Download Chapter Objectives

Chapter 16
Marketing Ethics and Social Responsibility
Previewing the Concepts: Chapter Objectives
1.
2.
3.
4.
Identify the major social criticisms of marketing.
Define consumerism and environmentalism, and explain how they affect
marketing strategies.
Describe the principles of socially responsible marketing.
Explain the role of ethics in marketing.
JUST THE BASICS
Chapter Overview
There have been many criticisms of marketing as it impacts individual consumers, other
businesses, and society as a whole. This chapter discusses them in detail and provides
some responses to critics.
Surveys usually show that consumers hold mixed or even slightly unfavorable attitudes
toward marketing practices. Consumers, consumer advocates, government agencies, and
other critics have accused marketing of harming consumers through high prices,
deceptive practices, high-pressure selling, shoddy or unsafe products, planned
obsolescence, and poor service to disadvantaged consumers. Companies respond in many
ways, noting that the practices that cause so-called high prices—advertising, using
intermediaries, decorative packaging, and the like—are necessary and well liked by
consumers. Companies also note that those who use deceptive practices and highpressure selling, or produce shoddy products, will not remain in business long.
Critics also charge that the American marketing system has added to several “evils” in
society at large. Advertising has been a special target; it is charged that it urges too much
interest in material possessions. However, our wants and values are influenced not only
by marketers, but also by family, peer groups, religion, ethnic background, and education.
If Americans are materialistic, these values arose out of basic socialization processes that
go much deeper than business and mass media could produce alone.
Consumerism is an organized movement of citizens and government agencies to improve
the rights and powers of buyers in relation to sellers. Consumers not only have the right
but also the responsibility to protect themselves instead of leaving this function to
someone else.
Environmentalism is an organized movement of concerned citizens, businesses, and
government agencies to protect and improve people’s living environments.
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Environmentalists are not against marketing and consumption; they simply want people
and organizations to operate with more care for the environment. Companies have
responded. At the most basic level, a company can practice pollution prevention, which
means eliminating or minimizing waste before it is created. At the next level, companies
can practice product stewardship, which is minimizing not just pollution from production
but all environmental impacts through the full product life cycle. At the third level,
environmental sustainability, companies look to the future and plan for new environmental technologies. Finally, companies can develop a sustainability vision, which serves
as a guide to the future.
The philosophy of enlightened marketing holds that a company’s marketing should
support the best long-run performance of the marketing system. It consists of five
principles: consumer-oriented marketing, innovative marketing, value marketing, senseof-mission marketing, and societal marketing.
Companies also need to develop corporate marketing ethics policies, which are broad
guidelines that everyone in the organization must follow. These policies should cover
distributor relations, advertising standards, customer service, pricing, product
development, and general ethical standards. For the sake of all of the company’s
stakeholders—customers, suppliers, employees, shareholders, and the public—it is
important to make a commitment to a common set of shared standards worldwide. Ethics
and social responsibility require a total corporate commitment. They must be a
component of the overall corporate culture.
Chapter Outline
1.
Introduction
a.
Nike has been a lightning rod for social responsibility criticisms. Critics
have accused Nike of putting profits ahead of the interests of consumers
and the broader public, both at home and abroad.
b.
Despite its success at selling shoes, Nike has been accused of everything
from running sweatshops, using child labor, and exploiting low-income
consumers to degrading the environment.
c.
Nike outsources production to contractors in low-wage countries. It has
created a Code of Conduct, which demands socially responsible labor
practices by its contractors. Nike has actually been improving the working
conditions in low-wage countries.
d.
Nike has also received criticism at home. It has been accused of
inappropriately targeting its most expensive shoes to low-income families,
making the shoes an expensive status symbol for poor urban kids.
e.
A closer look shows that Nike works hard at being a socially responsible
global citizen. Nike and the Nike Foundation contributed more than $29
million in cash and products last year to programs that encourage youth to
participate in sports and that address challenges of globalization.
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f.
g.
h.
2.
Nike also donates money for education, community development, and
small-business loans in the countries in which it operates.
Responsible marketers discover what consumers want and respond with
marketing offers that give satisfaction and value to buyers and profit to the
producer. The marketing concept is a philosophy of customer satisfaction
and mutual gain.
Some companies use questionable marketing practices, and some
marketing actions that seem innocent in themselves strongly affect the
larger society.
Social Criticisms of Marketing
a.
Social critics claim that certain marketing practices hurt individual
consumers, society as a whole, and other business firms.
Use Chapter Objective 1 here.
Marketing’s Impact on Individual Consumers
b.
Surveys usually show that consumers hold mixed or even slightly
unfavorable attitudes toward marketing practices.
c.
Many critics charge that the American marketing system causes prices to
be higher than they would be under more “sensible” systems.
1.
A long-standing charge is that greedy intermediaries mark up
prices beyond the value of their services. There are too many
intermediaries, they are inefficient, or they provide unnecessary or
duplicate services.
i.
Companies respond that intermediaries do work that would
otherwise have to be done by manufacturers or consumers.
Markups reflect services that consumers themselves want—
more convenience, larger stores and assortments, longer
store hours, return privileges, and others.
2.
Modern marketing is also accused of pushing up prices to finance
heavy advertising and sales promotion. Much of the packaging and
promotion adds only psychological value to the product rather than
functional value.
i.
Marketers respond that consumers can usually buy functional versions of products at lower prices. However, they
are willing to pay more for products that also provide
psychological benefits.
ii.
Heavy advertising and promotion may be necessary for a
firm to match competitors’ efforts—the business would
lose “share of mind” if it did not match competitive
spending.
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Let’s Discuss This
If you did not have advertising, where would you gather information about products you
wanted to buy?
3.
Critics also charge that some companies mark up goods excessively.
i.
Marketers respond that most businesses try to deal fairly
with consumers because they want repeat business.
ii.
Marketers also respond that consumers often don’t understand the reasons for high markups.
Use Discussing the Issues 1 here.
d.
e.
Marketers are sometimes accused of deceptive practices that lead
consumers to believe they will get more value than they actually do.
However, marketers argue that most companies avoid deceptive practices
because such practices harm their businesses in the long run. Deceptive
practices fall into three groups.
1.
Deceptive pricing includes practices such as falsely advertising
“factory” or “wholesale” prices or a large reduction from a phony
high retail list price.
2.
Deceptive promotion includes practices such as overstating the
product’s features or performance, luring the customer to the store
for a bargain that is out of stock, or running rigged contests.
3.
Deceptive packaging includes exaggerating package contents
through subtle design, not filling the package to the top, using
misleading labeling, or describing size in misleading terms.
Salespeople are sometimes accused of high-pressure selling that persuades
people to buy goods they had no thought of buying.
1.
Marketers know that buyers often can be talked into buying
unwanted or unneeded things.
2.
In most cases, however, marketers have little to gain from highpressure selling. Such tactics may work in one-time selling
situations for short-term gain. However, most selling involves
building long-term relationships with valued customers.
Applying the Concept
Have you ever bought a used car? Describe the sales techniques used to get you to buy a
car. Did it feel like you were being overly pressured? How did you feel about the
transaction?
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f.
Another criticism is that products lack the quality they should have. Many
products are not made well and services are not performed well. Many
products deliver little benefit, or they might even be harmful.
1.
Product safety has been a problem for several reasons, including
company indifference, increased product complexity, and poor
quality control.
2.
Most manufacturers want to produce quality goods. The way a
company deals with product quality and safety problems can
damage or help its reputation.
Use Marketing at Work 16-1 here.
g.
h.
Critics have also charged that some producers follow a program of
planned obsolescence, causing their products to become obsolete before
they actually should need replacement.
1.
Marketers respond that consumers like style changes; they get tired
of old goods and want a new look in fashion or a new design in
cars.
2.
Companies do not design products to break down early, because
they do not want to lose customers to other brands. Instead, they
seek improvement to ensure that products will consistently meet or
exceed customer expectations.
The American marketing system has been accused of serving disadvantaged consumers poorly. Critics claim that the urban poor often have
to shop in smaller stores that carry inferior goods and charge higher prices.
1.
Better marketing systems must be built to service disadvantaged
consumers. Disadvantaged consumers clearly need consumer protection.
2.
The FTC has taken action against merchants who advertise false
values, sell old merchandise as new, or charge too much for credit.
Use Linking the Concepts here.
Marketing’s Impact on Society as a Whole
i.
The American marketing system has been accused of adding to several
“evils” in American society at large. Advertising has been a special target.
j.
Critics have charged that the market system urges too much interest in
material possessions.
1.
The critics do not view this interest in material things as a natural
state of mind but rather as a matter of false wants created by
marketing.
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2.
k.
l.
On a deeper level, our wants and values are influenced not only by
marketers but also by family, peer groups, religion, ethnic background, and education.
Business has been accused of overselling private goods at the expense of
public goods.
1.
As an example, an increase in automobile ownership (private
good) requires more highways, traffic control, parking spaces, and
police services (public goods).
2.
A way must be found to restore a balance between private and
public goods.
i.
One option is to make producers bear the full social costs
of their operations.
ii.
A second option is to make consumers pay the social costs.
Critics charge the marketing system with creating cultural pollution.
1.
Our senses are constantly being assaulted by advertising.
2.
Marketers answer that they hope their ads reach the primary target
audience. Also, ads make much of television and radio free to
users and keep down the costs of magazines and newspapers.
Finally, today’s consumers have alternatives.
Let’s Discuss This
How do you feel about billboards along the highways? Do you feel differently about
them along a country road? Can marketers truly target their markets if they advertise on
billboards?
m.
Another criticism is that business wields too much political power.
1.
Advertisers are accused of holding too much power over the mass
media, limiting their freedom to report independently and objectively.
2.
American industries do promote and protect their own interests.
They have a right to representation in Congress and the mass
media, although their influence can become too great.
Marketing’s Impact on Other Businesses
n.
Critics also charge that a company’s marketing practices can harm other
companies and reduce competition.
1.
Critics claim that firms are harmed and competition is reduced
when companies expand by acquiring competitors rather than by
developing their own new products.
2.
Critics have also charged that marketing practices bar new companies from entering an industry.
3.
Finally, some firms have in fact used unfair competitive marketing
practices with the intention of hurting or destroying other firms.
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4.
3.
Various laws work to prevent such predatory competition. It is
difficult, however, to prove that the intent or action was really
predatory.
Citizen and Public Actions to Regulate Marketing
a.
Grassroots movements have arisen from time to time to keep businesses in
line.
Use Chapter Objective 2 here.
Consumerism
b.
American business firms have been the target of organized consumer
movements on three occasions.
1.
The first consumer movement took place in the early 1900s. It was
fueled by rising prices, Upton Sinclair’s writings on conditions in
the meat industry, and scandals in the drug industry.
2.
The second consumer movement, in the mid-1930s, was sparked
by an upturn in consumer prices during the Great Depression and
another drug scandal.
3.
The third movement began in the 1960s. Consumers had become
better educated, products had become more complex and
potentially more hazardous, and people were unhappy with
American institutions.
c.
Consumerism is an organized movement of citizens and government
agencies to improve the rights and powers of buyers in relation to sellers.
Use Key Term Consumerism here.
1.
2.
Traditional sellers’ rights include:
i.
The right to introduce any product in any size and style,
provided it is not hazardous to personal health or safety; or,
if it is, to include proper warnings and controls.
ii.
The right to charge any price for the product, provided no
discrimination exists among similar kinds of buyers.
iii.
The right to spend any amount to promote the product,
provided it is not defined as unfair competition.
iv.
The right to use any product message, provided it is not
misleading or dishonest in content or execution.
v.
The right to use any buying incentive programs, provided
they are not unfair or misleading.
Traditional buyers’ rights include:
i.
The right not to buy a product that is offered for sale.
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d.
ii.
The right to expect the product to be safe.
iii.
The right to expect the product to perform as claimed.
3.
Consumer advocates call for the following additional consumer
rights:
i.
The right to be well informed about important aspects of
the product.
ii.
The right to be protected against questionable products and
marketing practices.
iii.
The right to influence products and marketing practices in
ways that will improve the “quality of life.”
Consumers have not only the right but also the responsibility to protect
themselves instead of leaving this function to someone else.
Environmentalism
e.
Environmentalism is an organized movement of concerned citizens,
businesses, and government agencies to protect and improve people’s
living environments.
Use Key Term Environmentalism here.
f.
g.
h.
i.
Environmentalists are not against marketing and consumption; they simply
want people and organizations to operate with more care for the environment.
The first wave of modern environmentalism in the United States was
driven by environmental groups and concerned consumers in the 1960s
and 1970s.
1.
They were concerned about the damage to the ecosystem caused
by strip-mining, forest depletion, acid rain, loss of the atmosphere’s ozone layer, toxic wastes, and litter.
The second environmentalism wave was driven by government, which
passed laws and regulations during the 1970s and 1980s governing
industrial practices that have an impact on the environment.
Those two movements are now merging into a third and strong wave in
which companies are accepting responsibility for doing no harm to the
environment.
1.
More and more companies are adopting policies of environmental
sustainability—developing strategies that both sustain the environment and produce profits for the company.
Use Key Term Environmental Sustainability here.
Use Marketing at Work 16-2 here.
Use Application Questions 1 here.
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j.
Figure 16-1 shows a grid that companies can use to gauge their progress
toward environmental sustainability.
Use Figure 16-1 here.
Use Application Questions 2 here.
1.
2.
3.
At the most basic level, a company can practice pollution prevention.
At the next level, companies can practice product stewardship—
minimizing not just pollution from production but all environmental impacts through the full product life cycle.
i.
Many companies are adopting design for environment
(DFE) practices, which involve thinking ahead in the
design stage to create products that are easier to recover,
reuse, or recycle.
At the third level of environmental sustainability, companies look
to the future and plan for new environmental technologies.
i.
Many organizations that have made good headway in
pollution prevention and product stewardship are still
limited by existing technologies.
Use Under the Hood/Focus on Technology here.
4.
k.
Finally, companies can develop a sustainability vision, which
serves as a guide to the future. It shows how the company’s
products and services, processes, and policies must evolve and
what new technologies must be developed to get there.
Environmentalism creates some special challenges for global marketers.
1.
As international trade barriers come down and global markets
expand, environmental issues are having an ever-greater impact on
international trade.
2.
Environmental policies still vary widely from country to country,
and uniform worldwide standards are not expected for many years.
Let’s Discuss This
What might be holding back worldwide environmental standards? Do you think they will
ever be developed?
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Public Actions to Regulate Marketing
l.
Figure 16-2 illustrates the major legal issues facing marketing management.
Use Figure 16-2 here.
4.
Business Actions Toward Socially Responsible Marketing
a.
Most companies have grown to embrace the new consumer rights, at least
in principle. They might oppose certain pieces of legislation as
inappropriate ways to solve specific consumer problems, but they
recognize the consumer’s right to information and protection.
Use Chapter Objective 3 here.
Use Discussing the Issues 2 here.
Enlightened Marketing
b.
The philosophy of enlightened marketing holds that a company’s
marketing should support the best long-run performance of the marketing
system. It consists of five principles.
1.
Consumer-oriented marketing means that the company should
view and organize its marketing activities from the consumer’s
point of view. It should work hard to sense, serve, and satisfy the
needs of a defined group of customers.
2.
The principle of innovative marketing requires that the company
continuously seeks real product and marketing improvements. The
company that overlooks new and better ways to do things will
eventually lose customers to another company that has found a
better way.
3.
According to the principle of value marketing, the company should
put most of its resources into value-building marketing investments.
4.
Sense-of-mission marketing means that the company should define
its mission in broad social terms rather than narrow product terms.
When a company defines a social mission, employees feel better
about their work and have a clearer sense of direction.
5.
Following the principle of societal marketing, an enlightened
company makes marketing decisions by considering consumers’
wants and interests, the company’s requirements, and society’s
long-run interests.
c.
Figure 16-3 shows how products can be classified according to their
degree of immediate consumer satisfaction and long-run consumer benefit.
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1.
d.
Deficient products, such as bad-tasting and ineffective medicine,
have neither immediate appeal nor long-run benefits.
2.
Pleasing products give high immediate satisfaction but may hurt
consumers in the long run.
3.
Salutary products have low appeal but may benefit consumers in
the long run.
4.
Desirable products give both high immediate satisfaction and high
long-run benefits.
Companies should try to turn all of their products into desirable products.
Use Key Terms Enlightened Marketing, Consumer-Oriented Marketing, Innovative
Marketing, Value Marketing, Sense-of-Mission Marketing, Societal Marketing, Deficient
Products, Pleasing Products, Salutary Products, and Desirable Products here.
Use Figure 16-3 here.
Use Linking the Concepts here.
Use Discussing the Issues 3 and 4 here.
Use Focus on Ethics here.
Marketing Ethics
e.
Companies need to develop corporate marketing ethics policies—broad
guidelines that everyone in the organization must follow.
1.
These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general
ethical standards.
f.
Table 16-1 lists some difficult ethical situations marketers could face during their careers.
Use Table 16-1 here.
Use Chapter Objective 4 here.
Use Discussing the Issues 5 here.
g.
But what principles should guide companies and marketing managers on
issues of ethics and social responsibility?
1.
One philosophy is that such issues are decided by the free market
and legal system. Under this principle, companies and their
managers are not responsible for making moral judgments.
Companies can in good conscience do whatever the market and
legal systems allow.
2.
A second philosophy puts responsibility not on the system but in
the hands of individual companies and managers. This more
enlightened philosophy suggests that a company should have a
“social conscience.”
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h.
i.
j.
Under the societal marketing concept, each manager must look beyond
what’s legal and allowed and develop standards on personal integrity,
corporate conscience, and long-run consumer welfare.
As with environmentalism, the issue of ethics provides a special challenge
for international marketers.
1.
Business standards and practices vary a great deal from one
country to the next.
2.
For the sake of all the company’s stakeholders—customers,
suppliers, employees, shareholders, and the public—it is important
to make a commitment to a common set of shared standards
worldwide.
Many industrial and professional associations have suggested codes of
ethics, and many companies are now adopting their own codes.
1.
Table 16-2 shows the code of ethics for the American Marketing
Association.
Use Table 16-2 here.
Use Discussing the Issues 6 here.
k.
Ethics and social responsibility require a total corporate commitment.
They must be a component of the overall corporate culture.
Travel Log
Discussing the Issues
1. Of the criticisms of marketing discussed in the text, which criticism concerns you
most? Which criticism concerns you the least? Which criticism do you think is most
valid?
Student responses will vary.
2. Does a company’s socially responsible behavior influence your buying decisions?
Do irresponsible or unethical actions influence your decisions?
Student responses will vary.
3. What is the difference between consumerism and environmentalism? How are they
alike? Give an example of a cause that would be championed by each movement.
Consumerism is an organized movement of citizens and government agencies to improve
the rights and power of buyers in relation to sellers. Environmentalism is an organized
movement of concerned citizens, businesses, and government agencies to protect and
improve people’s living environment. Whereas consumerists consider whether the
marketing system is efficiently serving consumer wants, environmentalists are concerned
with marketing’s effects on the environment and with the costs of serving consumer needs
and wants. Those championing consumerism might lobby for better labeling laws.
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Environmentalists want environmental costs included in both producer and consumer
decision making.
4. Can an organization be focused on both consumerism and environmentalism at the
same time?
Student responses will vary. The two focuses are not mutually exclusive. In fact, the
goals can be very compatible. With more information, consumers may choose products
that protect the environment they care about.
5. Distinguish between the five principles of enlightened marketing: consumer-oriented
marketing, innovative marketing, value marketing, sense-of-mission marketing, and
societal marketing.
The philosophy of enlightened marketing holds that a company’s marketing should
support the best long-run performance of the marketing system. Consumer-oriented
marketing means that the company should view and organize its marketing activities from
the consumer’s point of view. The principle of innovative marketing requires that the
company continuously seek real product and marketing improvements. According to the
principle of customer-value marketing, the company should put most of its resources into
customer value-building marketing investments. Sense-of-mission marketing means that
the company should define its mission in broad social terms rather than narrow product
terms. Following the principle of societal marketing, an enlightened company makes
marketing decisions by considering consumers’ wants and interests, the company’s
requirements, and society’s long-run interests.
6. Classify three of the products you regularly buy using the Figure 16-3. How does
analyzing the products this way impact your future buying decisions?
Student responses will vary.
Application Questions
1. Study Figure 16-1. Select two companies, one you regard as very environmentally
active and one you believe is not. After researching the companies, rate each
company in the areas of pollution prevention, product stewardship, new
environmental technology, and sustainability vision. Are you surprised by any of
your findings?
Student responses will vary.
2. Write a corporate marketing ethics policy for a company selling mortgage services
online. How would such a policy influence ethical decision making among
employees in this company?
Student responses will vary. Corporate marketing ethics policies are broad guidelines
that everyone in the organization must follow. These policies should cover distributor
relations, advertising standards, customer service, pricing, product development, and
general ethical standards. The finest guidelines cannot resolve all the difficult ethical
situations the marketer faces. However, guidelines can help inform employee decisions.
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3. In small groups, consider the four issues regarding marketing’s impact on society as a
whole. Debate each issue and after each debate take a poll of where your group
stands on the issue.
Student responses will vary.
Under the Hood
Technology surges forward at an ever-quickening pace. As computers work faster, cars
get better gas mileage, and televisions offer more vivid colors, consumers constantly
upgrade products to reap the benefits. But critics argue that continual improvement often
stems from planned obsolescence rather than from meaningful technological
breakthroughs, causing products to become obsolete before they actually should need
replacement. Marketers respond that much of so-called planned obsolescence is the
working of the competitive and technological forces in a free society—forces that lead to
ever-improving goods and services.
According to Gary Coleman, a manager with Deloitte & Touche, managing
product innovation and new features is a must for any successful marketer hoping to stay
ahead of the competition. He argues that, “the so-so companies will wait the extra year
while they perfect their product and will put all the quality in and all the bells and
whistles on. The great innovating companies will go to market with 80 percent of the
design features and a facelift or upgrade strategy. It’s not planned obsolescence. It’s
planning according to a profit cycle rather than a product cycle and it gives you speed to
market. They get five to seven years out of the product instead of one big hit and rapid
fall off.”*
1. Do you agree with Gary Coleman’s assertion that managing the release of innovations
and features is a necessary part of successful marketing?
Student responses will vary.
2. Is Coleman’s approach ethical?
Student responses will vary.
3. As a consumer, does the issue of planned obsolesence concern you?
Student responses will vary.
*See Ian Porter, “Agility and Innovation the Winners,” Manufacturing Reporter, August
16, 2005.
Focus on Ethics
We’ve all heard about the community outreach efforts of retailers like Ben & Jerry’s and
The Body Shop. But, unlike the social activists of the past, today’s values-led businesses
are founded by well-trained business managers and company builders with a passion for a
cause. The result is socially minded businesses with the know-how needed to target and
connect with customers. For example, to make money and follow its values at the same
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time, WorldWise Inc. offers garden, home, and pet products made from recycled or
organic materials. WorldWise’s strategy for getting up and running, built around the
concept of environmentally responsible products, illustrates double-bottom-line thinking.
Company CEO Aaron Lamstein comments, “You can’t be successful if you can’t do
both. Our whole concept was that our products had to work as well as or better than
others, look as good or finer, cost the same or less, and be better for the environment.”
1. Visit the WorldWise Web site (www.worldwise.com) and learn about the company
and its products. Would you be interested in these products? Are you confident in
their quality and the value they offer?
Student responses will vary.
2. What impact does the company’s double-bottom-line approach (values and profits)
have on your interest in its products?
Student responses will vary.
3. Do you believe a company can be truly successful when focusing on a double bottom
line?
Student responses will vary.
GREAT IDEAS
Barriers to Effective Learning
1.
2.
3.
Most of the concepts in this chapter will be new. Some students cast an uncritical
eye on the opinions of activist groups and think that not a single company can be
trusted to “do the right thing.” The task in this chapter is to present both sides,
both good and bad, so that students can see that although problems do exist, there
are solutions, and industry does tend to work toward reining in those who would
create problems for consumers, society as a whole, or other businesses.
The complaint of prices being higher than they would be without marketing is a
good way to get students thinking about how the costs do add up at every stage of
the process. It is important for them to understand where the complaint originates,
and going through each of the areas—distribution and intermediaries, advertising
and promotion, and the markups that come from every level—will drive home
why items that might cost only pennies to manufacture will cost dollars by the
time they hit the retail shelves. This will also help students understand why
effective budgeting is necessary and why it is important to clearly understand
your target market so that you can reach them efficiently.
Unless the university is in an urban environment, most students will be surprised
that many large retailers stay away from disadvantaged neighborhoods, and that
banks and insurance companies might discriminate against customers living in
these areas. Even at urban universities this could be cause for surprise, because
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4.
5.
6.
7.
8.
most urban schools are not located in the truly disadvantaged areas. A discussion
on the pros and cons of, say, a Wal-Mart or a major grocery retailer locating in an
inner-city neighborhood can aid in the comprehension of the risks and rewards for
the company, as well as for the consumers.
The United States is certainly a materialistic society, but is that because of
marketing? This is an unanswerable question, but it makes for a lively debate in
class. You can either have two students volunteer to represent each side of the
question, or break the class up into teams to debate among themselves.
Another lively debate is that of public versus private goods. Should society bear
the cost of health care for those who smoke, eat too much, or drink to excess?
And are these problems caused by marketing, or is marketing reacting to what
people are asking for? Again, there is really no “right” answer, only beliefs. But
attempting to answer these questions is a good way to get students to exercise
their critical thinking skills.
Consumerism and environmentalism are two important concepts for the students
to be aware of. It is unlikely that either of these movements will go away any time
soon, and because the Internet has made so much information available to so
many, these issues will likely only become more in the forefront of consumers’
minds. Product recalls have become commonplace, but it is worthwhile discussing
in class any recalls the students have been affected by. Comparing the number of
recalls today to the number in the 1960s and 1970s will also help. As for
environmentalism, one thing that is useful is to ask how many students have
traveled to cities in other countries where the pollution controls are not as
stringent as in the United States. Also, discuss how your own university recycles,
particularly if computers are given to the students every two years, as many
business schools are now doing. What happens to those that are turned in by
students? Go further with this topic, and discuss companies such as IKEA (see
Classroom Exercise) that work hard toward achieving environmentally
sustainable practices.
The concepts of enlightened marketing should not be difficult to understand,
however, you should go through them carefully. Consumer-oriented marketing
should certainly not be new, but the term will be. Sense-of-mission marketing
might be a new notion, but describing companies such as Ben & Jerry’s,
Newman’s Own, and even the old “Bell System,” which had a mission of
“universal service” that truly motivated its thousands of employees, should help
the students see how having a broad social mission would make employees feel
better about their work.
Use Table 16-1 to guide the discussion of marketing ethics. This section would
also be best handled as a debate or discussion, rather than as a lecture. Forcing
students to make choices in delicate situations is the best way to illustrate how
decisions are made on a daily basis. Also, a discussion of how ethics failed in
corporations such as Enron and Tyco will also be of use.
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Student Projects
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Research articles on ADP, a division of Tyco, and their former billing practices.
Did the managers involved make ethical decisions? Did the corporate culture
encourage the kinds of decisions they made, or were they made in spite of the
culture?
Find five examples of products or a marketer’s practices that you believe are
environmentally sensitive. How can you tell that this is a policy that is being
stressed?
Bring an example of a firm that you do not think is being socially responsible to
class. How did you determine this? What were the firm’s negative actions? What
could they do to remove the negative perceptual image?
Describe an ethical situation that you have faced since you have been an adult.
This situation could be personal, school-related, or job-related. Be honest in
describing how you resolved this situation. What did you learn? Would you do
anything differently if you were to face the situation again?
Research the business news and find a situation where a company acquired a
competitor. Did the acquisition harm consumers in any way?
Find at least three examples of socially responsible marketing and bring the
examples to class. Demonstrate what you think makes the firms involved qualify
as being socially responsible.
Bring an example of a firm that you do not think is being socially responsible to
class. How did you determine this? What were the firm’s negative actions? What
could the firm do to remove the negative social image?
Write a pro or con paper about social responsibility. Be sure to examine the issues
of cost and profit. Examine the issues of social responsibility versus shareholder
responsibility.
Find three examples of deceptive practices and describe them.
Find five examples of products or marketer practices that you perceive to be
environmentally-sensitive. How can you tell that this is a policy that is being
stressed?
Interview five fellow students (not from your class) on their feelings about the
environment. Do they buy environmentally-oriented products? Do they recycle?
Are they interested in environmental organizations? Have them give examples of
positive and negative actions that they take daily with respect to the environment.
Are they afraid of any environmental issues? If so, which ones and why?
Find an example of a company that you perceive is practicing enlightened
marketing. Describe why you feel the company qualifies. Is its practice
publicized? Should it be?
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Interactive Assignments
Small Group Assignments
1. Form students into groups of three to five. Each group should read the opening
vignette to the chapter on Nike. Each group should then answer the following
questions:
a. What is Nike’s impact on consumers? Do most consumers need the high
tech Nike builds into its shoes, thus increasing costs and prices? Explain
your answer.
b. Is Nike creating materialism, or is it responding to it? Defend your answer.
c. Comment on Nike’s response to the “sweat shop” issues. What are your
feelings about their comment that they are playing by the rules of the
individual country? Should Nike try to change those rules if they are in
conflict with typical U.S. practices?
Each group should share its findings with the class.
Individual Assignments
1. Read the opening vignette to the chapter. Think about the answers to the
following questions:
a. What is Nike’s impact on consumers? Do most consumers need the high
tech Nike builds into its shoes, thus increasing costs and prices? Explain
your answer.
b. Is Nike creating materialism, or is it responding to it? Defend your answer.
c. Comment on Nike’s response to the “sweat shop” issues. What are your
feelings about their comment that they are playing by the rules of the
individual country? Should Nike try to change those rules if they are in
conflict with typical U.S. practices?
Share your findings with the class.
Think-Pair-Share
1. Consider the following questions, formulate an answer, pair with the student on
your right, share your thoughts with one another, and respond the questions from
the instructor.
a. What are the primary criticisms of marketing? Which of the criticisms are
fair? Unfair?
b. What is a deceptive practice?
c. What are deceptive practices that can take place in marketing?
d. What is planned obsolescence? Is it good or bad? Explain your answer.
e. Does marketing have a responsibility to serve all customers? Or only
profitable ones? Who decides this?
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f. What “evils” has advertising been accused of? Are these fair or unfair?
Comment.
g. What is consumerism? What are the various “rights” under this concept?
h. What is environmentalism?
i. What is environmental sustainability? List and describe the four parts of
Figure 16-1.
j. What is green marketing? Does it work?
k. According to Figure 16-2, what are all the marketing decision areas that
may be called in question under the law?
l. List and describe the various forms of enlightened marketing. Which do
you prefer? Why?
m. List and describe the forms of products shown in Figure 16-3. Which of
these are desirable, and which are not?
n. How do firms meet their social responsibility function?
Outside Example
People for the Ethical Treatment of Animals, known as PETA, claims animals have
rights, and humans have no right to eat them, use them to produce clothing (leather goods
and furs, for example), or for testing purposes. They are against practices they say are
cruel and barbaric, including everything from corporate animal farming to breeding dogs
and cats to supply our nation’s pet supply.
The organization targets high profile companies and their practices, recently targeting
Perdue Farms and KFC for cruelty to chickens. Their activists have been known to break
into test labs and release the animals there. Others have released dogs that were with their
owners at dog shows.
Some have decried PETA as the lunatic fringe, while others praise their efforts to force us
all to treat animals humanely.
1. Should PETA be able to release animals they truly believe are suffering? Defend
your answer.
2. If you were Perdue Farms, and PETA released videos taken undercover at one of
your processing facilities, how would you react? How much influence would this
have on your marketing practices?
3. If you worked for a fur manufacturer, how would you counteract PETA’s
campaign to get people to stop wearing fur?
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Classroom Exercise/Homework Assignment
IKEA operates 154 stores in 22 countries. It offers furnishings for the home that as many
people as possible can afford. They claim their business is run in partnership with their
customers—their part is to find the suppliers and raw materials that will produce
fashionable yet durable furniture. And then customers do their part by picking it up and
assembling it themselves. But IKEA goes well beyond offering nice furnishings at low
prices. They firmly believe in social and environmental responsibility—they believe that
this will translate into not only greater profits, but a better world. Visit the company’s
Web site at www.ikea-usa.com and click the “about” link to find information about their
corporate responsibility.
What is “the IKEA Way,” and how does it translate into good corporate
citizenship?
The IKEA Way is a document that codifies its purchasing standards. It covers issues such
as social and working conditions, child labor, the environment, and forestry. The code
sets only minimum standards; suppliers are supposed to go well beyond the code in
ensuring safety and respect for their employees, and in the use of environmentally safe
processes. IKEA also works with nongovern-mental organizations, such as UNICEF, to
aid in environmental and child labor issues.
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IKEA says it “takes all aspects of a product’s life into consideration. Through
choice of raw material through production and distribution to end of use” (see the
section “IKEA and the Environment”). Using Figure 16-1, determine IKEA’s
progress toward environmental sustainability.
IKEA is at least at product stewardship. They are attempting to not only minimize
pollution from production, but are working toward design for environment (DFE).
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How has this social responsibility affected IKEA’s financials?
IKEA’s revenues have grown steadily since its inception. Worldwide, 286 million people
visited their 154 stores in their last fiscal year. It is difficult to tell if this is because of
their social responsibility, but customers are certainly responding to their marketing
efforts.
Classroom Management Strategies
Although there are several Key Terms in this section that should be defined for the
students, this is that rare chapter that could be more easily learned in a discussion format
than a lecture. Drawing out student opinions on the topics in this chapter will make the
material come alive.
1.
You can spend a full 30 minutes on the first section. Discussing actual situations
that could cause critics to make these charges would be helpful. For instance, as
mentioned in the text, many people rail against the high prices that pharma-
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ceutical companies charge, when each pill typically costs only a few cents to
manufacture. Discussing all the “backroom” work that goes into developing new
drugs, as well as the costs of their push-and-pull marketing strategies, brings the
full picture into focus. If Christmas is near, a good discussion can also ensue
about the onslaught of advertising, both on television and in newspapers. Debate
whether this is the cause of materialism, or a reaction to it. An interesting debate
can also be held regarding cigarettes and alcohol—is it ethical to market these
products when we know they can be harmful? Have students take sides to fully
discuss the pros and cons.
The section on citizen and public actions should take 15 minutes. A brief history
of both consumerism and environmentalism is generally helpful. If you have an
activist university, and Earth Day is near, perhaps you could organize a group to
participate through increasing your own recycling and studying the history of the
environmental movement in the United States. Also, research the companies in
Marketing at Work 16-2 as well as IKEA (found in the Classroom Exercise) to
see what actions they are currently taking to improve the environment.
Finally, take 15 minutes to discuss business actions, enlightened marketing, and
marketing ethics. Use Marketing at Work 16-3 to discuss what happens when a
company focuses too much on being socially responsible and how it could hurt
the bottom line. Then stress the positive results from companies such as Honest
Tea and WorldWise, also discussed. Have the students search for other companies
that practice enlightened marketing.
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