Ethical Considerations in Business-to-Business Marketing

A Poem by R.W. Grant You’re gouging on your prices if you charge more than the rest. But it’s unfair competition if you think you can charge less. A second point that we would make to help avoid confusion: Don’t try to charge the same amount: That would be collusion!

Ethics vs. Social Responsibility BUSINESS ETHICS Moral principles and standards that guide behavior in the world of business SOCIAL RESPONSIBILITY Obligations a business assumes to have for society, including economic, legal, ethical, and philanthropic

Corporate Social Responsibilities Legal –Play by the rules of the game Economic –Be profitable Ethical –Do what is right, just, and fair; avoid harm Philanthropic –Contribute resources to community; improve quality of life

Differing Moral Philosophies Deontology –The action itself matters. No “gray” areas. Teleology –The outcome matters. Level of harm caused. Egoism –The outcome related to “ME” matters. Relativism –Everything is relative. All actions are im/moral within their own context.

Typical Actions that are Considered Unethical in B-t-B Marketing Collusive bidding Restrictive conditions in specifications Artificial stimulation of demand Verbal/actual sabotage of competitive products Padding orders and shipments Obscure contract clauses buried in small type

Typical Actions that are Considered Unethical in B-t-B Marketing Overselling Promising more than can be delivered Lying Failing to keep confidences Bribes Gifts Entertainment

Myths about Business Ethics Ethics is a personal, individual affair. –We do not operate in a vacuum. Business and ethics do not mix. –Business is a human activity. Ethics in business is relative. –Contradicts everyday experience. –I.e., just because this society practiced slavery, did that make it right? Good business means good ethics. –Basically says that ethics do not provide solutions to business problems.

Why Ethics are Necessary in Business Decisions Rarely are facts & viewpoints in perfect correlation. Good and evil exist simultaneously Knowledge of consequences are limited Existence of multiple stakeholders exposes us to competing & conflicting claims. Multiple stakeholders use conflicting ethical arguments Human reasoning is imperfect

Quick Ethical Tests Is it right? Is it fair? Who gets hurt? Would you be comfortable if your decision was reported on the front page of your hometown newspaper? What would you tell your child to do?

Other Quick Ethical Tests Do unto others as you would have them do unto you. Use your intuition (gut-feel). Are the ends really worthwhile? Does the action you are planning to take really make good common sense? Is the decision compatible with your self- concept at its best?

Federal Legislation to Protect Competition Sherman Act 1890 –no monopolies Clayton Act 1914 –no price discrimination FTC Act 1914 –no unfair competition Wheeler-Lea 1938 –no false advertising Robinson-Patman Act 1936 –no price discrimination to resellers

To Protect the Consumer Meat Inspection Act 1906 Wool Products Labeling (1940): % of wool Cigarette Labeling (1965) Truth in Lending (1968) Consumer Product Safety (1972) Nutrition Labeling and Education Act (1990)

Regulatory Agencies FTC: no false/deceptive advertising FDA: no harmful drugs/products ICC: rates of interstate RR, trucking – dissolved STB: regulates motor carriers, railroad EPA: pollution FCC: regulates wire, radio, TV broadcasts