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Explain the differences between legal and ethical behavior in marketing. LO1 Identify factors that influence ethical and unethical marketing decisions. Describe the different concepts of social responsibility. LO3 LO2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 4, YOU SHOULD BE ABLE TO: Recognize unethical and socially irresponsible consumer behavior. LO3 4-2

RESPONSIBILITY MATTERS AT ANHEUSER-BUSCH 4-3

 Ethics Ethics NATURE AND SIGNIFICANCE OF MARKETING ETHICS  Laws Laws Ethical-Illegal Unethical-Illegal Ethical-Legal Unethical-Legal  Ethical-Legal Framework  Current Perceptions of Ethical Behavior LO1 4-4

FIGURE 4-1 FIGURE 4-1 Four ways to classify marketing decisions according to ethical and legal relationships 4-5

FIGURE 4-2 FIGURE 4-2 A framework for understanding ethical behavior 4-6

 Culture ETHICAL MARKETING BEHAVIOR SOCIETAL CULTURE AND NORMS LO2  Societal Values and Attitudes Are Relative Affect Ethical and Legal Relationships 4-7

 Business Cultures ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO2  Ethics of Exchange Caveat Emptor Consumer Bill of Rights (1962): The Right Consumer Bill of Rights (1962): The Right  To Safety  To Be Informed  To Choose  To Be Heard 4-8

ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO2 Consumer Product Safety Commission Federal Trade Commission (FTC)  The Right to Safety  The Right to Be Informed 4-9

ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO2 Slotting Allowances/Fees Do Not Call Registry  The Right to Choose  The Right to Be Heard 4-10

ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO2  Ethics of Competition Economic Espionage Bribes and Kickbacks 4-11

MAKING RESPONSIBLE DECISIONS Corporate Conscience in the Cola War LO2 4-12

GOING ONLINE The Corruption Perceptions Index LO2 4-13

ETHICAL MARKETING BEHAVIOR CORPORATE CULTURE AND EXPECTATIONS LO2  Corporate Culture  Code of Ethics Code of Ethics  Ethical Behavior of Top Management and Co-Workers Whistle-Blowers 4-14

FIGURE 4-3 FIGURE 4-3 American Marketing Association Statement of Ethics (abridged) 4-15

ETHICAL MARKETING BEHAVIOR PERSONAL MORAL PHILOSOPHY AND ETHICS LO2  Moral Idealism Moral Idealism  Utilitarianism Utilitarianism Nestlé’s Gerber Good Start Infant Formula 4-16

SOCIAL RESPONSIBILITY IN MARKETING THREE CONCEPTS OF SOCIAL RESPONSIBILITY LO3  Social Responsibility Social Responsibility Stakeholder Responsibility Societal Responsibility Profit Responsibility 4-17

FIGURE 4-4 FIGURE 4-4 Three concepts of social responsibility 4-18

SOCIAL RESPONSIBILITY IN MARKETING THREE CONCEPTS OF SOCIAL RESPONSIBILITY LO3  Societal Responsibility Green Marketing Cause Marketing Triple-Bottom Line 4-19

MARKETING MATTERS Will Consumers Switch Brands for a Cause? Yes, If… LO3 4-20

SOCIAL RESPONSIBILITY IN MARKETING THE SOCIAL AUDIT LO3  Social Audit Social Audit  Sustainable Development Sustainable Development 4-21

SOCIAL RESPONSIBILITY IN MARKETING CONSUMER ETHICS AND SOCIAL RESPONSIBILITY LO4  Unethical Practices by Consumers  Consumer Motivations for Unethical Behavior  Consumer Purchase, Use, and Disposition of Environmentally Sensitive Products Greenwashing FTC Guidelines 4-22

STARBUCKS CORPORATION: SERVING MORE THAN COFFEE VIDEO CASE

FIGURE 1 FIGURE 1 Starbucks mission statement and guiding principles 4-24

VIDEO CASE 4 Starbucks 1. How does Starbucks’ approach to social responsibility relate to the three concepts of social responsibility described in the text? 4-25

VIDEO CASE 4 Starbucks 2. What role does sustainable development play in Starbucks’ approach to social responsibility? 4-26

Ethics Ethics are the moral principles and values that govern the actions and decisions of an individual or group. 4-27

Laws Laws are society’s values and standards that are enforceable in the courts. 4-28

Caveat Emptor Caveat emptor is the legal concept of “let the buyer beware” that was pervasive in the American business culture prior to the 1960s. 4-29

Consumer Bill of Rights (1962) The Consumer Bill of Rights (1962) is a law that codified the ethics of exchange between buyers and sellers, including the rights to safety, to be informed, to choose, and to be heard. 4-30

Economic Espionage Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. 4-31

Code of Ethics A code of ethics is a formal statement of ethical principles and rules of conduct. 4-32

Whistle-Blowers Whistle-blowers are employees who report unethical or illegal actions of their employers. 4-33

Moral Idealism Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. 4-34

Utilitarianism Utilitarianism is a personal moral philosophy that focuses on the “greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. 4-35

Social Responsibility Social responsibility is the idea that organizations are part of a larger society and are accountable to that society for their actions. 4-36

Triple-Bottom Line The triple-bottom line is the recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth. 4-37

Green Marketing Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products. 4-38

Cause Marketing Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. 4-39

Social Audit A social audit consists of a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility. 4-40

Sustainable Development Sustainable development consists of conducting business in a way that protects the natural environment while making economic progress. 4-41