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M16MKT

Marketingethics

&CorporateSocialResponsibility

M16MKT

MarketingethicsLearningObjectives2Todefinethemeaningofethics,businessethicsandmarketingethicsToexaminetheethicalissuesinmarketingpracticeTodiscusstheStakeholderTheoryanditsimpactsonmarketingpracticeToevaluatethenatureanddimensionsofCorporateSocialResponsibility(CSR)TopresentargumentsforandagainstCSRprogrammesLearningObjectives2TodefineDefinitionsEthicsMoralprinciplesandvaluesthatgoverntheactionsanddecisionsofanindividualorgroup.BusinessEthicsMoralprinciplesandvaluesthatguideafirm’sbehaviour.Writtenandunwrittencodesofprinciplesandvaluesthatgoverndecisionsandactionswithinacompany.Inthebusinessworld,theorganization’sculturesetsstandardsfordeterminingthedifferencebetweengoodandbaddecisionmakingandbehaviour.DefinitionsEthicsMoralprinciMarketingEthics4Moralprinciplesandvaluesthatguidebehaviourwithinthefieldofmarketingandcoverissues,suchas(1)productsafety,(2)truthfulnessinmarketingcommunications,(3)honestyinrelationshipswithcustomersanddistributors,(4)pricingissuesand(5)theimpactofmarketingdecisionsontheenvironmentandsociety.MarketingEthics4MoralprincEthicalissuesinmarketing5EthicalissuesinmarketingMarketingmixeffectsonconsumersPoliticalissuesSocietalissuesEnvironmentalissuesEthicalissuesinmarketing5EtSocietalresponsestoethicalissuesinmarketingConsumerismEnvironmentalismEthicalConsumption6SocietalresponsestoethicalLegalandregulatoryresponsestoethicalissuesinmarketingEUcompetitionlawsandregulatorybodiesthataimtoprotecttherightsofconsumers.Nationallawscoveringconsumerrightsandprotection.Competitionregulationsupportedbygovernment-backedregulatorybodies.Voluntarybodiessetupbyindustriestocreateandenforcecodesofpractice.7LegalandregulatoryresponsesHondaHondaisdevelopingaffordable,fuel-efficientandless-pollutinghybridcars.8HondaHondaisdeveloping8MarketingMix:ProductPotentialharmofproductstoconsumers.e.g.geneticallymodified(GM)food;highlevelsoffatinfood,tobacco,sugarinchildren’sfood(combinedwithadvertising!)Governmentandbusinessestakingstepstoreduceharmfuleffectofproducts(e.g.smokingban)CreationofFoodStandardsAgency(FSA)–independentfoodsafetybodysetuptoprotectpublichealthandconsumerinterestsinrelationstofoodintheUKPortmanGroup–overseestheUK’salcoholicdrinksindustry:marketalcoholinasociallyresponsibleway.9MarketingMix:ProductPotentiaMarketingMix:PriceFirmscancolludetoforceupthepriceofproducts.---Interfererswithconsumers’freedomofchoice.EUcompetitionpolicyprovidesalegalframeworkdesignedtopreventfirmsfromcolluding.10MarketingMix:PriceFirmscanMarketingMix:PlaceSlottingallowances:feepaidbymanufacturerstoaretailerinexchangeforanagreementtoplaceaproductonshelves.Distortscompetition:favouringlargemanufacturesoversmallerones(whomighthavesuperiorproducts!)11MarketingMix:PlaceSlottingaMarketingMix:PromotionExaggeratedclaimsorconcealedfacts.

E.g.foodadvertisedashealthybecauseofvitamincontent,butishighinsugarorfats.Advertisingistightlyregulatednow!DeceptiveSelling:SalespeopledeceivinginordertomakeasaleORsellthemoreexpensiveproduct.12MarketingMix:PromotionExaggeMarketingMix:PromotionDirectMarketing’sinvasionofprivacy:theunethicalpracticeofenteringconsumernamesandaddressesontodatabaseswithoutconsumer’spermission.InternetPrivacy:trackingonlineshoppers’informationrecordedusing“cookies”(downloadedontoshoppersPC’s)withoutpermission.Allowmarketerstoprovidecustomizedandpersonalizedcontentforonlineshoppers.Promotionalinducementtothetrade:Offeringinducementstoretailerstoplaceemphasisonaparticularcompany’sproducts.13MarketingMix:PromotionDirectGreen&BlackEthicalbrandscanalsotastewonderful.14Green&BlackEthicalbrandscaHigh-PressureSellingSalespeoplearetrainedtodeliversmooth,cannedtalkstoenticepurchase.Hardsalescanoccurbecauseofprizesgoingtotopsellers.High-pressureselling:notgoodforlong-termrelationships.15High-PressureSellingSalespeopMarksandSpencer16M&Sencouragesitsconsumersto‘lookbehindthelabel’inonecampaign.MarksandSpencer16M&SencouraCorporateSocialResponsibility(CSR)17DefinitionsTheethicalprinciplethatanorganizationshouldbeaccountableforhowitsbehaviourmightaffectsocietyandtheenvironment.

Avoluntaryapproachthatabusinessenterprisetakestomeetorexceedstakeholderexpectationsbyintegratingsocial,ethical,andenvironmentalconcernstogetherwiththeusualmeasuresofrevenue,profit,andlegalobligation.CorporateSocialResponsibilitBusinessethicsandCorporateSocialResponsibility(CSR)18Businessethicsisabouttheapplicationofethicalvalues,CSRistheexpressionofthosevaluesbothwithincorebusinessstrategiesandasasetofcommitmentsandobligationsmadetoitsstakeholders.BusinessethicsandCorporateWhyisbusinessethicsimportant?19PowerofbusinessesinsocietyissignificantBusinessmalpracticeshavelotsofnegativeimpactFewbusinesspeoplehaveformalethicstrainingEthicalviolationscontinuetooccurinbusiness (Crane&Matten,2004)WhyisbusinessethicsimportaTypicalkeystakeholdersforacompany20THECOMPANYShareholdersSuppliersCommunitiesassociatedwiththecompanyCustomers(includingintermediaries)EmployeesTypicalkeystakeholdersPotentialstakeholders–Universities21UniversityLocal/NationalGovtEmployeesSuppliersLocalBusinessStudentsCompetitorsPotentialstakeholders–UniverCarroll(1991)‘Four-partmodelofCorporateSocialResponsibility’22EconomicResponsibilitiesLegalResponsibilitiesEthicalResponsibilitiesPhilanthropicResponsibilitiesPromotehumanwellbeing.Conceptofgoodcorporatecitizen.DowhatismorallyrightObeylawsShareholderValueCarroll(1991)‘Four-partmodeCamelCigarettes23CamelCigarettes232424Whatisthisadportraying?25Whatisthisadportraying?25Benetton26Benetton26Benetton27Benetton27Benetton28Benetton28Benetton29Benetton29Benetton30Benetton30Benetton31Benetton31InternalmarketingDimensionsEmployeeRelationsSupplyChainConsumerSocial(communityinvolvement)PhysicalenvironmentDimensionsofcorporatesocialresponsibility32MarketingresponseSocietalmarketing/cause-relatedmarketingSocietalmarketingFairtrademarketingSustainablemarketingInternalmarketingDimensionsEmPhysicaldimensionsofCSRcombatingglobalwarming;pollutioncontrol;conservationofenergyandotherscarceresources;Useofenvironmentalfriendlyingredientsandcomponents;non-animaltesting;recyclingandnon-wastefulpackaging.MarketingResponse:Sustainablemarketing:focusingonenvironmentalissuesandreducingdamagebycreating,producinganddeliveringsustainablesolutionswhilecontinuingtosatisfycustomersandotherstakeholders.

(e.g.Prius;Green&Black)33PhysicaldimensionsofCSRcombSocialandConsumerdimensionsofCSRSupportforlocalcommunitySupportforthewidercommunityProductsafety(includingharmfullong-termeffects)Avoidanceofprice-fixingHonestlyincommunicationsRespectingprivacyMarketingresponse:SocietalandCause-relatedmarketing.Considerconsumer’sandsociety’sneedsandlong-termwelfare.Rectifyconflictsbetweenshort-term(e.g.fast-food)andlong-termneeds(health).34SocialandConsumerdimensionsDimensionsofSupplyChaininCSRFairtradingStandardsettingforsuppliers(e.g.humanrights,labourstandardsandenvironmentalresponsibility).Marketingresponse:Fair-trademarketing(development,promotionandsellingoffairtradebrandsandthepositioningoforganisationsonthebasisofafairtradeethos.35DimensionsofSupplyChaininDimensionsofemployeerelationsinCSRFairpayEqualopportunitiesTrainingandmotivationInformationprovision(e.g.careerpaths,recruitmentpoliciesandtrainingopportunities).Marketingresponse:Internalmarketing(development,trainingandmotivationofemployeesdesignedtoenhancetheirperformanceinprovidingcustomersatisfaction)36DimensionsofemployeerelatioThestagesinthemovetowardsexcellence

inenvironmentalperformance37SustainablepolicyandorganizationSinglesustainableproduct/serviceSustainableproduct/servicerangeSustainableproductionAllsustainableproducts/servicesSource:M.Charter,K.Peattie,J.OttmanandM.J.Polonsky(2002)MarketingandSustainability,Cardiff:CentreforBusinessRelationships,Accountability,SustainabilityandSociety(BRASS)inassociationwithCentreforSustainableDesign.ThestagesinthemovetowardsArgumentsforandagainstCSRprogrammesFOR:CSRleadstoenhancedbrand/corporateimageandreputationCSRprovidesmarketingopportunities(BodyShop,Organicfoodetc.)CSRcanreduceoperatingcosts(improveenergyefficiency,reducingwaste,sellingrecycledmaterials)CSRincreasesorganizationsabilitytoattractandretainemployeesCSRisaformofriskmanagement(nolossofreputation)CSRimprovesaccesstocapital(accesstosociallyresponsibleinvestment)AGAINST:CSRismisguided(companiesshouldmakeprofit/governmentsshouldaddressotherissues)CSRistoocostlyCSRencouragesconsumercynicism(seenaspublicrelationexercises)38ArgumentsforandagainstCSREthicsintheleisureindustry39GrandTheftAutoEthicsintheleisureindustryResponsestoethicalissues

inmarketing40ResponsestoethicalissuesinmarketingBusinessCorporatesocialResponsibilityLegalandregulatoryEuropeanandnationallawsandregulatorybodiesSocietalConsumerismEnvironmentalismResponsestoethicalissues

iManagingethicalissues:CSR41EncouragescorporationstotakegreaterresponsibilityfortheiractionsCorporationscausesocialproblems,sotheyneedtoresolvethemCorporationsshouldusetheirresources&powerresponsiblyCorporationsneedtotakeintoaccounttheinterestsofshareholders&stakeholdersMayleadtomoresatisfiedcustomers,attractemployees&createlong-terminvestmentinthecommunityManagingethicalissues:CSR41CompanyPracticingCSRTheBodyShop&CommunityTradepartners:"Withthisincomefromsellingseed…foroilandfromsellingafewanimals,wewereabletosaveuptobuyasmallareaofland,andsonowwecannotonlyguaranteeourfoodandlivelihood,butwealsohaveanincome."

Accountofsesamefarmer,JuanFranciscoPazSilvaCo-operative,Nicaragua

42CompanyPracticingCSRTheBodyThisweek’sreading43Abela,A.V.andMurphy,P.E.2008.Marketingwithintegrity:ethicsandtheservice-dominantlogicformarketing.JournaloftheAcademyofMarketingScience,36(1),39-53.Thisweek’sreading43Abela,AExercisefornextweek44Inagroupof4-5Usingoneoftheexamplesbelowtopreparea5minutepresentationsummarisingthekeyethicaldebatesinthecaseconcerned.Usereallifeexamplesfrommarketingmagazines,newspaperreportsorwebsitestoillustrateyourdiscussion.ChooseONEfromthebelowcategory.Thepromotionandsaleofunhealthyorharmfulproducts.Thetargetingofvulnerablesegmentsinadvertisingcampaigns.Theinvasionofconsumerprivacythroughintrusivemarketingpractices.Exercisefornextweek44Inag

M16MKT

Marketingethics

&CorporateSocialResponsibility

M16MKT

MarketingethicsLearningObjectives46Todefinethemeaningofethics,businessethicsandmarketingethicsToexaminetheethicalissuesinmarketingpracticeTodiscusstheStakeholderTheoryanditsimpactsonmarketingpracticeToevaluatethenatureanddimensionsofCorporateSocialResponsibility(CSR)TopresentargumentsforandagainstCSRprogrammesLearningObjectives2TodefineDefinitionsEthicsMoralprinciplesandvaluesthatgoverntheactionsanddecisionsofanindividualorgroup.BusinessEthicsMoralprinciplesandvaluesthatguideafirm’sbehaviour.Writtenandunwrittencodesofprinciplesandvaluesthatgoverndecisionsandactionswithinacompany.Inthebusinessworld,theorganization’sculturesetsstandardsfordeterminingthedifferencebetweengoodandbaddecisionmakingandbehaviour.DefinitionsEthicsMoralprinciMarketingEthics48Moralprinciplesandvaluesthatguidebehaviourwithinthefieldofmarketingandcoverissues,suchas(1)productsafety,(2)truthfulnessinmarketingcommunications,(3)honestyinrelationshipswithcustomersanddistributors,(4)pricingissuesand(5)theimpactofmarketingdecisionsontheenvironmentandsociety.MarketingEthics4MoralprincEthicalissuesinmarketing49EthicalissuesinmarketingMarketingmixeffectsonconsumersPoliticalissuesSocietalissuesEnvironmentalissuesEthicalissuesinmarketing5EtSocietalresponsestoethicalissuesinmarketingConsumerismEnvironmentalismEthicalConsumption50SocietalresponsestoethicalLegalandregulatoryresponsestoethicalissuesinmarketingEUcompetitionlawsandregulatorybodiesthataimtoprotecttherightsofconsumers.Nationallawscoveringconsumerrightsandprotection.Competitionregulationsupportedbygovernment-backedregulatorybodies.Voluntarybodiessetupbyindustriestocreateandenforcecodesofpractice.51LegalandregulatoryresponsesHondaHondaisdevelopingaffordable,fuel-efficientandless-pollutinghybridcars.52HondaHondaisdeveloping8MarketingMix:ProductPotentialharmofproductstoconsumers.e.g.geneticallymodified(GM)food;highlevelsoffatinfood,tobacco,sugarinchildren’sfood(combinedwithadvertising!)Governmentandbusinessestakingstepstoreduceharmfuleffectofproducts(e.g.smokingban)CreationofFoodStandardsAgency(FSA)–independentfoodsafetybodysetuptoprotectpublichealthandconsumerinterestsinrelationstofoodintheUKPortmanGroup–overseestheUK’salcoholicdrinksindustry:marketalcoholinasociallyresponsibleway.53MarketingMix:ProductPotentiaMarketingMix:PriceFirmscancolludetoforceupthepriceofproducts.---Interfererswithconsumers’freedomofchoice.EUcompetitionpolicyprovidesalegalframeworkdesignedtopreventfirmsfromcolluding.54MarketingMix:PriceFirmscanMarketingMix:PlaceSlottingallowances:feepaidbymanufacturerstoaretailerinexchangeforanagreementtoplaceaproductonshelves.Distortscompetition:favouringlargemanufacturesoversmallerones(whomighthavesuperiorproducts!)55MarketingMix:PlaceSlottingaMarketingMix:PromotionExaggeratedclaimsorconcealedfacts.

E.g.foodadvertisedashealthybecauseofvitamincontent,butishighinsugarorfats.Advertisingistightlyregulatednow!DeceptiveSelling:SalespeopledeceivinginordertomakeasaleORsellthemoreexpensiveproduct.56MarketingMix:PromotionExaggeMarketingMix:PromotionDirectMarketing’sinvasionofprivacy:theunethicalpracticeofenteringconsumernamesandaddressesontodatabaseswithoutconsumer’spermission.InternetPrivacy:trackingonlineshoppers’informationrecordedusing“cookies”(downloadedontoshoppersPC’s)withoutpermission.Allowmarketerstoprovidecustomizedandpersonalizedcontentforonlineshoppers.Promotionalinducementtothetrade:Offeringinducementstoretailerstoplaceemphasisonaparticularcompany’sproducts.57MarketingMix:PromotionDirectGreen&BlackEthicalbrandscanalsotastewonderful.58Green&BlackEthicalbrandscaHigh-PressureSellingSalespeoplearetrainedtodeliversmooth,cannedtalkstoenticepurchase.Hardsalescanoccurbecauseofprizesgoingtotopsellers.High-pressureselling:notgoodforlong-termrelationships.59High-PressureSellingSalespeopMarksandSpencer60M&Sencouragesitsconsumersto‘lookbehindthelabel’inonecampaign.MarksandSpencer16M&SencouraCorporateSocialResponsibility(CSR)61DefinitionsTheethicalprinciplethatanorganizationshouldbeaccountableforhowitsbehaviourmightaffectsocietyandtheenvironment.

Avoluntaryapproachthatabusinessenterprisetakestomeetorexceedstakeholderexpectationsbyintegratingsocial,ethical,andenvironmentalconcernstogetherwiththeusualmeasuresofrevenue,profit,andlegalobligation.CorporateSocialResponsibilitBusinessethicsandCorporateSocialResponsibility(CSR)62Businessethicsisabouttheapplicationofethicalvalues,CSRistheexpressionofthosevaluesbothwithincorebusinessstrategiesandasasetofcommitmentsandobligationsmadetoitsstakeholders.BusinessethicsandCorporateWhyisbusinessethicsimportant?63PowerofbusinessesinsocietyissignificantBusinessmalpracticeshavelotsofnegativeimpactFewbusinesspeoplehaveformalethicstrainingEthicalviolationscontinuetooccurinbusiness (Crane&Matten,2004)WhyisbusinessethicsimportaTypicalkeystakeholdersforacompany64THECOMPANYShareholdersSuppliersCommunitiesassociatedwiththecompanyCustomers(includingintermediaries)EmployeesTypicalkeystakeholdersPotentialstakeholders–Universities65UniversityLocal/NationalGovtEmployeesSuppliersLocalBusinessStudentsCompetitorsPotentialstakeholders–UniverCarroll(1991)‘Four-partmodelofCorporateSocialResponsibility’66EconomicResponsibilitiesLegalResponsibilitiesEthicalResponsibilitiesPhilanthropicResponsibilitiesPromotehumanwellbeing.Conceptofgoodcorporatecitizen.DowhatismorallyrightObeylawsShareholderValueCarroll(1991)‘Four-partmodeCamelCigarettes67CamelCigarettes236824Whatisthisadportraying?69Whatisthisadportraying?25Benetton70Benetton26Benetton71Benetton27Benetton72Benetton28Benetton73Benetton29Benetton74Benetton30Benetton75Benetton31InternalmarketingDimensionsEmployeeRelationsSupplyChainConsumerSocial(communityinvolvement)PhysicalenvironmentDimensionsofcorporatesocialresponsibility76MarketingresponseSocietalmarketing/cause-relatedmarketingSocietalmarketingFairtrademarketingSustainablemarketingInternalmarketingDimensionsEmPhysicaldimensionsofCSRcombatingglobalwarming;pollutioncontrol;conservationofenergyandotherscarceresources;Useofenvironmentalfriendlyingredientsandcomponents;non-animaltesting;recyclingandnon-wastefulpackaging.MarketingResponse:Sustainablemarketing:focusingonenvironmentalissuesandreducingdamagebycreating,producinganddeliveringsustainablesolutionswhilecontinuingtosatisfycustomersandotherstakeholders.

(e.g.Prius;Green&Black)77PhysicaldimensionsofCSRcombSocialandConsumerdimensionsofCSRSupportforlocalcommunitySupportforthewidercommunityProductsafety(includingharmfullong-termeffects)Avoidanceofprice-fixingHonestlyincommunicationsRespectingprivacyMarketingresponse:SocietalandCause-relatedmarketing.Considerconsumer’sandsociety’sneedsandlong-termwelfare.Rectifyconflictsbetweenshort-term(e.g.fast-food)andlong-termneeds(health).78SocialandConsumerdimensionsDimensionsofSupplyChaininCSRFairtradingStandardsettingforsuppliers(e.g.humanrights,labourstandardsandenvironmentalresponsibility).Marketingresponse:Fair-trademarketing(development,promotionandsellingoffairtradebrandsandthepositioningoforganisationsonthebasisofafairtradeethos.79DimensionsofSupplyChaininDimensionsofemployeerelationsinCSRFairpayEqualopportunitiesTrainingandmotivationInformationprovision(e.g.careerpaths,recruitmentpoliciesandtrainingopportunities).Marketingresponse:Internalmarketing(development,trainingandmotivationofemployeesdesignedtoenhancetheirperformanceinprovidingcustomersatisfaction)80DimensionsofemployeerelatioThestagesinthemovetowardsexcellence

inenvironmentalperformance81SustainablepolicyandorganizationSinglesustainableproduct/serviceSustainableproduct/servicerangeSustainableproductionAllsustainableproducts/servicesSource:M.Charter,K.Peattie,J.OttmanandM.J.Polonsky(2002)MarketingandSustainability,Cardiff:CentreforBusinessRelationships,Accountability,SustainabilityandSociety(BRASS)inassociationwithCentreforSustainableDesign.ThestagesinthemovetowardsArgumentsforandagainstCSRprogrammesFOR:CSRleadstoenhancedbrand/corporateimageandreputationCSRprovidesmarketingopportunities(BodyShop,Organicfoodetc.)CSRcanreduceoperatingcosts(improveenergyefficiency,reducingwaste,sellingrecycledmaterials)CS

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