Chapter 4 Marketing Ethics The Scope of Marketing Ethics Business Ethics Marketing Ethics o Moral or ethical dilemmas that might arise in a business setting o Examines those ethical problems that are specific to the domain of marketing Ethical Issues Associated with Marketing Decisions People in marketing interact directly with the public Creating an Ethical Climate in the Workplace Ethical climate o A set of values that guides decisions making and behavior o Everyone within a firm must share the same understanding of its ethical values and how they translate into the business activities of the firm o Once values are understood the firms must develop explicit rules and implicit understandings that govern all the firm s transactions o Top management must commit to establishing an ethical climate and employees throughout the firm must be dedicated to that climate because the roots of ethical conflict often are the competing values of individuals o Each individual holds his her own set of values and sometimes those values result in inner turmoil or even conflicts between employee o Once the rules are in place there must be a system of controls that helps resolve such dilemmas and rewards appropriate behavior o Behaviors consistent with the firm s values and punishes inappropriate o The most important controls is pricing potential violations of human rights behaviors and child labor laws o Self pricing allows companies to avoid painful public revelation The Influence of Personal Ethics Every firm is made up of individuals each with his or her own needs and desires Ethics and Corporate Social Responsibility Corporate social responsibility generally entails voluntary actions taken by a company to address the ethical social and environmental impacts of its business operations and the concerns of its stakeholders Firms with strong ethical climates tends to be more socially responsible Firms should implement programs that are socially responsible and its employees should act in an ethically responsible manner Being socially responsible generally means going above and beyond the norms of corporate ethical behaviors Consumers and investors increasingly appear to want to purchase products and services from and invest in companies that act in socially responsible ways Ethics versus Social Responsibility Socially Responsible Socially Irresponsible Ethical both ethical and socailly responsible Ethical firm not involved with the larger community Unethical questionable firm practices yet donates a lot to the community neither ethical nor socially responsible both ethical and socailly responsibleEthical firm not involved with the larger communityquestionable firm practices yet donates a lot to the communityneither ethical nor socially responsible Ethics and Laws Ethics Laws o Moral principles and values that govern actions o Why important o Society s value which are enforceable in court Ethical but illegal ethical and legal unethica l and illegal unethica l and legal A framework for Ethical Decision Step 2 gather information and identify stakeholder Step 3 brainstorm and evaluate alternative Step 4 choose a course of action Step 1 Identify issues Step 1 Step 2 Investigate the use or misuse of data collected from consumers by a marketing research firm Issue that may occur is how the data is collected Issue might be whether the results are going to be used in a way that might mislead or even harm the public such as selling the information to a firm to use in soliciting the respondent Firm focuses on gathering facts that are important to the ethical issues including all relevant legal information Firm must identify all the individuals and groups that have a stake in how the issue is resolved Step 1 Identify issuesStep 2 gather information and identify stakeholderStep 3 brainstorm and evaluate alternativeStep 4 choose a course of action Stakeholders typically include the firm s employees and retired employees suppliers the government customer groups stockholders and members of the community in which the firm operates Many firms now also analyze the needs of the industry and the global community as well as one off stakeholders such as future generations and the natural environment itself After the marketing firm has identified the stakeholders and their issues and gathered the available data all parties relevant to the decision should come together to brainstorm any alternative course of action Step 3 Step 4 Objective is to weigh the various alternatives and choose a course of action that generates the best solution for the stakeholders using ethical practices Choose a course of action o How do you pick among alternatives o How do you decide if something is ethical Framework for Ethical Decisions In making a decision consider 4 sets of norms Societal Norm Company Norms Decision General Business Norms Personal Norms Values Societal culture and norms o Basic set of values of the society o Ethical decision making metric Publicity test transparency test Moral mentor admired observer test General business norms o What is the standard practice in business Basic business values be heard No longer caveat emptor Industry standards American Marketing Association Code of Ethics Consumer has right to safety to be informed to choose and to DecisionSocietal NormGeneral Business NormsPersonal Norms ValuesCompany Norms Generally accepted code in marketing Flows from general norms of conduct to specific values subareas within marketing have their own code of ethics to deal with specific issues American Marketing Association First do no harm Foster trust and consumer confidence in the marketing system Values of honesty responsibility fairness respect openness and citizenship Coca Cola University system code of ethics Company Norms Values Rules Controls Personal Norms Family Religion Values Personal moral philosophies Moral idealism o If any bad occurs than the action is unethical Utilitarianism o Balance good versus bad Golden rule test Person in the mirror test Generally accepted code in marketingFlows from general norms of conduct to specific valuessubareas within marketing have their own code of ethics to deal with specific issuesValuesRulesControlsFamilyReligionValues To whom is a company responsible By definition company is supposed to make profit o Responsible to stockholders investors owners Does a company have a duty beyond legal requirements to anyone else Levels of responsibility model To whom is a company