptable to the parties, bounded by a thin set of hypernorms that have a universal scope. Hasnas summarizes these norms in the following terse set, quoting Donaldson (1982):

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[T]here seems to be general agreement that the least they require is that business ‘avoid fraud and deception,...show respect for their workers as human beings, and... avoid any practice that systematically worsens the situation of a given group in society’ (Hasnas 1998: 31)

I will conclude this section on three observations. First, it may be of interest to note that the regulatory regime in the Franco-German legal doctrine is precisely that of the social contract theory (i.e. management is liable towards shareholders, employees, customers and the local community, and must work to further their interests).

Second, pragmatically, these three frameworks converge. We could think of the Anglo-American regulatory framework as being the incarnation of a social contract favouring, rightly or not, the pre-eminence of the shareholders’ interests and relying on regulatory safeguards to prevent abuses in order to maximize efficiency. In other parts of the world, other consensuses have formed. And noting that the Anglo-American regulatory framework arguably moves towards a new equilibrium somewhat closer to the European (Continental) model and vice-versa is a telling sign that efficiency and fairness concerns actively shape our societies.

Third, these frameworks differ markedly from the usual discourse on marketing ethics with the notable exception of Dunfee et al. (1999) who have introduced the Integrated Social Contract Theory to our discipline. Their article provides an excellent review of the several ethical frameworks that have been applied to marketing (e.g. Laczniak and Murphy 1993). They conclude that classical normative ethical frameworks offer a useful list of considerations to diagnose potential unethical behaviours, but are impractical, contradict each other at times, are under attack by philosophers and therefore provide little guidance in reaching a decision.

It is nonetheless necessary to briefly review this literature to understand the weaknesses of the idea of societal marketing and, perhaps, find new ways to address these concerns.

2.4 The “societal marketing” and the “quality-of-life” perspectives

Societal marketing and the related quality-of-life (QOL) approach dominate the discussion of ethics in the field of marketing (see Layton and Grosbart 2006 for a review, Jeurissen and van de Ven 2006 for a review of recent books on the subject, Lavidge 1970, Fisk 1973, Kotler 1972 and 2004, Sirgey and Lee 1996 for representative work). The literature builds on the common ground that the practice of marketing is problematic (e.g. Farmer 1967). One concern is that consumers may not make choices that are in their best interest (e.g. Kotler 1972, Sirgey and Lee 1996). Another is that rational individual choices may not be in the best interest of society (e.g. Fisk 1973). A third concern is that marketing is concerned with a narrow, materialistic, understanding of welfare such that what appears to be in the consumers’ best interest is, in fact, potentially damaging (e.g. Dawson 1980, Malloy 2000).

These issues are fundamental. If marketing is concerned with delivering value to consumers, societal marketers appropriately question the assumption that consumers alone can make the determination of what is valuable. The problem with this approach however, is the mistaken conclusion that marketers should fill the gap. I now briefly examine the three concerns identified above.

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2.4.1 Desires vs interests

Kotler (1972) wrote that business should focus on consumers’ interests rather than on their desires, giving several examples where immediate desires presumably run counter to long run interests (large cars, junk food, over packaging, cigarettes and alcohol). This idea leads to the Quality of Life (QOL, ex: Sirgey and Lee 1996) marketing perspective where marketers are encouraged to consider the wellbeing of their consumers rather than their expressed desires. This view of responsible marketing is problematic.

First, it assumes that the marketer would be in a better position to make an enlightened decision than the consumer, but does not provide a convincing explanation as to why this should be the case. A well known possibility is that there are information asymmetries, i.e. the seller knows more than the consumer. But one would assume that a benevolent marketer would simply provide all relevant information to consumers, so the only reasons why a consumer would engage in self destructive behaviours would have to be either a deficiency in information processing capabilities, such that the consumer is unable to make a proper decision, or because of a difference in preferences such that the marketer disagrees with the consumer on what is the best course of action.

Recognizing differences in preferences is an essential feature of marketing. It is evident that marketers will often disagree with the choices made by their customers, just as consumers will disagree with choices made by other consumers. Disagreements may raise difficult questions as what is a responsible, healthy and long life for one, may be a boring, empty and wasted life for another. But who is to decide for whom? Our society usually considers that freedom of choice is a fundamental right and will impose limits on this freedom only when it impinges on others’ or in severe cases of self-destruction. But more importantly, and for good reasons, our society will not allow one party to impose his will on another. If a consumer is seen as being fit to make decisions, he should be free to choose within the confines of socially defined boundaries. If a consumer is unfit (ex: minor, incapacitated adult), formal procedures have been devised in order to prevent abuse.

Second, a paternalistic approach would be impractical in a market economy. If one marketing organization stops providing for something the market wants, demand will go elsewhere unless all marketing organizations agree not to provide for these wants. The decision escapes the realm of a single marketing entity and requires social consensus.

Business may be justified to not serve a market against its conscience. Business may also voice concern. But whether this will or will not be in the best interests of consumers is a matter that consumers, as individuals and as a society, should answer on their own.

This is not to say that business can therefore act carelessly, as failing to disclose negative long run effects and even not researching enough such possibility would be construed as negligence. But these obligations are spelled out by regulations and do not require the conceptual platform of societal marketing.

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2.4.2 Individual vs collective welfare

A widely held concern is that marketing engenders negative externalities, such as pollution, that are detrimental to society. The problem has several variants that I will summarize later. For the moment I will only point out that since business does not serve ‘society’ as such, but serves individual people or organizations, the problems of paternalism would apply here as well.

There is one obvious difference however – in providing consumers with value, an organisation may have an adverse impact on third parties who cannot simply put a stop to the exchange relationship as if they were customers. In the context of the normative frameworks outlined above, aggrieved third parties will have to rely on the safeguards of law, social activism and/or alignment of interests with influential stakeholders in order to win the day.

This concern of societal marketers appears to be valid and may or may not require that we make a formal difference between marketing (providing value to consumers in a way that benefits stakeholders) and societal marketing, based on which stakeholders we believed to be covered in the formal definition of marketing. Under closer examination however, this claim seems to have very limited application because it could hardly mean that marketing organizations should think of themselves as being endowed with the power of arbitrating conflicting interests. If, for instance, a gasoline lawnmower is perceived as a convenient way of taking care of a lawn by some and as an obnoxious source of pollution by others, who will resolve the dilemma?

There could be, however, a strong case for an enlightened marketing practice in which the scope of market is broad enough so as to include concerned third parties. Rather than myopically create value as it is measured in the eyes of the consumer, the focus should be to create value to society as a whole. The idea is simple – if a business organization destroys more value amongst third parties than it creates in the target market, regulation and litigation are likely to put an end to such practice anyway. Just as the marketing concept is saying that the pursuit of profit is sustainable only if consumers perceive value in what is offered, the societal marketing concept is saying that consumer value is sustainable only if society as a whole is gaining. It is in the consumers’ interest that their consumption be socially sustainable, and therefore in the business interest. This logic may seem trivial, but because it offers pragmatic guidance to management and may not be obvious from the standard marketing point of view, it is arguably an important idea.

2.4.3 A different kind of society

The third type of concern is much broader in scope. In essence, authors such as Dawson (1980) say that marketing is fundamentally flawed because it focuses myopically on one class of needs, material needs, neglecting ‘human values.’

It is fair to argue that material goods make a limited contribution to wellbeing. It is also quite remarkable that the argument is so often misconstrued. As a case in point, Karl Polanyi’s Great Transformation chronicles how society has transformed itself, in the wake of the Industrial Revolution, from a society governed by tradition to a society governed by prices. The key insight generally attributed to Polanyi is that markets became ‘disembedded’ from society. His work is generally used to illustrate why and how social institutions interfere with the utopia of a free

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market. For instance, Stiglitz’s forewords to the 2001 edition (Polanyi 2001) state clearly that modern economics has taken such arguments into consideration:

“Today there is no respectable intellectual support for the proposition that markets, by themselves, lead to efficient, let alone equitable outcomes. Whenever information is imperfect or markets are incomplete – that is, essentially always – interventions exist that in principle [emphasis in the original] could improve the efficiency of resource allocation. We have moved, by and large, to a more balanced position, one that recognizes both the power and the limitations of markets, and the necessity that government play a large role in the economy, though the bounds of that role remain in dispute. (p. viii)”

Arguably, most economists have interpreted Polanyi’s work in this way – social institutions will resist market forces whenever they threaten the interests of a significant fraction of their constituents. In a broadcast prepared by Cayley (2005), Fred Block, a respected economist who was Polanyi’s graduate student, says that in his view Polanyi was arguing for strong social regulations that would restrict the utopian view of a self regulated free market, and that ultimately, this means that individuals must act responsibly to send the proper signal to regulating bodies. But quite interestingly, Kari Polanyi-Levitt, an economist, director of the Karl Polanyi Institute and the daughter of Polanyi, says that her father meant something more radical, i.e. that a market society is irremediably different from what we had seen before and that no amount of regulation could change that:

“The radical edge, ultimately, is that there has never before been an economic organization of society which is based on individual gain, or the fear of individual hunger, as was instituted in the 19th century, (…) people are socialized and forced and molded into having to act as producers and consumers within the market system and we are victim of this, but that does not mean to say that there is anything natural about this or that indeed this can continue. (Cayley 2005, episode 5: 48:00-48:46)

What is striking is that two respected intellectuals very close to Polanyi interpret his work differently, one as to mean that market societies must be regulated, the other as to mean that market societies have transformed humankind in a negative manner.1 A thoughtful discussion of this question is without question beyond the scope of this paper. Suffice it to say that the notion that there is a continuum between free-market and socialism is naïve and that there are numerous alternative ways in which societies can, and maybe should, organize themselves.

I do not wish to dismiss the societal marketing perspective, because the concerns that are addressed by this school are very real. Yet, if we hope to make progress, we must recognize the fact that marketing is practiced in regulated market economies. Ignoring this reality makes it easier to dismiss the whole idea of responsible marketing. In the next section I use two well known examples to identify what may be valid flaws in the responsible practice of marketing.

1 I would tend to agree with this second interpretation. The book in which Polanyi first expressed these views is entitled The Great Transformation. It clearly makes the point that the very nature of human exchanges has been changed to accommodate the technological innovations of the Industrial Revolution.

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2.5 Obesity and Global warming – anything different?

2.5.1 Quantum consumers

Marketing has often been accused of being manipulative. This has been at the center of the legal battle against the tobacco industry, where it was argued that targeting minors is unfair, that advertising tobacco in general is deceptive, that the product had been deliberately designed to be addictive, etc. (e.g. Rabin 1992). Similar observations are made today about the fast food industry (e.g. McCann and Haltom 2004, Munger 2004, Rotgeld 2005, Weber 2006).

This, in and of itself, is not a condemnation of marketing as an organizing principle, but an illustration of the fact that means can be used to achieve a variety of ends.

But what if the question were framed differently? What if it we were asking whether the obesity pandemics is a predictable consequence of the marketing principle? What if we ask ourselves if a benevolent, socially responsible, organization operating under the marketing principle of delivering value to customers will inadvertently harm them in a predictable manner? We must not hold the marketing principle liable for unforeseen side-effects, but we should certainly reflect on the possibility that the marketing principle is irremediably flawed.

The general scenario could be something like this: the food industry, when it researches consumers’ preferences, identifies strong demand for ‘tasty’ food (i.e. high salt, sugar, fat contents). It develops a portfolio of offerings that are well received. An effective marketing mix is designed to raise awareness to the fact that a satisfying solution to consumers’ preferences exists. And if the industry does its job well, undesirable side effects occur. Stated more generally, what if marketing techniques used to satisfy a specific need predictably disrupt consumers’ equilibrium in a way that requires significant efforts to restore it?

In a sense, McDonald’s2 is not contributing more to the obesity pandemics than generations of grandmothers baking scrumptious desserts. To be sure, there are differences: grandmothers are seeking smiles of approval and affection, while McDonald’s seeks money and brand loyalty; grandmothers work on a small scale, McDonald’s on a global scale, etc. Yet, it can be said that both work towards providing satisfaction. Both are hugely successful (albeit grandmothers’ success is not visible on the stock exchange). Arguably, McDonald’s and other industrial participants in the food industry are in fact more successful because large organizations work systematically, scientifically, at improving their ways of producing satisfied customers for the benefit of their stakeholders.

A parallel might be drawn between the dark side of success in marketing and what happens in the field of medicine. The medical profession is undoubtedly concerned with the wellbeing of patients, yet the instruments at the disposal of caregivers have become so sophisticated in a limited scope as to, perhaps, cause more suffering than wellbeing. In a disturbing paper, Solomon et al (1993) concluded that:

2 I refer to this particular organization simply because it is well known and the target of litigation. I do not wish to be interpreted as singling out this organization because of its presumed negative impact on society.

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Almost half (47%) of all respondents and fully 70% of the house officers reported that they had acted against their conscience in providing care to the terminally ill. [… M]any physicians and nurses were disturbed by the degree to which technological solutions influence care during the final days of a terminal illness and by the undertreatment of pain.

A shift in attitude has arguably occurred as pain management is now a leading concern of caregivers, patients and family (Steinhauser 2000), which does not mean that end-of-life decisions are easy, as moral judgements may conflict among concerned parties or with regulations (Meisel 2000, Annas 2005).

This illustration shows however that it is certainly conceivable that marketing could be detrimental to consumers’ interests in the hands of ethically responsible organizations, but one more idea must be addressed. If consumers voice their dissatisfaction, there should be no ethical problem as it would be clear to marketers that consumers are ‘in pain’. The problem is that marketers may not listen to the proper signals.

A food company focuses (appropriately) its efforts on delivering satisfaction on the food-related dimensions. In doing so it ignores the fact that consumers are multi-dimensional beings riddled with conflicting goals and desires. Eating a ‘satisfying’ amount of ‘tasty’ food may conflict with the goal of living a long and healthy life, the goal of looking good in a world where ‘thin is in’, etc. If a marketer focuses on maximizing satisfaction on the quantity and taste dimensions of a food product, it will pressure the consumer along the lines of his conflicting goals in a way reminiscent of caregivers trying as best as they can to prolong life.

The problem is complicated by the fact that while we generally assume a rational decision maker who will resolve conflict in a desirable manner, it could be more appropriate to assume what I like to call a ‘quantum consumer’. A quantum consumer is animated with dynamic, conflicting preferences such that an effective marketing organization may end-up energizing a particular desire over and above a critical level that will trigger action, but at the price of accumulating tension in the consumer’s value system.

2.5.2 Social canaries

The global warming example raises another set of questions. Examples of unsustainable development are often met with the aphorism that what is unsustainable will not be sustained3. The general idea involves rising prices as a resource such as oil becomes scarcer, which will tend to curb demand on the one hand and provide incentives for alternative resources on the other and a new equilibrium will be reached. One could hear about Malthus’ prediction of famine on a massive scale as he forecasted population growth that could not possibly be matched with the 18th century food production technology. These predictions never materialized. Quite the opposite happened in fact: not only did technological advances improve the supply of food in the

3 A quote generally attributed to Herbert Stein, former chair of the Council of Economic Advisers under presidents Nixon and Ford

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developed world, but the demographic expansion is also slowing to such an extent as to raise concern over the shrinking base of the age pyramid.

While it is certainly true that the predictions of large scale catastrophes are often so alarmist as to discredit their authors, there is room for genuine concern as saying that a new point along the equilibrium curve does not mean that it will be desirable, nor does it mean that reaching this new point will not be painful. I suppose that a fairly convincing argument can be made that society will naturally gravitate towards socially more desirable outcomes as social forces express themselves, but just as someone who has learned that he is victim of cancer cannot turn the clock backwards to amend his lifestyle, society must deal with the fact that some technologies may cause terminal damage, such as nuclear weapons. What is unclear is whether society can successfully regulate terminal technologies as in both cases (nuclear proliferation and global warming) solutions arguably exist (e.g. Bunn 2003, Keith 2000).

The proper question would therefore seem to be whether or not marketing can be conceived as having the character of a terminal technology, whose effects are either undetectable until it is too late, or obvious yet so powerful as to be irremediably destructive when unleashed.

While I certainly agree that marketing can be used in destructive ways by malevolent individuals or organizations, I would tend to assume that society has strong safeguards and that reasonable vigilance, inducing responsible behaviour, should be expected. Allowing for the occasional deviant causing circumscribed damage, it seems ridiculous to conceive of a wanton CEO who would rely on marketing to suddenly destroy the world as we know it.

It also seems preposterous to argue that, surreptitiously, marketing will consume society irreversibly – but since everything is surreptitious to the careless, responsible marketing should pay attention to ‘social canaries’. Canary, the bird, was used in coal mines as an early warning system for the presence of inappropriate levels of methane. When the chirping stopped, miners knew that there was a high risk of explosion. Canary, the social activist, may be used as an early warning system for the presence of inappropriate levels of marketing. Unlike the bird, social activists make more noise as the level of inappropriate marketing is increasing and the challenge is to identify the reasonable course of action as activists have the unfortunate tendency to frequently voice concern.

3 THE MEANINGS OF RESPONSIBILITY

There are several meanings to the word responsibility. Goodpaster and Matthews (1982) suggest three meanings (causal, rule following and decision-making). Williams (2006) observes that there is no consensus on ways to apprehend the question of responsibility, and that relevant areas of inquiry include moral agency, retrospective responsibility, prospective responsibility, and virtue. I think that a useful way to proceed is to consider the elements of Figure 1.

The first meaning of responsibility is that of causation, as in ‘the sun and the moon are responsible for the tides’. There is no implication of right or wrong. There is no intent. It just is. This is not to say that there is neither good nor bad. The sun makes plants grow (good) and provokes sunburns (bad). This is what I could have in mind when I consider the meaning of responsible marketing, using the word marketing as a noun, a ‘thing’ that ‘is responsible’ for causing effects.

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We, scholars, professors, businesspersons and consumers, have a role to play in the design of marketing as a tool, and therefore may bear responsibility in another sense: responsibility as liability. Just as a manufacturer may be held responsible for selling hazardous products to consumers, scholars could be held liable for putting a ‘defective’ theory in the hands of well intentioned users. This would be marketing’s instrumental responsibility.

Figure 1 Elements of responsibility

Causation

Liability(retrospective)

Agency(prospective)

Liability(retrospective)

Agency(prospective)

Instrumental

individual

collective

individual

collectivesocial

legal

moral

social

legal

moral

Control

Virtue

The second type of responsibility refers to the control an agent has over some outcome. Whereas the sun has no control over the tides and its side effects, a person is thought to have some degree of free will, and it is the careful exercise of this free will that is at the heart of CSR. That is what we mean when we say ‘responsible marketing’ where marketing is a verb. An important idea here is that freedom and responsibility go hand in hand, and in exchanges, if one party takes full responsibility it will be at the expense of the other’s freedom. This is why we usually consider two sides of responsibility.

At the risk of oversimplifying, we can consider one perspective where the rule is to do no harm (liability), and another where we mean to act in the best interest of the principal (agency). Bearing responsibility in a car accident refers to the liability that one party has towards the other, either through malevolent intent, negligence or, in some cases, strict responsibility (i.e. a party is held liable for damages towards another even in the absence of negligence or intent). Bearing responsibility, say, as an impresario or as a physician, refers to the agency that one party must carefully exert on behalf of others, generally acting in the best interest of the principal.

Responsibility, as it supposes free will, is generally assigned to the individual person and whether a corporation is, philosophically, a potentially responsible moral person is controversial (see Risser 2006). Goodpaster and Mathews (1982) argue that corporations must be held morally responsible because individuals, even if they retain some responsibility, are not entirely free to exert control. French (1984) applies the criterion of Corporate Internal Decision Structure (CIDS). When such structure exists, responsibility can be assigned to the corporation itself. These structures are designed to make good on corporate intent, and moral judgments can be made on corporate virtues, such as integrity (French 1996). Alternate views would claim that the presence of CIDS is not necessary as its absence could be interpreted as negligence.

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Individuals within organizations and CIDS are informed on the ethics of their actions by three sources: the law, social judgment and morals. Moral, social and legal considerations are only partially related, and certainly not to be ordered on a scale ranging from the minimum you should do (ex: legal considerations) to the best you could do (ex: moral considerations). Laws are nothing more than the expression of the intent of a state legislature, at some point in time. Laws can be utterly immoral; they can go expressly against social judgment – visionaries will vote for laws that eventually become recognized as desirable by society (e.g. abolishing slavery), utopians will vote for laws that will ultimately fail (e.g. imposing prohibition) and tyrants will legalize whatever injustice and it would be irresponsible on two counts (social and moral) to obey them. The legal system may also be used to shape social judgment ‘inadvertently’ (i.e. social activists use existing laws in new, unintended, ways) (McCann and Haltom 2004).

Finally, responsibility can refer to the nature of a person, as in this is a responsible person (e.g. Williams and Murphy 1990). This is to make a distinction between a person who would be accidentally liable despite benevolence and due diligence and another who might be accidentally ‘not liable’ despite malevolence or negligence.

At this point it is useful to summarize what has been said in a few compact propositions:

Proposition 1a: Marketing is a set of managerial tools. In this sense, responsible marketing means that instruments work as intended and will not cause undesirable, predictable, side-effects.

Proposition 1b: As there is no corporate decision structure to shape these instruments, marketing scholars bear individual moral responsibility in order to search for the possible existence of such flaws and to inform society of their existence if they come to be known. A reasonable argument can be made that such flaws exist.

Proposition 1c: One such flaw is the way in which consumer decision making is modeled. Marketing, because it advocates the creation of value, is unlikely to lead to its destruction at the individual level. However, because it pursues the narrowly defined goal of maximizing customer value under the simplifying assumption that needs are independent, just like the practice of medicine by well intentioned caregivers can harm patients, the practice marketing by well intentioned business organizations may harm consumers.

Proposition 1d: Marketing focuses on the needs of an organization’s proximate stakeholders. A valid definition of societal marketing would include more distant stakeholders in the analysis, in such a way as to insure that offering value to a subset of society leads to the net creation of value rather than to a transfer from distant to the benefit of proximate stakeholders.

Proposition 2: Organizations use marketing to further their interests. In this sense, socially responsible organization means that the organization has taken formal steps within its CIDS to make sure that it complies with the obligations of the social contract to which it gave its implicit consent.

Proposition 2b: An organization should always practice marketing responsibly. Therefore, a claim that it practices responsible marketing should be construed as to mean that it practices en enlightened kind of marketing, i.e. societal marketing, as otherwise it would be a pointless declaration.

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4 VALUE TO ME, VALUE TO THEM, VALUE TO ALL OF US

The preceding sections have highlighted the importance of a proper understanding of the notion of value. Successful societies try to organize themselves in such a way as to reduce the destruction of value. Different classes of problems arise at the individual as well as the societal level. In an attempt to clarify these matters Table 1 identifies several scenarios where value is destroyed.

Table 1 Value Destruction

Individual level Societal level

Extortion

Fraud / deception

Inefficiencies

Systemic

Conflicting values

Public Goods

(1) Tragedy of the commons(2) Drama of the commons(3) Sustainable development

4.1 The destruction of value at the individual level

It is easy to think of several situations in which there is unquestionable destruction of value. The worst, ethically, are probably those involving extortion or fraud, where an organization does not provide positive value to a consumer but will instead extract value either through brute force or intentional and deceitful pretence. Writers in the field of societal marketing are critical of marketing practices whose purpose is said to create the illusion of value, such as puffery or celebrity endorsement (ex. Dawson 1980, Sirgey and Lee 1996). But the fact that value is intangible should not be construed as being problematic per se as it is not clear that an utilitarian world in which a phone book would be deemed more worthy than, say, Joyce’s Ulysses would be a better world. The relevant question is whether a feature, such as celebrity endorsement, is deceptive (i.e. creates unmet expectations) or does provide perceived value to the consumer (Kamins et al. 1989, McCraken 1989, Starek 1996).

Next, there are cases where the destruction of value comes from inefficiencies. Worst case scenarios would be where net value is negative (i.e. the value of the outputs is less than that of the inputs), which should made a business bankrupt in short order, but the more general problem of opportunity costs due to inefficient use of inputs is the fundamental problem addressed by economics. Here again we are likely to hear criticisms as to how much zeal is appropriate in the search for efficiency, as an aggressive business organization will pressure several constituents of our society in pursuit of the creation of value to consumers and their proximate stakeholders.

A third set of issues pertains to the ability of consumers to effectively deal with the available information. Consumers are endowed with bounded rationality, i.e. inherent or pragmatic limitations on the amount of thinking they will devote to the analysis of a consumption problem, irrespective of the amount of information available (Simon 1984). This creates opportunities for abuse by unethical organizations. But it also creates opportunities to ethical organizations that may

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provide simpler alternatives or decision aids that will assist consumers in reaching better decisions.

These scenarios (extortion, fraud and cognitive limitations) are well known and the marketing concept is unlikely to cause value destruction in the hands of a socially responsible organisation.

Finally, there are systemic issues such as those discussed earlier, where one could claim that business organizations destroy human values in order to create materialistic values. As noted, the claim has some validity but if we agree that marketing is a set of managerial tools for organizations operating in regulated market societies, we then understand that these criticisms are to be directed at society itself.

4.2 Giving to some, taking from others

A policy of value creation that is compatible with stakeholders’ interests is more likely than not to lead to socially desirable outcomes. But this is not necessarily the case as we can easily identify situations where value created for individual consumers has negative consequences for others.

The most obvious case is that of conflicting interests as discussed in section 2.4.2. In essence, a business organization is faced with the task of evaluating the rationale of serving a controversial market whose needs are conflicting with those of another constituent of society. The problem is not trivial as it may seem on the surface because initial conditions are likely to change as a result of the actions by the marketing organization. If a segment of society has a strong preference for a product or service with negative externalities, a marketing organization is likely to engender negative actions on the part of those who experience the negative side effects that are not obvious prior to the introduction of new products. For instance, the development of leaf blowers has lead to widespread activism resulting on the ban for such devices in many jurisdictions (Cameron 2000). If a marketing organization today were to consider the development of such a product, it would be aware of the regulation and other social prescriptions against such a device and could come up with socially acceptable solutions. But in the 1960s, when the first patents were issued for such a contraption, no such regulation or prescription existed and intuition could have suggested that blowers would be considered on the same plane as lawnmowers.

As far as marketing is concerned, I am not aware of any new product design methodology that would advocate a careful evaluation of the costs and benefits of an innovation in adverse segments.

Another type of problem occurs for what we call public goods. It is customary to make a distinction between rivalrous and non rivalrous goods, i.e. goods that are considered to be in finite supply (ex: fish stocks) vs. those that are infinite (ex: digital assets) such that consumers compete against each other or not; and between excludable goods (most physical goods, possibly digital assets) and those that are not (ex: fish stocks) such that a seller can prevent or not a consumer from having access to the product.

Public goods are inefficiently managed under a market economy because free riding on the part of consumers provide inadequate incentives for their private supply (Samuelson 1954). This is why social institutions must regulate against pollution, enforce intellectual property rights and so forth.

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These questions, at first glance, lie completely outside of the realm of marketing and belong to welfare economics, social studies and politics. On the other hand, the current debate on digital media shows how business decisions that are very closely related to marketing will have a highly significant impact along those lines. For instance, if the music industry fails in its efforts to implement a strong digital rights management to provide excludability for digital media, it could be argued that the supply of digital media will decline to socially sub-optimal levels. But the flipside is that digital assets are no real substitute for each others such that a strong intellectual property regime confers monopoly power resulting in socially inefficient pricing.

The problem of public goods can also be considered under the three following headings: sustainable development, the drama of the commons and the tragedy of the commons. Sustainable development is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (Brundtland 1987: 54) As I discussed in section 2.5.2, sustainability will always be resolved one way or another and the relevant issue is the management of the transitional process considering the very real difficulty of dealing with inter-generational conflicts of interests and technological uncertainties. In most cases, sustainability issues can be reasonably expected to be resolved through progressive adjustments of the ‘soft landing’ type. But in tragedy of the commons, the outlook is bleak.

The problem of the commons is the traditional way in which we describe individually rational but collectively destructive consumption levels (see Hardin 1968 for the seminal article). I think it is useful to distinguish between two type of problems of the commons – reversible (dramatic) and irreversible (tragic) collective abuse. The oft cited enclosure movement of the 18th century (see Boyle 2003 for a recent analysis) refers to a ‘collective’ decision to privatize land in England in order to deal with the problem of overgrazing of the public land. Privatization succeeded in restoring productive pastures. In other cases, because privatizing is impractical and the number of agents makes collaboration less likely (see Schuster 2005 for a short synopsis), prospects are bleak. Global warming is such a problem where consequences may well be highly undesirable and irreversible.

Discussions on tragedies of the common are difficult because the rational strategy is not obvious since, as Hardin noted, nice guys end up losing. This may explain why the Kyoto accord is not working as major contributors to the emission of greenhouse gas are playing a chicken game. For instance, the oft vilified US administration has not ratified Kyoto in part because developing countries were unwilling to negotiate reasonable reciprocal commitments (Schelling 2002). Whether this is irresponsible selfishness or an adequate strategy to hopefully find a solution is debatable, but what is clear is that social tension is mounting (ex: Athanasiou and Baer 2002).

This discussion seemingly leads to a dead-end as if it is clear that marketing organizations are part of the problem of sustainable development, the solution goes beyond the realm of individual decisions because of free-riding. Providing value to the customer is still a valid normative basis for action, but we can expect that the determination of value will be increasingly dynamic as society comes to grips with the many ramifications of sustainability and third parties’ activism raise to unprecedented levels.

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5 QUANTUM CONSUMER, SOCIAL CANARIES: PAYING ATTENTION TO TENSION

When business takes the definition of marketing as a starting point, it is immediately confronted to the problem of building operational models of customer value. This generally takes the form of models where products are conceived as bundles of attributes. The task boils down to the identification of relevant attributes, the measure of the importance consumers place on such attributes and the optimal design of offers that will account for differences in valuation (i.e. segments), competition and the cost of production. The predictive accuracy of these models is very good (see for instance Urban and Katz 1983) such that they are used both in the classroom in order to explain the workings of markets and in business to support the value creation process.

A marketing oriented organisation is riveted to the satisfaction of its customers because it leads to customer loyalty, and loyalty makes it easier to achieve profitability (Anderson, Fornell and Lehman, 1994). Satisfaction is frequently expressed as the difference between experienced vs expected quality levels (ex: Parasuraman, Zeithmal and Berry 1985). Focusing on satisfaction therefore provides an implicit motivation to push for more value in order to surpass markets’ raising expectations.

But what is an accurate model of aggregate behaviour may not be appropriate at the micro level, just as Newtonian physics is a useful representation of human-scale phenomena in the material world that is inappropriate for what is happening inside atoms. If this multi-attribute modeling arguably dominates marketing practice, it is certainly not the only conceptual model of consumer decision making processes (see Jackson 2005 for a review of several alternative models of consumer behaviour, and Kahneman 2003 for a survey in the field of economics). For instance, Max-Neef (1991) identifies a finite number of conflicting needs and suggests that in providing satisfaction for one need, (a marketing organization) may actually reduce satisfaction of another. Yet concepts such as guilt, shame, regret or frustration are certainly not studied with as much zeal as satisfaction, in our discipline. A search for the word satisfaction in five leading marketing journals4 in the Web of Science database for the years 1974-2006 finds 295 entries. A similar search for the words frustration or guilt or regret or shame only yields 43 entries. More significantly perhaps, research on frustrated consumption is practically absent from the Journal of Marketing as can be seen in table 2.

Table 2 Publications using satisfaction related words*, 1974-2006, by leading journal

Journal Satisfaction Frustration, guilt, regret or shame Ratio of (1) to (2)

Journal of Consumer Research 50 21 2.38Journal of Marketing 123 2 61.50Journal of Marketing Research 66 5 13.20Management Science 31 12 2.58Marketing Science 25 3 8.33Total 295 43

* The search words had to appear in the title, abstract or keywords of the article

4 Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, Marketing Science and Management Science

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The literature on frustration was practically non-existent prior to 1990 and even today papers are published only sporadically, while the study of satisfaction, always present, has taken off in the early 1990s (see figure 2)

Figure 2 Publications using satisfaction related words*, 1974-2006, by year

0

5

10

15

20

25

1975 1980 1985 1990 1995 2000 2005

Satisfaction Frustration, guilt, regret or shame

* The search words had to appear in the title, abstract or keywords of the article

Assuming stable preferences and ignoring side-effects greatly simplifies what is already a demanding exercise. Yet, important work has already shown that preferences are evolving (e.g. Bettman, Luce and Payne 1998) and exciting ideas have been explored in the field of economics (e.g. Benabou and Tirole 2003) and cognitive sciences (e.g. Ainslie 2005) such that we may believe that more realistic models will eventually be used.

In the meantime, crude approximations will have to do. Naïve models where management tries to satisfy a targeted need should be augmented by analyses of tension at the consumer level that is expressed in a various ways, some of which may accumulate and eventually come back to haunt the marketing organization by fuelling activism and litigation.

The story is more complex when we consider social tensions. The dominant paradigm, law and economics (see Shavell 2004 for an excellent introduction), considers how rational lawmakers should shape regulations in such a way as to improve social welfare, but it does not consider the influence of social activism in the genesis of the regulatory body. It does not even formally consider the role that social norms do play, even in the absence of formal regulation. (Ellickson 1998). What we can find are numerous essays on how marketing can sustain activism (ex: Varadarajan and Menon 1988), but no model of activism that marketing organizations could use in order to act responsibly.

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6 SUMMARY AND CONCLUSION

The purpose of this paper was to explore the concept of responsible marketing, a popular term in the corporate world but without much theoretical substance. After reviewing the literature on normative ethical frameworks for business and on the concept of responsibility, I suggest two complementary meanings for responsible marketing.

First, marketing is a set of managerial tools and is an instrument used by organizations in the pursuit of their objectives. As such, responsible marketing refers to the fact that the instrument is not defective, i.e. that it will not cause predictable harm to the organization’s stakeholders. Marketing academics, organizations and consumers are all responsible and should investigate the existence of potential flaws, conceptual or operational.

We can make a credible argument to the effect that such flaws exist. Drawing a parallel with medicine, a discipline devoted to the wellbeing of its patients yet a discipline that has been accused of being too focussed on prolonging life at any cost, I argue that marketing may be a discipline devoted to the wellbeing of consumers, yet the emphasis on consumer satisfaction on a targeted need is likely to create tension, both at the individual and at the societal levels, by ignoring conflicting interests in the mind of the quantum consumer, and failing to account for the negative externalities that it may create.

Second, I argue that the marketing concept could be enlightened by the adjective societal if it is meant to incorporate distant stakeholders in the value equation, but that other meanings of societal marketing, i.e. a tendency towards a paternalistic attitude or a rejection of current societal values, are unjustified, as we must respect the preferences of others and the implied contract to which social participants have consented.

It is therefore in this narrow sense that an organization could state that it is committed to responsible marketing. Such organization would in effect be warning its proximate stakeholders that it will assess the impact of its actions on distant stakeholders. This is equivalent to saying to shareholders that it is in their best interest to focus on the needs of consumers; similarly it is in the interests of proximate stakeholders that the organization makes responsible efforts to align their interests with those of society at large.

This exercise has been conducted for my personal benefit as I wanted to be able to get a better understanding of issues that were brought to my attention by a colleague. Space limitations made it impossible to better explain many ideas that are coming from diverse fields and would have required a more comprehensive treatment. I apologize for any oversimplification.

This question of what do we mean when we say responsible marketing? opens interesting doors. By asking ourselves what practices can be harmful in the hands of a socially responsible organization, we bring fresh air in a room filled with questions about what can go wrong in the hands of a malevolent organization. Instead of focussing on what is wrong with them, we ask the more responsible question of what might be wrong with us. There is also a very rich field of inquiry behind the question of how to go about modeling tension, both at the individual and societal levels. Gaining a better understanding of the genesis of tension, of the ways in which it is managed by consumers and society, of the ways in which business organizations may measure and managed it promises an exciting research agenda.

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