 Be able to explain marketing’s impact on individual consumers, society as a whole and businesses.  Be able to recommend actions that promote a socially responsible way of doing business 2

 Reminder: “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” (Kotler et al, 2008, p7) 3

 “Certain marketing practices hurt individual consumers, society as a whole and other business firms.” (Kotler et al, 2008, p67) 4

‘To be an ethical business, an organisation must be a business and must conduct its activities ethically. An organisation is a business if its objective is maximising long-term owner value; a business acts ethically, if its actions are compatible with that aim and with distributive justice and ordinary decency.’ Sternberg, E. (1994), Just Business, London: Warner 5

‘Managers seeking to ‘balance’ stakeholder interests will quickly encounter the very practical problem of how that ‘balance’ should be defined.’ (Fill, 2002:150) 6

Positive  Increase sales  increase employment  Informs individuals on products & services  Publicity  better profile  more business  Promotes investment in R&D and social sciences  Get a broader market  global expansion, more choice Negative  Offensive  Environmental impact  Promotes obsolescence  Eliminate businesses  Pushing through unpopular strategies  Make us buy things that we don’t need 7

8  The study of moral principles & how individuals should conduct themselves in social affairs  Ethics are an individual’s personal beliefs about right & wrong behaviour  Ethical considerations in decision taking involve the decision taker’s personal feelings & subjective opinion as to what’s good or bad  can vary by individual  can vary by culture

9  Factors instrumental in formation of ethics  family influences  peer influences  life experiences  personal values & morals  situational factors  Managerial ethics - standards of behaviour that guide individual managers in their work:  Relationship of the firm to its employees e.g. working conditions, privacy  relationship of employees to the firm e.g. conflicts of interest  relationship of firm to other economic agents

 Negatives  High prices to cover the cost of: ▪ Distribution ▪ Advertising & Promotion ▪ Excessive mark-ups  Deceptive practices  High-pressure selling  Shoddy, harmful or unsafe products  Poor service to disadvantaged customers 10

Planned obsolescence 11

 False wants and too much materialism 12

 Too few social goods  Cultural pollution  Excessive political power 13

 Acquisition of competitors  Marketing practices that create barriers to entry  Unfair competitive practices 14

“Former employees have alleged the company induced doctors to use Infuse and other spine products by sending them on lavish trips to resorts, paying them undeserved royalties, and handing out lucrative consulting contracts that required little work.” (David Armstrong, Wall Street Journal, Oct. 3, 2008) 15

The company’s ethics policy is supposed to keep vendors from using fancy gifts to win favor with CVS execs. But the rules don’t apply to the company’s annual charity golf tournament, where vendors pay big bucks for trips with key CVS executives, Greg Norman, left, talks with CVS President Tom Ryan, second from right, as others look on during the 6th Annual CVS Charity Classic in

Workplace Co-workers Managers Ethical Policies Community Ethical norms Culture Profession Family Religion Legal System Law Punishment Self Influences in Ethical Decision Making Cron and Decarlo,

1.Get support from top management showing that they expect you to follow the spirit and letter of the law. 2.Develop and distribute a sales ethics policy. 3.Establish the proper moral climate. If the bosses follow the rules, then the troops are apt to do likewise. 4.Assign realistic sales goals. People who try to meet an unfair quota are more likely to rationalize their way to a kickback scheme. 5.Set up controls when needed. Watch people who live above their income. 6.Suggest that salespeople call for help when they face unethical demands. 7.Get together with your competition if payoffs are an industry problem. 8.Blow the whistle if necessary. Cron and Decarlo,

 Enlightened marketing – “holds that a company’s marketing should support the best long-run performance of the marketing system. It consists of five principles.” (Kotler et al, 2008, p96)  Consumer-oriented marketing  Value marketing  Sense-of-mission marketing – mission should be defined in broad social terms rather than narrow product terms  Societal marketing  Innovative marketing – real improvements 19

 You have a chance to win a big account that will mean a lot to you and your company. The purchasing agent hints that a ‘gift’ would influence the decision. Your assistant recommends sending a colour TV set to the buyer’s home. What would you do?  You have heard that a competitor has a new product feature that will make a big difference in sales. The competitor will demonstrate the feature in a private dealer meeting at the annual trade show. You can easily send a snooper to this meeting to learn about the new feature. What would you do? 20

 Kotler, P., Armstrong, G., Wong, V. and Saunders, J. (2008), Principles of Marketing, Fifth European Edition, Pearson; chapter 2 21