Chapter Sixteen Marketing Ethics and Social Responsibility.

Chapter Sixteen

Marketing Ethics and Social Responsibility

Copyright 2007, Prentice Hall, Inc. 16-2

Roadmap: Previewing the Concepts

1. Identify the major social criticisms of marketing.

2. Define consumerism and environmentalism and explain how they affect marketing strategies.

3. Describe the principles of socially responsible marketing.

4. Explain the role of ethics in marketing.


Background Nike has been heavily

criticized for NOT being socially responsible.

Accusation: use of sweatshops and child labor overseas, and horrible working conditions.

Accusation: targeting low-income families by making shoes an expensive status symbol for poor urban street kids.

Nike – Socially Responsible?Nike – Socially Responsible?Case StudyCase Study

Behavior Code of conduct and six-

point plan ensures more socially responsible labor practices & commissioned an independent study of Nike factories abroad.

Created a huge social responsibility department and publishes CRS report.

Donates more than $37 million to sports programs and 3% of earnings to charity.


Criticisms of Marketing

High prices Deceptive practices High-pressure selling Shoddy, harmful, or unsafe products Planned obsolescence Poor service to disadvantaged

consumers


High Prices

Caused by:– High costs of distribution– High advertising and promotion costs– Excessive markups


Deceptive Practices

Deceptive Pricing:– Falsely advertising “factory” or “wholesale”

prices or large reductions from phony high retail list prices.

Deceptive Promotion:– Overstating a product’s features or performance,

running rigged contests.

Deceptive Packaging:– Exaggerating package contents through subtle

design, using misleading labeling, etc.


High-Pressure Selling

Salespeople are trained to deliver smooth, canned talks to entice purchase.– High-pressure selling persuades people to

buy goods they had no intention of buying.– High-pressure selling can occur because

of prizes going to top sellers.– High-pressure selling is not good for long-

term relationships.


Shoddy or Unsafe Products

Includes:– Products that are not made well or

services that are not performed well.– Products that deliver little benefit or that

may even be harmful.– Unsafe products due to manufacturer

indifference, increased production complexity, poorly trained labor, and poor quality control.


Planned Obsolescence

Refers to:– Products needing replacement before they

should because they are obsolete.– Producers who change consumer

concepts of acceptable styles.– Intentionally holding back attractive

functional features, then introducing them later to make old model obsolete.


Poor Service to Disadvantaged Consumers

Disadvantaged consumers are served poorly when:– Poor are forced to shop in smaller stores

where they pay more for inferior goods.– “Redlining” by national chain stores

occurs in disadvantaged neighborhoods.• Redlining charges have also been

leveled against insurers, banking, health care providers and other industries.

– Poor are targeted for “rapid refunds.”


Marketing’s Impact on Society as a Whole

False wants and too much materialism Producing too few social goods Cultural pollution Too much political power


Marketing’s Impact on Other Businesses

Critics charge that a firm’s marketing practices can harm other companies and reduce competition.– Acquisitions of competitors.– Marketing practices that create barriers to

entry.– Unfair competitive marketing practices.


Consumerism

Consumerism is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers.


Sellers’ Rights

The right to . . .1. 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.

2. charge any price for the product, provided no discrimination exists among similar kinds of buyers.

3. spend any amount to promote the product, provided it is not defined as unfair competition.

4. use any product message, provided it is not misleading or dishonest in content or execution.

5. use any buying incentive schemes, provided they are not unfair or misleading.


Buyers’ Rights

The right to:1. not buy a product that is offered for sale.

2. expect the product to be safe.

3. expect the product to perform as claimed.

4. be well informed about important aspects of the product.

5. be protected against questionable products and marketing practices.

6. influence products and marketing practices in ways that will improve “quality of life.”


Environmentalism

An organized movement of concerned citizens and government agencies to protect and improve people’s living environment.


Environmental Sustainability

A management approach that involves developing strategies that both sustain the environment and produce profits for the company.

Levels of environmental sustainability:– Pollution prevention– Product stewardship– New environmental technologies– Sustainability vision


Enlightened Marketing

A marketing philosophy holding that a company’s marketing should support the best long-run performance of the marketing system.– Customer-oriented marketing– Innovative marketing– Customer-value marketing– Sense-of-mission marketing– Societal marketing



Consumer-Oriented Marketing:– The philosophy of enlightened marketing

that holds that the company should view and organize its marketing activities from the consumer’s point of view.



Innovative Marketing:– A principle of enlightened marketing that

requires that a company seek real product and marketing improvements.



Customer-Value Marketing:– A principle of enlightened marketing that

holds that a company should put most of its resources into value-building marketing investments.



Sense-of-Mission Marketing:– A principle of enlightened marketing that

holds that a company should define its mission in broad social terms rather than narrow product terms.



Societal Marketing:– A principle of enlightened marketing that

holds that a company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, and society’s long-run interests.• Seeks to introduce desirable products,

rather than those that are deficient, displeasing, or salutary.


Marketing Ethics

Corporate Marketing Ethics Policies:– Broad guidelines that everyone in the

organization must follow.

These should cover:– Distributor relations– Advertising standards– Customer service– Pricing– Product development– General ethical standards


Marketing Ethics

What principle should guide companies and marketing managers on issues of ethics and social responsibility?– Free market and legal system– Responsibility falls to individual

companies and managers– International marketers face special

challenges


Rest Stop: Reviewing the Concepts

1. Identify the major social criticisms of marketing.

2. Define consumerism and environmentalism and explain how they affect marketing strategies.

3. Describe the principles of socially responsible marketing.

4. Explain the role of ethics in marketing.

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Chapter Sixteen Marketing Ethics and Social Responsibility.

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