Marketing Ethics and
Social Responsibility in
Strategic Planning1st Group• Ary Suryo W
• Masruroh
The Auto Industry Tries to Go Green
Car manufacturers have gone to great lengths to promote hybrid cars.
These cars are generally much more expensive to develop and produce. Do corporations have a social responsibility to develop environmentally friendly cars? Why or why not?
The Role of Ethics and Social Responsibility in Marketing Strategy Grown in importance recently
Due to firms having problems in this area
Have become necessities due to: Stakeholder demands Changes in Federal law
Improve marketing performance and profits
Are important to development of marketing strategy
The Dimensions of Social Responsibility Social Responsibility
A broad concept that relates to an organization’s obligation to maximize its positive impacts on society while minimizing its negative impacts
Marketing citizenshipThe adoption of a strategic focus for
fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders
StakeholdersConstituents who have a “stake” or claim in
some aspect of the company’s products, operations, markets, industry, and outcomes
The Nature of Social Responsibility
The Nature of Social Responsibility (cont’d) The Dimensions of Social Responsibility
Marketing ethics
Principles and standards that define acceptable marketing conduct as determined by various stakeholders
Cause-related marketing
The practice of linking products to a particular cause on an ongoing or short-term basis
Strategic philanthropy
The synergistic use of organizational core competencies and resources to address key stakeholders’ interests and achieve both organizational and social benefits
Best Corporate Citizens1 General Mills 11 AT&T
2 Cummins Inc. 12 Fannie Mae
3 Intel 13 Bank of America
4 Procter & Gamble 14 Motorola
5 IBM 15 Herman Miller
6 Hewlett-Packard 16 Expedia
7 Avon Products 17 Autodesk
8 Green Mountain Coffee Roasters
18 Cisco Systems
9 John Nuveen 19 Wild Oats Markets
10 St. Paul 20 Deluxe
Source: Peter Asmus, with Sandra Waddock and Samuel Graves, “100 Best Corporate Citizens of 2003,” Business Ethics, www.business-ethics.com/100best.htm (accessed Oct. 24, 2003).
Marketing Strategy in Action
R.J. Reynolds has been accused by critics of using its “Joe Camel” cartoon character, to target children for cigarette consumption.
How has society acted to protect children from advertising such as this? What obligations do companies have to protect children?
The Pyramid of Corporate Social Responsibility
Exhibit 3.1
Social Responsibility
Includes:
Economic responsibility of making a profit Legal responsibility of obeying laws and
regulations Ethical responsibility to uphold principals and
standards Philanthropic responsibility to increase the
firm’s positive impact on society
Marketing Ethics and Strategy
Requires that organizations and individuals accept responsibility
Can lead to violations of public trust Involves complex and detailed
decisions in gray areas Deals with experiences and
decisions made at work Comes into play anytime individuals
feel manipulated or cheated
The European Eco-label
Social Responsibility Issues Green Marketing
The specific development, pricing, promotion, and distribution of products that do not harm the natural environment
Green Marketing Goals Eliminate the concept of waste Reinvent the concept of a product Make prices reflect actual and
environmental costs Make environmentalism profitable
Social Responsibility Issues (cont’d) Consumerism The efforts of independent individuals, groups,
and organizations to protect the rights of consumers
Lobbying government officials and agencies Letter-writing campaigns and boycotts Public service announcements Coverage by the news media and the
Internet Consumer “Bill of Rights”
Right to safety Right to be informed Right to choose Right to be heard
Social Responsibility Issues (cont’d)
Community Relations Expectations of firms as “good corporate
citizens”Philanthropic contributions to civic projects and
institutionsEducational, health, cultural, and recreational
Employee volunteer participationEmployment opportunities and economic
development
The Nature of Ethics
Ethical Standards
Company
Industry
Government
Customers
Interest Groups
Society
InfluenceFactors
The Nature of Ethics (cont’d)
EthicalIssues
LegalIssues
EthicalIssues
LegalIssues
GrayAreas
The Nature of Ethics (cont’d)
Ethical Issues in Marketing An identifiable problem, situation,
or opportunity requiring a choice among several actions that must be evaluated as right or wrong, ethical or unethical
The Challenges of BeingEthical and Socially Responsible
Business decisions involve complex decisions in which correctness may not be clear cut e.g. Internet privacy, protecting
trademarks and brand names
Ethical conflict may emerge from an inconsistency between personal values and the values held by members of the work group
Ethical issues can develop into legal problems
Types of MisconductObserved in Organizations
Exhibit 3.4
Deceptive Practices in Marketing Deceptive Communications and Promotion
Fraud or any false communication Exaggerated claims or statements Ambiguous statements Product labeling issues Selling abuses
Regulating Deceptive Marketing Practices Typically regulated by:
The firms themselvesIndustry and trade associations
Organizational Determinants of Marketing Ethics & Social Responsibility Ethical Decision Making
Determined by an individual’s background and business colleagues
Affected by personal values, opportunity for unethical behavior, and exposure to others
Intricately tied to the firm’s culture and ethical climatea
Can only be improved by planning and structure
Likely to occur when modeled by a strong leader
Ethical Climate
Part of a corporate culture that relates to an organization’s expectations about appropriate conduct The character component of an
organization Sets the tone for ethical decisions Determines whether or not an
individual perceives an issue to be an ethical issue
Codes of Conduct (1 of 2)
Codes of Conduct (Codes of Ethics) Formal statement that describes
what an organization expects of its employees
Not an effective means of controlling ethical behavior unless integrated into daily decision making
Not effective unless the code has support of top management
Codes of Conduct (2 of 2) Codes must reflect management’s desire for
compliance with values, rules, and policies Codes should have six core values:
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship Codes will not resolve every issue encountered in
daily operations Codes can help managers deal with ethical dilemmas
Key Considerations in Developing and Implementing a Code of Ethical Conduct
Exhibit 3.5
Market Orientation
Market Orientation The development of an organizational
culture that effectively and efficiently promotes the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance of the firm.
Strongly tied to ethics and social responsibility
Means fostering a sense of cooperation and information exchange
Stakeholder Orientation
Stakeholder Orientation The degree to which a firm understands
and addresses stakeholder demands Strongly tied to ethics and social
responsibility Comprised of three activities:
1. Generation of stakeholder groups data and assessment of firm effects on these groups
2. Distribution of this information throughout the firm
3. Responsiveness as a whole to this intelligence
Connecting Ethics & Social Responsibilityto Marketing Performance Strong ethics causes employees to be:
Motivated to serve customers Committed to the firm Committed to high quality standards Satisfied with their job
Can lead to trust among firm’s stakeholders
Is so important that it can have major negative impacts on firms that don’t uphold ethical standards
The Connection BetweenEthics and Strategic Planning
Typically done through ethical compliance programs or integrity initiatives
Vested in the marketing plan Based on an understanding of:
1) Risks associated with misconduct 2) Ethical and social consequences of
strategy 3) Values of organizational members and
stakeholders
Manifested through actions … not just words