Marketing Ethics and Social Responsibility in Strategic Planning 3 C H A P T E R

The Auto Industry Tries to Go Green Car manufacturers have gone to great lengths to promote hybrid cars. These cars are generally much more expensive to develop and produce. Do corporations have a social responsibility to develop environmentally friendly cars? Why or why not? Beyond the Pages 3.1

The Role of Ethics and Social Responsibility in Marketing Strategy Grown in importance recently Due to firms having problems in this area Have become necessities due to: Stakeholder demands Changes in Federal law Improve marketing performance and profits Are important to development of marketing strategy

Discussion Question Why is marketing ethics a strategic consideration in organizational decisions? Who is most important in managing marketing ethics: the individual or the firm’s leadership? Explain your answer.

Dimensions of Social Responsibility A broad concept that relates to an organization’s obligation to maximize its positive impacts on society while minimizing its negative impacts Marketing Ethics Principles and standards that define acceptable marketing conduct as determined by the public, government regulators, private interest groups, competitors, and the firm itself

Marketing Strategy in Action R.J. Reynolds has been accused by critics of using its “Joe Camel” cartoon character, as shown in this 1988 ad, to target children for cigarette consumption. How has society acted to protect children from advertising such as this? What obligations do companies have to protect children?

The Pyramid of Corporate Social Responsibility Exhibit 3.1

Social Responsibility Includes: Economic responsibility of making a profit Legal responsibility of obeying laws and regulations Ethical responsibility to uphold principals and standards Philanthropic responsibility to increase the firm’s positive impact on society

Marketing Ethics and Strategy Requires that organizations and individuals accept responsibility Can lead to violations of public trust Involves complex and detailed decisions in gray areas Deals with experiences and decisions made at work Comes into play anytime individuals feel manipulated or cheated

Potential Ethical Issues in Marketing Overall Issues Product Issues Pricing Issues Distribution Issues Promotion Issues See Exhibit 3.2 in Text

Government Regulation of Marketing Activities Exhibit 3.3

The Challenges of Being Ethical and Socially Responsible Business decisions involve complex decisions in which correctness may not be clear cut e.g. Internet privacy, protecting trademarks and brand names Ethical conflict may emerge from an inconsistency between personal values and the values held by members of the work group Ethical issues can develop into legal problems

Types of Misconduct Observed in Organizations Exhibit 3.4

Discussion Question Why have we seen more evidence of widespread ethical marketing dilemmas within firms today? Is it necessary to gain the cooperation of marketing managers to overstate revenue and earnings in a corporation?

Deceptive Practices in Marketing Deceptive Communications and Promotion Fraud or any false communication Exaggerated claims or statements Ambiguous statements Product labeling issues Selling abuses Regulating Deceptive Marketing Practices Typically regulated by: The firms themselves Industry and trade associations

Better Business Bureau

Organizational Determinants of Marketing Ethics & Social Responsibility Ethical Decision Making Determined by an individual’s background and business colleagues Affected by personal values, opportunity for unethical behavior, and exposure to others Intricately tied to the firm’s culture and ethical climate Can only be improved by planning and structure Likely to occur when modeled by a strong leader

Ethical Climate Part of a corporate culture that relates to an organization’s expectations about appropriate conduct The character component of an organization Sets the tone for ethical decisions Determines whether or not an individual perceives an issue to be an ethical issue

Codes of Conduct (1 of 2) Codes of Conduct (Codes of Ethics) Formal statement that describes what an organization expects of its employees Not an effective means of controlling ethical behavior unless integrated into daily decision making Not effective unless the code has support of top management

Codes of Conduct (2 of 2) Codes must reflect management’s desire for compliance with values, rules, and policies Codes should have six core values: Trustworthiness Respect Responsibility Fairness Caring Citizenship Codes will not resolve every issue encountered in daily operations Codes can help managers deal with ethical dilemmas

Key Considerations in Developing and Implementing a Code of Ethical Conduct Exhibit 3.5

Texas Instruments’ “Ethics Quick Test” Is the action legal? Does it comply with our values? If you do it, will you feel bad? How will it look in the newspaper? If you know it’s wrong, don’t do it! If you’re not sure, ask. Keep asking until you get an answer.

Texas Instruments

Market Orientation Market Orientation The development of an organizational culture that effectively and efficiently promotes the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance of the firm. Strongly tied to ethics and social responsibility Means fostering a sense of cooperation and information exchange

Stakeholder Orientation The degree to which a firm understands and addresses stakeholder demands Strongly tied to ethics and social responsibility Comprised of three activities: Generation of stakeholder groups data and assessment of firm effects on these groups Distribution of this information throughout the firm Responsiveness as a whole to this intelligence

Connecting Ethics & Social Responsibility to Marketing Performance Strong ethics causes employees to be: Motivated to serve customers Committed to the firm Committed to high quality standards Satisfied with their job Can lead to trust among firm’s stakeholders Is so important that it can have major negative impacts on firms that don’t uphold ethical standards

Discussion Question What is the relationship between marketing ethics and organizational performance? What are the elements of a strong ethical compliance program to support responsible marketing and a successful marketing strategy?

The Connection Between Ethics and Strategic Planning Typically done through ethical compliance programs or integrity initiatives Vested in the marketing plan Based on an understanding of: 1) Risks associated with misconduct 2) Ethical and social consequences of strategy 3) Values of organizational members and stakeholders Manifested through actions … not just words