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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

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved. ETHICAL BEHAVIOR IN MARKETING

The moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral/ethical dilemmas. ETHICS DEFINITION 4-4

 Ethics Ethics NATURE AND SIGNIFICANCE OF MARKETING ETHICS FRAMEWORK LO1  Laws Laws Ethical-Illegal Unethical-Illegal Ethical-Legal Unethical-Legal  Ethical-Legal Continuum  Current Perceptions of Ethical Behavior 4-5

FIGURE 4-1 FIGURE 4-1 Four ways to classify marketing decisions according to ethical and legal relationships 4-6

FIGURE 4-2 FIGURE 4-2 A framework for understanding ethical behavior 4-7

 Business Cultures ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO2  Ethics of Exchange Caveat Emptor Consumer Bill of Rights (1962) U.S. Consumer Product Safety Commission Federal Trade Commission (FTC) 4-8

ETHICAL MARKETING BEHAVIOR BUSINESS CULTURE AND INDUSTRY PRACTICES LO2  Ethics of Competition Economic Espionage Bribes and Kickbacks 4-9

MAKING RESPONSIBLE DECISIONS Corporate Conscience in the Cola War 4-10

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 4-11

ETHICAL MARKETING BEHAVIOR PERSONAL MORAL PHILOSOPHY AND ETHICS LO2  Moral Idealism Moral Idealism  Individual rights or duties are universal regardless of the outcome Individual rights or duties are universal regardless of the outcome  Utilitarianism Utilitarianism  Greatest good for the greatest number Greatest good for the greatest number 4-12

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved. SOCIAL RESPONSIBILITY IN MARKETING

FIGURE 4-4 FIGURE 4-4 Three concepts of social responsibility 4-14

SOCIAL RESPONSIBILITY IN MARKETING CONCEPTS OF SOCIAL RESPONSIBILITY LO3  Social Responsibility Social Responsibility  Profit Responsibility  Stakeholder Responsibility 4-15

SOCIAL RESPONSIBILITY IN MARKETING CONCEPTS OF SOCIAL RESPONSIBILITY LO3  Societal Responsibility Green Marketing ISO Cause Marketing 4-16

SOCIAL RESPONSIBILITY IN MARKETING THE SOCIAL AUDIT LO3  Social Audit Social Audit  Sustainable Development Sustainable Development  Protecting natural environment while making economic progress Protecting natural environment while making economic progress 4-17

Ethics Ethics are the moral principles and values that govern the actions and decisions of an individual or group. 4-18

Laws Laws are society’s values and standards that are enforceable in the courts. 4-19

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. 4-20

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. 4-21

Economic Espionage Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. 4-22

Code of Ethics A code of ethics is a formal statement of ethical principles and rules of conduct. 4-23

Whistle-Blowers Whistle-blowers are employees who report unethical or illegal actions of their employers. 4-24

Moral Idealism Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. 4-25

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. 4-26

Social Responsibility Social responsibility is the idea that organizations are part of a larger society and are accountable to that society for their actions. 4-27

Green Marketing Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products. 4-28

ISO ISO consists of worldwide standards for environmental quality and green marketing practices developed by the International Standards Organization (ISO). 4-29

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. 4-30

Social Audit A social audit consists of a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility. 4-31

Sustainable Development Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. 4-32