ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING

You should be able to Appreciate the nature and significance of ethics in marketing. Understand the differences between legal and ethical behavior in marketing. Identify factors that influence ethical and unethical marketing decisions. Distinguish among the different concepts of ethics and social responsibility. Recognize the importance of ethical and socially responsible consumer behavior.

Anheuser Busch’s campaign for responsible drinking and environment-conscious disposition of packaging “Know When to Say When” campaign for responsible drinking appeared first via posters in 1983 and two years later with TV commercials. Such efforts have contributed to a sizeable decline in fatal drunk-driving accidents and a 64% drop in teen drunk-driving deaths since Anheuser Busch is an advocate and sponsor or numerous efforts to preserve the environment and is the world’s largest recycler of aluminum cans.

Trends in alcoholic consumption by high school seniors Percentage Year

Definition of Ethics Ethics are.... The moral principals 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.

Classifying marketing decisions according to ethical and legal relationships Ethical Ethicality IllegalLegal Legality Ethical but illegal Ethical but illegal Unethical and illegal Unethical but legal Unethical but legal Ethical and legal Ethical and legal Unethical

Concept Check 1.What are ethics? 2.What are 4 possible reasons for the present state of ethical conduct in our country?

Understanding Ethical Marketing Behavior Consider the use of another’s ideas: In the US copyrights, trademarks and patents are considered intellectual property, and unauthorized use is illegal and unethical. Outside the US, sometimes due to the culture of a country, unauthorized use of copyrights, patents and trademarks is not considered unethical or illegal. Such is the case in countries like China, Mexico and Korea.

International comparison of the percent of U.S. software package sales that are illegal copies Percentage China Taiwan Iberia Switzerland Korea Japan Italy Benelux Germany Benelux

A framework for understanding ethical behavior Societal culture and norms Business culture and industry practices Organizational culture and expectations Personal moral philosophy and ethical behavior

Consumer Bill of Rights In 1962 President John F. Kennedy outlined the Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers.

Consumer bill of rights - continued Safety Be informed Choose Be heard Right to

Two kinds of unethical behavior 1.Industrial Espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. Industrial espionage is most prevalent in high- technology industries, such as electronics, specialty chemicals, industrial equipment, aerospace, and pharmaceuticals, where technical know-how and trade secrets separate industry leaders from followers.

Two kinds of unethical behavior 2.The giving and receiving of bribes and kickbacks is the second form of unethical competitive behavior. Bribes and kickbacks are often disguised as gifts, consultant fees and favors. They are more common in business-to-business and government marketing than in consumer marketing.

Foreign Corrupt Practices Act This act makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country. Generally, ethical standards are more likely to be compromised in industries experiencing intense competition and in countries in earlier stages of economic development.

American Marketing Association Code of Ethics Members of the American Marketing Association have joined together in subscribing to its code of ethics embracing the following topics: 1.Responsibilities of the Marketer 2.Rights and Duties of Parties in the Marketing Exchange Process 3.Organizational Relationships

Personal moral philosophies MORAL IDEALISM Considers certain individual rights or duties universal regardless of the outcome UTILITARIANISM Considers the “greatest good for the greatest number” by assessing the costs and benefits of the consequences

Concept Check 1.What rights are included in the Consumer Bill of Rights? 2.What ethical practice is addressed in the Foreign Corrupt Practices Act? 3.What is meant by moral idealism?

Three concepts of social responsibility Profit responsibility Owners/ Stockholders Stakeholder responsibility Societal responsibility General public Ecological environment Customers Employees Suppliers/Distributors Public interest groups

Elements of a social audit Of social expectations and rationale for engaging in social responsibility endeavors Of causes or programs consistent with the company’s mission Of objectives and priorities for programs and activities to be undertaken Of the type and amount of resources necessary to achieve objectives Recognition Identification Determination Specification Evaluation Of programs and activities and assessment of future involvement

Valdez Principles The Valdez Principles encourage companies to: 1.eliminate pollutants, minimize hazardous wastes, and conserve nonrenewable resources; 2.market environmentally safe products and services; 3.prepare for accidents and restore damaged environments; 4.provide protection for employees who report environmental hazards;

Valdez Principles appoint an environmentalist to their boards of directors, name an executive for environmental affairs, and develop an environmental audit of their global operations to be made available for public inspection.