Sustainable Marketing Social Responsibility and Ethics Chapter 16

Rest Stop: Previewing the Concepts Define sustainable marketing and discuss its importance. Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of sustainable marketing. Explain the role of ethics in marketing. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Patagonia’s Sustainability Mission: Do No Harm First Stop Patagonia’s Sustainability Mission: Do No Harm Background Business Approach: To produce the highest-quality products while doing the least possible harm to the environment. Environmental Review Process examines all of the methods and materials used in making clothing. Socially Responsible: Donates time, services, and 1% of sales to grassroots environmental groups. Challenge: Eco-savvy buyers are asking hard questions about product origins. Patagonia’s Response Created Footprint Chronicles: Documents and shares with customers information about the environmental effects of every link in the firm’s supply chain. Both positive and negative information is provided. Results: Manufacturing, not transportation, takes the most energy and often creates bad by-products. PFOA used in rain shell jacket was found to be toxic, requiring a product change. CEO believes benefits outweigh the costs, and that firm is setting a new competitive bar. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Sustainable Marketing Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action McDonald’s “Plan to Win” addresses environmental issues related to food-supply sustainability, environmentally sustainable packaging, and more responsible store designs. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Figure 16.1: Sustainable Marketing Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Marketing’s impact on individual consumers has been criticized in terms of: High prices. Deceptive practices. High-pressure selling. Shoddy, harmful, or unsafe products. Planned obsolescence. Poor service to disadvantaged consumers. Is Hardee’s being socially irresponsible by marketing this big, juicy, calorie and cholesterol laden burger? Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Three factors are cited as leading to high prices: High costs of distribution. High advertising and promotion costs. Excessive markups. Heavily promoted brands cost much more than do private labels. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Marketers are often accused of deceptive practices such as: Deceptive Pricing: Falsely advertising “factory” or “wholesale” prices or large reductions from phony high retail list prices. Deceptive Promotion: Misrepresenting a product’s features or performance, or luring consumers to store for out-of-stock item. Deceptive Packaging: Exaggerating package contents through subtle design, using misleading labeling, etc. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action A recent TerraChoice study found that 98% of products making green claims committed at least one of the greenwashing sins. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Deceptive practices have led to legislation and other protective consumer actions. FTC governs deceptive practices. Use of puffery is legal, but may harm consumers in subtle ways. Deceptive practices are not sustainable as they harm a firm’s business in the long-run. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Salespeople are often accused of using high-pressure selling tactics: In persuading people to buy goods they had no intention of buying. Because prizes are often given to top sellers. Marketers have little to gain from high-pressure tactics. Such actions damage relationships with the firm’s customers. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Shoddy or unsafe product criticisms include complaints that: Products are not made well or services are not performed well. Products deliver little benefit or are even harmful. Products are unsafe due to manufacturer indifference, increased product complexity, and poor quality control. Manufacturers provide desirable, quality goods. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Planned obsolescence refers to products needing replacement before they should because they are obsolete. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Criticisms of planned obsolescence include: Use of materials and components that will break, wear, rust, or rot before they should. Continually changing consumer concepts of acceptable styles. Intentionally holding back attractive functional features, then introducing them later to make older models obsolete. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Social Criticisms of Marketing Marketers are also accused of serving disadvantaged consumers poorly as: The poor are forced to shop in smaller stores where they pay more for inferior goods. National chain stores, insurers, and health care providers practice “redlining” and refuse to open businesses in poor neighborhoods. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action Critics have accused mortgage lenders of “reverse redlining,” purposively targeting disadvantaged consumers with subprime mortgages that they couldn’t afford. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing’s Impact on Society as a Whole Marketing’s impact on society as a whole has been criticized in terms of: Creating false wants and encouraging too much materialism. This criticism overstates the power of business and ignores consumers ability to defend themselves against advertising. Overselling private goods at the expense of public (social) goods. Creating cultural pollution, stemming from constant exposure to marketing messages. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Fuel for Thought Marketing messages are prevalent throughout the United States, and critics contend that this causes “cultural pollution.” Do you agree? Why or why not? Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing’s Impact on Other Businesses Critics charge that a firm’s marketing practices can harm other companies and reduce competition via: Acquisitions of competitors. Shrinking number of competitors. Marketing practices that create barriers to entry. Patents, heavy promotional spending can limit competition. Unfair competitive marketing practices. Predatory pricing and other practices. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action Wal-Mart was accused of predatory pricing practices by local pharmacists. Wal-Mart countered charges by noting that their tremendous buying power allows them to sell at this price and still make a profit. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumerism An organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. Consumerism is one of two major consumer actions to promote sustainable marketing. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumer Actions to Promote Sustainable Marketing Traditional seller’s rights include the right to: Introduce any product in any size and style, provided it is not hazardous to personal health or safety; or, if it is, to include proper warnings and controls. Charge any price for the product, provided no discrimination exists among similar kinds of buyers. Spend any amount to promote the product, provided it is not defined as unfair competition. Use any product message, provided it is not misleading or dishonest in content or execution. Use any buying incentive schemes, provided they are not unfair or misleading. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumer Actions to Promote Sustainable Marketing Traditional buyers’ rights include the right to: Not buy a product that is offered for sale. Expect the product to be safe. Expect the product to perform as claimed. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumer Actions to Promote Sustainable Marketing Consumer advocates call for these additional rights to be added: Be well informed about important aspects of the product. Be protected against questionable products and marketing practices. Influence products and marketing practices in ways that will improve “quality of life”. Consume now in a way that will preserve the world for future generations of consumers. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action Today’s product labels contain a variety of useful information, from ingredients and nutrition facts to recycling and country of origin information. Drink maker IZZE uses the label to promote the brand, both on the bottle and at its web site. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Environmentalism An organized movement of concerned citizens and government agencies to protect and improve people’s living environment. Environmentalism is the second consumer action to promote sustainable marketing. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumer Actions to Promote Sustainable Marketing Environmentalism: Those who subscribe to environmentalism believe that marketing system’s goal should be to maximize quality of life. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumer Actions to Promote Sustainable Marketing Environmentalism: First wave in the 1960s - 1970s was driven by environmental groups and concerned consumers. Second wave in the 1970s and 1980s was driven by government and resulted in environmental laws. Third wave is occurring now. Firms are accepting more responsibility and many have adopted a policy of environmental sustainability. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Consumer Actions to Promote Sustainable Marketing Environmental sustainability: A management approach that involves developing strategies that both sustain the environment and produce profits for the company. See some of the actions that Land Rover is taking towards environmental sustantainability! Click on filmstrip icon at left to play video Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Figure 16.2: The Environmental Sustainability Portfolio Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action Suburu of Indiana works towards pollution prevention, and claims that it now sends less trash to the landfill each year than the average American family. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action To reduce its packaging waste, Coca-Cola is now testing new contour bottles made from corn, bioplastics, or more easily recycled aluminum. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Figure 16.3: Major Marketing Decision Areas That May Be Called into Question Under the Law Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Consumer-oriented marketing: The philosophy of sustainable marketing that holds that the company should view and organize its marketing activities from the consumer’s point of view. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Customer-value marketing: A principle of sustainable marketing that holds that a company should put most of its resources into customer-value-building marketing investments. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Innovative marketing: A principle of sustainable marketing that requires that a company seek real product and marketing improvements. Ninetendo’s customer-focused innovation marketing resulted in the Wii breaktrhough. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Sense-of-mission marketing: A principle of sustainable marketing that holds that a company should define its mission in broad social terms rather than narrow product terms. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action Timberland’s corporate mission is about “trying to make a difference in the communities where we live and work.” Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Societal marketing: A principle of sustainable marketing that holds that a company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Figure 16.4: Societal Classification of Products Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Marketing in Action Haworth’s Zody office chair fits the bill as a desirable product. Not only is it attractive and functional, but also environmentally responsible. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Firms need to develop corporate marketing ethics policies to serve as broad guidelines that everyone in the organization must follow. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing Ethics policies should cover: Distributor relations. Advertising standards. Customer service. Pricing. Product development. General ethical standards. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Business Actions Toward Sustainable Marketing What principle should guide firms and marketing managers on issues of ethics and social responsibility? Free market and legal system is one option. Letting responsibility fall to individual companies and managers to develop a “social conscience” is a second option. International marketers face special challenges. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Rest Stop: Reviewing the Concepts Define sustainable marketing and discuss its importance. Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of sustainable marketing. Explain the role of ethics in marketing. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc.   Publishing as Prentice Hall Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall