© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-2 ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING C HAPTER

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Explain the differences between legal and ethical behavior in marketing. 2.Identify factors that influence ethical and unethical marketing decisions. 3.Describe the different concepts of ethics and social responsibility. 4.Recognize unethical and socially irresponsible consumer behavior.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-4 THERE IS MORE BREWING AT ANHEUSER-BUSCH THAN BEER

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NATURE AND SIGNIFICANCE OF MARKETING ETHICS Slide 4-5 Ethics  Laws Laws Ethical/Legal Framework in Marketing Current Perceptions of Ethical Behavior

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-6 FIGURE 4-1 FIGURE 4-1 Classifying marketing decisions according to ethical and legal relationships

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-7 Concept Check 1. What are ethics? A: Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-8 Concept Check 2. What are four possible reasons for the present state of ethical conduct in the United States? A: (1) Pressure on businesspeople to make decisions in a society with diverse value systems. (2) Business decisions being judged publicly by groups with different values and interests. (3) The public’s expectations of ethical business behavior has increased. (4) Ethical business conduct may have declined.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-9 FIGURE 4-2 FIGURE 4-2 A framework for understanding ethical behavior

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING ETHICAL MARKETING BEHAVIOR Slide 4-10 Societal Culture and Norms  Culture

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin MARKETING NEWSNET Slide 4-11 Internet Piracy and Campus Pirates

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING ETHICAL MARKETING BEHAVIOR Slide 4-12 Business Culture and Industry Practices  Business Cultures  Ethics of Exchange Caveat Emptor Caveat Emptor Consumer Bill of Rights Consumer Bill of Rights Federal Trade Commission (FTC)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-13 Federal Trade Commission Is your online privacy protected?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING ETHICAL MARKETING BEHAVIOR Slide 4-14 Business Culture and Industry Practices  Ethics of Competition Economic Espionage Economic Espionage Bribes Kickbacks

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-15 WEB LINK The Corruption Perceptions Index

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING ETHICAL MARKETING BEHAVIOR Slide 4-16 Corporate Culture and Expectations  Corporate Culture Whistle-blowers Whistle-blowers  Code of Ethics Code of Ethics  Ethical Behavior of Top Management and Co-workers

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-17 FIGURE 4-3 FIGURE 4-3 American Marketing Association Code of Ethics Click on the icon for the AMA Code of Ethics

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING ETHICAL MARKETING BEHAVIOR Slide 4-18  Moral Idealism Moral Idealism  Utilitarianism Utilitarianism Personal Moral Philosophy and Ethical Behavior

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-19 FIGURE 4-A FIGURE 4-A Personal moral philosophies

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-20 Concept Check 1. What rights are included in the Consumer Bill of Rights? A: The rights to safety, to be informed, to choose, and to be heard.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-21 Concept Check 2. Economic espionage includes what kinds of activities? A: Economic espionage includes trespassing, theft, fraud, misrepresentation, wiretapping, searching competitors’ trash, and violations of written and implicit employment agreements with noncompete clauses.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-22 Concept Check 3. What is meant by moral idealism? A: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING Slide 4-23 Concepts of Social ResponsibilityConcepts of Social Responsibility  Profit Responsibility Green Marketing Green Marketing  Stakeholder Responsibility  Societal Responsibility ISO ISO Cause Marketing Cause Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-24 FIGURE 4-4 FIGURE 4-4 Three concepts of social responsibility

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-25 Avon Why do companies engage in cause marketing?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin MARKETING NEWSNET Slide 4-26 Will Consumers Switch Brands for a Cause? Yes, if…

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING Slide 4-27  Social Audit Social Audit  Sustainable Development Sustainable Development The Social Audit: Doing Well by Doing Good Turning the Table: Consumer Ethics and Social Responsibility

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-28 Ronald McDonald House How do companies ‘do well by doing good’?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-29 Reebok Why is sustainable development important?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-30 Concept Check 1. What is meant by social responsibility? A: Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-31 Concept Check 2. Marketing efforts to produce, promote, and reclaim environmentally sensitive products are called _____________. green marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-32 Concept Check 3. What is a social audit? A: A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in the domain of social responsibility.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-33 DOING WELL BY DOING GOOD GOING ONLINE

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Visit the BSR website. Can you update at least one example in the text related to your chosen topic? Going Online

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-35 THE FIVE MOST COMMON KINDS OF ECONOMIC ESPIONAGE SUPPLEMENTAL LECTURE NOTE 4-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-36 WHISTLE-BLOWERS: TRUTH AND CONSEQUENECES SUPPLEMENTAL LECTURE NOTE 4-2

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-37 STARBUCKS CORPORATION: SERVING MORE THAN COFFEE VIDEO CASE 4

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-38 VIDEO CASE 4 Starbucks

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin VIDEO CASE 4 Starbucks FIGURE 1 FIGURE 1 Starbucks Mission Statement and Guiding Principles Slide 4-39

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide How does Starbucks’ approach to social responsibility relate to the three concepts of social responsibility described in the text? VIDEO CASE 4 Starbucks

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide What role does sustainable development play in Starbucks’ approach to social responsibility? VIDEO CASE 4 Starbucks

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-42 FORD AND FIRESTONE: WHO’S TO BLAME? APPENDIX D CASE D-4

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide What moral philosophy appeared to guide the decision making at Ford? At Bridgestone/Firestone? Is there any evidence that either company changed its decision-making model as lawsuits mounted? APPENDIX D CASE D-4 Ford and Firestone

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Do you see Ford’s handling of the situation surrounding the development, marketing, and subsequent recall as ethical but illegal, ethical and legal, unethical but legal, or unethical and illegal? Why? APPENDIX D CASE D-4 Ford and Firestone

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide What actions would you recommend Ford take to deal with the aftermath of this situation? APPENDIX D CASE D-4 Ford and Firestone

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-46 Ethics Ethics are the moral principles and values that govern the actions and decisions of an individual or group.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-47 Laws Laws are society’s values and standards that are enforceable in the courts.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-48 Caveat Emptor Caveat emptor is the legal concept of “let the buyer beware” that was pervasive in American business culture prior to the 1960s.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-49 Consumer Bill of Rights (1962) The Consumer Bill of Rights (1962) is a law that codified the ethics of exchange between buyers and sellers, including the rights (1) to safety, (2) to be informed, (3) to choose, and (4) to be heard.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-50 Economic Espionage Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-51 Code of Ethics A code of ethics is a formal statement of ethical principles and rules of conduct.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-52 Whistle-blowers Whistle-blowers are employees who report unethical or illegal actions of their employers.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-53 Moral Idealism Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-54 Utilitarianism is a personal moral philosophy that focuses on “the greatest good for the greatest number,” by assessing the costs and benefits of the consequences of ethical behavior. Utilitarianism

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-55 Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions. Social Responsibility

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-56 Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products. Green Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-57 ISO consists of worldwide standards for environmental quality and green marketing practices developed by the International Standards Organization (ISO). ISO 14000

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-58 Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. Cause Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-59 A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility. Social Audit

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 4-60 Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. Sustainable Development