Download Business Marketing Ethics

Business Marketing Ethics
September 13, 2011
Dawne Martin, Ph.D.
Learning Objectives &
Assignments
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To review issues in marketing ethics
To understand the legal constraints on
marketing behavior
To investigate the issues associated with
diversity
To apply the AMA code of ethics to complex
situations
For Thursday, September 15
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Quiz – Chapters 1 – 2 – 10 points
Chapter 3
Ethics & Marketing
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Ethics deal with personal moral principles and values
Laws are society’s values and standards that are
enforceable in courts
There are numerous situations where judgment plays
a large role in defining ethical and legal boundaries
Actions that are technically legal could be viewed as
unethical
Actions are considered to be ethical may not be seen
as legal
Perceptions of Ethical Behavior
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58 of US adults rate ethical standards of
business executives as “fair” or “poor”
90% think white-collar crime is “very
common” or “somewhat common”
76% say the lack of ethics in business
contributes to tumbling societal moral
standards
41% of 1,694 corporate employees in a
recent survey were aware of ethical problems
in their company
Marketing Ethics
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Marketing Ethics: Moral judgments, standards
and rules of conduct relating to marketing
decisions.
Factors influencing ethical decision-making:
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Individual factors - attitudes and values.
Opportunity presenting itself - likelihood of
punishment, no professional codes of ethics, no
corporate policies to discourage unethical decision
making.
Values, attitudes, and behaviors of others - peers,
supervisors, top management.
Three Views of Ethical
Responsibility
• Invisible hand: True and only social responsibilities of business
organizations are to make profits and obey laws. Morality,
responsibility, and conscience reside in invisible hand of freemarket system, not with managers or organizations.
•
Hand of government: Corporation has no moral responsibility
beyond legal obedience. Regulatory hand of law and political
process turn these objectives into common good.
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Hand of management: Encourages corporations to exercise
independent, non-economic judgment over matters of morals
and ethics that face them.
Sources of Ethical Standards
Markkual Center for Applied Ethics,
http://www.scu.edu.ethics/practising/decision/frameworks.html
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Utilitarian Approach – produces the
greatest good and least harm for all
affected
Rights Approach – protects and
respects moral rights of those affected
Fairness or Justice Approach – all
equals should be treated equally, or on
a standard that is defensible.
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Common Good Approach -- Respect
and compassion for all others –
specifically the vulnerable
Virtue Approach – Actions consistent
with our virtues – Is this consistent with
my acting my best.
Respect, Honor, Integrity
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Recent job ad with clear ethical expectations:
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Salary: $115,000 base (neg.), plus 20-30% incentive
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Personal characteristics: Must be a person of high
bonus, car, and executive benefits.
integrity and impeccable character, whom people will
trust and respect; have emotional maturity; be
growing as a person, with a sense of purpose; bring
credibility by demeanor, professional knowledge, and
approach.
Characteristics of Successful
Relationships
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Mutual Trust
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Communication
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Shared Goals
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Commitment to Mutual Gain
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Organizational Support
Trust
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Belief that party will
fulfill its obligations in
the relationship and not
act to detriment of
partner
Aspects of Trust
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Honesty & Integrity
Dependability
Capability & Expertise
Concern for Other
Two-Sides of Business Ethics
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Buyers and Buying Center Members
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Collusive bidding
Restrictive conditions for bid specifications
Over-estimating purchases for quantity discounts
Excessive quantity on “sample” orders
Obscure contract clauses in small type
Accepting bribes or gifts
Sellers
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Overselling
Promising more than can be delivered
Lying or making exaggerated claims
Failing to keep customers confidences of divulging information to
competitors
Offering inappropriate or illegal entertainment
Ethical Dilemmas
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Read the AMA Code of Ethics
For each ethical dilemma address the
following:
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Is this situation covered by the AMA code of
Ethics?
What are the short-term consequences of your
decision?
Will anyone be hurt by your decision?
How will your decision affect the trust of the
customer or your employer?
What are the long term consequences of your
decisions?
Ethical Issues in Marketing
Research
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Society’s rights
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Clients’ rights
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The right to be informed of research results that may
impact society as a whole
The right to expect objective research results
The right to confidentiality
The right to expect quality research
Researcher’s Rights
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The right for protection against improper solicitation
of proposals
The right to accurate presentation of findings
The right to confidentiality of proprietary information
on techniques
Ethics and Pricing
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Setting an unfair price
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Altering product quality without changing price
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Practicing price discrimination with smaller accounts
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Price fixing
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Typical Examples of Antitrust Violations
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Bid Rigging
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Price Fixing
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Tying
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Market Allocations
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Using a Competitor’s Quote to Re-quote or Re-bid
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Reciprocity
Ethics and Advertising Strategy
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Comparative advertising
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If comparisons are made, then they must be accurate.
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Not implying that if a product is superior to competition in
one characteristic, then it is superior overall.
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Better to point out competitive differences, leaving
business customer to judge superiority of product.
Truth in Advertising
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It is immoral to:
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Lie, mislead, or deceive in advertising.
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Fail to indicate dangers that are not normally expected.
It is not immoral to:
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Use a metaphor or other figure of speech if these will be understood as
figurative language.
Persuade as well as to inform
Ethics in Sales Management
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Dealing with Customers
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Bribes
Gifts
Entertainment
Reciprocity
Dealing with Employers
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Moonlighting
Changing jobs
Expense Accounts
Contests
Three Concepts of Social
Responsibility
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Profit Responsibility: Companies have a duty
to maximize profits for their owners and
stockholders
Stakeholder Responsibility: Focuses on
obligations an organization has to those who
can affect achievement of its objectives
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Customers
Employees
Suppliers
Distributors
Social Responsibility
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Societal
Responsibility
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Preservation of the
ecological
environment and
general public
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Education
Diversity
Economically
disadvantaged
Labor conditions,
child labor
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Responses
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Green marketing:
Produce, promote and
reclaim environmentally
sensitive products
ISO 4000 – international
standards for
environmental quality and
green marketing standards
Cause-related marketing –
charitable contributions
tied to customer revenues
McDonnell Corporation
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Competitive Research for Multi-million dollar contracts.
Potential research techniques – which are unethical? Why?
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Check competitors annual and 10K reports, SEC filings, etc.
Ask competitor for information with full identification.
Buy competitor’s products, take them apart and price components.
Hire head-hunting firm to interview key managers from competitor
firm.
Hire management consultant to interview competitor under the
guise of doing an industry survey and guarantee of confidentiality.
Ask salespeople to ask customers about competitors.
Get a customer to request a phony bid from competitor.
Buy competitor’s garbage.
Infiltrate a competitor’s business operations (cleaning crews, new
hires)
Hack through competitor’s extranet.