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MM2711
Introduction to Marketing
Ethics and social responsibility
Week 4
MARKETING ETHICS
LEARNING OBJECTIVES

Why do marketers have to worry about ethics?

What does it take for a firm to be considered
socially responsible?

How should a firm make ethically responsible
decision?

How can ethics and social responsibility be
integrated into a firm’s marketing strategy?
4-2
Attitudes About the Ethical
Standards of Various Professions

Why do you feel
marketers (advertising
practitioners) rank so
low on this scale?

What can marketers do
to improve their
ranking?
4-3
Firm Goals
Greed and short
term profit seeking
Creating value
over the long run
Serious long term
consequences
Long term
success
Profit is important to the success of the firm. But how
the firm makes that profit can have a dramatic impact on
the firm’s future.
4-4
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
High Prices
Deceptive Practices
High-Pressure Selling
Shoddy, Harmful or Unsafe Products
Planned Obsolescence
Poor Service to Disadvantaged Consumers
4-5
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
High Prices
Complaint:
•Prices are too high due to
high costs of:
•distribution
•Advertising and
promotion
•Excessive mark-ups
Response:
•Intermediaries are
important and offer value
•Advertising informs buyers
of availability and merits of
a brand
•Consumer’s don’t
understand the cost of
doing business
4-6
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
Deceptive Practices
Complaint: Companies use deceptive practices
that lead customers to believe they will get
more value than they actually do. These
practices fall into three categories:

Deceptive pricing (e.g. discount after price
increasing)

Deceptive promotion (e.g. bait and switch)

Deceptive packaging (e.g. difference in actual and
apparent sizes)
4-7
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
Deceptive Practices
Response:
Support Legislation to protect consumers from
deceptive practices
Make lines clear

Products that are harmful

Products that provide little benefit

Products that are not made well
4-8
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
High-Pressure Selling
Complaint:
•Salespeople use highpressure selling that
persuade people to buy
goods they had no
intention of buying.
Response:
•Most selling involves
building long-term
relationships and valued
customers. Highpressure or deceptive
selling can damage
these relationships.
4-9
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
Shoddy, Harmful, or Unsafe Products
Complaint:
Response:
• Products have poor
quality, provide
little benefit, and
can be harmful.
• Good marketers
realize there is no
value in marketing
shoddy, harmful, or
unsafe products.
4-10
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
Planned Obsolescence
Complaint:
• Producers cause their
products to become
obsolete and change
consumers’ concepts of
acceptable styles to
encourage more and
earlier buying.
Response:
• Planned obsolescence is
really the result of
competitive market forces
leading to ever-improving
goods and services.
• Customer customers like
style changes and want
the latest innovations
4-11
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
Poor Service to Disadvantaged Consumers
Complaint:
•American marketers serve
disadvantaged customers
poorly. Some retail
companies “redline” poor
neighborhoods and avoid
placing stores there.
Response:
•Some marketers profitably
target these customers and
the FTC has taken action
against marketers that do
advertise false values,
wrongfully deny service, or
charge disadvantaged
customers too much.
4-12
Social Criticisms of Marketing
Marketing’s Impact on Society as a Whole
False wants and too much materialism
Too few social goods
Cultural pollution
4-13
Social Criticisms of Marketing
Marketing’s Impact on Society as a Whole
False Wants and Too Much Materialism
Complaint:
Response:
• The marketing system urges
too much interest in material
possessions. People are judged
by what they own rather than
who they are, creating false
wants that benefit industry
more than they benefit
consumers.
• People do have strong
defenses against advertising
and other marketing tools.
Marketers are most effective
when they appeal to existing
wants rather than creating new
ones. The high failure rate of
new products shows that
companies cannot control
demand.
4-14
Social Criticisms of Marketing
Marketing’s Impact on Society as a Whole
Too Few Social Goods
Complaint:
Response:
• Businesses oversell private
goods at the expense of
public goods and require more
public goods to support them
• There needs to be a balance
between private and public
goods
• Producers should bear full
social costs of their operations
• Consumers should pay the
social costs of their purchases
4-15
Social Criticisms of Marketing
Marketing’s Impact on Society as a Whole
Cultural Pollution
Complaint:
Response:
• Marketing and advertising create
cultural pollution
• Marketing and advertising are
planned to reach only a target
audience, and advertising makes
radio and television free to users
and helps to keep down the costs
of newspapers and magazines.
Today’s consumers have
alternatives to avoid marketing
and advertising from technology.
4-16
Social Criticisms of Marketing
Marketing’s Impact on Other Businesses
• Acquisition of competitors reduces competition
• Marketing practices create barriers to entry
– High promotional spending
– Abuse of patent protection
• Unfair competitive marketing practices
– Predatory pricing
– Supplier relations
4-17
MARKETING ETHICS

Why do marketers have to worry about ethics?

What does it take for a firm to be considered
socially responsible?

How should a firm make ethically responsible
decision?

How can ethics and social responsibility be
integrated into a firm’s marketing strategy?
4-18
American Marketing Association
Code of Ethics
Generally accepted code in marketing
Flows from general norms of conduct to
specific values
Subareas within marketing have their own
code of ethics to deal with specific issues
Each sub-area within marketing, such as marketing
research, advertising, pricing, and so forth, has its own
code of ethics that deals with the specific issues that
arise when conducting business in those areas.
Source: http://www.helleniccomserve.com/marketingcodeofethics.html
4-19
The Six Tests of Ethical Action
4-20
Creating an Ethical Climate in the
Workplace

Values
–
–
–

Rules
–
A strong ethical climate requires a
commitment from the top down
within the firm. Everyone within
the firm must agree to a system
of controls that rewards
appropriate behavior and
punishes inappropriate behavior.
–

Establish
Share
Understand
Management
commitment
Employee dedication
Controls
–
–
Reward
Punishment
4-21
The Link Between Ethics and
Corporate Social Responsibility
Firms should
implement
programs that
are socially
responsible
Employees
should act in an
ethically
responsible
manner
Corporate social
responsibility describes the
voluntary actions taken by a
company to address the
ethical, social, and
environmental impacts of its
business operations and the
concerns of its stakeholders.
4-22
MARKETING ETHICS

Why do marketers have to worry about ethics?

What does it take for a firm to be considered
socially responsible?

How should a firm make ethically responsible
decision?

How can ethics and social responsibility be
integrated into a firm’s marketing strategy?
4-23
A Framework for
Ethical Decision Making
Example: How to make ethical decisions in a marketing
research firm
4-24
Step One: Identify Issues
Data collection
methods
Using results to
mislead or even
harm the public
Hiding the real
purpose of the
study
In a marketing research firm, ethical issues might include:
•data collection methods—not informing respondents
that they are being observed
•hiding the true purpose of a study from respondents—
telling them they are an independent research company,
but actually doing research for a particular politician.
•using results to mislead or even harm the public—results
of a pharmaceutical study.
4-25
Step Two: Gather Information and
Identify Stakeholders
Identify all ethical issues
and relevant legal
information
Identify all relevant
stakeholders and get
their input on any
identified ethical issues
4-26
Stakeholder Analysis Matrix for a
Marketing Research Firm
4-27
Step Three: Brainstorm Alternatives

Halt the market
research project?

Make responses
anonymous?

Instituting training on
the AMA Code of
Ethics for all
researchers
4-28
Step Four: Choose a Course of
Action
Weigh the alternatives
Take a course of action
4-29
Ethical Decision-Making Evaluation
Questionnaire
4-30
MARKETING ETHICS

Why do marketers have to worry about ethics?

What does it take for a firm to be considered
socially responsible?

How should a firm make ethically responsible
decision?

How can ethics and social responsibility be
integrated into a firm’s marketing strategy?
4-31
Integrating Ethics Into Marketing Strategy
4-32
Planning Phase

The mission or vision
statement sets the
overall ethical tone for
planning.

Firms often go beyond
the mission or vision
statement by including
a values statement.
4-33
Implementation Phase
Should the firm be targeting
this market with this product?
Should the firm be relocating
production to another country?
Should the firm be selling
its product in this market
in this manner?
4-34
Control Phase
1.
Check successful
implementation
2.
React to change
Any plan requires constant
evaluation and revision, and this
truism applies particularly to the
evaluation of ethical issues.
4-35