Consumers and Social Well-Being CONSUMER BEHAVIOR, 11e Michael R. Solomon Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall

Underlying assumption: Ethical business is good business.

Marketing Ethics and Public Policy Business ethics are rules of conduct that guide actions in the marketplace There are cultural differences in what is considered ethical. It can be difficult to avoid ethical conflicts because our thoughts of what is right and wrong vary among people, organizations, and cultures. These cultural differences certainly influence whether business practices such as bribery are acceptable. Bribing foreigners to gain business has been against the law in the United States since 1977, under the Foreign Corrupt Practices Act. The Organization for Economic Cooperation and Development (OECD), to which most industrialized countries belong, also outlaws bribery. Still, these practices are common in many countries.

Do Marketers Manipulate Consumers? Advertisers simply do not know enough about people to manipulate them (some argue) The failure rate for new products ranges from 40-80%. Although people may think that advertisers use magic to sell products, marketers are only successful when they promote good products.

Do Marketers Create Artificial Needs? Objective of marketing: create awareness that needs exist, not to create needs versus Need: a basic biological motive Want: one way that society has taught us that the need can be satisfied Marketing is commonly criticized as trying to convince consumers that they need something when they really don’t. This is an ethical issue. Marketers respond to this question by pointing out that the need already exists in the consumer, but marketers recommend ways to satisfy the need.

Do Marketers Promise Miracles? Do consumers “discount” ad claims? The failure rate for new products ranges from 40-80%. Although people may think that advertisers use magic to sell products, marketers are only successful when they promote good products.

Materialism: the importance people attach to worldly possessions “The good life”...“He who dies with the most toys, wins” Materialists: value possessions for their own status and appearance; buy just to have Non-materialists: value possessions that connect them to other people or provide them with pleasure in using them Our possessions play a central role in our lives and our desire to accumulate them shapes our value systems. A value that’s related to materialism is cosmopolitanism. Researchers define a cosmopolitan as someone who tries to be open to the world and who strives for diverse experiences.

Advertising & Materialism Does advertising foster materialism? Products are designed to meet existing needs Advertising only helps to communicate their availability Other sources of materialism Is materialism necessarily bad? Yes, we can say that advertising and marketing are necessary because consumers may not know that solutions to problems exist without the information provided by advertising and marketing. This is the view of the economics of information perspective. It points out that there is an economic cost to searching for information. Advertising helps consumers by reducing search time.

Old versus New Materialism This table illustrates some differences in what materialism used to look like compared to what it looks like today. Today’s materialistic consumers are more likely to focus on values over status.

Adbusters and “Culture Jamming” Adbusters sponsors many initiatives that try to discourage rampant commercialism. Its work is a type of culture jamming, a strategy to disrupt efforts by the corporate world to dominate our cultural landscape.

Transformative Consumer Research TCR promotes research projects that help people or bring about social change Social marketing strategies use marketing techniques to encourage positive behaviors such as increased literacy and to discourage negative activities such as drunk driving

Data Privacy and Identity Theft Identity theft occurs when someone steals your personal information and uses it without your permission. Advances in technology to combat Identity Theft Are consumers deterred by loss of privacy and identity theft fears?

Market Access Disabilities Impoverished populations Access to reasonably priced goods and Redlining Food deserts Equal protection under the law

Sustainability and Environmental Stewardship Triple bottom-line orientation Financial (profit) Social (people) Environmental (planet)

Conscientious Consumerism Conscientious consumerism is a focus on personal health merging with a growing interest in global health LOHAS (Lifestyles of Health and Sustainability) Middle/Upper-Middle/Upper Class consumers Concerned about the environment Want products to be produced in a “sustainable” way The “Worried Well” One survey revealed that 8 in 10 consumers said they believe it’s important to buy green brands and products from green companies. Analysts call this new value conscientious consumerism. A sizeable number of people are interested in being more green. Marketers point to a segment called LOHAS – an acronym for lifestyles of health and sustainability.

LOHAS LOHAS is the term used to describe the groups of green consumers.

Carbon Footprint Breakdown The carbon footprint measures, in units of carbon dioxide, the impact human activities have on the environment in terms of the amount of greenhouse gases they produce. The average American is responsible for 9.44 tons of CO2 per year! As the figure shows, a carbon footprint comes from the sum of two parts, the direct, or primary, footprint and the indirect, or secondary, footprint: 1) The primary footprint is a measure of our direct emissions of CO2 from the burning of fossil fuels, including domestic energy consumption and transportation (e.g., cars and planes). 2 The secondary footprint is a measure of the indirect CO2 emissions from the whole life cycle of products we use, from their manufacture to their eventual breakdown.