Marketing and Society: Social Responsibility and Marketing Ethics Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter Three Marketing and Society: Social Responsibility and Marketing Ethics

Looking Ahead Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of socially responsible marketing. Explain the role of ethics in marketing. Chapter 3, page 82

Marketing and Consumers Negative impact on individual consumer welfare: High prices due to costs of distribution, advertising and excessive markups. Deceptive practices: pricing, promotion. High-pressure selling. Shoddy or unsafe products. Planned obsolescence. Poor service to disadvantaged customers. Chapter 3, page 87

High Prices Critics and consumers claim that high prices are the result of Expensive advertising Excessive distribution margins Outrageous markups Marketers answer charge by carefully delivering value to consumers rather than reducing prices and profits Chapter 3, page 87

High-Pressure Selling Salespeople are trained to deliver smooth, canned talks to entice purchase. Hard sales can occur because of prizes going to top sellers. High-pressure selling not good for long- term relationships. Chapter 3, page 89

Deceptive Practices Deceptive pricing: Deceptive promotion: Falsely advertising “factory” or “wholesale” prices or large reductions from phony high retail list prices. Deceptive promotion: Overstating a product’s features or performance, running rigged contests. Deceptive packaging: Exaggerating package contents through subtle design, using misleading labelling, etc. Chapter 3, page 89-91

Shoddy or Unsafe Products Products not made well or service not performed well. Products deliver little benefit or can be harmful. Unsafe products due to manufacturer indifference, increased production complexity, poorly trained labor and poor quality control. Chapter 3, page 91

Planned Obsolescence Products needing replacement before they should be obsolete. Producers change consumer concepts of acceptable styles. Intentionally holding back attractive functional features, then introducing them later to make old model obsolete. Chapter 3, page 91-92

Poor Service to Disadvantaged Consumers Poor may pay more for inferior goods. “Redlining” may occur in disadvantaged neighborhoods. Higher insurance premiums to people with poor credit ratings. “Weblining” can occur. Chapter 3, page 93

Marketing Ethics and Society Negative impact on society: Creating false wants. Too few social goods. Cultural pollution. Too much political power. Chapter 3, page 94

Creating False Wants Charges that we suffer from materialism and over-concern with status. Creates an acquisitive society. Criticisms overstate the power of business to create needs. Chapter 3, page 94

Too Few Social Goods Private goods create social ills. Automobiles create need for more highways, create pollution. Possible ways to create balance. Make producers pay for social costs such as emission control systems in cars. Make consumers pay costs such as toll roads or health care premiums for smokers. Chapter 3, page 95

Cultural Pollution Constant assault of advertising and promotion on the senses. Average Canadian is exposed to 3000 marketing messages a day. Vicious circle: the more advertising, the more advertise must find ways to capture our attention. Chapter 3, page 95

Too Much Political Power Industries lobby government to promote interests against public good. Advertising spending in the media prevents media from honest journalism about products. Canada has put controls in place to help curb powerful business interests. Chapter 3, page 96

Marketing Ethics and Business Negative impact on other businesses: Harming competitors. Reducing competition through acquisitions. Practices that create barriers to entry. Unfair competitive marketing practices. All can harm other businesses and reduce competitiveness. Chapter 3, page 96

Consumerism An organized movement of citizens and government agencies to protect the rights of buyers. The right to safety. The right to be informed. The right to choose. The right to be heard. The right to redress against damage. The right to consumer education. Chapter 3, page 98

Seller’s Rights These rights depend on fair and safe practices: The right to introduce any product in any style and size. The right to charge any price for the product. The right to spend any amount to promote the product. The right to use any product message. The right to use any buying incentive scheme. Chapter 3, page 98

Environmentalism An organized movement of citizens, businesses and government agencies. Protect and improve the living environment. Maximize life quality, rather than consumption, choice or satisfaction. Strive for environmental sustainability. Government regulation to support these goals. Chapter 3, page 100

Environmental Sustainability Developing strategies that both sustain the environment and produce profits for the company. Current capabilities: Pollution prevention. Product stewardship. Tomorrow’s goals: New environmental technologies. Sustainability vision. Chapter 3, page 100-01

Socially Responsible Marketing Five principles of enlightened marketing: Consumer-oriented marketing. Innovative marketing. Value marketing. Sense-of-mission marketing. Societal marketing. Chapter 3, page 103

Legal Marketing Decisions Selling decisions. Advertising decisions. Channel decisions. Product/packaging decisions. Pricing decisions. Competitive management decisions. Chapter 3, page 103

Enlightened Marketing A marketing philosophy holding that a company’s marketing should support the best long-run performance of the marketing system. Chapter 3, page 103

Enlightened Marketing Consumer-oriented marketing: The philosophy of enlightened marketing that holds that the company should view and organize its marketing activities from the consumer’s point of view. Innovative marketing: A principle of enlightened marketing that requires that a company seek real product and marketing improvements. Chapter 3, page 104

Enlightened Marketing Value marketing: A principle of enlightened marketing that holds that a company should put most of its resources into value-building marketing investments. Sense-of-mission marketing: A principle of enlightened marketing that holds that a company should define its mission in broad social terms rather than narrow product terms. Chapter 3, page 105

Enlightened Marketing Societal marketing: A principle of enlightened marketing that holds that a company should make marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-run interests and society’s long-run interests. Similar to the societal marketing concept. Chapter 3, page 105-07

Societal Classification of Products Immediate Satisfaction Low High Salutary Products Desirable Products High Chapter 3, page 105-07 Long-run Benefit Deficient Products Pleasing Products Low

Marketing Ethics Corporate marketing ethics policies: Broad guidelines that everyone in the organization must follow. Distributor relations. Advertising standards. Customer service. Pricing. Product development. General ethical standards. Chapter 3, page 108

Marketing Ethics What principle should guide companies and marketing managers on issues of ethics and social responsibility? Free market and legal system on the one hand. Responsibility falls to individual companies and managers on the other. Chapter 3, page 108

Ethics Programs Canadian Marketing Association has a code of ethics to help govern marketing decisions. Many companies now appoint executives to oversee ethics and ethical corporate behaviour. Being aware of ethics in international business dealings a particular issue. Chapter 3, page 111

Looking Back Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of socially responsible marketing. Explain the role of ethics in marketing. Chapter 3, page 115-16