1. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Ethics and Social Responsibility in Marketing

2. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. NATURE AND SIGNIFICANCE OF MARKETING ETHICS ‣ Ethical / Legal Frameworks ‣ How do laws relate to ethics? ‣ Current Perceptions of Ethical Behaviour ‣ in business in general ‣ In marketing in particular

3. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. FIGURE 4-2 A framework for understanding ethical behaviour

4. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. UNDERSTANDING ETHICAL MARKETING BEHAVIOUR ‣ Societal Culture and Norms ‣ Business Culture and Industry Practice ‣ Ethics of Exchange ‣ Caveat emptor ‣ Ethics of Competition ‣ Economic espionage (trade secrets or proprietary information not normally available)

5. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. UNDERSTANDING ETHICAL MARKETING BEHAVIOUR ‣ Corporate Culture and Expectations ‣ (Codes of Ethics) ‣ Ethical behaviour of Top Management and Co-Workers ‣ Whistleblowers (employees who report unethical or illegal actions of their employers.)

6. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ‣ Personal Moral Philosophy and Ethical behaviour ‣ Moral Idealism – based on principles ‣ Utilitarianism – based on consequences UNDERSTANDING ETHICAL MARKETING BEHAVIOUR

7. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING ‣ Concepts of Social Responsibility ‣ Profit Responsibility ‣ Stakeholder Responsibility ‣ Societal Responsibility ‣ Green marketing ‣ Cause marketing (Marketing efforts for social or charitable causes)

8. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.

9. ‣ Ethics are the moral principles and values that govern the actions and decisions of an individual or group. Ethics

10. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ‣ Laws are society’s values and standards that are enforceable in the courts. Laws

11. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ‣ A code of ethics is a formal statement of ethical principles and rules of conduct. Code of Ethics

12. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ‣ Idea that companies have a simple duty—to maximize profits for their owners or shareholders. Profit Responsibility

13. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ‣ Refers to obligations that organizations have to the (1) preservation of the ecological environment, and (2) general public. Societal Responsibility

14. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ‣ Focuses on the obligations an organization has to those who can effect achievement of its objectives, including customers, employees, suppliers, and distributors. Stakeholder Responsibility

15. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ETHICAL ISSUES IN MARKETING Marketing is the interface between the firm and the external world. How marketing deals with external issues has a significant impact on the firm’s success. Marketing ethics Marketers’ standards of conduct and moral values. Many companies create ethics programs to train employees to act ethically. Employees’ personal values sometimes conflict with employers’ ethical standards.

16. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ETHICS IN MARKETING RESEARCH Consumers are concerned about privacy, and Internet has increased privacy concerns.

17. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ETHICS IN PRODUCT STRATEGY Example: Package strategy. Larger packages are more noticeable on the shelf. Oddly sized packages make price comparison difficult.

18. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ETHICS IN DISTRIBUTION What is the appropriate degree of control over the distribution channel? Should a company distribute its products in marginally profitable outlets that have no alternative source of supply?

19. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. ETHICS IN PROMOTION Truth in advertising is the bedrock of ethics in promotion. Marketing to children has come under increased scrutiny. Marketing beer to college students, including through providing promotional items such as shirts and hats, raises ethical questions. ETHICS IN PRICING Most regulated aspect of a firm’s marketing activities.

20. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. SOCIAL RESPONSIBILITY IN MARKETING Social responsibility Marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective.

21. Trinidad Perspective Corporate Social Responsibility And Government According to Wikipedia, “Corporate Social Responsibility is the deliberate inclusion of Public Interest into corporate decision-making, that is, the core business of the company or firm, and the honouring of a triple bottom line: people, planet, profit.” The term has been around since the 1960s and today, CSR is more relevant than ever in the context of the global economic crisis. The European Commission cites that CSR can help build – and rebuild – trust in business, which is vital for the health of any nation’s market economy. It can also point to new forms of value creation based on addressing societal challenges, which may represent a way out of the crisis. Europe is not alone. Across the globe, governments in progressive societies are recognising their integral roles and responsibilities in facilitating social change and sustainability for future generations. This represents a shift away from the traditional perspective that Corporate Social Responsibility, or CSR, is a commitment by only the private sector to contribute to sustainable economic development. CSR has become increasingly important as a policy framework for the way corporate entities conduct business, creating an acceptable benchmark or standard for nation building.

22. Trinidad Perspective Corporate Social Responsibility And Government As CSR matures, national policies and frameworks are being engineered to address issues such as the Environment, Business Ethics, Fair trade, Accountability and Measurement of Key Performance Indicators (KPI’s), which impact on the way societies operate. Locally, the move toward a national policy framework would be consistent with the adoption by Trinidad and Tobago of ISO 26000 Standard on Social Responsibility. It is important for nations, in order to be relevant to their respective developmental goals, to give consideration to the development of Policy Frameworks that address Sustainability and Social Responsibility, as these are necessary for national competitiveness and branding. In today’s world Government’s participation in CSR is supported by the fact that foreign investors are attracted to nations which operate responsibly, support good governance, anti- corruption and a robust, responsible business sector. These are perceived as more attractive and secure investment ‘safe havens’ for new business development. More so than developing national competitiveness, the Government’s involvement aids in building long-term sustainability of local CSR agendas, inspiring new strategies to address gaps in public sector capacities and create synergies through partnerships to achieve public policy goals related to sustainable development. These can be achieved through the various roles of director, exemplar, enforcer, enabler and partner that the Government can play.

24. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Innovation –innovation is a huge benefit to a company and society. Unilever was able to innovate new products such as a hair conditioner that uses less water. Without sustainability, the company’s research and development efforts possibly wouldn’t have led to such a product. Reasons Companies Should Embrace CSR

25. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Cost savings – One of the easiest places for a company to start engaging in sustainability is to use it as a way to cut costs. Whether it’s using less packaging or less energy, these savings add up quickly. For example, after installing energy monitoring meters on several pieces of equipment at its Covington, Ga. plant, the company- General Mills saved $600,000 Reasons Companies Should Embrace CSR

26. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Brand differentiation – In the past, brand differentiation was one of the primary reasons companies embraced CSR. Companies such as Timberland were able to find their voice and incorporate the company’s values into their business model. However, as CSR has become more commonplace, using it to differentiate your brand is getting harder to do. For example, the “Cola Wars” is one of the longest running rivalries in business. Coke and Pepsi are constantly looking to grab as much market share as they can from each other. Yet they are both adopting similar, although slightly different, approaches to CSR. Reasons Companies Should Embrace CSR

27. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Customer engagement – What’s the point of doing CSR if no one knows about it?. Using CSR can help you engage with your customers in new ways. Since the message is about something “good,” it can often be an easier way to talk to your customers. This is an underused tool for business-to-business company communication. Reasons Companies Should Embrace CSR

28. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Employee engagement – If your own employees don’t know what’s going on within your organization, you’re missing an opportunity. Reasons Companies Should Embrace CSR

29. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved. Long-term thinking –CSR is an effort to look at the company’s long-term interest and ensuring that the company’s future is sustainable. It is a shift from worrying about the next fiscal quarter’s financial results to the impact business decisions today have on financial (and social) results ten years from now. Reasons Companies Should Embrace CSR