Download MBA 860 - Adv. Mkt. Strategy

2
Ethical
Considerations in
Business-to-Business
Marketing
McGraw-Hill/Irwin
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Agenda
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Marketing Ethics: An Overview
Marketing Strategy and Ethics
An Ethical Issue: The Organizational
Buying Function and Buyer-Seller
Relationships
Ethical Issues in Marketing Research
Ethics and the Management of the Pricing
Function
Ethics and Sales Force Management
Ethics and Advertising Strategy
2-2
Marketing Ethics: An Overview
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Marketers must be capable of formulating and
implementing policies based not only on
economic reasoning, but on ethical and
professional values as well.
Influencing factors:
• 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 –
“culture” as illustrated by peers, supervisors,
top management.
2-3
Marketing Ethics: An Overview
A Reputation for Integrity
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Takes years to earn.
Takes one bad decision to destroy.
Once a bad decision is made, it is often
impossible to reverse and may end
business relationships.
2-4
Marketing Ethics: An Overview
Respect, Honor, Integrity
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How would you feel about working for
someone who had no integrity?
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How would you feel about purchasing
important products from someone with no
integrity?
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How would you feel about having people
with no integrity working for you (where
you are responsible for what they do)?
2-5
Marketing Ethics: An Overview
Ethics in the Future
Businesses are increasingly operating as part of
society, not only in their traditional role of
improving standard of living (by generating jobs,
offering products and services, and paying
taxes), but also via a sensitivity that supports
employees, empowers customers and investors,
and deals with needs of local, national, and
international communities.
2-6
Marketing Ethics: An Overview
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What Does Ethics Involve?
• Three Views on Corporate Management
Responsibility
Invisible hand: True and only social
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responsibilities of business organizations are to
make profits and obey laws. Morality,
responsibility, and conscience reside in invisible
hand of free-market system, not with managers
or organizations.
2-7
Marketing Ethics: An Overview
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What Does Ethics Involve?
• Three Views on Corporate Management
Responsibility (con’t.)
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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,
noneconomic judgment over matters of
morals and ethics that face them.
2-8
Marketing Ethics: An Overview
Sample Corporate Code of Ethics
Integrity and ethics exist in the individual or
they do not exist at all. They must be
upheld by the individual or they are not
upheld at all. In order for integrity and
ethics to be characteristics of this
company, we who make up the corporation
must strive to be honest and trustworthy in
all our relationships. . .
(Courtesy of Boeing Company)
2-9
Marketing Strategy and Ethics
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Business Ethics is Not a One-Sided
Proposition
• Buying Centers may be faced with:
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Participating in collusive bidding
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Placing restrictive conditions when defining
specifications
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Overestimating demand to receive a price
concession
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Purchasing “sample order” that are magnified
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Burying obscure contract clauses in small type
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Accepting bribes or gifts
2-10
Marketing Strategy and Ethics
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Business Ethics is Not a One-Sided
Proposition
•Sellers may be faced with:
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Overselling
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Promising more than can be delivered
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Exaggerated claims and lying
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Failing to keep confidences or promises
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Accepting bribes or gifts
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Offering inappropriate or illegal entertainment
2-11
Ethical Issues in Marketing Research
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Society’s rights
• The right to be informed of research results that may
impact society as a whole
• The right to expect objective research results
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Clients’ rights
• The right to confidentiality
• The right to expect quality research
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Researcher’s Rights
• 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
2-12
Ethics and the Management of the Pricing
Function
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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
2-13
Ethics and the Management of the Pricing
Function
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Typical Examples of Antitrust Violations
• Bid Rigging
• Price Fixing
• Tying
• Market Allocations
• Using a Competitor’s Quote to Requote or Rebid
• Reciprocity
2-14
Ethics and Sales Force Management
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Ethics in Dealing with Customers
• Taking Bribes – should be refused tactfully
• Accepting or Giving Gifts – may or may not be
improper
• Entertainment – may or may not be improper
• Reciprocity – giving preference to a supplier who is
also a customer
2-15
Ethics and Sales Force Management
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Ethics in Dealing with Employers
• Moonlighting - Holding more than one job.
• Changing jobs to a competitor - May
unavoidably involve taking company training,
customer knowledge, customer goodwill, or
confidential information.
• Expense Accounts - Present special temptations
and are most frequent areas for ethical abuse.
• Contests - May result in stockpiling orders until
contest begins, selling unneeded products to friends
for later return, overselling.
2-16
Ethics and Advertising Strategy
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Truth in Advertising
• 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.
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Persuade as well as to inform.
2-17
Ethics and Advertising Strategy
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Comparative advertising
• If comparisons are made, then they must be
accurate.
• Care must be taken not to imply that if a
product is superior to competition in one
characteristic, then it is superior overall.
• Better to point out competitive differences,
leaving business customer to judge superiority
of product.
2-18