Ethics and Social Responsibility in Marketing Chapter 3

Ethical Marketing= Oxymoron? What are ethics? What are ethics? Ethics are the “moral principles and values that govern the actions and decisions of an individual or group.” Ethics are the “moral principles and values that govern the actions and decisions of an individual or group.”

Legal v. Ethical Standards Laws Laws Standards enforceable by the courts Standards enforceable by the courts Are laws and ethics the same thing? Are laws and ethics the same thing? Nike: Illegal? Unethical? Nike: Illegal? Unethical? Causes for the increasing focus on ethics Causes for the increasing focus on ethics Diverse value systems within the culture Diverse value systems within the culture Public groups are more active Public groups are more active Expectations have increased Expectations have increased Decrease in ethical behavior? Decrease in ethical behavior?

Influences upon What Is Ethical Societal Culture and Norms Societal Culture and Norms Business Culture and Industry Practices Business Culture and Industry Practices Corporate Culture and Expectations Corporate Culture and Expectations

Society Societal Culture Societal Culture Levi Strauss Levi Strauss Societal Values Societal Values Patents Patents Source:

Businesses Business Culture Business Culture The rules of the game in interactions between buyers and sellers, and companies The rules of the game in interactions between buyers and sellers, and companies Ethics of Exchange Ethics of Exchange Caveat Emptor Caveat Emptor Consumer Bill of Rights Consumer Bill of Rights

Businesses Ethics of Competition Ethics of Competition Economic espionage Economic espionage Costs businesses in US & Canada nearly $100 billion each year! Costs businesses in US & Canada nearly $100 billion each year! Bribery Bribery Gifts, favors, etc. Gifts, favors, etc.

Corporate Culture & Expectations Code of Ethics Code of Ethics Formal statement listing what comprises acceptable behavior Formal statement listing what comprises acceptable behavior Must be very clear Must be very clear Must be equally applied throughout the organization Must be equally applied throughout the organization Whistleblowers Whistleblowers

Ethical Theories Moral idealism Moral idealism Considers certain rights as universal Considers certain rights as universal Do no harm Do no harm Utilitarianism Utilitarianism “The greatest good for the greatest number” “The greatest good for the greatest number” Deontological Theories Deontological Theories “The ends justify the means” “The ends justify the means”

Social Responsibility Companies are accountable to society or their actions Companies are accountable to society or their actions Three types: Three types: Profit Responsibility Profit Responsibility Stakeholder Responsibility Stakeholder Responsibility Societal Responsibility Societal Responsibility Environment Environment General Public General Public

Societal Responsibility Environment Environment Green Marketing Green Marketing ISO ISO General Public General Public Cause-Related Marketing Cause-Related Marketing

Public-Policy Issues Deceptive Advertising Deceptive Advertising Advertising to Children Advertising to Children Telemarketing Fraud Telemarketing Fraud Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.

Deceptive Advertising “Literally false or potentially misleading” “Literally false or potentially misleading” False statements False statements Misleading Safety Claims Misleading Safety Claims Misleading Affirmative Safety Claims Misleading Affirmative Safety Claims Deceptive Denials of Product Risk Deceptive Denials of Product Risk Deceptive Information Omissions Deceptive Information Omissions Unfair Information Omissions Unfair Information Omissions Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.

Advertising to Children What’s wrong with it? What’s wrong with it? Source: Source: Yes, this is real

Telemarketing Fraud Costs Americans $40 billion per year Costs Americans $40 billion per year Who is at risk? Who is at risk? Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice- Hall, New Jersey, 2001.

Compulsive Behavior Smoking Smoking Drinking Drinking Gambling Gambling Compulsive Shopping Compulsive Shopping Source: Mower & Minor. “Consumer Behavior: A Framework.” Prentice-Hall, New Jersey, 2001.

Measuring Ethical Conduct Social audit Social audit McDonald’s McDonald’s Long-term: Sustainable development Long-term: Sustainable development Impact of ethical behavior: Impact of ethical behavior: Word-of-mouth Word-of-mouth Outperform less ethical competitors Outperform less ethical competitors

Ethical Conduct- Consumers Dishonest consumer practices Dishonest consumer practices Billions of dollars lost annually Billions of dollars lost annually Consumers are unwilling to pay higher prices for ecologically safe products Consumers are unwilling to pay higher prices for ecologically safe products Consumers lack information Consumers lack information