Chapter 4 Social Responsibility and Ethics in Marketing 4 1 The Nature of Social Responsibility Social Responsibility an organization s obligation to maximize its positive impact and minimize its negative impact on society o Ignoring stakeholder s demands for responsible marketing can destroy consumer trust o Socially responsible behavior can generate positive publicity and sales 4 1A The Dimensions of Social Responsibility Marketing Citizenship the adoption of a strategic focus for fulfilling the economic legal ethical and philanthropic social responsibilities expected by stakeholders When customers become outraged over what they perceive as misconduct by an organization they may urge their legislators to draft new laws to regulate the undesirable behavior Marketing Ethics principles and standards that define acceptable marketing conduct as determined by various stakeholders Philanthropic not necessary for good marketing ethics but it promotes human welfare or goodwill Cause Related Marketing the practice of an organization of linking a product to a particular social issue 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 o Both financial and nonfinancial time goods services equipment etc 1 4B Social Responsibility Issues There are three issues 1 Sustainability the potential for the long term well being of the natural environment and the interaction among nature and individuals a Includes improvement of strategies practices technologies and lifestyles all while maintaining the environment 2 Consumerism the efforts of independent individuals groups and organizations to b Generates positive publicity protect the rights of consumers a Boycotting unethical businesses b Consumers should have i Right to Safety product should not harm consumers ii Right to be Informed product should be descriptive iii Right to Choose product should have alternatives iv Right to be Heard Customer interests will receive consideration 3 Community Relations avoiding harmful actions that could damage the community a Example Target donating 1 billion to improving education and schools 4 2 Marketing Ethics 4 2A Ethical Issues in Marketing Marketers should be aware of stakeholders customers employees suppliers community etc Ethical Issue an identifiable problem that requires an organization to choose from several actions that must be evaluated as right or wrong ethical or unethical o Ethical issues arise any time an activity causes marketing managers or customers in their target market to feel manipulated or cheated regardless of legality o Usually arise when marketers fail to disclose risks associated with a product Product recalls Misleading advertising friendly than they really are o Greenwashing occurs when products are promoted as being more environmentally o Bribery occurs when an incentive is offered in exchange for an illicit advantage o Price Gouging pricing products at exorbitant levels and taking advantage of customers who must purchase the item such as medicine to survive or maintain the quality of their life o Bait and Switch attempt to gain consumer interest with a low priced product then switch the buyer to a more expensive product or add on service We don t have what you re looking for available but we do have a similar more expensive item you may like o Channel Shuffling shipping surplus inventory to wholesalers and retailers at an excessive rate typically before the end of a quarter Attempts to conceal declining demand for a product and inflate earnings thus misleading investors o Counterfeiting fake or pirated goods 4 2B Ethical Dimensions of Managing Supply Chain Relationships Marketers must encourage their suppliers to pursue ethically sound practices as well 4 2C The Nature of Marketing Ethics Individual Factors Organizational Relationships organization share o Different people have different ethical standards o It is necessary to have a set of shared ethical values and compliance standards o Corporate Culture a set of values beliefs goals norms and rituals that members of an Direct codes of conduct memos manuals dress codes etc Opportunity Indirect habits extracurricular activities stories etc o An employee that acts unethically and is not punished may repeat the offense Codes of Conduct consist of formalized rules and standards that describe what the company expects of its employees o Must be periodically revised o Promote ethical behavior o Provide clear consequences for misconduct and unethical practices 4 2D Improving Marketing Ethics Whistleblowers should not be punished by management for reporting misconduct 4 3 Incorporating Social Responsibility and Ethics into Strategic Planning Ethics individual and group decisions judgments about what is right or wrong in a particular decision making situation Social Responsibility deals with the total effect of marketing decisions on society If an issue can withstand open discussion that results in agreement or limited debate an acceptable solution may exist In trying to satisfy the desires of one group marketers may dissatisfy others 4 4 Social Responsibility and Ethics Improve Marketing Performance Being ethically and socially concerned is consistent with meeting the demands of customers and other stakeholders which increases financial performance A direct association exists between corporate social responsibility and customer satisfaction Elaboration Likelihood Model o Central Route meaningful processing people engaged in material o Peripheral Route use of sexual appeal logos jingles etc to engage audience Low motivation to process Low ability to process Energy sector banking sector seen as bad IT sector seen as good Senior Leadership o Has a big impact on public perception o Wealthy CEO ie GM IBM vs fun hip leaders ie Steve Jobs Customer Value Typology Intrinsic Extrinsic Efficiency Self Oriented Personal Health Other Oriented Slow Food Help the Planet Status See How I Care Aesthetics Ethics Toilet o Other Oriented Extrinsic Helps planet saves water o Self Oriented Extrinsic Others think you re environmentally aware o Other Oriented Intrinsic o Self Oriented Intrinsic It makes you feel good when you use it It was actually useful filled septic tank slower Self Oriented Value products trumps all It s the most influential Repetitive messages of how you re an ethical business instills self
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