16-1 Visit UMT online at © UMT 2004 MKT100Version: Visit UMT online at PRINCIPLES OF MARKETING University of Management and Technology 1901 N. Fort Myer Drive Arlington, VA USA Phone: (703) Fax: (703) Website:

16-2 Visit UMT online at © UMT 2004 MKT100Version: Visit UMT online at CHAPTER 16: Marketing and Society: Social Responsibility and Marketing Ethics Armstrong, G. & Kotler, P. Marketing: An Introduction (6th ed.) Prentice Hall © 2003.

16-3 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Road Map: Previewing the Concepts Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of socially responsible marketing. Explain the role of ethics in marketing.

16-4 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Deceptive Practices High-Pressure Selling Shoddy, Unsafe Products Planned Obsolescence Poor Service to Some Marketing’s Impact on Individual Consumers Criticisms Leveled at the Marketing Function by Consumers, and Others High Prices

16-5 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at High Costs of Distribution High Costs of Distribution High Advertising and Promotion Costs High Advertising and Promotion Costs High Prices Caused by the Following Factors Excessive Markups Excessive Markups Marketing’s Impact on Individual Consumers: High Prices

16-6 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Deceptive Pricing Deceptive Pricing Falsely Advertising “Factory” or “Wholesale” Prices, Large Reduction From Phony High List Price Falsely Advertising “Factory” or “Wholesale” Prices, Large Reduction From Phony High List Price Deceptive Packaging Deceptive Packaging Exaggerating Package Contents, Not Filling Package to the Top, Using Misleading Labeling Deceptive Promotion Deceptive Promotion Overstating the Product’s Features, Luring Customers to the Store for Out-of-Stock Bargains, etc. Marketing’s Impact on Individual Consumers: Deceptive Practices

16-7 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Marketing’s Impact on Individual Consumers High-Pressure Selling Some products – such as cars and jewelry – are said to be sold, not bought. Such tactics damage marketer’s long-run relationship with customers. Shoddy or Unsafe Products Complaint that many products are not made well. Second, many products deliver little benefit. Third, concerns product safety.

16-8 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at American Association of Advertising Agencies This ad demonstrates that advertising can’t make consumers buy things that they don’t need despite high- pressure selling.

16-9 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Marketing’s Impact on Individual Consumers Planned Obsolescence Change consumer concepts of acceptable styles. Hold back attractive functional features. May break, wear, rust, or rot sooner than should. Poor Service to Disadvantaged Consumers May pay more for inferior goods. “Redlining” may occur where major chain retailers avoid placing stores in disadvantaged neighborhoods.

16-10 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at False Wants & Too Much Materialism Too Much Political Power Producing Too Few Social Goods Cultural Pollution Marketing’s Perceived Negative Impact on Society as a Whole Marketing’s Impact on Society as a Whole

16-11 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Unfair Competitive Marketing Practices Marketing’s Impact on Other Businesses Marketing Practices Create Barriers to Entry Acquisitions of Competitors

16-12 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Buyers’ Rights Sellers’ Rights Consumerism is an Organized Movement of Citizens and Government Agencies to Improve the Rights and Power of Buyers in Relation to Sellers. Consumerism

16-13 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at The Right Not to Buy a Product Offered for Sale The Right to Expect the Product to be Safe The Right to Expect the Product to Perform as Claimed The Right to Be Protected Against Questionable Products The Right to Be Heard About “Quality of Life” Issues The Right to Be Well Informed About the Product Consumerism – Buyers’ Rights

16-14 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Plan for New Environmental Technologies Adopt Design for the Environment Practices Have a Sustainability Vision Practice Product Stewardship Practice Pollution Prevention Environmentalism

16-15 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Major Legal Issues Facing Marketing Management (Fig. 16-2)

16-16 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Consumer-Oriented Marketing Innovative Marketing Value Marketing Sense-of-Mission Marketing Societal Marketing Holds That a Company’s Marketing Should Support the Best Long-Run Performance of the Marketing System. Enlightened Marketing

16-17 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Societal Classification of Products (Fig. 16-3)

16-18 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Marketing Ethics  Distributor Relations  Advertising Standards  Customer Service  Pricing  Product Development  General Ethical Standards Companies Need to Develop Corporate Marketing Ethics Policies – Broad Guidelines That Everyone in the Organization Must Follow and Should Address:

16-19 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Decided by the Free Market and Legal System Decided by the Free Market and Legal System Responsibility of Individual Companies And Managers Responsibility of Individual Companies And Managers Marketing Ethics Principles That Should Guide Companies and Marketing Managers On Issues of Ethics and Social Responsibility:

16-20 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Rest Stop: Reviewing the Concepts Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of socially responsible marketing. Explain the role of ethics in marketing.