Chapter 4 Ethical and Social Responsibility in Marketing a The Moral Principles and Values the guide the actions and decisions of an I Ethics individual or a group II Business Ethics a involves what is right and wrong in the workplace and doing right III Business Ethics WHO NEEDS IT a NO ONE Because It s religion not business i ii Our people ARE ethical iii It s for philosophers iv It s Obvious Do Good v It s preaching vi It s just a recent fad vii Ethics can t be managed It s the same as social responsibility viii ix If a firm is not in legal trouble it s ethical x Managing ethics has little practical relevance b Well maybe BUT i Nestle s Infant formula water killed babies in Africa ii Beech Nut watered apple juice iii Manville asbestos employees iv E F Hutton kiting scheme v Union Carbide Bhopal India vi Enron Conflicts of Interest vii Worldcom MCI Inflated Accounting Reports viii Martha Steward Insider Trading ix Bernie Madoff First Jail Then Bankruptcy for Madoff x Nike Questionable Hiring Practices 1 The Background a Child sweat shops bad working conditions b Target low income families by making shoes expensive 2 Corrective Behavior a Code of consuct and 6 point plan ensures more socially responsible labor practices and commissioned an independent study of Nike factories abroad b Created a huge social responsibility department and published a corporate responsibility report IV Figure 4 1 text page 92 Four ways to classify marketing decisions according to ethical and legal relationships a Unethical AND Illegal DUH 35 b Ethical AND Legal Okay to consider c Unethical and Illegal don t do it d Ethical but Illegal Drug can save life steal e Unethical but Legal Pump dump stocks or con people V Criticism of Marketing a High prices b Deceptive practices c High pressure selling d Shoddy harmful or unsafe products e Planned obsolescence f Poor service to disadvantaged consumers g WHEN THESE OCCUR they have impact on i Consumers ii Society as a whole iii other businesses VI High Prices a Causes i High costs of distribution and markups 1 Consumers want convenience they want lots of assortment they want easy return privileges etc ii High advertising and advertising and promotion Costs 1 Generic vs Branded ex Bayer b SO markups that result in high prices often reflect services that customers WANT and are willing to pay for i Convenience ii Image iii Safety iv Service v Return privileges warranties VII Deceptive Practices a Deceptive Pricing i Falsely advertising factory or wholesale prices or large reductions from phony high retail list prices morrgage rates 36 i Overstating a product s features or performance running rigged b Deceptive Promotions contests c Deceptive Packaging i Exaggerating package contents through subtle design using misleading labeling food labels etc d Deceptive Practices lead to i Legislation e Is Puffery promotional statement and claims that express subjective rather than objective views that no reasonable person would take literally Come to Larry s for the best cup of coffee in the world Deception harmful and misleading f Harm Business Buyer Beware caviet enter VIII High Pressure Selling a Some people are trained to deliver i High pressure selling persuades people to buy goods they had no intent of buying ii High pressure selling can occur because of prizes going to top sellers b It DOES happen i Confessions of a Car Salesman 1 Bumping raising the customer s offer for a car if customer says he only wants to pay 250 a month just say up to He ll probably bump himself up to 300 without you doing anything 2 Strong holding firm on your price and being a tough negotiator 3 Turn Over passing a customer from one salesman to another to prevent them from leaving the lot c BUT it is not standard business practice i High pressure selling is not good for long term relationships IX Unsafe Products a Products that are not made well or services that are not performed well b Products that deliver little benefit or that may be harmful c Unsafe products come from i Manufacturer indifference ii Increased production complexity iii Poorly trained labor 37 iv Poor quality control and v Outright dishonest people Example Wal Mart Pulling Children s Jewelry With Toxic Metals Example Lead Paint on Toys made in China Example Salmonella problems in the food supply d HELP for consumers via the Consumer Product Safety Commission i Mission To protect consumers against unreasonable risk of injury by developing voluntary and mandatory standards banning dangerous consumer products issuing recalls of products already on the market and researching potential hazards associated with consumer products http www cpsc gov e Video Apel on Safe Quality Products i Fix any problems and fix them right ii Get products that provide the little features that consumers won t notice at first but that they will appreciate later iii The result is a satisfied consumer who will be happy and who will come back and refer others X Planned Obsolescence a Products needing replacement before they should because they are obsolete ex flat screen tvs b Producers who influence consumer concepts of acceptable styles c Intentionally holding back attractive functional features then introducing them later to make old model obsolete d The case of the Apple iPhone XI Poor Service to Disadvantaged Consumers a Poor are forced to shop in smaller stores where they pay more for inferior goods b Redlining by national chain stores occurs in disadvantaged neighborhoods i Redlining charges have also been leveled against insurers banking health care providers and others c Poor are targeted for rapid refunds 38 XII Cultural Pollution segment a Mass communication media is imprecise and reaches outside target b But advertising keeps the cost of radio and television free and magazines newspaper down and c Consumers can opt for technologies or media that reduce or eliminate ads XIII Questionable Judgments in Advertising a Provocative ads for Clearasil have parents upset b Are such ads i Over the top ii Unethical iii Humorous Funny c Should they be i Banned ii Censored iii Or should consumer response be the main influence d Clearasil s Response Ad is humorous and unrealistic example of an awkward family event Inform and entertain e GoDaddy com i Do you like their Super Bowl ads 1 Rated on artistic content sophomoric artistic level 2 based on personal moral views may look down upon them or find them offensive 3 But is you re a marketer you love them 4