Marketing
Chapter 3
Marketing Ethics
Dhruv Grewal
Michael Levy
McGraw-Hill/Irwin
Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
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Johnson & Johnson
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Credo
Customers first
Employees second
Stockholders last
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Firm Goals
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Greed and short term profit seeking lead to
serious long term consequences
Creating value over the long run leads to
long term success
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The Scope of Marketing Ethics
Business ethics
 Marketing ethics
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Attitudes About the Ethical Standards
of Various Professions
Discussion
question
Why do you feel
marketers rank so low on
this scale? What can
marketers do to improve
their ranking?
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Creating an Ethical Climate in the
Workplace
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Values
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Rules
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Establish
Share
Understand
Management
commitment
Employee dedication
Controls
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Reward
Punishment
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Creating a strong ethical climate within a firm includes having a
set of __________ that guide decision making and behavior.
A)
employee opinions
B)
values
C)
religious decrees
D)
morals
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Exhibit 3.2: American Marketing
Association Code of Ethics
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Generally accepted code in marketing
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Flows from general norms of conduct to
specific values
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Subareas within marketing have their own
code of ethics to deal with specific issues
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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The Influence of Personal Ethics
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Values
Genetics
Religion
Upbringing
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Why People Act Unethically
What makes people
take actions that
create so much
harm?
Are all the individuals who
engage in questionable
behavior just plain immoral
or unethical?
Decisions often have conflicting outcomes, where both
options have positive and negative consequences
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Competing Outcomes
Dangerous flaw in new model
Continue
production
Delay
production
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Delayed revenue
Possible layoffs
Loss of bonuses
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Potential injury
to consumers
Loss of revenue
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Aligning Goals
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Individual short term goals not
in line with firm long term goals.
Reward and incentive structures
ensure that goals are aligned.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
To align personal and corporate goals, firms need to have a
strong ethical climate, explicit rules for governing a firm’s
transactions including a code of ethics, and a system
for________________.
A)
rewarding and punishing behavior
B)
covering up questionable activities
C)
assuring the long term goals of the firm are met
D)
protecting stockholder interests
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The Link Between Ethics and
Corporate Social Responsibility
Firms should implement programs that are
socially responsible
Employees should act in an ethically
responsible manner
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Adding Value 3.1:
Coca Cola Fights HIV/AIDS in Africa
Coca Cola Africa Foundation
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Corporate Social Responsibility in
Practice
How does a firm link the economic and social
functions of the business to create value for all
stakeholders?
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Case in Point:
Whole Foods Market
Challenge
To find success in customer
satisfaction and wellness, employee
excellence and happiness, enhanced
shareholder value, community
support, and environmental
improvement.
Answer
Support organic farming, invest in the
firm’s “team members” and donate at
least 5% of net profits to non-profits.
Results
Sales in excess of $1.8 Billion and
being listed on Fortune’s Best
Companies to Work For,
establishment of two successful
foundations.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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A Framework for Ethical Decision Making
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Step One: Identify Issues
Using results to
mislead or even
harm the public
Data
collection
methods
Marketing
research firm
issues
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Hiding the real
purpose of the
study
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Step Two: Gather Information and
Identify Stakeholders
1
Identify all ethical issues and relevant
legal information
2
Identify all relevant stakeholders and get
their input on any identified ethical issues
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Stakeholder Analysis Matrix for a
Marketing Research Firm
Discussion question
How are stakeholders interrelated? How do the responsibilities of one
overlap the other?
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Step Three: Brainstorm Alternatives
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Halt the market research project
Make responses anonymous
Instituting training on the AMA
Code of Ethics for all researchers
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Step Four: Choose a Course of Action
Weigh the alternatives
Take a course of action
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Which step in the ethical decision making framework involves
collecting legal information?
A)
Identify issues
B)
Gather information and identify stakeholders
C)
Brainstorm alternatives
D)
Choose a course of action
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Ethical Decision-Making Evaluation
Questionnaire
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Integrating Ethics Into Marketing Strategy
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Planning Phase
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The mission or vision statement sets the
overall ethical tone for planning.
Firms often go beyond the mission or vision
statement by including a values statement.
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Newman’s Own
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Test Your Knowledge
During planning, ethical mission statements can take on
another role as a means to guide a firm’s __________.
A)
profit and loss
B)
marketing strategy
C)
performance evaluation
D)
SWOT analysis
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Putting an Ethical Mission
Into Practice
How does a firm live up to the ethical goals of its
mission statement?
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Case in Point: Ben and Jerry’s
Challenge
Answer
Results
To promote business practices
that respect the earth and the
environment.
Ethical sourcing of production
and suppliers.
The company only uses milk that
does not contain growth
hormones, and now has
transitioned to “certified humane”
cage free eggs, also using fair
trade certified ingredients such as
coffee and vanilla.
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Implementation Phase
Should the firm be relocating
production to another country?
Should the firm be targeting
this market with this product?
Should the firm be selling its
product in this market in this
manner?
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Entrepreneurial Marketing 3.1: Fetzer
Vineyards
“We Make Our Wines Responsibly Please Drink Them Responsibly.”
Environmentally conscious
Socially conscious
Committed to the development of both
their business and their people
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Control Phase
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Check successful implementation
React to change
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Adding Value 3.2: Tragedy Hits Six Flags
Discussion question
What were the keys to
Six Flags handling of this
tragedy?
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Exhibit 3.8: The Six Tests of Ethical Action
1.
2.
3.
4.
5.
6.
The Publicity Test
The Moral Mentor Test
The Admired Observer Test
The Transparency Test
The Person in the Mirror Test
The Golden Rule Test
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Which test of ethical action asks what the person you most
admire would do in that situation?
A)
The Publicity Test
B)
The Admired Observer Test
C)
The Moral Mentor Test
D)
The Golden Rule Test
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Understanding Ethics Using Scenarios
Scenario 1: Who Is on the Line?
Scenario 2: West Virginia T-Shirts
Scenario 3: Giving Credit Where Credit Isn’t Due
Scenario 4: The Jeweler’s Tarnished Image
Scenario 5: No Wonder It’s So Good
Scenario 6: Bright Baby’s Bright Idea
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Ethical Dilemma 3.1: A Questionable
Promotion
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What alternatives did Steve
come up with?
How did Steve evaluate these
alternatives?
Which alternative did Steve
select, and why?
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Scenario 1: Who Is on the Line?
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What are the ethical issues in this
scenario?
Why would a firm use this service?
How do you think consumers will
respond to firms who use this
service?
Would you advise purchasing this
service?
Back to list of scenarios
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Scenario 2: West Virginia T-Shirts
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What are the ethical issues in this
scenario?
If you were the retailer how would
you have responded?
Does a history of previous
inappropriate business practices
impact your opinion of the retailer?
Back to list of scenarios
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Scenario 3: Giving Credit Where
Credit Isn’t Due
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Is this an inappropriate target
market?
Could you argue that the firm
provides a valuable service to this
market?
Would you advise the cataloger to
pursue this new strategy?
Back to list of scenarios
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Scenario 4: The Jeweler’s
Tarnished Image
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Is the manufacturer responsible for the acts
of independent sales people?
How do you feel the Billing’s should
respond?
Back to list of scenarios
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Scenario 5: No Wonder It’s So Good
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Is the legal non disclosure of the
alcohol content and ethical issue?
Should the firm be required to disclose
the alcohol content?
What would you do if you were Mia?
Back to list of scenarios
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Scenario 6: Bright Baby’s Bright Idea
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Is the potential for injury enough to merit
removal of the product from the market?
Do you feel it is ethical to move the
product to a less regulated market?
What would you have advised the CEO?
Back to list of scenarios
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Chapter 3 Glossary
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Business ethics: Refers to a branch of ethical study that
examines ethical rules and principles within a commercial
context, the various moral or ethical problems that might
arise in a business setting, and any special duties or
obligations that apply to persons engaged in commerce.
Corporate social responsibility: The voluntary actions
taken by a company to address the ethical, social, and
environmental impacts of its business operations and the
concerns of its stakeholders.
Marketing ethics: Examines those ethical problems that
are specific to the domain of marketing.