Part Two The Global Environment and Social and Ethical Responsibilities Principles of Marketing Chapter 4

Learning Objectives… To understand the Nature of Ethics and its importance in marketing To understand how to Incorporate Social Responsibility and Ethics into Strategic Planning To define and describe the importance of marketing ethics To understand the role of social responsibility and ethics in marketing Copyright © Houghton Mifflin Company. All rights reserved. 4 | 2

What is Ethics? ETHICS: (used with a singular or plural verb) a system of moral principles: the ethics of a culture The rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.. Moral principles, as of an individual Rules relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions. Copyright © Houghton Mifflin Company. All rights reserved. 4 | 3

What is Social Responsibility? Social responsibility  An organization’s obligation to maximize its positive impact and minimize its negative impact on society ◦ They do this by: Marketing Citizenship  The adoption of a strategic focus for fulfilling the economic, legal, ethical, and social responsibilities expected by stakeholders. Avon & Breast Cancer Awareness  Who are Stakeholders?  Constituents who have a “stake” or claim in some aspect of the company’s products, operations, markets, industry, and outcomes Copyright © Houghton Mifflin Company. All rights reserved. 4 | 4

Best Corporate Citizens Copyright © Houghton Mifflin Company. All rights reserved. 4 | 5 1General Mills11AT&T 2Cummins Inc.12Fannie Mae 3Intel13Bank of America 4Procter & Gamble14Motorola 5IBM15Herman Miller 6Hewlett-Packard16Expedia 7Avon Products17Autodesk 8Green Mountain Coffee Roasters 18Cisco Systems 9John Nuveen19Wild Oats Markets 10St. Paul20Deluxe Source: Peter Asmus, with Sandra Waddock and Samuel Graves, “100 Best Corporate Citizens of 2003,” Business Ethics, ethics.com/100best.htm (accessed Oct. 24, 2003).

The Pyramid of Corporate Social Responsibility Copyright © Houghton Mifflin Company. All rights reserved. 4 | 6 FIGURE 4.1 Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug Copyright © 1991 by the Foundation for the School of Business at Indiana University. Reprinted with permission.

How to be Socially Responsible ◦ Marketing ethics  Principles and standards that define acceptable marketing conduct as determined by various stakeholders ◦ Cause-related marketing  The practice of linking products to a particular cause on an ongoing or short-term basis – ex: UNICEF & Halloween or Am Ex w/ Statue of Liberty ◦ Strategic philanthropy  The use of organizational core competencies and resources to address key stakeholders’ interests and achieve both organizational and social benefits ex-Home Depot & Habitat For Humanity! Copyright © Houghton Mifflin Company. All rights reserved. 4 | 7

Social Responsibility Issues  Green Marketing  The specific development, pricing, promotion, and distribution of products that do not harm the natural environment  Green Marketing Goals  Eliminate the concept of waste  Reinvent the concept of a product  Make prices reflect actual and environmental costs – factor in cost of helping environment  Make environmentalism profitable If your harming the environment – don’t sell! Copyright © Houghton Mifflin Company. All rights reserved. 4 | 8

Social Responsibility Issues  Consumerism  The efforts of individuals, groups, and organizations to protect the rights of consumers  Lobbying government officials and agencies  Letter-writing campaigns and boycotts  Public service announcements  Coverage by the news media and the Internet  Consumer “Bill of Rights”  Right to safety  Right to be informed  Right to choose  Right to be heard Copyright © Houghton Mifflin Company. All rights reserved. 4 | 9

Social Responsibility Community Relations: people want marketers who add to the well being of society…… ◦ Expectations of firms as “good corporate citizens”  Philanthropy: contributions to civic projects and institutions  Educational, health, cultural, and recreational Copyright © Houghton Mifflin Company. All rights reserved. 4 | 10

Improving Ethical Conduct in Marketing ◦ Companies should have a Codes of Conduct (ethics)  Formalized rules and standards that describe what the company expects of its employees ◦ Ethics officers  High-ranking persons (known to respect legal and ethical standards) in the organization who have responsibilities for  creating and distributing codes of conduct.  providing advice about ethical issues.  overseeing and enforcing of the code of conduct. Copyright © Houghton Mifflin Company. All rights reserved. 4 | 11

The Nature of Ethics (cont’d) Implementing Ethics and Legal Compliance Programs ◦ Provide open communication and coaching on ethical issues ◦ Enforce standards and impose penalties or punishment for codes of conduct violations. ◦ Revise compliance programs as necessary. ◦ Make compliance programs an essential part of the marketing strategy implementation. Copyright © Houghton Mifflin Company. All rights reserved. 4 | 12

Incorporating Social Responsibility and Ethics Into Strategic Planning Evaluating whether an activity is ethical and socially responsible… ◦ Ask other persons in the organization for their approval. ◦ Contact concerned consumer, industry, and governmental groups. ◦ Check company policies. Copyright © Houghton Mifflin Company. All rights reserved. 4 | 13