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PRINCIPLES OF MARKETING
University of Management and Technology
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Module 16: Marketing Ethics
and Social Responsibility
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Copyright Warning
This presentation is the intellectual property of Pearson Education
Inc. 2011. Students are hereby advised that they may not copy or
distribute this work to any third party
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Rest Stop: Previewing the Concepts
Define sustainable marketing and discuss its importance.
Identify the major social criticisms of marketing.
Define consumerism and environmentalism and explain how they
affect marketing strategies.
Describe the principles of sustainable marketing.
Explain the role of ethics in marketing.
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First Stop
Patagonia’s Sustainability Mission: Do No Harm
Patagonia’s Response
Background
Business Approach: To produce the
highest-quality products while doing
the least possible harm to the
environment. Environmental Review
Process examines all of the methods
and materials used in making clothing.
Created Footprint Chronicles:
Documents and shares with customers
information about the environmental
effects of every link in the firm’s supply
chain. Both positive and negative
information is provided.
Socially Responsible: Donates time,
services, and 1% of sales to
grassroots environmental groups.
Results: Manufacturing, not
transportation, takes the most energy
and often creates bad by-products.
PFOA used in rain shell jacket was
found to be toxic, requiring a product
change. CEO believes benefits
outweigh the costs, and that firm is
setting a new competitive bar.
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Challenge:
Eco-savvy buyers are
asking hard questions about product
origins.
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Sustainable Marketing
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Socially and environmentally
responsible marketing that
meets the present needs of
consumers and businesses
while also preserving or
enhancing the ability of
future generations to meet
their needs.
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Marketing in Action
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McDonald’s “Plan to Win” addresses environmental issues related to
food-supply sustainability, environmentally sustainable packaging, and
more responsible store designs.
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Figure 16.1:
Sustainable Marketing
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Social Criticisms of Marketing
Marketing’s impact on individual consumers has been criticized in terms of:
High prices.
Deceptive practices.
High-pressure selling.
Shoddy, harmful, or
unsafe products.
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Planned
obsolescence.
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Poor service to
disadvantaged
consumers.
Is Hardee’s being socially irresponsible
by marketing this big, juicy, calorie
and cholesterol laden burger?
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Social Criticisms of Marketing
Three factors are cited as leading
to high prices:
High costs of distribution.
High advertising and promotion
costs.
Excessive markups.
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Heavily promoted brands cost
much more than do private labels.
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Social Criticisms of Marketing
Marketers are often accused of deceptive practices such as:
Deceptive Pricing: Falsely advertising “factory” or “wholesale” prices or
large reductions from phony high retail list prices.
Deceptive Promotion: Misrepresenting a product’s features or
performance, or luring consumers to store for out-of-stock item.
Deceptive Packaging: Exaggerating package contents through subtle
design, using misleading labeling, etc.
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Marketing in Action
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A recent TerraChoice study found that 98% of products making green
claims committed at least one of the greenwashing sins.
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Social Criticisms of Marketing
Deceptive practices have led to legislation and other protective
consumer actions.
FTC governs deceptive practices.
Use of puffery is legal, but may harm consumers in subtle ways.
Deceptive practices are not sustainable as they harm a firm’s business
in the long-run.
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Social Criticisms of Marketing
Salespeople are often accused of using high-pressure selling
tactics:
In persuading people to buy goods they had no intention of buying.
Because prizes are often given to top sellers.
Marketers have little to gain from high-pressure tactics.
Such actions damage relationships with the firm’s customers.
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Social Criticisms of Marketing
Shoddy or unsafe product criticisms include complaints that:
Products are not made well or services are not performed well.
Products deliver little benefit or are even harmful.
Products are unsafe due to manufacturer indifference, increased
product complexity, and poor quality control.
Manufacturers provide desirable, quality goods.
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Social Criticisms of Marketing
Planned obsolescence refers to
products needing replacement
before they should because they
are obsolete.
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Social Criticisms of Marketing
Criticisms of planned obsolescence include:
Use of materials and components that will break, wear, rust, or rot
before they should.
Continually changing consumer concepts of acceptable styles.
Intentionally holding back attractive functional features, then introducing
them later to make older models obsolete.
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Social Criticisms of Marketing
Marketers are also accused of serving disadvantaged consumers
poorly as:
The poor are forced to shop in smaller stores where they pay more for
inferior goods.
National chain stores, insurers, and health care providers practice
“redlining” and refuse to open businesses in poor neighborhoods.
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Marketing in Action
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Critics have accused mortgage lenders of “reverse redlining,”
purposively targeting disadvantaged consumers with subprime
mortgages that they couldn’t afford.
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Marketing’s Impact on
Society as a Whole
Marketing’s impact on society as a whole has been criticized in
terms of:
Creating false wants and encouraging too much materialism.
This criticism overstates the power of business and ignores consumers
ability to defend themselves against advertising.
Overselling private goods at the expense of public (social) goods.
Creating cultural pollution, stemming from constant exposure to
marketing messages.
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Fuel for Thought
Marketing messages are
prevalent throughout the United
States, and critics contend that
this causes “cultural pollution.”
Do you agree? Why or why
not?
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Marketing’s Impact on
Other Businesses
Critics charge that a firm’s marketing practices can harm other
companies and reduce competition via:
Acquisitions of competitors.
Shrinking number of competitors.
Marketing practices that create barriers to entry.
Patents, heavy promotional spending can limit competition.
Unfair competitive marketing practices.
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Predatory pricing and other practices.
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Marketing in Action
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Wal-Mart was accused of predatory pricing practices by local pharmacists.
Wal-Mart countered charges by noting that their tremendous buying power
allows them to sell at this price and still make a profit.
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Consumerism
An organized movement of
citizens and government
agencies to improve the
rights and power of buyers
in relation to sellers.
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Consumerism is one of two major consumer
actions to promote sustainable marketing.
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Consumer Actions to Promote
Sustainable Marketing
Traditional seller’s rights include 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.
Charge any price for the product, provided no discrimination exists
among similar kinds of buyers.
Spend any amount to promote the product, provided it is not defined as
unfair competition.
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Use
any product message, provided it is not misleading or dishonest in
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content or execution.
Use any buying incentive schemes, provided they are not unfair or
misleading.
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Consumer Actions to Promote
Sustainable Marketing
Traditional buyers’ rights include the right to:
Not buy a product that is offered for sale.
Expect the product to be safe.
Expect the product to perform as claimed.
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Consumer Actions to Promote
Sustainable Marketing
Consumer advocates call for these additional rights to be added:
Be well informed about important aspects of the product.
Be protected against questionable products and marketing practices.
Influence products and marketing practices in ways that will improve
“quality of life”.
Consume now in a way that will preserve the world for future
generations of consumers.
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Marketing in Action
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Today’s product labels contain a variety of useful information, from
ingredients and nutrition facts to recycling and country of origin information.
Drink maker IZZE uses the label to promote the brand, both on the bottle
and at its web site.
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Environmentalism
An organized movement of
concerned citizens and
government agencies to
protect and improve
people’s living environment.
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Environmentalism is the second consumer
action to promote sustainable marketing.
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Consumer Actions to Promote
Sustainable Marketing
Environmentalism:
Those who subscribe to environmentalism believe that marketing
system’s goal should be to maximize quality of life.
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Consumer Actions to Promote
Sustainable Marketing
Environmentalism:
First wave in the 1960s - 1970s was driven by environmental groups
and concerned consumers.
Second wave in the 1970s and 1980s was driven by government and
resulted in environmental laws.
Third wave is occurring now. Firms are accepting more responsibility
and many have adopted a policy of environmental sustainability.
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Consumer Actions to Promote
Sustainable Marketing
Environmental sustainability:
A management approach that involves developing strategies that both
sustain the environment and produce profits for the company.
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Figure 16.2:
The Environmental Sustainability Portfolio
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Marketing in Action
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Suburu of Indiana works towards pollution prevention, and claims that it
now sends less trash to the landfill each year than the average American
family.
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Marketing in Action
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To reduce its packaging waste, Coca-Cola is now testing new contour
bottles made from corn, bioplastics, or more easily recycled aluminum.
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Business Actions Toward Sustainable
Marketing
Consumer-oriented marketing:
The philosophy of sustainable marketing that holds that the company
should view and organize its marketing activities from the consumer’s
point of view.
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Business Actions Toward Sustainable
Marketing
Customer-value marketing:
A principle of sustainable marketing that holds that a company should
put most of its resources into customer-value-building marketing
investments.
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Business Actions Toward Sustainable
Marketing
Innovative marketing:
A principle of sustainable marketing
that requires that a company seek
real product and marketing
improvements.
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Ninetendo’s customer-focused
innovation marketing resulted
in the Wii breaktrhough.
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Business Actions Toward Sustainable
Marketing
Sense-of-mission marketing:
A principle of sustainable marketing that holds that a company should
define its mission in broad social terms rather than narrow product
terms.
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Marketing in Action
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Timberland’s corporate mission is about “trying to make a difference in the
communities where we live and work.”
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Business Actions Toward Sustainable
Marketing
Societal marketing:
A principle of sustainable marketing that holds that a company makes
marketing decisions by considering consumers’ wants and interests, the
company’s requirements, consumers’ long-run interests, and society’s
long-run interests.
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Figure 16.4:
Societal Classification of Products
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Marketing in Action
Haworth’s Zody office chair fits
the bill as a desirable product.
Not only is it attractive and
functional, but also
environmentally responsible.
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Business Actions Toward Sustainable
Marketing
Firms need to develop corporate
marketing ethics policies to serve as
broad guidelines that everyone in
the organization must follow.
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Business Actions Toward Sustainable
Marketing
Ethics policies should cover:
Distributor relations.
Advertising standards.
Customer service.
Pricing.
Product development.
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General ethical standards.
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Business Actions Toward Sustainable
Marketing
What principle should guide firms and marketing managers on
issues of ethics and social responsibility?
Free market and legal system is one option.
Letting responsibility fall to individual companies and managers to
develop a “social conscience” is a second option.
International marketers face special challenges.
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Rest Stop: Reviewing the Concepts
Define sustainable marketing and discuss its importance.
Identify the major social criticisms of marketing.
Define consumerism and environmentalism and explain how they
affect marketing strategies.
Describe the principles of sustainable marketing.
Explain the role of ethics in marketing.
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