Powerpoints prepared by: Victor Bilodeau Grant MacEwan University - School of Business © 2011 McGraw-Hill Ryerson Ltd. All rights reserved. Marketing 8th Canadian Edition

Ethics and Social Responsibility in Marketing 4 4 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

1. Explain the differences between legal and ethical behaviour in marketing. 2. Identify factors that influence ethical and unethical behaviour in marketing. 3. Describe the different concepts of social responsibility. 4. Recognize unethical and socially irresponsible consumer behaviour. Learning Objectives After reading this chapter, you should be able to: © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING ‣ Canadian Automakers Make a Commitment to Canada © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

NATURE AND SIGNIFICANCE OF MARKETING ETHICS ‣ Ethical/Legal Framework in Marketing ‣ Laws Laws ‣ Current Perceptions of Ethical Behaviour LO 1 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

FIGURE 4-1 Classifying marketing decisions according to ethical and legal relationships LO 1 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What are ethics? Answer: The moral principles and values that govern the actions and decisions of an individual or group. Learning Review LO 1 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What are laws? Answer: Society’s values and standards that are enforceable in the courts. Learning Review LO 1 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

FIGURE 4-2 A framework for understanding ethical behaviour LO 1, 2 © 2011 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 Caveat emptor ‣ Ethics of Competition ‣ Economic espionage Economic espionage LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

The Corruption Perceptions Index Bribery varies widely by country LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

UNDERSTANDING ETHICAL MARKETING BEHAVIOUR ‣ Corporate Culture and Expectations ‣ Codes of Ethics Codes of Ethics ‣ Ethical behaviour of Top Management and Co-Workers ‣ Whistleblowers Whistleblowers LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

FIGURE 4-3 Excerpt from the Canadian Marketing Association Code of Ethics and Standards of Practice and from the American Marketing Association’s Code of Ethics. LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Personal Moral Philosophy and Ethical behaviour ‣ Moral Idealism ‣ Utilitarianism UNDERSTANDING ETHICAL MARKETING BEHAVIOUR LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What does 3Ms Scotchgard have to do with ethics, social responsibility; and a $200 million loss in annual sales? LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What is caveat emptor? Answer: Caveat emptor means buyer beware. This concept was pervasive in Canadian business culture prior to the 1960s. Learning Review LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What is a code of ethics? Answer: The code of ethics is a formal statement of ethical principles and rules of conduct. Learning Review LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What is meant by moral idealism? Answer: Moral idealism is a personal philosophy that considers certain individual rights or duties as universal regardless of the outcome. Learning Review LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING ‣ Concepts of Social Responsibility ‣ Profit Responsibility ‣ Stakeholder Responsibility ‣ Societal Responsibility ‣ Triple-bottom-line Triple-bottom-line ‣ Green marketing Green marketing ‣ ISO ISO ‣ Cause marketing Cause marketing LO 3 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Which of the three concepts of social responsibility do you think Perrier applied when it learned of quality problems with its popular water? LO 2 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

FIGURE 4-4 Three concepts of social responsibility LO 3 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3 Marketing and social responsibility programs are often integrated, as is the case with McDonald’s © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING ‣ The Social Audit: Doing well by Doing GoodSocial Audit ‣ Sustainable development Sustainable development ‣ Greenwashing ‣ Turning the Table: Consumer Ethics and Social Responsibility LO 3, 4 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3, 4 Are Canadian consumers buying this car because they are eco-minded? Or because it is a practical choice? © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What is meant by social responsibility? Answer: Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions. Learning Review LO 3 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Marketing efforts to produce, promote, and reclaim environmentally sensitive products are called _______________. green marketing Learning Review LO 3 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What is a social audit? Answer: A social audit is a systematic assessment of a firm's objectives, strategies, and performance in the domain of social responsibility. Learning Review LO 4 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Starbucks Corporation © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Starbucks Corporation: Serving More Than Coffee © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

VIDEO CASE 4 Starbucks Corporation: Serving More Than Coffee © 2011 McGraw-Hill Ryerson Ltd. All rights reserved. Starbucks

How does Starbucks’ approach to social responsibility relate to the three concepts of social responsibility described in the text? VIDEO CASE 4-1 Starbucks Corporation: Serving More Than Coffee © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

What role does sustainable development play in Starbucks’ approach to social responsibility? VIDEO CASE 4-2 Starbucks Corporation: Serving More Than Coffee © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Ethics are the moral principles and values that govern the actions and decisions of an individual or group. Ethics © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Laws are society’s values and standards that are enforceable in the courts. Laws © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Caveat emptor is a legal concept which means let the buyer beware. Caveat Emptor © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. Economic Espionage © 2011 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 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Whistle-blowers are employees who report unethical or illegal actions of their employers. Whistle-blowers © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. Moral Idealism © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ 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 behaviour. Utilitarianism © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ ISO consists of worldwide standards for environmental quality and green marketing practices. ISO © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ 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 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in the domain of social responsibility. Social Audit © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. Sustainable Development © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Disinformation disseminated by an organization so as to present an environmentally responsible public image. Greenwashing © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Idea that companies have a simple duty—to maximize profits for their owners or shareholders. Profit Responsibility © 2011 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 © 2011 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 © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Marketing efforts to produce, promote, and reclaim environmentally sensitive products. Green Marketing © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

‣ Recognition of the need for organizations to improve the state of people, the planet and profit simultaneously, if they are to achieve sustainable, long-term growth. Triple-bottom-line © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.