1. Marketing Ethics and Social Responsibility in Strategic Planning3
C H A P T E R

2. The Role of Ethics and Social Responsibility in Marketing Strategy
Grown in importance recently
Due to firms having problems including corporate scandals and misconducts
Have become necessities due to:
Stakeholder demands
Changes in law
May improve marketing performance and profits
Are important to development of marketing strategy

3. Discussion Question
Why is marketing ethics a strategic consideration in organizational decisions? Who is most important in managing marketing ethics: the individual or the firm’s leadership? Explain your answer.

4. Dimensions of Social Responsibility
A broad concept that relates to an organization’s obligation to maximize its positive impacts on society while minimizing its negative impacts
Includes:
Economic responsibility of making a profit
Legal responsibility of obeying laws and regulations
Ethical responsibility to uphold principles and standards
Philanthropic responsibility to increase the firm’s positive impact on society

5. The Pyramid of Corporate Social Responsibility
Exhibit 3.1

6. 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?

7. Marketing Ethics and Strategy
Principles and standards that define acceptable marketing conduct as determined by the public, government regulators, private interest groups, competitors, and the firm itself
The most basic of these standards is the codified laws and regulations
Involves complex and detailed decisions in gray areas
Deals with experiences and decisions made at work
Can lead to violations of public trust
Comes into play anytime individuals feel manipulated or cheated
A firm’s reputation is one of its greatest assets.

8. Marketing Ethics and Strategy
Potential Ethical Issues in Marketing
Overall Issues
Misrepresenting the firm’s capabilities
Manipulation or misuse of data or info
Invasion of privacy
Anticompetitive activities
Product Issues
Pricing Issues
Distribution Issues
Promotion Issues
See Exhibit 3.2 in Text

9. Marketing Ethics and Strategy
Public Sentiment Toward Business Regulation
Exhibit 3.3

10. Marketing Ethics and Strategy
The Challenges of Being Ethical and Socially Responsible
Business decisions involve complex and detailed discussions in which correctness may not be so clear cut.
Internet privacy, protecting trademarks and brand names
A person's experiences and decisions at home, in school, and in the community may be quite different from the experiences and the decisions (he or she has to make) at work.
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

11. Types of Misconduct Observed in Organizations
Exhibit 3.4

12. Discussion Question
Why have we seen more evidence of widespread ethical marketing dilemmas within firms today? Is it necessary to gain the cooperation of marketing managers to overstate revenue and earnings in a corporation?

13. 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 themselves
Industry and trade associations including Better Business Bureau

14. 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 climate
Corporate or organizational culture
May be conveyed formally in employee handbooks, codes of conduct, memos, and ceremonies.
Expressed informally through dress codes, extracurricular activities, and anecdotes

15. Organizational Determinants of Marketing Ethics & Social Responsibility
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
Can only be improved by planning and structure
The majority of firms that experience ethical or legal problems usually have stated ethics codes and programs. However, these codes, values, and standards may not be integrated into daily decision making
Likely to occur when modeled by a strong leader

16. Organizational Determinants of Marketing Ethics & Social Responsibility
Codes of Conduct (Codes of Ethics)
Formal statement that describes what an organization expects of its employees
Core values or principles that should be contained in a code of ethics include trustworthiness, respect, responsibility, fairness, caring, and citizenship.
Must reflect management’s desire for compliance with values, rules, and policies
Will not resolve every ethical issue in daily operations, but help deal with ethical dilemmas by prescribing or limiting specific activities.
Not an effective means of controlling ethical behavior unless integrated into daily decision making
Not effective unless the code has support of top management

17. Organizational Determinants of Marketing Ethics & Social Responsibility
Key Considerations in Developing and Implementing a Code of Ethical Conduct
Exhibit 3.5

18. Organizational Determinants of Marketing Ethics & Social Responsibility
Texas Instruments’ “Ethics Quick Test”
Is the action legal?
Does it comply with our values?
If you do it, will you feel bad?
How will it look in the newspaper?
If you know it’s wrong, don’t do it!
If you’re not sure, ask.
Keep asking until you get an answer.

19. Organizational Determinants of Marketing Ethics & Social Responsibility
Marketing Ethics and Leadership
Ethical cultures emerge from strong leadership.
Leader as a model of acceptable behavior.
Having a strong ethical climate depends on top mangers who consistently model the firm’s policies and standards.
Great leaders:
Create a common goal or vision for the company
Obtain "buy in" or support from significant partners
Motive others to be ethical
Use the resources that are available to them
Enjoy their jobs and approach them with an almost contagious tenacity, passion, and commitment.

20. Stakeholders, Market Orientation, and Marketing Performance
The increasing evidence of a link between social responsibility, stakeholders, and marketing performance.
Employees working in an ethical climate will make an extra effort to better understand the demands and concerns of customers.
Employee commitment to the firm, customer loyalty, and profitability have also been linked to increased social responsibility.
Employees who work in an ethical climate are more committed to the achievement of high quality standards.
Become more willing to personally support the quality initiatives of the firm.
An ethical climate is also conducive to a strong market orientation

21. Stakeholders, Market Orientation, and Marketing Performance
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

22. Stakeholder Orientation
The degree to which a firm understands and addresses stakeholder demands
Strongly tied to ethics and social responsibility
Comprised of three activities:
Generation of stakeholder groups data and assessment of firm effects on these groups
Distribution of this information throughout the firm
Responsiveness as a whole to this intelligence
Research indicates a strong association between social responsibility and customer loyalty

23. Incorporating Ethics & Social Responsibility to 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

24. The Connection Between Ethics and Strategic Planning
Typically done through ethical compliance programs or integrity initiatives
Vested in the marketing plan
Based on an understanding of:
Risks associated with misconduct
Ethical and social consequences of strategy
Values of organizational members and stakeholders
Manifested through actions … not just words

25. Discussion Question
What is the relationship between marketing ethics and organizational performance? What are the elements of a strong ethical compliance program to support responsible marketing and a successful marketing strategy?