3. Offering warranties with insufficient time or parts coverage A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 1. Manufacturing stuffed animals that are known to be flammable and selling the stuffed animals for toddlers and infants   2. Producing products that cannot withstand ordinary wear and tear, but are sold at standard prices 3. Offering warranties with insufficient time or parts coverage 4. Manufacturing non-biodegradable plastic products

A = Ethical and acceptable behavior A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 5. Selling apple flavored sugar water as apple juice 6. Bribing Federal Drug Administration officials to secure agency approval of pharmaceuticals Substituting generic drugs for branded prescriptions without customer approval Selling counterfeit branded goods sold as originals

A = Ethical and acceptable behavior A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 9. Setting high prices to connote quality 10. Using yield-management pricing of airline tickets resulting in day-to-day differential pricing of adjacent seats 11. Using puffery in advertising, such as Wilkinson Blades claimed its ultra Glide Razor offered “the smoothest, most comfortable shave known to man”--an assertion challenged by Gillette 12. Using sexual innuendoes and gender stereotyping (e.g., Miller Brewing Company targeted college males with ads on “how to scam babes”)

A = Ethical and acceptable behavior A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 13. Using inner-city billboards promoting luxury products (e.g., $125 sneakers targeted to ghetto youth) 14. Using rock stars as spokespersons to promote beer, liquor, cigarette ads 15. Placing ads on children’s TV programs for nutritionally unsound products (e.g., sugary cereals, candy, etc.) 16. Using phony markdowns based on overstated retail list prices

A = Ethical and acceptable behavior A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 17. Luring consumers with ads for low-priced merchandise with the hope of switching them to higher-priced models once in the store, even though the low-price merchandise is available 18. Using misleading product performance claims Using “packaging-to-price” tactics that mask an increase in price by maintaining the same package price, but decreasing package size Returning clothing that has been worn satisfactory several times; i.e., the clothing has no defects

A = Ethical and acceptable behavior A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 21. Redeeming coupons that have expired 22. Returning clothing bought at full-price after the item has gone on sale, and demanding a refund for the sales price differential 23. Returning products bought on sale and demanding the full-price refund 24. Returning partially used products for full store credit

A = Ethical and acceptable behavior A = Ethical and acceptable behavior B = Ethical, but undesirable behavior for society C = Moderately unethical behavior D = Seriously unethical behavior 25. Damaging merchandise in a store and then demanding a sales discount 26. Copying copyrighted materials (e.g., books, videotapes, computer software) without permission

Mattel – Product Safety Crisis MARKETING ETHICS 3 Mattel – Product Safety Crisis Lead paint from subcontracted manufacturer in China 3-3

Firm Goals MARKETING ETHICS 3 Creating value over the long run Greed and short term profit seeking Serious long term consequences Creating value over the long run Long term success 3-4

The Six Tests of Ethical Action Would I want to see this in the media? The Publicity Test Would the person I admire the most do this? The Moral Mentor Test Would I want the person I admire the most to SEE me doing this? The Admired Observer Test Could I give a clear explanation for the action The Transparency Test Would I be able to look in the mirror and respect myself The Person in the Mirror Test Would I like to be on the receiving end of this action? The Golden Rule Test 3-33

Scenario 1: R.J. Reynolds: Promotions to the Youth Market R.J. Reynolds sent a set of coasters featuring its cigarette brands and recipes for mixed drinks with high alcohol content to young adults, via direct mail, on their 21st birthdays. The brands included in the recipes included Jack Daniels, Southern Comfort, and Finlandia Vodka. The reverse side of the coaster read, “Go ‘til Daybreak, and Make Sure You're Sittin’.” The campaign clearly promoted abusive and excessive drinking. This campaign was eventually stopped because the cigarette company did not have permission to use the alcohol brands.

Scenario 1: R.J. Reynolds What are the ethical issues Mailings to young adults Is it wrong? Why or why not? Publicity – Moral Mentor – Admired Observer – Transparency – Mirror – Golden Rule 3-35

Scenario 2: Victoria's Dirty Secret Forest Ethics, a nonprofit environmental organization, launched a campaign against the lingerie store Victoria's Secret, protesting the enormous amount of paper used in its catalogs. The organization put full-page ads in magazines, chained themselves to stores, and faxed nasty letters to Victoria's Secret's corporate offices asking the company to use recycled paper or discontinue its catalog business. They became very “annoying,” by interrupting day-to-day operations. Forest Ethics even attended the shareholders' meeting to find out exactly what the company planned on doing in the future. Victoria's Secret's catalog business generates more than $1 billion in sales. When the company tried to use recyclable paper, it found that it could not achieve the same quality glossy photos for the catalog. As a result, it did not change the paper that it used. Its negative press did not have a negative effect on Victoria's Secrets' sales. If the company changes its mind and decides to stop printing catalogs, it would save the trees, but it might cause lost sales, and ultimately lost jobs.

Scenario 2: Victoria’s Dirty Secret What was Victoria’s Secret doing? Was it wrong? Unethical How could they fix this? Publicity – Moral Mentor – Admired Observer – Transparency – Mirror – Golden Rule 3-36

Scenario 3: The Jeweler's Tarnished Image Sparkle Gem Jewelers, a family-owned costume jewelry manufacturing business, traditionally sold its products only to wholesalers. Recently Barb Stephens convinced Sparkle Gem Jewelers to begin selling through a network of distributors who recruited individuals to host “jewelry parties” in their homes. Sparkle Gem's owners, the Billing family, have been thrilled with the revenue generated by these home parties. Mrs. Billing just received a letter from a jewelry party customer, who expressed sympathy for her loss. Mrs. Billing was concerned and contacted the letter writer, who told her that Barb Stephens had come to the jewelry party at her church. According to Stephens's story, Mrs. Billing was a young widow struggling to keep her business together after her husband had died on a missionary trip. The writer had purchased $200 worth of jewelry at the party and told Mrs. Billing that she hoped it helped. Mrs. Billing was stunned, having just celebrated her 50th wedding anniversary.

Scenario 3: The Jeweler’s Tarnished Image Is the manufacturer responsible for the acts of independent sales people? How do you feel the Billing’s should respond? Publicity – Moral Mentor – Admired Observer – Transparency – Mirror – Golden Rule 3-38

Scenario 4: Bright Baby's Bright Idea Bartok Manufacturing produces a line of infant toys under the “Bright Baby” brand label. The Consumer Product Safety Commission (CPSC) recently issued a recall order for the Bright Baby car seat gym, a very popular product. According to the CPSC, the gym contains small parts that present a choking hazard. The recall could cost as much as $1 million in lost revenue from the Bright Baby line. Noting that there had been no deaths or injuries from the product, just the potential for injury, it is proposed that the remaining inventory of car seat gyms be sold where there are no rules such as the CPSC's. The marketing director for Bartok recommended that the product be repackaged and sold under a different brand name so that the Bright Baby name would not be associated with the product. Bartok, though a bit leery of the plan, agreed to go along with it to avoid the monetary losses.

Scenario 4: Bright Baby’s Bright Idea Is the potential for injury enough to merit removal of the product from the market? Do you feel it is ethical to move the product to a less regulated market? What would you have advised the CEO? Publicity – Moral Mentor – Admired Observer – Transparency – Mirror – Golden Rule 3-39