We are in a system of fouling our
own nest, so long as we behave
as independent, rational,
free-enterprises.
CHAPTER
GARRETT HARDING
two
Sustainable marketing:
marketing ethics and
social responsibility
●
Prelude case – NSPCC: Full Stop to child cruelty
●
Introduction
●
Social criticisms of marketing
●
Real Marketing 2.1 – The Dove Campaign for Real Beauty
●
Marketing’s impact on other businesses
●
Citizen and public actions to regulate marketing
●
Business actions towards socially responsible marketing
●
Real Marketing 2.2 – From Plato’s Republic to supermarket slavery
●
Company case 2 – Nestlé: singled out again and again
▲
Mini Contents List
SOURCE: To come
‘Flash, love you, but we only have fourteen hours
to save the world.’
Queen from ‘Flash’ on ‘Flash Gordon: Original Soundtrack’, Parlophone,
B000024ZSC, 1994
Previewing the concepts
In this chapter, we will focus on sustainable marketing. First, we look at some common
criticisms of marketing as it affects individual consumers, other businesses and society as
a whole. Then, we’ll examine consumerism, environmentalism and other citizen and public
actions to keep marketing in check. Finally, we’ll see how companies themselves can benefit
from proactively pursuing socially responsible and ethical practices that bring value not just
to individual customers, but to society as a whole and into the future. You’ll see that sustainable marketing, social responsibility and ethical actions are more than just the right thing to
do; they’re also good for business.
After reading this chapter, you should be able to:
1. Identify the major social criticisms of marketing.
2. Define consumerism and environmentalism and explain how they affect marketing
strategies.
3. Describe the principles of socially responsible marketing.
4. Explain the role of ethics in marketing.
5. Understand the dimensions of sustainable marketing.
First, we look at how marketing is being used to achieve social, not commercial ends.
Formed in 1884, the NSPCC is an old charity controversially using modern marketing to
achieve its objectives.
Prelude case
NSPCC: Full Stop to child cruelty
The National Society for the Prevention of Cruelty to Children
(NSPCC) Full Stop campaign has hardly ever been out of the
headlines. Aimed to put a full stop to cruelty to children, the
campaign was a call to children in need and people aware of
them, to come forward so that the children could be helped.
At the start of the campaign, the charity’s end-of-year 2000
accounts prompted condemnation. They revealed that the £43m
(€63m) the charity spent on fundraising, publicity, campaigning
and administration far exceeded the £32m it spent on services
to children. It was ‘a sign of complete incompetence’, charged
Conservative MP Gerald Howarth, who vowed to stop backing
the NSPCC’s high-profile Full Stop campaign. The furore was
not helped by the NSPCC’s use of pop icons, including Kylie
Minogue, Ms Dynamite, David Beckham and Pelé to put their
Full Stop message across.
After years sticking to the Full Stop campaign it believed in,
the NSPCC again hit controversy. The celebrities supporting the
campaign were more classy than they used to be, including
artist Tracey Emin and actress Dame Judi Dench, but still
attracted the anger of the charity’s donors. Many donors were
outraged over the revelations that £25,000 was spent producing
2,000 limited edition brochures for well-heeled NSPCC
supporters to mark the end of the £250m Full Stop Appeal.
Once again the charity’s spending was under fire. The NSPCC
spends 81p of every pound directly on ending cruelty to children. In comparison, 92p in every pound raised by the RSPCA
(Royal Society for the Prevention of Cruelty to Animals) goes
directly to animal welfare.
According to Quentin Anderson, chief executive of Addison,
the corporate marketing arm of WPP Group, such criticism
of the NSPCC strategy is unwise and failed to recognise the
professional makeover many charities have undertaken in
recent years. Charities are now highly organised operations and
have adopted a more businesslike approach, which is essential
if they are to survive in a crowded sector. When arguing how big
the various components of the NSPCC’s budget should be,
detractors must remember that there is a multi-million pound
budget to disburse. Charities need highly skilled staff to
manage such funds.
According to Mr Anderson, the NSPCC’s campaign makes
sense. The charity has stated that its long-term objectives were
to raise social awareness of child cruelty and to raise £250m
through the ‘Full Stop’ initiative. On both these counts it had
succeeded but the NSPCC needs to ensure that people understand what it is trying to achieve because it needs their help.
It needs to show that it is awake, reacting to change and
anticipating it.
Despite the furore, the NSPCC sticks to its guns and keeps
campaigning. The advertising is central to NSPCC’s mission: ‘to
end cruelty to children for ever’. With help from the campaign,
650,000 people pledged their support for their campaign to
achieve a better future for all children.
Marketing is ideally suited to the task the charity has set
itself. In crude terms, its route to market is not so obvious as
those of other charities. For example, it is comparatively easy
for ‘Meals on Wheels’ to identify the disabled and elderly to
whom it provides hot food, so the charity can dedicate the
majority of its expenditure to providing the service. By contrast,
the NSPCC has defined its audience as the whole population. By
communicating clearly with all communities, it hopes to enlist
many more foot soldiers than direct action ever would.
The campaign has got a lot right. To achieve its aim, the
NSPCC used celebrities to back its central message that to
reduce cruelty to children you need to raise awareness of child
cruelty and challenge social attitudes. To reach those at risk it
focuses on teenage media: Sugar, Cosmo Girl, Bliss, Shout and
Mizz. Boys are reached through music, football and games
magazines, including Hip-Hop Connection, which offered a hip
hop CD, ‘Holla!’, with a recent issue. Teen rock music fans are
reached through Kerrang!. The charity’s 2007 Don’t Hide It
campaign has a strong presence on teen websites, including
Bebo.com, Piczo.com and Habbo.com. Donthideit.com is
promoted as a place to access information about abuse. Anyone
needing to speak out is encouraged to talk to ChildLine.
Matching your brand to stars is a successful marketing technique and need not be a cause for controversy, says the NSPCC.
Nike pays Tiger Woods handsomely but obviously believes it
gets value for money. The NSPCC would be foolish not to exploit
celebrities willing to donate their time free of charge. Without
celebrities, would the Full Stop campaign receive front-page
exposure in the magazines teenagers read?
So, why should the NSPCC be criticised for spending money
and talking about it? The charity understands that dissemination of better information creates confidence in the community.
This leads to many benefits, including greater loyalty from
donors and a more secure position in the sector. It also avoids
the accusation of hoarding funds, a criticism that has been
levelled at many charities.
The negative reaction to the NSPCC marketing campaign is a
sign not that its marketing strategy is failing but that its communications policy is. A first principle for all good communicators is
to evolve messages defining what the organisation does and
what its aims are. The NSPCC should have explained better the
rationale behind its spending on marketing.1
Questions
You should attempt these questions only after completing your
reading of this chapter.
1. Who are the charity’s target market and what are the main
aspects of the service offered by a charity such as the
NSPCC?
2. Assess the role of marketing in assisting the charity to
achieve its goals. Should the charity spend more on
fundraising, publicity, campaigning and administration than
on direct services to children?
3. Evaluate the NSPCC’s current marketing strategy. Has the
charity got its current marketing strategy wrong? Or are the
problems due to its communication policy?
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Introduction
Responsible marketers discover what consumers want and respond with marketing offerings that
create value for buyers in order to capture value in return. The marketing concept is a philosophy
of customer value and mutual gain. Its practice leads the economy by an invisible hand to satisfy
the many and changing needs of millions of consumers.
Not all marketers follow the marketing concept, however. In fact, some companies use
questionable marketing practices, and some marketing actions that seem innocent in themselves
strongly affect the larger society. Consider the sale of cigarettes. On the face of it, companies
should be free to sell cigarettes and smokers should be free to buy them. But this transaction
affects the public interest and involves larger questions of public policy. For example, the smokers
are harming their health and may be shortening their own lives. Smoking places a financial
burden on the smoker’s family and on society at large. Other people around smokers may suffer
discomfort and harm from secondary smoke. Finally, marketing cigarettes to adults might also
influence young people to begin smoking. Thus, the marketing of tobacco products has sparked
substantial debate and negotiation in recent years.2
Marketers face difficult decisions when choosing to serve customers profitably on the one
hand, and seeking to maintain a close fit between consumers’ wants or desires and societal
welfare on the other. This chapter examines the social effects of private marketing practices. We
address several questions: What are the most frequent social criticisms of marketing? What steps
have private citizens taken to curb marketing ills? What steps have legislators and government
agencies taken to curb marketing ills? What steps have enlightened companies taken to carry out
The NSPCC’s ‘Full Stop’
campaign. To reach its various
target audiences, the charity
organisation has to spend
huge sums on fundraising and
marketing campaigns. Critics,
however, question whether
the organisation should spend
more on marketing campaigns
and administration than on
direct services to children.
SOURCE: NSPCC. Photographer:
Matt Harris.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
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Social criticisms of marketing
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sustainable marketing that creates value for both individual customers and society as a whole,
now and into the future? In addition, as the prelude case suggests, the issues of public accountability, social responsibility and ethical behaviour are also relevant for not-for-profit organisations.
r s o n . co . u k
Marketing receives much criticism. Some of this criticism is justified; much is not. Social critics
claim that certain marketing practices hurt individual consumers, society as a whole and other
business firms. Malpractice may also endanger the survival of a company and the welfare of
future consumers.
“
“
Certain marketing practices hurt individual consumers, society as a whole and
other business firms.
Marketing’s impact on individual consumers
Consumers have many concerns about how well marketing and businesses, as a whole, serve their
interests. Consumers, consumer advocates, government agencies and other critics have accused
marketing of harming consumers through high prices, deceptive practices, high-pressure selling,
shoddy or unsafe products, planned obsolescence and poor service to disadvantaged consumers.
High prices
Many critics charge that marketing practices raise the cost of goods and cause prices to be higher
than they would be under more ‘sensible’ systems. They point to three factors: high costs of distribution, high advertising and promotion costs and excessive mark-ups.
High costs of distribution
A long-standing charge is that greedy intermediaries mark up prices beyond the value of their
services. Critics charge either that there are too many intermediaries, or that intermediaries are
inefficient and poorly run, or that they provide unnecessary or duplicated services. As a result,
distribution costs too much and consumers pay for these excessive costs in the form of higher
prices.
How do resellers answer these charges? They argue that intermediaries do work that would
otherwise have to be done by manufacturers or consumers. Mark-ups reflect services that
consumers themselves want – more convenience, larger stores and assortments, more service,
longer store opening hours, return privileges and others. They argue that retail competition is
so intense that margins are actually quite low. For example, after taxes, supermarket chains are
typically left with barely 1 per cent profit on their sales. They survive by turning over their stock
many times a year, so accumulating the 1 per cent. If some resellers try to charge too much
relative to the value they add, other resellers will step in with lower prices. Low-price stores
and other discounters pressure their competitors to operate efficiently and keep their prices
down.
High advertising and promotion costs
Marketing is accused of pushing up prices because of heavy advertising and sales promotion. For
example, a few dozen tablets of a heavily promoted brand of pain reliever sell for the same price as
100 tablets of less promoted (often termed ‘generic’) brands. Differentiated products – cosmetics,
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A heavily promoted brand of
aspirin sells for much more
than a virtually identical nonbranded or store-branded
product. Critics charge that
promotion adds only psychological value to the product
rather than functional value.
detergents, toiletries – include promotion and packaging costs that can amount to 40 per cent or
more of the manufacturer’s price to the retailer. Critics charge that much of the packaging and
promotion adds only psychological value to the product rather than real functional value.
Marketers respond by saying that advertising does add to product costs, but it also adds value
by informing potential buyers of the availability and merits of a brand. Brand name products
may cost more, but branding gives buyers assurances of consistent quality. Moreover, consumers
can usually buy functional versions of products at lower prices. However, they want and are
willing to pay more for products that also provide psychological benefits – that make them feel
wealthy, attractive or special. Also, heavy advertising and promotion may be necessary for a firm
to match competitors’ efforts – the business would lose ‘share of mind’ if it did not match
competitive spending. At the same time, companies are cost-conscious about promotion and try
to spend their money wisely.
Excessive mark-ups
Critics also charge that some companies mark up goods excessively. They point to the drug
industry, where a pill costing 5 cents to make may cost the consumer €2 to buy. They point to the
pricing tactics of perfume manufacturers, who take advantage of customers’ ignorance of the
true worth of a 50 ml bottle of Chanel perfume, while preying on their desire to satisfy
emotional needs.
Marketers respond that most businesses try to deal fairly with consumers because they want
to build customer relationships and repeat business. Most consumer abuses are unintentional.
When shady marketers do take advantage of consumers, they should be reported to industry
watchdogs and to other consumer-interest or consumer-protection groups. Marketers also stress
that consumers often don’t understand the reason for high mark-ups. For example, pharmaceutical mark-ups must cover the costs of purchasing, promoting and distributing existing
medicines, plus the high research and development costs over many years of formulating and
testing new drugs.
Deceptive practices
Marketers are sometimes accused of deceptive practices that lead consumers to believe they will get
more value than they actually do. Deceptive marketing practices fall into three groups: deceptive
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
pricing, promotion and packaging. Deceptive pricing includes inflationary price comparisons where
‘factory’ or ‘wholesale’ prices are falsely advertising a large price reduction from a falsely high retail
list price. Deceptive promotion includes practices such as misrepresenting the product’s features or
performance, or ‘bait and switch’ where customers are lured to the store for a bargain that is out of
stock, then sold a higher-priced item. Deceptive packaging includes exaggerating package contents
through subtle design, not filling the package to the top, using misleading labelling or describing
size in misleading terms. To be sure, questionable marketing practices do occur, as in the following
example.
DFS sell well-designed sofas and armchairs at competitive prices. It has long been seen as
one of the UK’s most reliable financial performers in the retail sector, the retail sector’s
largest spender on advertising and the country’s largest furniture retailer. Its advertising is
bland, consistent and discount oriented. In spring 2007 DFS promoted ‘50% off the Eclipse
collection’; ‘designer sofas half price’; ‘Bex, previous price £1698, half price £798; Opus, previous
price £1155, half price £498’. Of course, not all the products on sale are half price, but there will
be an equally generous-looking offer advertised all year round. As well as being well stocked
with sofas, the warehouse-sized stores have enthusiastic salespeople who eagerly pounce on
customers entering the store and are usually able to offer enticing financial deals to help them
buy their living room suite. It is all legal but . . . .3
Deceptive practices have led to legislation and other consumer-protection actions, as in the
following example.
European Council Directive 93/35/EEC paves the way for far-reaching changes to cosmetics
laws. The legislation controls the constituents of cosmetic products and accompanying
instructions and warnings about use. It also specifies requirements for marketing of cosmetic
products, including product claims, labelling, information on packaging and details about the
product’s intended function. Where a product claims to remove ‘unsightly cellulite’ or make the
user look ‘20 years younger’, proofs must be documented and made available to the enforcement
authorities. These laws also require clear details specifying where animal testing occurred on both
the finished product and its ingredients. In recognition of the increased public resistance to animal
testing, a limited EU ban on animal testing for cosmetic ingredients has been in force since 1998.
Despite regulations, some critics argue that deceptive claims are still the norm. The toughest
problem is defining what is ‘deceptive’. For instance, an advertiser’s claim that its powerful
laundry detergent ‘makes your washing machine ten feet tall’, showing a surprised home-maker
watching her appliance burst through her laundry room ceiling, isn’t intended to be taken
literally. Instead, the advertiser might claim, it is ‘puffery’ – innocent exaggeration for effect.
One noted marketing thinker, Theodore Levitt, claims that some advertising puffery is bound
to occur – and that it may even be desirable:
There is hardly a company that would not go down in ruin if it refused to provide fluff,
because nobody will buy pure functionality . . . . Worse, it denies . . . people’s honest
needs and values. Without distortion, embellishment and elaboration, life would be
drab, dull, anguished and at its existential worst.4
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“
“
There is hardly a company that would not go down in ruin if it refused to
provide fluff.
However, others claim that puffery and alluring imagery can harm consumers in subtle ways,
and that consumers must be protected through education. Lane Jennings talks of ‘Hype, Spin,
Puffery and Lies’:
The real danger to the public . . . comes not from outright lies – in most cases facts can
ultimately be proven and mistakes corrected. But . . . advertising uses [the power of
images and] emotional appeals to shift the viewer’s focus away from facts. Viewers who
do not take the trouble to distinguish between provable claims and pleasant but meaningless word play end up buying ‘the sizzle, not the steak’ and often paying high prices.
The best defense against misleading ads . . . is not tighter controls on [advertisers], but
more education and more critical judgment among . . . consumers. Just as we train children to be wary of strangers offering candy, to count change at a store, and to kick the
tyres before buying a used car, we must make the effort to step back and judge the value
of . . . advertisements, and then master the skills required to separate spin from
substance.5
Marketers argue that most companies avoid deceptive practices because such practices harm
their business in the long run. Profitable customer relationships are built upon a foundation
of value and trust. If consumers do not get what they expect, they will switch to more reliable
products. In addition, consumers usually protect themselves from deception. Most consumers
recognise a marketer’s selling intent and are careful when they buy, sometimes to the point of
not believing completely true product claims.
High-pressure selling
Salespeople are sometimes accused of high-pressure selling that persuades people to buy goods
they had no thought of buying. It is often said that cars, insurance and home improvement plans
are sold, not bought. Salespeople are trained to deliver smooth, canned talks to entice purchase.
They sell hard because commissions and sales contests promise big prizes to those who sell the
most.
Interested in buying a conservatory, a consumer contacted several local suppliers and
Anglian Home Improvements, the market leader, who was promoting ‘up to 25 per cent off
conservatories plus free solar roof’. All the suppliers sent someone to discuss the project,
sometimes the owner of the business. The local suppliers all supplied a plan and an estimate
within a few days. Anglia sent a salesman who worked out an estimate on the spot, offered a loan
at 1 per cent and tried to get a close. He even rang his boss, talking in a loud voice so that all
could hear, to get a special deal if the customer’s house could be a show house. The customer
did not agree to buy on the spot and never did so because even with the ‘25 per cent off’ the price
was well over £20,000 (€30,000) while all the other estimates were well below that figure.
In most cases, marketers have little to gain from high-pressure selling. Such tactics may work
in one-time selling situations for short-term gain. However, Anglian is the market leader.6
Consumers are particularly vulnerable when making expensive purchases.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
Holiday timeshare is one area. There are many reputable companies in this sector, such as
Sunterra, that offer good-value products but still use high-pressure selling to achieve
closure. The European Commission estimates holiday property rip-offs cost European
consumers over €7bn a year and is extending the law protecting timeshare owners. The industry
also wants political help in policing the sector. Sandy Grey, of the Timeshare Consumers’
Association, says ‘Nobody wants to buy because the reputation of the industry is so bad.’7
As these examples show, high-pressure selling abounds when selling high-cost services to
vulnerable people. It also damages the prospects for legitimate marketers. Fortunately, most
selling involves building long-term relationships with valued customers. High-pressure or deceptive selling can do serious damage to such relationships. For example, imagine a Unilever account
manager trying to pressure a Tesco buyer, or an IBM salesperson trying to browbeat a Siemens
information technology manager. It simply would not work.
Shoddy, harmful or unsafe products
Another criticism concerns poor product quality or function. One complaint is that, too often,
products are not made well and services are not performed well. A second complaint is that
many products deliver little benefit, or that they might even be harmful. For example, many
critics have pointed out the dangers of today’s fat-laden fast-food. McDonald’s recently faced a
class-action lawsuit charging that its fast food meals have contributed to the obesity epidemic.
Who’s to blame for the nation’s obesity problem? And what should responsible food companies do about it? As with most social responsibility issues, there are no easy answers. McDonald’s
has worked to improve its fare and make its menu and its customers healthier. However, other
fast feeders seem to be going the other way. Burger King launched its Enormous Omelet breakfast sandwich, packing an unapologetic 47 grams of fat. Are these companies being socially
irresponsible? Or are they simply serving customers choices they want?8
Once we laughed at the US as being the fast food nation. Now Europe is catching up. ‘The
last three decades have seen the levels of overweight and obesity in the EU population rise
dramatically, particularly among children, where the estimated prevalence of overweight was
30 per cent’, says Markos Kyprianou, the European Union health commissioner. He explained
that in most EU countries more than half the adult population was either overweight or obese
and ‘today’s overweight children will be tomorrow’s heart attack victims’.
Governments in some countries have already acted. In some European countries, junk food is
banned in schools and marketing restrictions are imposed on food companies, with the UK
restricting television advertisements of junk food. Half the products of one in three European food
companies had been ‘reformulated’ to make them healthier. Industry had also accepted voluntary
curbs on advertising and modified their marketing to avoid further regulation. Soft drinks companies
and some food companies are stopping advertisements to children under the age of 12.
The voluntary steps taken by the industry had persuaded the European Commission to give
self-regulation a chance. Beuc, the European Consumers’ Association, thinks the Commission
has failed to tackle what the Commissioner himself called a ‘top public health priority’. Beuc
attacked the Commission’s policy paper as a ‘disappointing, unambitious and minimalist
response to the problems of obesity and diet-related diseases’.9
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For over 100 years consumers
have worried about the ‘goodness’ of what they consume,
hence the success of Marmite
and Perrier. Dogs do not fret
about food additives but their
owners care for them.
At the opposite end of the spectrum to obesity, marketers and particularly the fashion
industry are criticised for idolising images of beauty that are unrealistic, if not dangerous. Real
Marketing 2.1 shows how Unilever have responded to this aspiration by trying to create a more
realistic portrayal of womanhood.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
2.1
The Dove Campaign for Real Beauty
Unilever’s Dove brand is on a mission. The Dove Campaign for Real Beauty aims to change
the traditional definition of beauty.
In a year when both ‘skinny chic’ and the size 00 – the waist of a typical sevenyear-old – was the height of fashion, Ana Carolina Reston’s death was poignant. She
was the second model during 2006 to die from an eating disorder. In August, at a
fashion show in Uruguay, 22-year-old Luisel Ramos suffered a heart attack thought
to be the result of anorexia. Although anorexia is not the preserve of the fashion
industry, it is not surprising that Reston’s death has spotlighted how the fashion
business treats its models and how destructive our current perception of female
beauty can be.
How do you define beauty? Open the latest copy of a fashion magazine and check
out the ads for cosmetics and beauty-care products. Look at the models in those
ads – the classic beauties with incredibly lean, sexy figures with flawless features.
Does anyone you know look like the women in those ads? Maybe not. They are
supermodels, chosen to portray ideal beauty. The ads are aspirational. But real
women, who compare themselves to these idealised images day in and day out, too
often come away feeling diminished by thoughts that they could never really look
▼
like that.
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…2.1
Unilever’s Dove brand is on a mission to change all of this. Its Campaign for
Real Beauty hopes to do more than just sell Dove beauty creams and lotions. It
aims to change the traditional definition of beauty – to ‘offer in its place a broader,
healthier, more democratic view of beauty’. It tells women to be happy just the way
they are. ‘In Dove ads,’ says one advertising expert, ‘normal is the new beautiful.’
It all started with a Unilever study that examined the impact on women of a
society that narrowly defines beauty by the images seen in entertainment, in
advertising and on fashion catwalks. The startling result: only 2 per cent of 3,300
women and girls surveyed in 10 countries around the world considered themselves
beautiful. Unilever’s research revealed that among women ages 15 to 64 worldwide, 90 per cent want to change at least one aspect of their physical appearance
and a staggering 67 per cent withdraw from some life-engaging activities because
they are uncomfortable with their looks.
Unilever concluded: ‘It is time to redefine beauty!’ ‘We believe that beauty
comes in different shapes, sizes and ages,’ says Dove marketing director Philippe
Harousseau. ‘Our mission is to make more women feel beautiful every day by
broadening the definition of beauty.’ Unilever launched the Dove Campaign for
Real Beauty globally in 2004, with ads that featured candid and confident images of
real women of all types (not just actresses or models) and headlines that prompted
consumers to ponder their perceptions of beauty. Among others, it featured fullbodied women (‘Oversized or Outstanding?’), older women (‘Gray or Gorgeous?’;
‘Wrinkled or Wonderful?’) and a heavily freckled woman (‘Flawed or Flawless?’).
In 2005, the campaign’s popularity skyrocketed as Dove introduced six new ‘real
beauties’ of various ethnicities and proportions, in sizes ranging from 6 to 14.
These women appeared in magazines and on billboards wearing nothing but their
underwear and big smiles, with headlines proclaiming, ‘Let’s face it, firming the
thighs of a size 2 supermodel is no challenge,’ or ‘New Dove Firming: As Tested on
Real Curves.’
In 2006, Unilever took the Dove campaign to a new level, with a ground-breaking
spot in the mother of all ad showcases, the US Super Bowl. This ad did not feature
curvy, confident women. Instead, it presented young girls battling self-esteem
issues – not models but real girls picked from schools, sports leagues and Girl
Scout troops. In the ad, one dark-haired girl ‘wishes she were a blond’. Another
‘thinks she’s ugly’. A pretty young redhead ‘hates her freckles’. The ad also
promoted the Dove Self-Esteem Fund, which supports, among other causes,
the Girl Scouts’ Uniquely Me programme. It urged viewers to ‘get involved’ at the
campaignforrealbeauty.com website.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
‘We want to raise awareness of self-esteem being a real issue [for a young girl],’
says Harousseau. ‘Every single one of us can get engaged and can change the way we
…2.1
interact with her to increase self-esteem.’ As the campaign has taken off, so have
sales of Dove products. And calls to Unilever’s consumer call centre have surged, as
has traffic to the campaignforrealbeauty.com website. Women, girls and even men
praise Dove for addressing a too-long-ignored social issue.
Debora Boyda, managing partner at Ogilvy & Mather, the ad agency that created
the campaign, received a phone call from an emotional father. His teenage daughter
had just recovered from a four-year battle with anorexia. The father thanked her and
stressed how important he thought the ad was. ‘That to me was the high point of what
the ad achieved,’ says Boyda.
In addition to the positive reactions, however, the Dove Campaign for Real Beauty
has also received criticism. Critics argue that the ‘real women’ in the Dove ads are
still head turners, with smooth skin, straight teeth and no cellulite. Although these
unretouched beauties are more realistic than supermodels, they still represent a lofty
standard of beauty. Fans of the campaign counter that, compared with typical adindustry portrayals, the Dove women represent an image of beauty that is healthy,
constructive and much closer to reality. For example, after seeing a Dove billboard,
one young woman gushed, ‘Most girls don’t have that (supermodel) type of body and
they know they won’t get to that. But seeing this [Dove ad] they say, “I can do that.”’
Other critics claim that the campaign is hypocritical, celebrating less-than-perfect
bodies while at the same time selling products designed to restore them, such as
firming lotions.
‘Any change in the culture of advertising that allows for a broader definition of
beauty and encourages women to be more accepting and comfortable with their
natural appearance is a step in the right direction,’ says noted psychologist and
author Mary Pipher. ‘But embedded within this is a contradiction. They are still
saying you have to use this product to be beautiful.’ Still, she concedes, ‘It’s better
than what we’ve had in the past.’
Yvonne, a woman featured in one of the Dove ads, takes issue with the criticism.
‘That’s like saying, why be into fashion? Women are women. We love to be the best we
can be. It’s not contradictory; it’s just taking care of yourself.’ Ad executive Boyda also
defends Unilever’s intentions: ‘We are telling [women] we want them to take care of
themselves, take care of their beauty,’ she says. ‘That’s very different from sending
them the message to look like something they’re not.’
Still others criticise Unilever for capitalising on women’s low self-esteem just to
▼
make a buck. But the company responds that it has created a lot more than just a
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…2.1
series of ads. It is promoting a philosophy, supported by a substantial advertising
budget, the Dove Self-Esteem Fund and a website full of resources designed to build
the self-esteem of women and young girls.
Certainly, Unilever does have financial objectives for its Dove brand – most
consumers understand and accept that. If women are not buying the message of
Dove about the nature of real beauty, then they aren’t buying its products either. But
the people behind the Dove brand and the Campaign for Real Beauty have noble
motives beyond sales and profits. According to Fernando Acosta, Dove vice-president
of brand development, the bold and compelling mission of the Dove brand to redefine
beauty and reassure women ranks well beyond the issues of money: ‘You should see
the faces of the people working on this brand now,’ he says. ‘There is a real love for
the brand.’
SOURCES: Theresa Howard, ‘Dove ad gets serious for super bowl’, USA Today (23 January 2006), accessed at
www.usatoday.com; Don Babwin, ‘Dove ads with “real” women get attention’, Associated Press Financial Wire
(29 July 2005); Theresa Howard, ‘Ad campaigns tell women to celebrate how they are’, USA Today (7 August
2005), accessed at www.usatoday.com; Pallavi Gogoi, ‘From reality TV to reality ads’, BusinessWeek Online
(17 August 2005), accessed at www.businessweek.com; ‘Positioning: Getting comfy in their skin’, Brandweek
(19 December 2005), p. 16; Patricia Odell, ‘Real girls’, Promo (1 March 2006), p. 24; ‘Beyond stereotypes:
Rebuilding the foundation of beauty beliefs’ (February 2006), accessed at www.campaignforrealbeauty.com;
Jeani Read, ‘Women modeling for Dove love challenging skinny stereotypes’, The Calgary Herald (15 May
2006), p. C3; and information found at www.campaignforrealbeauty.com, December 2006; Tom Phillips,
‘Everyone knew she was ill . . .’, The Observer (14 January 2007).
In order to persuade customers to buy their brand rather than any other, manufacturers
sometimes make claims that are not fully substantiated.
The recent spate of food scares and the increasing popularity of functional food products
that claim to have beneficial effects on consumer health have spurred the European
Commission into action. Planned legislation would ban companies from using claims ‘that
make reference to general, non-specific benefits to overall good health, well-being and normal
functioning of the body’. So, slogans such as ‘90 per cent fat-free’ and ‘strengthens your body’s
natural defences’ would be prohibited. According to the European Commission there is a need to
ensure that consumers are not fooled by information provided on the products. A fundamental
requirement is that consumers are protected. The food industry is less than enthusiastic. They
welcome regulations that would allow companies to use the same labelling across the EU, but
fear that the Commission may be overstepping the mark. It may be easy to see why. The new
regulations would mean that Nestlé LCI yoghurts, Danone Actimel drinkable yoghurt range and
Unilever’s Latta margarine would not be able to claim to stimulate, help or strengthen your
body’s natural defences. Neither would Kellogg’s be allowed to use the little symbols to indicate
the health benefits that it puts on cereals in its range.10
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A third complaint concerns product safety. Product safety has been a problem for several
reasons, including manufacturer indifference, increased production complexity, poorly trained
labour and poor quality control. Consider the following cases of costly and image-damaging
crises brought upon several car manufacturers:
In 2004 Mercedes-Benz’s quality image took a battering when it recalled almost one in
three of the 4 million cars it had sold in the previous four years to fix electronic problems.
Mercedes are far from alone among car makers in making recalls. VW recalled 350,000 of its
models worldwide because of a potentially faulty electric cable, as well as some 950,000 Golfs,
Jettas, Passats and Corrados because of problems, including a cooling system fault, which could
potentially damage engines and injure passengers. In the same year Jaguar had to recall its topof-the-range car after the manufacturer discovered the automatic gearbox could switch into
reverse without warning. Such defects and recalls are an inevitable feature of mass-producing
products as complicated as a car. The real issues occur when manufacturers resist or ignore
problems. Ford and Firestone blamed each other for accidents following blowouts on their Ford
Explorers Sports Utility Vehicle that were claimed to have caused 271 deaths and more than 800
injuries. And in Japan, Toyota executives faced a criminal investigation for failing to recall the
company’s Hi-Lux minivans for years.11
For years, consumer protection groups or associations in many countries have regularly tested
products for safety, and have reported hazards found in tested products, such as electrical
dangers in appliances, and injury risks from lawnmowers and faulty car design. The testing and
reporting activities of these organisations have helped consumers make better buying decisions
and have encouraged businesses to eliminate product flaws.
Marketers may sometimes face dilemmas when seeking to balance consumer needs and social
responsibility. For example, no amount of test results can guarantee product safety in cars if
consumers value speed and power more than safety features. Buyers might choose a less expensive chain-saw without a safety guard, although society or a government regulatory agency might
deem it irresponsible and unethical for the manufacturer to sell it.
“
“
No amount of test results can guarantee product safety.
However, most responsible manufacturers want to produce quality goods. The way a company
deals with product quality and safety problems can damage or help its reputation. Companies
selling poor-quality or unsafe products risk damaging conflicts with consumer groups and regulators. Moreover, unsafe products can result in product liability suits and large awards for
damages.
More fundamentally, consumers who are unhappy with a firm’s products may avoid future
purchases and talk other consumers into doing the same. Thus, quality missteps can have severe
consequences. Today’s marketers know that customer-driven quality results in customer value
and satisfaction which, in turn, creates profitable customer relationships.
Planned obsolescence—A
Planned obsolescence
Critics have charged that some producers follow a programme of planned obsolescence, causing
their products to become obsolete before they should need replacement. For example, consider
computer printer companies and their toner cartridges:
strategy of causing products to become obsolete
before they actually need
replacement.
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Computer printer makers use a ‘lamp and oil’ pricing strategy adopted by Standard Oil to
stimulate oil sales in the nineteenth century. Their Mei Foo, ‘beautiful and trustworthy’,
lamp was sold very cheaply or given away with kerosene by the millions. Computer printer
makers make their profits on ink cartridges that customers need to make the printer work.
Kodak estimates that, as a consequence, consumers pay $4,000 per US gallon (about €800 per
litre) for their ink. Not surprisingly, this high margin has attracted retailers, from local shops to
large big-box stores, to now offer toner cartridge refill services. However, printer companies
would prefer to sell their cartridges for €50 or more, rather than allow someone to refill one for
half the price. So they make it hard for refill operations by continually introducing new models
and tweaking inkjet cartridges and laser toner containers to make refillable ones obsolete. This
leaves refill parts manufacturers struggling to keep up, jockeying with the printer companies that
are working to thwart them.12
Critics charge that some producers continually change consumer concepts of acceptable styles
in order to encourage more and earlier buying. An obvious example is constantly changing
clothing fashions. Other producers are accused of holding back attractive functional features,
then introducing them later to make older models obsolete. Critics claim that this practice is
frequently found in the consumer electronics and computer industries. For example, Intel and
Microsoft have been accused in recent years of holding back their next-generation computer
chips or software until demand is exhausted for the current generation. Consumers have also
expressed annoyance with kitchen appliances, cameras and consumer electronics companies’
policy of rapid and frequent model replacement. Rapid obsolescence has created difficulties in
obtaining spare parts for old models. Moreover, dealers refuse to repair outdated models and
planned obsolescence rapidly erodes basic product values. Still other producers are accused of
using materials and components that will break, wear, rust or rot sooner than they should.
Marketers respond that consumers like style changes; they get tired of the old goods and want a
new look in fashion or a new design in cars. No one has to buy the new look, and if too few people
like it, it will simply fail. For most technical products, customers want the latest innovations, even if
older models still work. Companies that withhold new features run the risk that competitors will
introduce the new feature first and steal the market. For example, consider personal computers.
Some consumers grumble that the consumer electronics industry’s constant push to produce
‘faster, smaller, cheaper’ models means that they must continually buy new machines just to keep
up. Others, however, can hardly wait for the latest model to arrive.
Thus, companies rarely design their products to break down earlier, because they do not want
to lose their customers to other brands. Instead, they seek constant improvement to ensure that
products will consistently meet or exceed customer expectations. Much of so-called planned
obsolescence is the working of the competitive and technological forces in a free society – forces
that lead to ever-improving goods and services.
In addition, if exploited to excess consumers rebel and market opportunities arise. Miele, the topof-the-range German kitchen appliance manufacturer, now offers a free 10-year warranty with its
washing machines, and Kodak is launching computer printers that use inexpensive ink cartridges.
Poor service to disadvantaged consumers
Finally, marketing has been accused of serving disadvantaged consumers poorly. Critics claim
that the urban poor often have to shop in smaller stores that carry inferior goods and charge
higher prices. Others, particularly those in the countryside, are in retail deserts without access to
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main goods. The large grocery stores are doubly accused. First, they kill off local competitors and
then, detractors say, they do not set up in low-income neighbourhoods and help to keep prices
down. Furthermore, critics accuse major chain retailers of ‘redlining’, drawing a red line around
disadvantaged neighbourhoods and avoiding placing stores there and so creating food deserts.
The continued threat of the closure of small bank branches and local post offices creates a similar
threat to less mobile people.13
Redlining charges have been levelled at the insurance, consumer lending, banking and
healthcare industries. Home and motor car insurers have been accused of assigning higher
premiums to people with poor credit ratings. The insurers claim that individuals with bad
credit tend to make more insurance claims, and that this justifies charging them higher
premiums. However, critics and consumer advocates have accused the insurers of a new form
of redlining. Says one writer, ‘This is a new excuse for denying coverage to the poor, elderly
and minorities.’14
Marketing’s eye on profits also means that disadvantaged consumers are not viable segments
to target. The high-income consumer is the preferred target. Or, that corporations are not doing
enough to enhance the quality of life or living conditions of the local communities their businesses depend on.
Marketing systems must be built to service disadvantaged consumers. In fact, many marketers
profitably target such consumers with legitimate goods and services that create real value.
Many small retail chains survive in areas neglected by the majors. Multinationals such as
Tesco are creating local Tesco Express convenience stores that give customers access to
their goods and financial services in many countries. High-street banks deal with low-earners
who want to open basic bank accounts into which state benefits can be paid. HBOS targets
customers who are sub-prime or who have irregular incomes – such as contract workers.
Capital One has a Classic MasterCard aimed at those rebuilding their credit record, at an annual
percentage rate of up to 30 per cent. Provident Financial, a doorstep lender, is trialling a range of
Vanquis credit cards that charge interest rates between 17 and 65 per cent. These are high but
preferable to the threat of violence and extortion from loan sharks who live off people on low
incomes.15
Having examined common criticisms of marketing as it impacts consumers, we now turn to
social critics’ assessment of how marketing affects society as a whole.
Marketing’s impact on society as a whole
Marketing is accused of adding to the ‘evils’ in our society. Advertising has been a special target. It
has been blamed for creating false wants, fostering greedy aspirations and urging too much materialism in our society. Marketing has also been blamed for working against the long-term interests of
society and the well-being of its members. Here, we will examine the major societal concerns
relating to marketing: the creation of false wants and too much materialism; overselling of private
goods at the expense of social goods; cultural pollution and an excess of political power.
“
“
Advertising . . . has been blamed for creating false wants, fostering greedy
aspirations and urging too much materialism.
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Businesses within immigrant
communities often start by
serving their own community.
There are a range of ethnic
companies supplying the
Asian market – some from
India and some from England.
False wants and too much materialism
Critics have charged that the marketing system urges too much interest in material possessions.
People are judged by what they own rather than by who they are. To be considered successful,
people must own a large home or smart-looking apartment in a prime residential area,
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expensive cars, the latest (or best) designer clothing and high-tech gadgets. This drive for
wealth and possessions hit new highs in the 1980s and 1990s, when phrases such as ‘greed is
good’ and ‘shop till you drop’ seemed to characterise the times. In the current decade, many
social scientists have noted a reaction against the opulence and waste of the previous decades
and a return to more basic values and social commitment. However, our infatuation with
material things continues.
Between 1960 and 2007 real GDP (inflation adjusted Gross Domestic Product) grew 400 per
cent in the EU15 and close to 500 per cent in the US. The size of the typical new house has
more than doubled. A family owning a car was once a goal, now it is hard to know where to put
the multiple cars that families own. Designer everything, personal electronics and other items
that didn’t even exist a half-century ago are now affordable. Although our time spent shopping
has dropped in recent years to just three hours a week, our rate of spend in that short time has
exploded.16
The critics do not view this interest in material things as a natural state of mind, but rather as
a matter of false wants created by marketing. Businesses spend huge sums of money to hire
advertising agencies to stimulate people’s desires for goods, and advertisers use the mass media to
create materialistic models of the good life. People work harder to earn the necessary money.
Their purchases increase the output of the nation’s industry, and industry, in turn, uses the
advertising industry to stimulate more desire for the industrial output. Thus marketing is seen as
creating false wants that benefit industry more than they benefit consumers.
These criticisms overstate the power of business to create needs. People have strong defences
against advertising and other marketing tools. Marketers are most effective when they appeal to
existing wants rather than when they attempt to create new ones. Furthermore, people seek
information when making important purchases and often do not rely on single sources. Even
minor purchases that may be affected by advertising messages lead to repeat purchases only if the
product delivers the promised customer value. Finally, the high failure rate of new products
shows that companies are not able to control demand.
On a deeper level, our wants and values are influenced not only by marketers, but also by
family, peer groups, religion, ethnic background, education and deep-seated needs that pre-date
the modern age. The pre-industrial age 1660–69 diaries of Samuel Pepys, the writings of
Dr Johnson (1709–84) and Jane Austen’s (1775–1817) novels are littered with products that
were desired and bestowed status. Also within Bronislaw Malinowski’s seminal work on field
anthropology is the realisation that people’s status was based on jewellery traded across the
Pacific islands. The roots of our modern materialistic societies are much deeper than business
and mass media could produce alone. Dr Johnson even decoded and classified ‘puff ’, meaning
exaggeration, in advertising and selling.17
Too few social goods
Business is accused of overselling private goods at the expense of public goods. As private goods
increase, they require more public services that are usually not forthcoming. For example, an
increase in car ownership (private good) requires more roads, traffic control, parking spaces and
police services (public goods). The overselling of private goods results in ‘social costs’. For cars,
the social costs include excessive traffic congestion, air pollution, fuel shortages and pedestrian
injuries from car accidents.
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A way must be found to restore a balance between private and public goods. One option is
to make producers bear the full social costs of their operations. Governments are also requiring
car manufacturers to build cars with even more safety features and better fuel efficiency. The
European Commission’s end-of-life vehicles (ELV) directive already makes manufacturers
pay for the cost of scrapping the cars they make. Car makers raise their prices to cover extra
costs. If buyers found the price of some cars too high, however, the production would
decline, and demand would move to those producers that could support both the private
and social costs.
A second option is to make consumers pay the social costs. For example, highway authorities
around the world are starting to charge ‘congestion charges’ in an effort to reduce traffic
congestion.
Countries such as Norway, the UK, France, Singapore and the US are managing traffic with
varying tolls. For example, to unclog its streets, the city of London now levies a congestion
charge of £10 (€15) per day per car to drive in an eight-square-mile area downtown. The
charge has not only reduced traffic congestion by 30 per cent, it raises money to fund London’s
public transportation system. In southern California drivers are being charged premiums to
travel in under-used car pool lanes. For example, San Diego has turned some of its HOV
(high-occupancy vehicle) lanes into HOT (high-occupancy toll) lanes for drivers carrying too
few passengers. Regular drivers can use the HOV lanes, but they must pay tolls ranging from
$0.50 (€0.37) off-peak to $4.00 (€3) during rush hour. Peak surcharges are being studied for
roads around other American cities. Economists point out that traffic jams are caused when
drivers are not charged the costs they impose on others, such as delays. If the costs of
driving rise high enough, consumers will travel at non-peak times or find alternative
transportation modes. In Singapore, drivers are charged for every move they make in the
city state’s central business district and the licence to buy a car on taxes makes the cost of
car ownership several times European levels, yet people still drive classy Mercedes. ‘Make
’em pay’ is part of making car drivers pay their full social cost but, whatever the price, people
drive on.18
Cultural pollution
Critics charge the marketing system with creating cultural pollution. Our senses are assaulted
constantly by advertising. Commercials interrupt serious programmes; pages of ads obscure
printed matter; billboards mar beautiful scenery; spam fills our e-mail inboxes. These interruptions continuously pollute people’s minds with messages of materialism, sex, power or status.
Children’s constant exposure to advertising, the protectionists argue, creates mercenary kids,
experts in ‘pester power’, who force their downtrodden and beleaguered parents into spending
enormous sums of money on branded goods and the latest crazes. Although not everyone may
find advertising overly annoying (some even think it is the best part of television programming),
a recent study noted that 65 per cent of consumers feel bombarded with too many marketing
messages, and some critics call for sweeping changes.19
Marketers answer the charges of ‘commercial noise’ with these arguments. First, they hope
that their ads reach primarily the target audience. But because of mass-communication channels,
some ads are bound to reach people who have no interest in the product and are therefore bored
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or annoyed. People who buy magazines slanted towards their interests – such as Vogue, Bliss,
Loaded, Heat or Fortune – rarely complain about the ads because the magazines advertise products of interest to them.
As for TV advertising’s influence on children, free marketers point to European research that
shows that parents and peers influence children more than advertising. Children are not empty
vessels helplessly vulnerable to marketers’ wiles. They are capable of absorbing and assimilating
advertising messages, approaching commercials with a critical mind and drawing their own
verdict.20 Moreover, advertisers argue that parents are responsible for managing their children’s
exposure to marketing. Although children are hedonists, inclined to make impulse buys and less
likely to make educated purchasing decisions, they have to start learning to distinguish truth
from spin in advertising. Nevertheless, responsible marketers recognise that however hedonistic
or naive they may be, children have long memories – deceive them and lose them as customers
forever.
Second, ads make much of television and radio free, keep down the cost of magazines and
newspapers and the cost of any place where advertising is allowed. Most people think commercials are a small price to pay for these benefits. Finally, consumers have alternatives: they can
zip and zap TV commercials or avoid them altogether on many cable and satellite channels.
Thus to hold consumer attention, advertisers are making their ads more entertaining and
informative.
Excessive political power
Another criticism is that business wields too much political power. ‘Oil’, ‘tobacco’, ‘pharmaceuticals’, ‘financial services’ and ‘alcohol’ have the support of important politicians who look after an
industry’s interests against the public interest. Advertisers are accused of holding too much power
over the mass media, limiting their freedom to report independently and objectively.
“
“
‘Oil’, ‘tobacco’, ‘pharmaceuticals’, ‘financial services’ and ‘alcohol’ have the
support of important politicians who look after an industry’s interests against
the public interest.
The aerospace industries showed their particular cosiness to politicians when Tony Blair’s
government prematurely terminated a UK Serious Fraud Office investigation into allegations
that BAE might have bribed officials in Saudi Arabia to secure defence contracts. British
politicians were shocked and Washington issued a formal protest. However, the intensity of US
scrutiny only increased after BAE boosted its US profile with the $4.1bn (€3bn) purchase of
Armor Holdings – for the biggest maker of armour for Humvee transport vehicles. The scope of
this investigation shows how many governments may be mixed up in dodgy arms deals. The US
Congress is looking at the sale of two A-4N Skyhawk aircraft to the German Air Force, an
agreement to upgrade Australian F/A-18 fighter jets, and an agreement between BAE and
Japanese companies to make transporters. Swiss prosecutors are also investigating alleged
money laundering relating to BAE Systems’ Saudi Arabia arms sales, and the UK’s Serious Fraud
Office is still investigating the sale of BAE Hawk trainer aircraft and Saab Gripen fighters to
South Africa.
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BAE extricated themselves from troubled Airbus, but the French and German governments
are at loggerheads over troubled EADS – Airbus’s maker. Nicolas Sarkozy launched his
presidency with a friendly dinner in Berlin with German chancellor Angela Merkel. According to
the Financial Times, it went well until the new French president served up the tricky subject of
EADS. Mr Sarkozy wants to resolve the infighting between the French and German camps at the
European aerospace group. He appeared ready to talk tough to the Germans and unlikely to
accept any more diplomatic dithering. The French themselves helped create the current crisis at
EADS and its Airbus affiliate. The scandal surrounding the disgraced former French boss of
EADS and Airbus – Noël Forgeard – was largely due to Paris political interference.21
Industries and other pressure groups have a right to representation in Parliament and the
mass media, although their influence can become too great. Fortunately, many powerful business
interests once thought to be untouchable have been tamed in the public interest. For example, in
the EU and the US, consumerism campaigns have resulted in legislation requiring the car
industry to build more safety into its cars and cigarette and food companies to put health warnings on their packages. Also, because the media receive advertising revenues from many different
advertisers, it is easier to resist the influence of one or a few of them. As with politics, freedom of
the press is an essential counterweight to powerful organisations. In a free society, too much
power tends to result in counter-forces that check and offset these powerful interests.
Let us now take a look at the criticisms that business critics have levelled at companies’
marketing practices.
Marketing’s impact on other businesses
Critics charge that marketing practices can harm other companies and reduce competition.
Three problems are involved: acquisition of competitors, marketing practices that create barriers
to entry, and unfair competitive marketing practices.
Critics claim that firms are harmed and competition reduced when companies expand by
acquiring competitors rather than by developing their own new products. The large number
of acquisitions and the rapid pace of industry consolidation over the past two decades have
caused concern that vigorous young competitors will be absorbed and that competition will be
reduced. In virtually every major industry – retailing, financial services, utilities, transportation,
motor vehicles, telecommunications, entertainment – the number of major competitors is
shrinking.
Consider the recent feeding frenzy of acquisitions in the food industry – Unilever’s buying
Bestfoods, Philip Morris’s snatching Nabisco, Nestlé buying Gerber, Danone buying 49 per
cent of Denmark’s Aqua d’Or and declaring it is placing ‘more emphasis on acquisitions as a
way of growing faster’.22
Acquisition is a complex subject. Acquisitions can sometimes be good for society. The
acquiring company may gain economies of scale that lead to lower costs and lower prices.
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A well-managed company may take over a poorly managed company and improve its efficiency.
An industry that was not very competitive might become more competitive after the acquisition.
But acquisitions can also be harmful and are therefore closely regulated by some governments
and competition (or mergers and monopolies) commissions. Badly implemented, they can also
damage the reputation of a well-respected company and write off a huge amount of wealth, as
did the Daimler Chrysler merger.23
Critics have also claimed that marketing practices bar new companies from entering an
industry. The use of patents and heavy promotion spending can tie up suppliers or dealers to
keep out or drive out competitors. Those concerned with antitrust regulation recognise that
some barriers are the natural result of the economic advantages of doing business on a large
scale. Other barriers could be challenged by existing and new laws. For example, some critics
have proposed a progressive tax on advertising spending to reduce the role of selling costs as a
substantial barrier to entry.
Finally, some firms have in fact used unfair competitive marketing practices with the intention
of hurting or destroying other firms. They may set their prices below costs, threaten to cut off
business with suppliers, or discourage the buying of a competitor’s products. Various laws work
to prevent such predatory competition. It is difficult, however, to prove that the intent or action
was really predatory.
Recently, Microsoft felt the impact of EU antitrust regulators seeking to balance the
interests of their scale and influence. The EU threatened Microsoft Corporation with fines of
up to €3m a day, claiming the software giant had failed to live up to promises for providing
information that could help rivals make servers compatible with Windows.24
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Citizen and public actions to
regulate marketing
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Although competitors and governments charge that the actions of companies are predatory
and illegal, others question whether this is unfair competition or the healthy competition of a
more efficient company against the less efficient ones.25
r s o n . co . u k
Because some people view business as the cause of many economic and social ills, grassroots
movements have arisen from time to time to keep business in line. The two main movements
have been consumerism and environmentalism.
Consumer movements
Western business firms have been the targets of organised consumer movements on three occasions. The first has its origins in the early 1900s, fuelled by rising prices and Upton Sinclair’s 1906
novel, The Jungle, that was an exposé of the dreadful conditions in the Chicago meat industry that
provide branded canned food across the world. A drug scandal and price increases during the
1930s Great Depression sparked the second consumer movement. The third began in the 1960s.
Consumers had become better educated, products had become more complex and potentially
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hazardous, and people were unhappy with Western institutions. Ralph Nader appeared on the
scene in the 1960s to force many issues, and other well-known writers accused big business of
wasteful and unethical practices. President John F. Kennedy and other Western politicians
declared that consumers have the right to safety and to be informed, to choose and to be heard.
The consumer movement has spread internationally and has become very strong in Europe.26
organised movement of
citizens and government
agencies to improve the
rights and power of
buyers in relation to
“
“
Consumerism—An
. . . equating personal happiness with purchasing material possessions and
consumption.
But what is the consumer movement? Karl Marx and Thorstein Veblen used consumerism
to describe the effects of equating personal happiness with purchasing material possessions and
consumption. Consumerism is now more often used to describe an organised movement of
citizens and government agencies to improve the rights and power of buyers in relation to
sellers. Traditional sellers’ rights include:
●
The right to introduce any product in any size and style, provided it is not hazardous to
personal health or safety; or, if it is, to include proper warnings and controls.
●
The right to charge any price for the product, provided no discrimination exists among
similar kinds of buyer.
●
The right to spend any amount to promote the product, provided it is not defined as unfair
competition.
●
The right to use any product message, provided it is not misleading or dishonest in content
or execution.
●
The right to use any buying incentive schemes, provided they are not unfair or misleading.
sellers.
Traditional buyers’ rights include:
●
The right not to buy a product that is offered for sale.
●
The right to expect the product to be safe.
●
The right to expect the product to perform as claimed.
Comparing these rights, many believe that the balance of power lies on the sellers’ side. True, the
buyer can refuse to buy. But critics feel that the buyer has too little information, education and
protection to make wise decisions when facing sophisticated sellers. Consumer advocates call for
the following additional consumer rights:
●
The right to be well informed about important aspects of the product.
●
The right to be protected against questionable products and marketing practices.
●
The right to influence products and marketing practices in ways that will improve the
‘quality of life’.
Each proposed right has led to more specific proposals by consumerists. The right to be informed
includes the right to know the true interest on a loan (truth in lending), the true cost per unit of a
brand (unit pricing), the ingredients in a product (ingredient labelling), the nutrition in foods
(nutritional labelling), product freshness (open dating) and the true benefits of a product (truth in
advertising). Proposals related to consumer protection include strengthening consumer rights in
cases of business fraud, requiring greater product safety, ensuring information privacy and giving
more power to government agencies. Proposals relating to quality of life include controlling the
ingredients that go into certain products and packaging, reducing the level of advertising ‘noise’ and
putting consumer representatives on company boards to protect consumer interests.
Consumers have not only the right but also the responsibility to protect themselves instead of
leaving this function to someone else. Consumers who believe that they got a bad deal have
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several remedies available, including contacting the company or the media, contacting government or private consumer-interest/protection bodies or agencies, going to small-claims courts, or
organising consumer boycotts.
Thomas Clarkson, a founder of the Society for Effecting the Abolition of Slavery in 1787,
organised what was probably the first ever consumer boycott. It was against slave-grown
sugar and aimed to bring home to Britons that they were paying a dreadful price in human
cruelty for indulging a sweet tooth. At one time more than 300,000 people joined the boycott that
was also designed to hit the profits of the plantation owners. It inspired a parliamentary
movement against slavery, recruiting William Wilberforce, who brought bills before Parliament to
abolish the slave trade until one was passed in 1807.
Over 200 years later Nike faced an anti-sweatshop protest. They initially denied responsibility
at contractors’ factories, but subsequently became a leader in an attempt to establish
independent factory monitoring and promote labour rights, including the freedom for its 800,000
workers worldwide to form and join trade unions. Other companies, including Reebok and Levi
Strauss, have since followed Nike’s lead.27
The advent of electronic communication has made it possible for consumers to gain mass
support and time their intervention powerfully. So powerful can these movements be that
companies have rated reputation loss as the greatest risk they face.28
Environmentalism
Whereas consumerists consider whether the marketing system is efficiently serving consumer
wants, environmentalists are concerned with marketing’s effects on the environment and the
costs of serving consumer needs and wants. Environmentalism is an organised movement of
concerned citizens and government agencies to protect and improve people’s living environment.
Environmentalists are not against marketing and consumption; they simply want people and
organisations to operate with more care for the environment. They assert that the marketing
system’s goal is not to maximise consumption, consumer choice or consumer satisfaction, but
rather to maximise life quality. ‘Life quality’ means not only the quantity and quality of
consumer goods and services, but also the quality of the environment. Environmentalists want
environmental costs to be included in both producer and consumer decision making.
The first wave of modern environmentalism was driven by fringe environmental groups, such
as Greenpeace, and concerned consumers in the 1960s and 1970s. They were concerned with
damage to the ecosystem caused by strip mining, forest depletion, acid rain, loss of the atmosphere’s ozone layer, toxic wastes, whaling and landfills. They were also concerned with the loss of
recreational areas and with the increase in health problems caused by bad air, polluted water and
chemically treated food.
The second wave was driven by governments, which passed laws and regulations during the
1970s and 1980s governing industrial practices impacting the environment. This wave hit some
industries hard. Chemical and steel companies and utilities had to invest in pollution-control
equipment and costlier (but cleaner) fuels. The car industry had to introduce expensive emission
controls in cars. The packaging industry has had to find ways to reduce litter. These industries
and others have often resented and resisted environmental regulations, especially when they have
been imposed too rapidly to allow companies to make proper adjustments. Many of these
companies claim they have had to absorb large costs that have made them less competitive.
Environmentalism—An
organised movement of
concerned citizens and
government agencies to
protect and improve
people’s living
environment.
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Environmental campaigns are gaining popularity. This campaign urges the British public to make the effort to recycle their glass bottles and
jars by disposing of them at bottle banks.
SOURCE: Advertising Archives.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
The first two environmentalism waves have now merged into a third and stronger wave in
which companies are accepting responsibility for doing no harm to the environment. They are
shifting from protest to prevention, and from regulation to responsibility. More and more
companies are adopting environmental sustainability. Simply put, environmental sustainability
is about generating profits while helping to save the planet. However, sustainability is a crucial
but difficult goal.
Environmental sustainability—A management
approach that involves
developing strategies that
both sustain the environment and produce profits
for the company.
Aviva make themselves more
attractive by ‘becoming the
first insurer to go carbon
neutral worldwide’. It is good
business logic ‘to make sure
there is a future’ to do
business.
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John Browne, chairman of giant oil company BP, asked this question: ‘Is genuine progress
still possible? Is development sustainable? Or is one strand of progress – industrialisation –
now doing such damage to the environment that the next generation won’t have a world worth
living in? Browne sees the situation as an opportunity. BP broke ranks with the oil industry on
environmental issues. BP once stood for British Petroleum. That changed to Beyond Petroleum.
‘There are good commercial reasons to do right by the environment,’ says Browne. Under his
leadership, Beyond Petroleum has become active in public forums on global climate issues and
has worked to reduce emissions in exploration and production. It has begun marketing cleaner
fuels and invested significantly in exploring alternative energy sources, such as photovoltaic
power and hydrogen. At the local level, BP recently opened ‘the world’s most environmentally
friendly service station’.29
Some companies have responded to consumer environmental concerns by doing only what is
required to avert new regulations or to keep environmentalists quiet. Enlightened companies,
however, are taking action not because someone is forcing them to, or to reap short-run profits,
but because it is the right thing to do – both for the company and for the planet’s environmental
future.
Figure 2.1 shows a grid that companies can use to gauge their progress towards environmental
sustainability. At the most basic level, a company can practise pollution prevention. This involves
more than pollution control – cleaning up waste after it has been created. Pollution prevention
means eliminating or minimising waste before it is created. Companies emphasising prevention
have responded with ‘green marketing’ programmes – developing ecologically safer products,
recyclable and biodegradable packaging, better pollution controls and more energy-efficient
operations.
Figure 2.1 The environmental
sustainability grid
SOURCE: Harvard Business
School Publishing. Reprinted by
permission of Harvard Business
Review, figure of The
Sustainability Portfolio, from
‘Beyond Greening: strategies for
a sustainable world’ by Stuart
Hart, Jan–Feb 1997. Copyright
© 1996 by the Harvard Business
School Publishing Corporation;
all rights reserved.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
●
Ricoh is aiming at zero waste in their plant and has cut waste to landfill by over
92 per cent since introducing a waste management system in 2001. Waste
management costs fell by over 62 per cent, despite increases in landfill tax
and waste carriage charges.
●
Nike produces PVC-free shoes, recycles old sneakers and educates young people about
conservation, reuse and recycling.
●
VW is investing in low-emission diesels. Already their new Polo BlueMotion diesel model
emits less carbon dioxide per kilometre than Toyota’s top-selling Prius hybrid and costs a
lot less to make.30
At the next level, companies can practise product stewardship – minimising not just pollution
from production but all environmental impacts throughout the full product life cycle, and all the
while reducing costs. Many companies are adopting design for environment (DFE) practices,
which involve thinking ahead in the design stage to create products that are easier to recover,
reuse or recycle. DFE not only helps to sustain the environment; it can be highly profitable for
the company:
●
●
Xerox Corporation’s Equipment Remanufacture and Parts Reuse Programme converts
end-of-life office equipment into new products and parts. Equipment returned to Xerox
can be remanufactured reusing 70 to 90 per cent by weight of old machine components,
while still meeting performance standards for equipment made with all new parts. The
programme creates benefits for both the environment and the company. It prevents
waste from entering landfills and reduces the amount of raw material and energy
needed to produce new parts. Energy savings from parts reuse total an estimated
320,000 megawatt hours annually – enough energy to light more than 250,000 homes
for a year.
Among many other actions, the Tesco supermarket chain aims to give consumers clear
information about the carbon cost of each product it sells – looking at its complete life cycle
from production through distribution to consumption.31
At the third level of environmental sustainability, companies look to the future and plan for
new environmental technologies. Many organisations that have made good headway in pollution
prevention and product stewardship are still limited by existing technologies. To develop fully
sustainable strategies, they will need to develop new technologies. For example, detergent manufacturers have developed laundry products for low-temperature washing. Some have embarked
on a ‘wash right’ campaign which promotes the virtues of low-temperature washing by emphasising the benefits to the clothes as well as energy savings.
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Wal-Mart is doing this too. It recently opened two experimental superstores designed to test
dozens of environmentally friendly and energy-efficient technologies:32
A 143-foot-tall wind turbine stands outside one Wal-Mart Supercenter. Incongruous as it
might seem, it is clearly a sign that something about the store is different. On the outside,
the store’s façade features row upon row of windows to allow in as much natural light as
possible. The landscaping uses native, drought-tolerant plants cutting down on watering,
mowing, and the amount of fertiliser and other chemicals needed. Inside the store, an efficient
high-output linear fluorescent lighting system saves enough electricity annually from this store
alone to supply the needs of 52 single-family homes. The store’s heating system burns recovered
cooking oil from the deli’s fryers that is mixed with waste engine oil from the store’s Tire and
Lube Express. All organic waste, including produce, meats and paper, is placed in an organic
waste compactor, which is then hauled off to a company that turns it into garden mulch. WalMart’s environmental goals are to use 100 per cent renewable energy, to create zero waste, and
to sell products that sustain its resources and environment. Moreover, Wal-Mart is eagerly
spreading the word by encouraging visitors – even from competing companies: ‘This is not
something we’re keeping to ourselves. We want everyone to know about it.’
Finally, companies can develop a sustainability vision, which serves as a guide to the future. It
shows how the company’s products and services, processes and policies must evolve and what
new technologies must be developed to get there. This vision of sustainability provides a framework for pollution control, product stewardship and environmental technology.
●
●
Tesco aims to be leader in helping to create a low-carbon economy. Sir Terry Leahy,
Tesco’s CEO, champions a sustainable vision: ‘I listen when the scientists say that, if we
fail to mitigate climate change, the environmental, social and economic consequences
will be stark and severe. This has profound implications for all of us, for our children,
and for our children’s children.’
BSkyB decided to become carbon neutral in January 2007 and succeeded within six months
through an effort across the whole organisation. But like Tesco, their aim is to educate as well
as act: ‘We saw the policy as part of a push to educate customers to reduce their impact on
the environment.’ Once sceptical Rupert Murdoch, chairman and chief executive of News
Corporation which owns BSkyB, says that the rest of his media empire will now follow
BSkyB’s lead.
However, most companies today still focus on the lower-left quadrant of the grid in Figure 2.1,
investing most heavily in pollution prevention. Some forward-looking companies practise product
stewardship and are developing new environmental technologies. Few companies have welldefined sustainability visions. Emphasising only one or a few cells in the environmental sustainability grid in Figure 2.1 can be shortsighted. For example, investing only in the bottom half of the
grid puts a company in a good position today but leaves it vulnerable in the future. In contrast, a
heavy emphasis on the top half suggests that a company has good environmental vision but lacks
the skills needed to implement it. Thus, companies should work at developing all four dimensions
of environmental sustainability.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
Alcoa, the world’s leading producer of aluminium, is doing just that. For two years
running, it has been one of three companies singled out by Global 100 for superior sustainability excellence:
Alcoa has distinguished itself as a leader through its sophisticated approach to identifying
and managing the material sustainability risks that it faces as a company. From pollution
prevention via greenhouse gas emissions reduction programs to engaging stakeholders over
new environmental technology, such as controversial hydropower projects, Alcoa has the
sustainability strategies in place needed to meld its profitability objectives with society’s larger
environmental protection goals . . . . Importantly, Alcoa’s approach to sustainability is firmly
rooted in the idea that sustainability programs can indeed add financial value. Perhaps the best
evidence is the company’s efforts to promote the use of aluminum in transportation, where
aluminum – with its excellent strength-to-weight ratio – is making inroads as a material of
choice that allows automakers to build low-weight, fuel-efficient vehicles that produce fewer
tailpipe emissions. This kind of forward-thinking strategy of supplying the market with the
products that will help solve pressing global environmental problems shows a company that sees
the future, has plotted a course, and is aligning its business accordingly. Says CEO Alain Belda,
‘Our values require us to think and act not only on the present challenges, but also with the
legacy in mind that we leave for those who will come after us . . . as well as the commitments
made by those that came before us.’33
Environmentalism creates special challenges for global marketers. As international trade
barriers come down and global markets expand, environmental issues will continue to have an
ever-greater impact on international trade. Global companies have to operate in accordance with
stringent environment regulations that are being developed in countries across North America,
Western Europe and other developed regions.
For example, the EU has ‘end-of-life’ regulations affecting cars and consumer electronics
products, and the EU’s Eco-Management and Audit Scheme provides guidelines for environmental self-regulation. However, environmental policies still vary widely from country to
country and uniform worldwide standards are not expected for many years. The EU wants to
increase recycling, with landfill disposal 25 per cent lower in 2010 than it was in 1995 and 65 per
cent lower by 2020. Across Europe the level of compliance varies hugely. The Netherlands is
super-clean in already recycling more than 60 per cent of household waste, but Portugal and
Greece manage less than 10 per cent.34
Although countries such as Denmark, Germany and Japan have fully developed environmental policies and high public expectations, major countries such as China, India, Brazil and
Russia are only in the early stages of developing such policies. Moreover, environmental factors
that motivate consumers in one country may have no impact on consumers in another. For
example, PVC soft-drink bottles cannot be used in Switzerland or Germany. However, they are
preferred in France, which has an extensive recycling process for them. Thus, international
companies are finding it difficult to develop standard environmental practices that work around
the world. Instead, they are creating general policies, and then translating these policies into
tailored programmes that meet local regulations and expectations.
Marketers’ lives will become more complicated. They must raise prices to cover environmental
costs, knowing that the product will be harder to sell. Yet environmental issues have become so
important in our society that there is no turning back to the time when few managers worried
about the effects of product and marketing decisions on environmental quality.
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Unforeseen consequences
Consequences—The
recognition that almost all
human actions have
unforeseen outcomes.
The Law of Unintended Consequences encapsulates the recognition that almost all human
actions have at least one unintended consequence. With its origins in the Scottish Enlightenment,
it is not a law in the legal sense but the realisation that each cause has more than one effect,
including unforeseen consequences. Global warming is an unforeseen consequence of our
lifestyle – central heating, air-conditioning, lighting our homes, leaving electrical appliances on
standby, gap years in Australia . . .
“
Global warming is an unforeseen consequence of our lifestyle.
“
Law of Unintended
Our environment is complicated, so any intervention often has consequences we do not like.
Early Australian settlers introduced rabbits to the continent as a familiar food source where the
flora and fauna were unfamiliar. With no natural predators, rabbits multiplied uncontrollably and
created deserts where they overgrazed on local plants. In response the settlers introduced foxes to
keep down the rabbit population. Unfortunately the European fox found Australian marsupials easier
meat than rabbits so, as the rabbit and fox populations soared, local plant and animal life declined.
It looked like a great improvement when, in the 1930s, it was realised that non-toxic, nonflammable chlorofluorocarbons (CFCs) were a substitute for the deadly refrigerants used in
early refrigerators – and great stuff to power aerosols too. Not until the 1970s did scientists
realise that the CFC release had the potential to destroy the ozone layer and therefore expose
millions of people to higher levels of cancer-causing ultraviolet radiation.
We are now facing some of the unforeseen consequences of reacting to the dangers of global
warming. Biofuels seem a green alternative to releasing the carbon dioxide tied up in fossil fuels,
like oil. This appears to be true of ethanol produced from sugar cane grown in the tropics but
less true of ethanol made from corn, as being promoted in the US. This uses so much energy in
manufacture that it probably adds to global warming and the sudden allocation of corn to
ethanol production is forcing up food prices. The price rises caused major riots in Mexico and
commodity prices are pushing up food prices worldwide. Western economies can absorb the
increased cost of food, but what of poor people in the Third World?
Biodiesel, a popular European solution to global warming, has its own unintended consequences. Rainforests in the tropics are being chopped down to create palm oil plantations.
That was not the intention. Just as global warming is an unintended consequence of affluence,
so intertwined are the global environment and economy that simple interventions designed to
reduce the problem can have unforeseen consequences that bite back.35
Fortunately, not all unforeseen circumstances are bad. Pfizer found that a side-effect of using
their anti-angina treatment UK-92480 for old people also treated impotence, hence Viagra. It has
now been found that Viagra may accelerate recovery from jet-lag. Regain, which helps the hair
growth of balding people, was also discovered as an unexpected benefit of taking a product to
fend off heart attacks.36
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
Public actions to regulate marketing
Citizen concerns about marketing practices will usually lead to public attention and legislative
proposals. New bills will be debated – many will be defeated, others will be modified and a few
will become workable laws. Many laws affect marketing practices. As we will discuss in Chapter 3,
companies operating within the EU are bound by several layers of laws and regulatory bodies.
National laws are designed to regulate local marketing and business practices. In addition, businesses have to comply with EU competition and consumer laws enforced by the European
Commission to ensure fair competition and to protect consumer rights. The task is to translate
these laws into the language that marketing executives understand as they make decisions about
competitive relations, products, price, promotion and channels of distribution. Figure 2.2
illustrates the principal legal issues facing marketing management.
‘Ethical consumption is perhaps the biggest movement in branding today,’ according to GfK
NOP market research group. Its share of individual markets is relatively tiny although its
influence is seen behind the sales of Toyota’s hybrid, L’Oréal’s €1bn acquisition of troubled
Body Shop and the huge growth of organic food and drink sales. But the problem, GfK NOP
concluded from their five-nation study, is that consumers are confused. The public is not sure
what an ethical brand actually is. There are so many angles to being ethical. In food labelling, is
it locally grown, organic or subject to fair trade agreements? In beauty, is it free from animal
testing or produced from ‘natural’ ingredients? Or, maybe products that are fuel-efficient,
recycled, produced in unionised work conditions or not linked to the tobacco or arms industries?
Selling decisions
Bribing?
Stealing trade secrets?
Disparaging customers?
Misrepresenting?
Disclosure of customer
rights?
Unfair discrimination?
Product decisions
Product additions and
deletions?
Patent protection?
Product quality and
safety?
Product warranty?
Figure 2.2 Legal issues facing
marketing management
Packaging decisions
Fair packaging and
labelling?
Excessive cost?
Scarce resources?
Pollution?
Advertising decisions
False advertising?
Deceptive advertising?
Bait-and-switch advertising?
Promotional allowances and
services?
Price decisions
Price fixing?
Predatory pricing?
Price discrimination?
Minimum pricing?
Price increases?
Deceptive pricing?
Channel decisions
Exclusive dealing?
Exclusive territorial
distributorship?
Tying agreements?
Dealer’s rights?
Competitive relations decisions
Anticompetitive acquisition?
Barriers to entry?
Predatory competition?
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The study of 5,000 consumers found international differences:
●
Germans felt that ‘business ethics had worsened’.
●
The more optimistic British thought that supporting ethical brands could help make
companies more accountable but were wary that ethical brands were for ‘people with money’.
●
French were more likely than US respondents to prioritise environmental issues.
●
Spaniards were enthusiastic about ethical food and beauty, but scoffed hype.37
“
“
Consumers are confused. The public is not sure what an ethical brand actually is.
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Having discussed citizen and public actions to regulate marketing, we will next examine the
business actions towards socially responsible marketing that lead to different philosophies of
enlightened marketing and the fostering of marketing ethics.
r s o n . co . u k
Enlightened marketing—
A marketing philosophy
holding that a company’s
marketing should support
Business actions towards socially
responsible marketing
At first, many companies opposed consumerism and environmentalism. They thought the criticisms were either unfair or unimportant. But, by now, most companies have grown to embrace
the new consumer rights, at least in principle. They might oppose certain pieces of legislation
as inappropriate ways to solve specific consumer problems, but they recognise the consumer’s
right to information and protection. Many of these companies have responded positively to
consumerism and environmentalism in order to create greater customer value and to strengthen
customer relationships.
the best long-run performance of the marketing
system; its five principles
are consumer-oriented
marketing, innovative
marketing, value
Enlightened marketing
The philosophy of enlightened marketing holds that a company’s marketing should support the
best long-run performance of the marketing system. Enlightened marketing consists of five
principles: consumer-oriented marketing, customer-value marketing, innovative marketing,
sense-of-mission marketing and societal marketing.
marketing, sense-ofmission marketing and
societal marketing.
Consumer-oriented
marketing—The philosophy of enlightened
Consumer-oriented marketing
Consumer-oriented marketing means that the company views and organises its marketing activities from the consumer’s point of view. It works hard to sense, serve and satisfy the needs of a
defined group of customers. Good marketing companies tend to have one thing in common – an
all-consuming passion for delivering superior value to carefully chosen customers. Only by seeing the
world through its customers’ eyes can the company build lasting and profitable customer relationships.
marketing that holds that
the company should view
Value marketing
and organise its
According to the principle of customer-value marketing, the company should put most of its
resources into value-building marketing investments. Many things marketers do – one-shot sales
promotions, minor packaging changes, direct-response advertising – may raise sales in the short
run, but add less value than would actual improvements in the product’s quality, features or
marketing activities from
the consumers’ point of
view.
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Chapter 2 Sustainable marketing: marketing ethics and social responsibility
convenience. Enlightened marketing calls for building long-run consumer loyalty and relationships, by continually improving the value that consumers receive from the firm’s market offering.
By creating value for customers, the company can capture value from consumers in return.
Innovative marketing
The principle of innovative marketing requires that the company continuously seek real product
and marketing improvements. The company that overlooks new and better ways to do things will
eventually lose customers to another company that has found a better way.
An excellent example of an innovative marketer is Samsung Electronics:
Customer-value
marketing—A principle of
enlightened marketing
that holds that a company
should put most of its
resources into customer
value-building marketing
investments.
Innovative marketing—A
principle of enlightened
Samsung Electronics, a subsidiary of South Korea’s largest conglomerate, started as a
copycat consumer electronics brand you bought off a shipping pallet at discount stores if you
couldn’t afford a Sony. But today, the brand holds a high-end, cutting-edge aura. In 1996,
Samsung Electronics made an inspired decision. It turned its back on cheap knock-offs and set
out to overtake rival Sony. The company hired fresh, young designers, who unleashed a torrent of
new products – sleek, bold and beautiful products targeted to high-end users. Samsung called
them ‘lifestyle works of art’ – from brightly coloured mobile phones and elegantly thin DVD
players to flat-panel TV monitors. Every new product had to pass the ‘Wow!’ test: if it didn’t get a
‘Wow!’ reaction during market testing, it went straight back to the design studio.
Samsung also changed its distribution to match its new caché. It initially abandoned low-end
distributors, instead building strong relationships with speciality retailers. Interbrand calculates
that Samsung is the world’s fastest growing brand over the past five years. It’s the world leader
in CDMA cellphones and battling for the number-two spot in total handsets sold. It’s also No. 1
worldwide in colour TVs, flash memory and LCD panels. ‘Samsung’s performance continues to
astound brand watchers,’ says one analyst. The company has become a model for others that
‘want to shift from being a cheap supplier to a global brand.’ Says a Samsung designer, ‘We’re
not el cheapo anymore.’38
marketing which requires
that a company seek real
product and marketing
improvements.
Sense-of-mission marketing
Sense-of-mission marketing means that the company should define its mission in broad social
terms rather than narrow product terms. When a company defines a social mission, employees
feel better about their work and have a clearer sense of direction. Brands linked with broader
missions can serve the best long-run interests of both the brand and consumers. For example,
Dove wants to do more than just sell its beauty-care products. It’s on a mission to discover ‘real
beauty’ and to help women be happy just the way they are.
Some companies define their overall corporate missions in broad societal terms.
Sense-of-mission
marketing—A principle of
enlightened marketing
which holds that a
company should define its
mission in broad social
terms rather than narrow
product terms.
For example, defined in narrow product terms, the mission of Unilever’s Ben & Jerry’s unit
might be ‘to sell ice cream’. However, Ben & Jerry’s states its mission more broadly, as one
of ‘linked prosperity’, including product, economic and social missions. From its beginnings,
Ben & Jerry’s championed a host of social and environmental causes, and it donated a whopping
7.5 per cent of pretax profits to support worthy causes. By the mid-1990s, Ben & Jerry’s had
become the [US] nation’s number-two superpremium ice cream brand. However, having a
‘double bottom line’ of values and profits is no easy proposition. Throughout the 1990s, as
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competitors not shackled by ‘principles before profits’ missions invaded its markets, Ben &
Jerry’s growth and profits flattened. In 2000, after several years of less than stellar financial
returns, Ben & Jerry’s was acquired by giant food producer Unilever. Looking back, the company
appears to have focused too much on social issues at the expense of sound business
management. [Co-founder Ben] Cohen once commented, ‘There came a time when I had to
admit “I’m a businessman.” And I had a hard time mouthing those words.’39
Such experiences taught the socially responsible business movement some hard lessons. The
result is a new generation of activist entrepreneurs – not social activists with big hearts who hate
capitalism, but well-trained business managers and company builders with a passion for a cause.
For example, consider the US company Honest Tea:
Honest Tea has a social mission. ‘We strive to live up to our name in the way we conduct our
business,’ states the company’s ‘philoso-tea’. ‘We do this in every way we can – whether we
are working with growers and suppliers, answering our customers’ questions, or trying to leave
a lighter environmental footprint.’ It all starts with a socially responsible product, an ‘Honest
Tea’ – tasty, barely sweetened, and made from all-natural ingredients, many purchased from
poorer communities seeking to become more self-sufficient. But unlike old revolutionaries like
Ben and Jerry, Honest Tea’s founders are businesspeople – and proud of it – who appreciate
solid business training. Co-founder Seth Goldman won a business-plan competition as a student
at business school and later started the company with one of his professors.
Honest Tea’s managers know that good deeds alone don’t work. They are just as dedicated
to building a viable, profitable business as to shaping a mission. For Honest Tea, social
responsibility is not about marketing and hype. It goes about its good deeds quietly. A few years
ago, Honest Tea became the first company to sell a Fair Trade bottled tea – every time the
company purchases the tea for its Peach Oo-la-long tea, a donation is made to the workers
who pick the tea leaves. The workers invest the money in their community for a variety of uses,
including a computer lab for children in the village and a fund for families. Royalties from sales
of Honest Tea’s First Nation Peppermint tea go to I’tchik Herbal Tea, a small woman-owned
company on the Crow Native Indian Reservation in Montana, USA, and the Pretty Shield
Foundation, which includes foster care among its activities. However, ‘when we first brought out
our peppermint tea, our label didn’t mention that we were sharing the revenues with the Crow
Nation,’ says Goldman. ‘We didn’t want people to think that was a gimmick.’40
Thus, today’s new activist entrepreneurs are not social activists with big hearts, but welltrained business managers and company builders with a passion for a cause.
Societal marketing
Following the principle of societal marketing, an enlightened company makes marketing decisions
by considering consumers’ wants and long-run interests, the company’s requirements and society’s
long-run interests. The company is aware that neglecting consumer and societal long-term interests
is a disservice to consumers and society. Alert companies view societal problems as opportunities.
In many cases customer needs, customer wants and customer long-run interests are the same
things, and customers are the best judges of what is good for them. However, customers do not
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invariably choose to do what’s good for them. People want to eat fatty food, which is bad for
their health; some people want to smoke cigarettes knowing that smoking can kill them and
damage the environment for others; many enjoy drinking alcohol despite its ill-health effects. To
control some of the potential evils of marketing, there has to be access to the media for the
counter-argument – against smoking, against fatty foods, against alcohol. There is also a need for
regulation – self if not statutory – to check unsavoury demand.
A second problem is that what consumers want is sometimes at odds with societal welfare. If
marketing’s job is to fulfil customers’ wants, unsavoury desires leave marketers with a dilemma.
Consumers want the convenience and prestige of hardwood window frames, doors and furniture,
but society would also like to keep the Amazon rainforest; consumers want the comfort of central
Europeans now have the
income, automobiles and
access to cheap food that now
allows them to challenge
America’s obesity. The lazy or
indulgent lifestyle also creates
market opportunities.
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Products that have neither
immediate appeal nor
long-term benefits.
Pleasing products—
Products that give high
immediate satisfaction but
may hurt consumers in
the long run.
Salutary products—
Products that have low
appeal but may benefit
consumers in the long
run.
Desirable products—
Products that give
both high immediate
satisfaction and high
long-run benefits.
“
What consumers want is sometimes at odds with societal welfare.
“
Deficient products—
heating and air-conditioning, yet we need to conserve energy; the growing number of cars on the
road, not least a fast-rising source of carbon emissions, overwhelm the benefits of improved fuel
efficiency, but few bother to reduce car ownership per household. Marketing has to be more alert
to the inconsistencies between consumer wants and society’s welfare. Where there is insufficient
drive from within the consumer movement and consumers’ own sense of responsibility,
marketers would do better to control or regulate their own behaviour in providing undesirable
goods or services for society at large. If not, legislation is likely to do that for them.
A societally oriented marketer wants to design products that are not only pleasing but also
beneficial. The difference is shown in Figure 2.3. Products can be classified according to their
degree of immediate consumer satisfaction and long-run consumer benefit. Deficient products,
such as bad-tasting and ineffective medicine, have neither immediate appeal nor long-run benefits.
Pleasing products give high immediate satisfaction but may hurt consumers in the long run.
Examples include cigarettes and junk food. Salutary products have low appeal but may benefit
consumers in the long run – for instance, seat belts and air bags. Desirable products give both high
immediate satisfaction and high long-run benefits, such as a tasty and nutritious breakfast food.
Examples of desirable products abound. Philips Lighting’s Earth Light compact fluorescent
light bulb provides good lighting while giving long life and energy savings. Toyota’s hybrid Prius
gives both a quiet ride and fuel efficiency. An interesting feature of economic development is that
the energy needed to generate each unit of output declines as wealth increases. There are several
reasons for this: the shift towards services, the use of more efficient manufacturing, the compression of more value into added-value products, and technological advance. The iPod is a
wonderful example of a desirable product that has huge environmental benefits:
In World War II recorded music was not available because the shellac used in making shortlived 78 rpm discs was a strategic material. That is unsurprising given that shellac came
from the secretion of the lac insect found only in the forests of Assam and Thailand! Shortly
after the advent of rock’n’roll in the 1950s, the 5-inch 45 rpm and long-playing albums were
made of much less expensive and longer lasting vinyl. Suddenly good recordings could be made
for less. Then came unattractive cassette, everlasting streams of which often decorated
roadsides. At last came almost indestructible and crackle-free CDs in their perfectly destructible
cases. Now, the taste for a piece of music wore out before the record. Finally, with the MP3
player with electronic downloads comes the ability to carry around weeks of music that would
have taken a truckload of 78s to store.
Figure 2.3 Societal
classification of new products
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Some technological
innovations can have huge
environmental benefits. A Zen
is produced with a fraction
of the environmental impact
of a boom box or even a CD
Walkman; electronically
stored music is more environmentally friendly than CD,
tapes or vinyl and electronically stored photos do not
consume paper or chemicals.
Companies should try to turn all of their products into desirable products. The challenge
posed by pleasing products is that they sell very well, but may end up hurting the consumer. The
product opportunity, therefore, is to add long-run benefits without reducing the product’s
pleasing qualities. The challenge posed by salutary products is to add some pleasing qualities so
that they will become more desirable in the consumers’ minds.
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Marketing ethics
Conscientious marketers, however, face many moral dilemmas. The best thing to do is often
unclear. Because not all managers have fine moral sensitivity, companies need to develop
corporate marketing ethics policies – broad guidelines that everyone in the organisation must
follow. They cover distributor relations, advertising standards, customer service, pricing, product
development and general ethical standards.
The finest guidelines cannot resolve all the difficult ethical situations the marketer faces.
Table 2.1 lists some difficult ethical situations marketers could face during their careers. If
marketers choose immediate sales-producing actions in all these cases, their marketing behaviour
might well be described as immoral or even amoral. If they refuse to go along with any of the
Table 2.1 Some morally
difficult situations in
marketing
1. You work for a cigarette company. Public policy debates over many years leave no doubt in
your mind that cigarette smoking and cancer are closely linked. Although your company
currently runs an ‘if you don’t smoke, don’t start’ promotion campaign, you believe that other
company promotions might encourage young (although legal age) non-smokers to pick up the
habit. What would you do?
2. Your R&D department has changed one of your products slightly. It is not really ‘new and
improved’, but you know that putting this statement on the package and in advertising will
increase sales. What would you do?
3. You have been asked to add a stripped-down model to your line that could be advertised to
pull customers into the store. The product won’t be very good, but salespeople will be able to
switch buyers up to higher-priced units. You are asked to give the green light for the strippeddown version. What would you do?
4. You are thinking of hiring a product manager who has just left a competitor’s company. She
would be more than happy to tell you all the competitor’s plans for the coming year. What
would you do?
5. One of your top dealers in an important territory recently has had family troubles and his
sales have slipped. It looks like it will take him a while to straighten out his family trouble.
Meanwhile you are losing many sales. Legally, on performance grounds, you can terminate the
dealer’s franchise and replace him. What would you do?
6. 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 fine colour television set to the buyer’s home. What would you do?
7. 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?
8. You have to choose between three ad campaigns outlined by your agency. The first (a) is a softsell, honest, straight-information campaign. The second (b) uses sex-loaded emotional
appeals and exaggerates the product’s benefits. The third (c) involves a noisy, somewhat
irritating commercial that is sure to gain audience attention. Pretests show that the campaigns
are effective in the following order: c, b, a. What would you do?
9. You are interviewing a capable female applicant for a job as salesperson. She is better
qualified than the men that you just interviewed. Nevertheless, you know that some of your
important customers prefer dealing with men and you will lose some sales if you hire her.
What would you do?
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actions, they might be ineffective as marketing managers and unhappy because of the constant
moral tension. Managers need a set of principles that will help them figure out the moral
importance of each situation and decide how far they can go in good conscience.
But what principle should guide companies and marketing managers on issues of ethics and
social responsibility? One philosophy is that such issues are decided by the free market and legal
system. Under this principle, companies and their managers are not responsible for making
moral judgements. Companies can in good conscience do whatever the system allows.
A second philosophy puts responsibility not in the system, but in the hands of individual
companies and managers. This more enlightened philosophy suggests that a company should have
a ‘social conscience’. Companies and managers should apply high standards of ethics and
morality when making corporate decisions, regardless of ‘what the system allows’. Each company
must work out a philosophy of socially responsible and ethical behaviour. Under the societal
marketing concept, each manager must look beyond what is legal and allowed, and develop
standards based on personal integrity, corporate conscience and long-run consumer welfare.
A clear and responsible philosophy will help the company deal with the many knotty questions
posed by marketing and other human activities.
A clear and responsible philosophy will help the company deal with knotty issues such as the
one faced recently by 3M:
In late 1997, a powerful new research technique for scanning blood kept turning up the
same odd result: tiny amounts of a chemical 3M had made for nearly 40 years were showing
up in blood drawn from people living all across the country. If the results held up, it meant that
virtually everyone may be carrying some minuscule amount of the chemical, called
perfluorooctane sulfonate (PFOS), in their systems. Even though at the time they had yet to come
up with a definitive answer as to what harm the chemical might cause, the company reached a
drastic decision. In mid-2000, although under no mandate to act, 3M decided to phase out
products containing PFOS and related chemicals, including its popular Scotchgard fabric
protector. This was no easy decision. Since there was as yet no replacement chemical, it meant
a potential loss of about €400m in annual sales. 3M’s voluntary actions drew praise from
regulators. ‘3M deserves great credit for identifying the problem and coming forward,’ says an
Environmental Protection Agency administrator. ‘It took guts,’ comments another government
scientist. ‘The fact is that most companies . . . go into anger, denial, and the rest of that stuff.
[We’re used to seeing] decades-long arguments about whether a chemical is really toxic.’ For
3M, however, it wasn’t all that difficult a decision – it was simply the right thing to do.41
In searching for ethical standards for marketing, marketing managers may also draw upon
postmodernist thinking and philosophies that date back well beyond marketing itself. Real
Marketing 2.2 introduces some of this. As with environmentalism, the issue of ethics provides
special challenges for international marketers. Business standards and practices vary a great deal
from one country to the next.
Imagine you are trying to win a big public contract in a developing country. The minister in
charge makes unmistakable references to the disgracefully low pay of local civil officials and the
benefits his own children would enjoy if they could study abroad. The cost of providing this
(concealed as a ‘scholarship’ paid for by your company) is minute compared with the value of the
contract. Your competitors, given the chance, would assuredly find the money. Do you pull out,
or pay up? Most businesspeople in such situations find that their scruples are soon swallowed. So
do most governments.
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2.2
From Plato’s Republic to supermarket
slavery
There is good reason to search a long way back for the ethics to guide marketing. As
the British philosopher Alfred North Whitehead (1861–1947) commented, ‘All Western
philosophy is really no more than a footnote to Plato’s (428–354 BC) great work The
Republic.’ If that were true, our thinking on ‘marketing ethics’ is little more than a
smudge on that footnote.
The ancients were also practical, as Plato’s student explained:
Ethics is a rough and ready business determined by ordinary practical men of
common sense, not by inbred ascetic ‘experts’ with their heads in a remote and
austere world.
Aristotle (384–322 BC)
Thinking’s the thing
A lot of thinking went on in ancient Athens, a city state of about 400,000 people.
Socrates (469–399 BC) thought that the most important thing about human beings is
that they ask questions. He also thought that real moral knowledge existed and was
worth pursuing. He did not think morality could be tough, but said that it was more
than just obeying the law. The newly democratic Athenians did not like this questioning of state morality, so they condemned him to death by poisoning.
Good for the state and good for you too
Plato thought that Athens’ experiments with democracy were a shambles and left
town. He believed in moral absolutes that were separate from the more sordid world.
This led him to idealise regimes where right and wrong were well defined. He thought
militaristic and disciplined Sparta was a much better place than freethinking Athens
and that people should do what is good for the state. Lots of leaders have tried this
and very nasty it is too.
Choosing the happy medium
Aristotle rejected his teachers’ concern for absolute truths, suggesting that people
take a middle road and learn how to behave from experience. People learn to become
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good citizens and from that achieve contentment. Well, most people! And how about
being a good citizen of a gang of hooligans?
…2.2
It was a long time before Western philosophy recovered from these Greeks, but
the Renaissance got things going again. Machiavelli was born in another city state:
Florence.
‘He may be dung, but at least he’s our dung’
Machiavelli (1469–1527) was an observer rather than a philosopher. After he saw
what succeeded, he recognised that politics and morality mix badly. This is a
convenient view for business leaders who think there should be two sets of moral
standards: one for public life and one for private life. In political and business life it
is necessary to be pragmatic and prudent – in other words, unethical – while retaining
a different private ethic. As recent politicians have found, life does not always divide
so easily.
Solitary, poor, nasty, brutish and short
The English Royalist Hobbes (1588–1678) is even more depressing than Machiavelli.
People are awful and are prevented from degenerating into our natural brutish
behaviour only by realising that everyone behaving that way would make life
unbearable. People therefore establish a ‘social contract’ (which parents call
‘bringing up’) that has to be enforced by a neutral third party (government contract).
Franco-Swiss Rousseau (1712–78) had the opposite view that humanity is essentially
good, but is corrupted by society to want things like smart clothes, carriages and
Nike trainers.
Sum happiness
English Utilitarians Bentham (1748–1832) and Mill (1806–73) invented a form of moral
calculus. Bentham thought his country’s laws were in a mess because they lacked a
scientific foundation. He saw human beings as pleasure–pain machines, so he
suggested that law makers should balance the sum of the pain and pleasure to
achieve ‘the greatest happiness of the greatest number’. This has two consequences:
means justifying ends and problems for minority groups. Mills worried about this
‘tyranny of the majority’. He preferred talking about happiness rather than pleasure,
tolerated individual lifestyles and thought that the ‘happiness sums’ varied and were
▼
for individuals as well as law makers.
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…2.2
Bah, happiness
Kant (1724–1804) had little time for happiness. The German idealist’s ethics had
categorical imperatives. He believed that a moral action was one done out of a sense
of duty. Ethics was about finding out our duties and living by them. Kant deduced a
‘universality test’ to find the compulsory rules. He asked people to imagine what it
would be like if everybody did what they themselves wanted to do. Using this mind
model, we deduce that if people sold shoddy goods habitually, life would be chaotic
and, therefore, people have a duty not to sell shoddy goods.
And justice for all
The American John Rawls (1921–2002) has greatly influenced modern liberal
thinking. He has a mind model based on imagining a group of people brought
together with no knowledge of what place they will have in society. They have to
invent a series of rules that will make their community just and fair. Then they have
to live in it.
Don’t know; can’t know
This rationalist claim to understanding ‘truths’ started being undermined by
Scotsman David Hume (1711–76). His ‘meta-ethics’ does not offer any advice, but
recognises an ‘is–ought gap’ between what we experience (is) and the conclusion we
try to draw from that (ought). Even though we know that bull bars on cars kill children
(is), we can only produce a false argument that they should not be sold (ought).
Developing similar insights, it follows that any moral argument between people is
‘utterly futile, unsolvable and irrational’ (A.J. Ayers, 1910–89).
The age of unreason
Postmodernists have pursued this ethical scepticism to new levels. Reason fails
because of its dependence on language. What passed as reason in the past has
caused so much human suffering. This level of ethical uncertainty is not new; it is
close to the Sophist views that Plato argued against. Postmodernists despair at the
society they see coming: a kaleidoscope of consumerist images that hypnotise
citizens into accepting the morality of capitalism; where individual morality ceases to
exist, where all that remains is supermarket slavery and where the only choice is by
consumers between products – marketing.
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…2.2
Meanwhile Alasdair MacIntyre looks back to the Aristotelian idea that we
should concentrate less on the individual and more on people and what is good
for society.
SOURCES: J. Ackrill, Aristotle and the Philosophers (Oxford, 1981); G. Kerner, Three Philosophical Moralists
(Oxford, 1990); A. MacIntyre, A Short History of Ethics (Routledge, 1987); D. Robinson and C. Garratt, Ethics for
Beginners (Icon, 1996); B. Russell, A History of Western Philosophy (Oxford, 1945); P. Singer, Practical Ethics
(Oxford, 1993); Lynn Sharp Paine, Value Shift (McGraw-Hill, 2003).
Although bribes and kickbacks are illegal in many countries, they are standard business practice in many others. One recent study found that companies from some nations were much more
likely to use bribes when seeking contracts in emerging-market nations. The most flagrant bribepaying firms were from Russia and China, with Taiwan and South Korea close behind. Other
countries where corruption is common include Turkmenistan, Bangladesh and Chad. The least
corrupt were companies from Iceland, Finland, New Zealand and Denmark.42
“
“
Although bribes and kickbacks are illegal in many countries, they are standard
business practice in many others.
Across the globe, national cultures naturally impose different standards of behaviour on
individuals and organisations. In the EU, each market sector in each country is still characterised
by a mixture of accepted commercial practices, codes of practice and formalised legislation. What
is considered an acceptable practice in one country may be illegal in another. Although the EU
seeks to move towards a pan-European business ethics policy and codes of conduct, that day is
still some way off.
The question arises as to whether a company must lower its ethical standards to compete
effectively in countries with lower standards. The answer: no. For the sake of all the company’s
stakeholders – customers, suppliers, employees, shareholders and the public – it is important to
make a commitment to a common set of standards worldwide. For example, the ethical code of
jeans manufacturer Levi Strauss forbids bribes, whether or not prevalent or legal in the foreign
country involved.
Many industrial and professional associations have suggested codes of ethics and many companies are now adopting their own codes. Efforts have also been made to develop ‘global’ standards.
An example is the Social Accountability standard SA8000, an international certification
standard that encourages organisations to develop, maintain and apply socially acceptable
practices in the workplace. It was created in 1989 by Social Accountability International (SAI), an
affiliate of the Council on Economic Priorities, and is viewed as the most globally acceptable
independent workplace standard. It can be applied to any company, of any size, in any part of the
world. The areas it addresses include forced and child labour, health and safety, freedom of
association and collective bargaining, discrimination, disciplinary practices, working hours,
compensation and management systems.43
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Companies are also developing programmes, workshops and seminars to teach managers
about important ethics issues and help them find the proper responses. They hold ethics workshops and seminars and set up ethics committees. Furthermore, many companies have appointed
high-level ethics officers to champion ethics issues and to help resolve ethics problems and
concerns facing employees.
PricewaterhouseCoopers (PwC) is a good example. In 1996, PwC established an ethics office
and comprehensive ethics programme, headed by a high-level chief ethics officer. The ethics
programme begins with a code of conduct, called ‘The Way We Do Business’. PwC employees
learn about the code of conduct and about how to handle thorny ethics issues in a comprehensive
ethics training programme, called ‘Navigating the Grey’. The programme also includes an ethics
helpline and regular communications at all levels. ‘It is obviously not enough to distribute a
document,’ says PwC’s CEO, Samuel DiPiazza. ‘Ethics is in everything we say and do.’ Last year
alone, the PwC training programme involved 40,000 employees, and the helpline received over
1,000 calls from people asking for guidance in working through difficult ethics dilemmas.44
Still, compliance rules, written codes and ethics training programmes do not guarantee ethical
behaviour. Ethics and social responsibility require a total corporate commitment. They must be a
component of the overall corporate culture. Ethics programmes or seminars for employees help
to imbue corporate ethics and codes of conduct among staff, while ethical and social audits may
be used to monitor and evaluate business conduct and to use the lessons to guide both policy
and behaviour. In the final analysis, ‘ethical behaviour’ must be an integral part of the organisation, a way of life that is deeply ingrained in the collective corporate body.
The future holds many challenges and opportunities for marketing managers. In this chapter,
we have examined many important concepts involving marketing’s sweeping impact on individual consumers, other businesses, our ecological environment and society as a whole.
Companies that are able to create new customer value in a socially responsible way will have a
world to conquer.
Sustainable marketing
The concept of sustainable marketing holds that an organisation should meet the needs of its
present consumers without compromising the ability of future generations to fulfil their own
needs. Figure 2.4 shows how sustainable marketing and the marketing concept are linked by the
dimension of time. The marketing concept recognises that organisations thrive from day to day
Figure 2.4 Sustainable
marketing
The business
Now
Future
Now
Marketing concept
Strategic planning
concept
Future
Societal marketing
concept
Sustainable
marketing concept
Customer
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by determining the needs and wants of a target group of customers and fulfilling those needs and
wants more effectively and efficiently than the competition. The focus is on what customers want
now. Try to foist upon them what they do not want and they will buy elsewhere. That is why cars
are getting larger and more powerful, why washing detergents still contain phosphates and why many
breakfast meals contain more sugar or fat than is good for us. Marketers succeed by finding a
need and fulfilling it. Sustainable marketing projects our focus on the long-run welfare of society.
Shoddy or defective goods
The first time dimension of sustainable marketing examines the welfare of customers now and in
the future. This dimension has escalating levels of concern. The first is the provision of shoddy
goods or defective goods.
This customer really did not want holes but needed them to fix a coat hook. He bought the
appropriate-looking coat hooks from Focus, a DIY chain, and these came with screws for
fixing. If they looked good, his aim was to fit out the whole corridor with these nifty hooks. Being
handy, the customer recognised that it would be better to drill holes for the screws before fixing
them. This he did, but when trying to fix the first screw it sheared, leaving an ugly bit of metal
in a hole. He remeasured and tried a second screw. That also sheared, leaving a second ugly
hole . . .
The customer had fulfilled his immediate need when buying the coat hooks, but ended up very
annoyed. Focus had also fulfilled their immediate need by buying the coat hooks, as had the
maker of the coat hooks in buying appropriately sized screws. At the same time, all lost because
of the shoddy little component. For Focus, the defective goods had to be refunded, the follow-up
order never came and the customer talked to others.
The marketing of shoddy ineffective goods is not sustainable because customers are likely to
find out, stop buying and pass on information to their friends. Many companies make a living by
knowingly fulfilling customer’s immediate needs by mis-selling or selling shoddy goods. Probably
the extreme case of this is the sale of bootlegged drugs that are, at their best, only theft but, at
their worst, lethal. Bootlegging of music or books may seem a relatively harmless crime, but
consider the long-run impact: what is the chance of a music industry or literature developing in
a country where any creative output is immediately stolen?
Any company making anything can discover that the product is either defective or dangerous.
3M phased out products containing PFOS when they discovered the potential damage of the
product without any legal action forcing them to do so. This contrasts with denial that sometimes occurs when dangers are uncovered.
Ford were aware of design flaws in their 1970s Ford Pinto but allegedly decided it would be
cheaper to pay off possible lawsuits for resulting deaths than to change the car’s design. A
magazine obtained the cost-benefit analysis that it said Ford had used to compare the cost of an
$11 (€7) repair against the cost of paying off potential lawsuits. Ford’s reputation was hugely
damaged by this disclosure as they were in the dispute with Firestone decades later over the
Ford Explorer accidents.45
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The sustainable marketing concept suggests that making defective goods, either knowingly or
unknowingly, defies the basic marketing principle of customer care.
Intrinsically harmful goods
Some products, such as red wine, are harmful to customers if consumed to excess. Others, such
as cigarettes, are harmful in any quantity. Yet others, such as asbestos, are harmful if ingested
accidentally. How do products that kill those who consume them square with the marketing
concept? Cigarettes certainly fulfil the needs and wants of those addicted to them, but is a
strategy that depends upon killing customers by making them addicts sustainable? If you can
keep the danger from the public, as big tobacco tried, then sales continue. But this form of
denial, like that of Ford with the Pinto, had dire consequences once the cover-up was exposed.
Cigarette smoking is declining, helped by the product being banned in public places. Even
smokers agree with smoking being banned in the workplace.46
One sustainable marketing strategy pursued by tobacco companies is to diversify away from
their cigarette base. With its Marlboro brand, Philip Morris is the world’s largest tobacco producer,
but it has also diversified away from that base to become Altria – a conglomerate that has among
its assets Kraft, the foods and beverage giant, and Miller, America’s second largest brewer.
In the eye of the storm over increased obesity, McDonald’s has responded with a
sustainable ‘Plan to Win’ strategy of diversifying from hamburgers into salads, sandwiches
and fruit, which has continued to pay off. Aimed at broadening McDonald’s appeal to healthconscious customers, the campaign helped sales increase 11 per cent and profits jump 22 per
cent with European results being particularly strong. Also, after a seven-year search for an oil
not containing dangerous trans fats without compromising the taste of its French fries,
McDonald’s is phasing out the traditional artery-clogging fats from its menu.47
Socially harmful goods
Externality—The effect of
a purchase by one party
A driver of a large sports-utility vehicle (SUV) walked away from a crash with a small car
whose occupant was killed. In response, the driver went out and bought an even larger SUV
based on the thesis that they are safer. In reality roll-over crashes accounted for 3 per cent of
car accidents in America but 32 per cent of deaths. Occupants of SUVs are three times more
likely to die from their vehicle rolling over than are the occupants of saloon cars.
Similar consumption behaviour is displayed by drivers installing ‘bull bars’ on the front of
their cars. Why? Few drivers encounter large wild animals on their school run or in their
supermarket car park. Why do customers install them? Partly as a fashion accessory and partly
because it protects their car in a bump or scrape. Unfortunately, these fashion items do have a
large social cost. Experimental studies suggest that the collision effect on pedestrians and
cyclists of adding bull bars is similar to doubling the actual speed of the vehicle. That trades off
against 2 to 3 per cent more protection to the vehicle that the accessories provide.48
on others who do not
have a choice and whose
interests are not taken
into account.
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In these cases the good bestows a fictional or marginal benefit to the buyer while imposing costs
on others. These can be called third-person costs. This is a case of a negative externality.
Chapter 2 Sustainable marketing: marketing ethics and social responsibility
Secondary smoking is another example of a negative externality, but not all externalities are
negative. Where more than one in three people install anti-theft vehicle tracker systems in their
cars, a positive externality occurs since the overall car crime rate goes down. Similarly, if more
than one in ten install radar-controlled cruise control systems, the stop-start motor congestion
on the roads declines for all drivers.
The social cost of goods such as SUVs or their bull bars may appear trivial to a buyer who is
ignorant of the third-person costs, or because the events that incur the third-person costs, such
as running over and killing a child, are rare.
The remoteness of negative externalities can lead to their neglect. In the nineteenth century,
many people in England were ignorant of the squalor of working-class life until it was graphically illustrated in novels like Charles Dickens’ Oliver Twist. Likewise, the cruelty of slavery was
invisible to early generations, although not to later ones. In this century, it is not apparent that a
pair of trainers that you buy was produced in a Third-World sweatshop or that a piece of hardwood furniture would involve destroying tribal areas in Borneo or the Amazon basin.
As the SUV examples show, marketers can achieve an immediate return from supplying goods
where a third party pays the cost. Is the strategy sustainable? In the case of SUVs whose safety is
illusory, it is akin to selling a dangerous good based on mythical safety claims. This flies in the
face of the basic marketing concept. There is also a danger of a consumer backlash. In many
countries SUVs and the perceived anti-social attitudes of their owners have become something of
a joke. In other cases, banning the offending behaviour can wreck once-lucrative markets, as is
occurring with bull bars and smoking in public places. Democratic governments have the ability
to protect their own people from negative externalities, although it often takes pressure groups
to stimulate action.
Where negative externalities are borne by distant peoples, the impulse for government action
is diminished. Hence the emergence of campaigners who use all the skills of modern marketing
to communicate their concerns – Live Aid and Live Eight, aimed at the G8 summit in Scotland,
are global examples. Like Nike in sportswear and B&Q in wood, enlightened marketers also see
the danger of reputation loss such as that which Nike faced or the opportunity to make their
products more appealing to concerned customers, as did B&Q by making sure their wood came
from renewable sources.
Many of the earlier concerns of environmentalists were the impact of pollution and other
practices upon people who live now. Excessive use of private transport was a problem because
of the environmental pollution and congestion it causes here and now. Global warming, however,
implies that the true cost of our love of heating, air-conditioning, flying, power boats, electrical
equipment that is instantly available and private motorised transport will be borne by future
generations or even during the lifetime of current students.
Environmentally harmful consumption
Environmentally harmful behaviour is not new. The ancient Greek philosopher Aristotle
recognised that: ‘That which is common to the greatest number has the least care bestowed upon
it.’ For a long time this did not matter beyond the local community. Over-fishing may have
destroyed the cod banks off North America’s coast, London was smothered in its Dickensian
smog, the Easter Islanders destroyed their lush tropical island, and the colonists of Greenland
overgrazed their land, making its name seem oddly inappropriate, but elsewhere in the world it
did not matter. These are all cases of The Tragedy of the Commons, a term derived originally
from a parable published by William Forster Lloyd in 1833.49 Over-exploitation occurs because
consumption benefits individuals who are motivated to maximise their own use of the resource,
while the costs of exploitation are distributed to all.
“
“
That which is common to the greatest number has the least care bestowed
upon it.
The Tragedy of the
Commons—Free access to
finite resource ultimately
dooms the resource by
over-exploitation.
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consume more than their
fair share of a resource,
or shoulder less than a
fair share of the costs of
its production.
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“
Consumers are enjoying being free riders where their immediate descendents
and the world’s poor pay.
“
Free riders—People who
The global tragedy of the commons now affects us all because the common good is the whole
environment. Industrialisation means that our combined consumption can now destroy the air
we all breathe and the atmosphere that protects us from the sun’s rays. Marketing’s endeavours
that result in destroying our shared environment by fulfilling the immediate needs and wants of
customers are clearly not sustainable. What does sustainable marketing offer?
The world’s greatest generators of greenhouse gases are electricity and heat (26 per cent),
deforestation (18), agriculture, industry and transport (14 each) and waste (4). In all sectors,
some marketers have gained a strategic advantage, embracing the need to look to the needs of
tomorrow’s markets. Denmark’s Vistas is growing fast as the world’s leading producer of wind
turbines but big money is catching up. GE has made ‘green is green’ their mantra. It has set up
Ecomagination that brings together businesses, like wind turbines, that are intrinsically green,
with its other businesses that are more environmentally sound than the competition. GE is
generally highly successful but its Ecomagination businesses are growing by 12 per cent per
annum compared with 9 per cent for GE as a whole. Likewise Bombardier, which makes planes
as well as being a global leader in rail technology: the Pendolino trains they make for Virgin
Trains already consume 76 per cent less fuel than road or local air travel, but Virgin Trains is now
pioneering Europe’s first biodiesel-powered Voyager trains that cut CO2 by a further 14 per cent.
These companies, along with many others, including Alstom and Siemens, are in an increasingly strong position compared with those whose response to environmental concerns was
denial. While Alstom, GE, Siemens, Vistas and the like were embracing sustainable marketing, the
Global Climate Coalition (GCC) of big carbon emitters aimed to ‘shoot the messengers’, casting
doubt on the science of global warning and greenhouse gas reductions. After GCC collapsed,
the Competitive Enterprise Institute championed denial, running an ad proclaiming: ‘Carbon
dioxide: they call it pollution, we call it life.’ Even Exxon has now broken from this alignment of
doubters.50
These differing responses to sustainable marketing cut across industries. As a result, in the
automotive industry Toyota, Nissan, PSA Peugeot Citroën and Renault are well positioned for a
future cleaner-energy low-cost exposure to the changing market and strengths in low-carbon
technologies. In contrast, BMW, Ford and GM, with their dependence on SUV and sporty cars,
are highly exposed. As GM’s vice-president of R&D now recognises: ‘This industry is 98 per cent
dependent on petroleum. GM has concluded that that’s not sustainable.’51
Indications are that marketers cannot rely on the behaviour of today’s consumers to provide
the market signals to shift to sustainable marketing. A few people are committed to ethical
consumption and many enjoy the warm glow of doing good when they buy, but consumers are
confused and there is little sign that they will buy ethical products that cost more or perform
less well than the norm. It is a free-rider problem: most wealthy consumers are enjoying being
free riders where their immediate descendents and the world’s poor pay.52
Today’s free-riding consumers are benefiting from an externality that has a time dimension.
The people who will pay are not born yet, so why bother? Environmentally damaging goods
carry with them a double incentive not to act now. Besides, the negative externality is tomorrow’s
problem, so we can free-ride. If everyone else constrains their lifestyle or invests to cut back their
environmental impact, we can benefit from a better environment without contributing anything.
But what if we all free-ride? As an example, BA’s customers have the chance to pay just £5 to
offset the carbon emissions of a flight from London to Madrid but fewer than 1 per cent do. The
link between our actions and the consequences are so remote that someone else can pick up the
tab. Even when the economic benefits accrue directly to consumers, few respond.
Chapter 2 Sustainable marketing: marketing ethics and social responsibility
The Green Car Congress promotes fuel-efficient driving by means that cost little to the
consumers, such as switching off car engines when the car is stationary, holding a steady
speed and removing unused roof racks. They also show the impact of speeding. The speed limit
on UK motorways is 70 miles per hour (113 kph), although people in the fast lane often drive at
85 mph or more (138 kph). That speed difference worsens the fuel consumption of a typical
family car, like an Opel Zafria, from 48 mpg (17 kpl) to 38 mpg (13.5 kpl), and that is without the
accelerating and braking that fast driving involves. Drivers can save themselves a lot of money
and be less damaging to the environment by driving legally.
Lighting accounts for 19 per cent of the world’s electricity use, and one of the most effective
ways of saving money and carbon emissions is changing a standard incandescent light bulb
(costs €1 and uses €15 of electricity a year) for an energy-efficient light bulb (costs €5 and
consumes €3 of electricity a year). Yet, according to Philips, only 30 per cent of the bulbs sold are
of the energy-efficient variety.
Unless the carbon-efficient product bestows some status, such as a Toyota Prius, few
consumers respond. As a result, companies are asking governments to act – even suggesting
carbon taxes and targets. There is also more chance that consumers will act collectively as voters
when everyone has to pay. It is already happening. The EU has a long-standing voluntary deal for
car emissions to reduce the CO2 to 120 g/km by 2012 but people so love big, fast cars that the
requirement is likely to soon become mandatory. ‘Not fair’, shout BMW, Porsche and Mercedes,
while Renault and PSA are strangely quiet as their investment in more sustainable vehicles pays
off. The EU and Australia also intend to ban incandescent light bulbs on which consumers are so
attached to wasting money.53
The sustainable company
At the foundation of marketing is the belief that a company that neglects the wants and needs of
its customers will decline. The first dimension of sustainable marketing extends this view by
suggesting the short-termism of marketing goods that harm customers, others in society or
people in the future. Killing your customers, other people’s customers or tomorrow’s customers
is not sustainable marketing.
“
“
Killing your customers, other people’s customers or tomorrow’s customers is
not sustainable marketing.
The second dimension of sustainable marketing is assuring the continuity of the business.
This means looking beyond current markets to new ones as product life cycles fade. The music
industry is doing this as recorded music sales decline by taking a greater interest in the growing
demand for live music and investing in the copyright of songs. As the sale of digital cameras
matures, Canon, the market leader, is moving into new-technology flat-screen TVs that fit with
their digital imaging and hi-tech competences.
The long-term survival of a business also depends on socially responsible behaviour that does
not risk the reputation of the company. The loss of reputation caused by poor governance and
questionable business practices can go far beyond the direct financial loss. When author, magazine editor, TV host and domestic arts wizard Martha Stewart was convicted of insider trading
and sentenced to prison, fined and barred from serving on a public company Board of Directors,
Governance—The action
of developing and
managing consistent and
cohesive policies,
processes, policies and
decision rights for areas
of responsibility within a
business.
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the shares in her company fell even faster than those of Enron. Similarly, recall the dissolution of
the Arthur Andersen accounting firm, after its involvement with Enron, and the demise of Union
Carbide after the death of thousands of people in the Bhopal disaster.
There are voluntary or legal codes designed to assure the governance of companies. Enron,
Worldcom and Robert Maxwell’s publishing empire all involved failures in governance that
allowed the senior managers to hide their business’s financial difficulties by ever more desperate
means. Sustainable marketing, therefore, goes beyond caring for the needs and wants of today’s
customers. It means having concern for tomorrow’s customers as well as the well-being of all
those in assuring the survival of the business, the shareholders, the employees and the society in
which they all live.
Reviewing the concepts
Responsible marketers discover what consumers want and respond with the right products,
priced to give good value to buyers and profit to the company. A marketing system should
sense, serve and satisfy consumer needs and improve the quality of consumers’ lives. In
working to meet consumer needs, marketers may take some actions that are not to
everyone’s liking or benefit. Marketing managers should be aware of the main criticisms of
marketing.
1. Identify the major social criticisms of marketing
Marketing’s impact on individual consumer welfare has been criticised for its high prices,
deceptive practices, high-pressure selling, shoddy or unsafe products, planned obsolescence
and poor service to disadvantaged consumers. Marketing’s impact on society has been criticised for creating false wants and too much materialism, too few social goods, cultural pollution
and too much political power. Critics have also criticised marketing’s impact on other businesses for harming competitors and reducing competition through acquisitions, practices that
create barriers to entry, and unfair competitive marketing practices. Some of these criticisms are justified, some are not.
2. Define consumerism and environmentalism and explain how they
affect marketing strategies
Concerns about the marketing system have led to citizen action movements. Consumerism is
an organised social movement intended to strengthen the rights and power of consumers
relative to sellers. Alert marketers view it as an opportunity to serve consumers better by
providing more consumer information, education and protection.
Environmentalism is an organised social movement seeking to minimise the harm done to
the environment and quality of life by marketing practices. The first wave of modern environmentalism was driven by environmental groups and concerned consumers, whereas the
second was driven by government, which passed laws and regulations governing practices
impacting the environment. The first two environmentalism waves are now merging into a
third and stronger wave in which companies are accepting responsibility for doing no environmental harm. Companies now are adopting policies of environmental sustainability –
developing strategies that both sustain the environment and produce profits for the
company.
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3. Describe the principles of socially responsible marketing
Many companies originally opposed these social movements and laws, but most of them
now recognise a need for positive consumer information, education and protection. Some
companies have followed a policy of enlightened marketing which holds that a company’s
marketing should support the best long-run performance of the marketing system.
Enlightened marketing consists of five principles: consumer-oriented marketing, customervalue marketing, innovative marketing, sense-of-mission marketing and societal marketing.
Because business standards and practices vary from country to country, the issue of
ethics poses special challenges for international marketers. The growing consensus among
today’s marketers is that it is important to make a commitment to a common set of shared
standards worldwide.
4. Explain the role of ethics in marketing
Increasingly, companies are responding to the need to provide company policies and guidelines to help their employees deal with questions of marketing ethics. Of course, even the
best guidelines cannot resolve all the difficult ethical decisions that individuals and firms
must make. However, there are some principles that marketers can choose among. One
principle states that such issues should be decided by the free market and legal system. A
second, and more enlightened, principle puts responsibility not in the system but in the
hands of individual companies and managers. Each firm and marketing manager must work
out a philosophy of socially responsible and ethical behaviour. Under the societal marketing
concept, managers must look beyond what is legal and allowable and develop standards
based on personal integrity, corporate conscience and long-term consumer welfare.
5. Understand the dimensions of sustainable marketing
Sustainable marketing recognises that the long-term survival of an organisation goes
beyond serving the wants and needs of today’s customers. It recognises the conflict between
the short-term needs for profit and customer gratification to build an operation that enhances
the lives of its current and future stakeholders. The first dimension of sustainable marketing
looks to the needs of tomorrow’s customers as well as today’s and the need to address environmental issues that endanger the livelihood of all. This means concern for shoddy goods
that unintentionally endanger customers (such as power motorcycles), intrinsically dangerous
products (such as cigarettes), consumption that damages the lives of others (such as cornbased ethanol fuel that drives up the cost of the food of poor people) or consumption that
endangers future generations (such as our appetite for energy to fuel our lifestyle).
Sustainable marketing’s second dimension means assuring the survival of a business in
order that it can continue to serve future customers. That means a concern that the company
has the agility to evolve as markets change and the governance to assure its well-being.
Discussing the concepts
1. Marketing receives much criticism, some justified and much not. Which of the major criticisms of marketing discussed in the chapter do you think are most justified? Which are least
justified? Explain.
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2. You have been invited to appear along with a sociologist on a panel assessing the marketing of
video games. You are surprised when the economist opens the discussion with a long list of
criticisms, focusing especially on the undesirable impacts of video gaming on society, such as
lifelike depictions of violence and inclusion of hidden sex scenes, which steal children’s innocence and make people violent. Abandoning your prepared comments, you set out to defend
marketing in general, and the video gaming industry in particular. How would you respond to
the sociologist’s attack?
3. The issue of ethics provides special challenges for international marketers as business
standards and practices vary a great deal from one country or cultural environment to the
next. Imagine that you are a manager working for a global company. Select five moral
dilemmas from Table 2.1. Propose an ethical response for each dilemma. Will these
responses be the same irrespective of whether the company faces these dilemmas when
operating in the UK, India or China? Discuss. Should the company adapt its ethical standards
when operating in countries with different standards?
4. Can an organisation be focused on both their consumers and the environment at the same
time? Explain, giving practical examples to support your answers.
5. How might companies benefit from practising the philosophy of sustainable marketing, and is
the survival of a business guaranteed by fulfilling the wants and needs of customers?
Applying the concepts
1. Many corporations support worthy causes and contribute generously to their communities.
Check out the websites of one of the following or some other company of your choice and
report on its philanthropic and socially responsible activities: Nestlé (nestle.com), Virgin
(virgin.com), Nike (nikebiz.com), Tesco (tesco.com), Saab (saab.com), Toyota (toyota.com) and
BP (bp.com). How does philanthropy by corporations counter the social criticisms of
marketing?
2. The growth of consumerism and environmentalism has led to marketing approaches that are
supposedly good for society, but some are actually close to deception.
●
Web
resources
For additional
classic case studies
and Internet exercises, visit www.
pearsoned.co.uk/
kotler
●
●
List three examples of marketing campaigns that you feel genuinely benefit society as a
whole. If possible, find examples of corporate communications, including advertising,
sponsorships, sales promotions or packaging, to support the examples you have listed.
You may also visit the websites of relevant companies to gather more specific information
on these campaigns.
Find three examples of deceptive or borderline marketing campaigns that appear to use
their social concern as a means of selling rather than showing a true commitment to the
communal good. How are you able to tell which activities are genuine and which are not?
What remedies, if any, would you recommend for this problem?
References
1. Quentin Anderson, Inside track: ‘In defence of the NSPCC’, Viewpoint: ‘The furore over the charity’s allocation of funds rests on a misunderstanding of its long-term goals’, Financial Times (14 December 2000),
p. 19; Tom Braithwaite, National news: ‘Websites that fail children face action’, Financial Times
(8 September 2006); ‘Charity donors in a chorus of protest at NSPCC wasters’, Daily Express (13 April
2007); NSPCC’s website: www.nspcc.org.uk.
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2. See Richard Tomkins, ‘Smoke signals out as cigarette adverts meet their match’, Financial Times
(9 February 2003), p. 3; Deborah L. Vence, ‘Match game’, Marketing News (11 November 2002), pp. 1,
11–12; Neil Buckley, ‘Philip Morris case brings threat of fresh tobacco suits’, Financial Times (24 March
2003), p. 30; Gordon Fairclough, ‘Study slams Philip Morris ads telling teens not to smoke – how a
market researcher who dedicated years to cigarette sales came to create antismoking ads’, Wall Street
Journal (29 May 2002), p. B1.
3. ‘DFS profit warning highlights threadbare furniture market’, Investors’ Chronicle (6 February 2004);
Carlos Grande, ‘Advertising up in effort to win shoppers’, Financial Times (13 January 2007).
4. Excerpts from Theodore Levitt, ‘The morality(?) of advertising’, Harvard Business Review (July–August
1970), pp. 84–92; Ben Abrahams, ‘The ASA: older and wiser’, Marketing (10 July 2000), p. 3.
5. Lane Jennings, ‘Hype, spin, puffery, and lies: Should we be scared?’, The Futurist (January–February
2004), p. 16. For recent examples of deceptive advertising, see ‘Mobile providers sued by New York
City’, Telecomworldwire (22 July 2005), p. 1; Chad Bray, ‘Federated to pay civil penalty’, Wall Street
Journal (15 March 2006), p. B3; and ‘Pfizer sues P&G over Crest ads’, Wall Street Journal (6 March 2006),
p. 1.
6. See the 1987 film The Tin Men starring Richard Dreyfuss and Danny DeVito for some great examples of
high-pressure selling, and the eventual downfalls.
7. Andrew Bounds, ‘Lucrative holiday property rip-offs targeted by EU’ and ‘Offer of home in sun just pie in
the sky for UK couple’, Financial Times (8 June 2007), p. 8.
8. ‘McDonald’s to cut “Super Size” option’, Advertising Age (8 March 2004), p. 13; Dave Carpenter, ‘Hold the
fries, take a walk’, The News & Observer (16 April 2004), p. D1; Michael V. Copeland, ‘Ronald gets back in
shape’, Business 2.0 (January/February 2005), pp. 46–7; David P. Callet and Cheryl A. Falvey, ‘Is restaurant food the new tobacco?’, Restaurant Hospitality (May 2005), pp. 94–6; Kate McArthur, ‘BK offers fat to
the land’, Advertising Age (4 April 2005), pp. 1, 60.
9. Eric Schlosser, Fast Food Nation: The dark side of the all-American meal (Harper Perennial, 2006); Greg
Critser, Fat Land: How Americans became the fattest people in the world (Penguin Books, 2004); Tobias
Buck and Jenny Wiggins, ‘EU pushes voluntary code to tackle obesity’, Financial Times (31 May 2007),
p. 8; Beuc press release PR 013/2007, www.beuc.eu.
10. Tobias Buck, ‘Brussels gets teeth into food groups’ “misleading” claims’, Financial Times (1/2 February
2003), p. 7.
11. N. Craig Smith, Robert J. Thomas and John A. Quelch, ‘A strategic approach to managing product
recalls’, Harvard Business Review (September–October 1996), pp. 102–12; ‘When quality control breaks
down’, The European (6–12 November 1997), p. 29; Vanessa Valkin, ‘Court overturns Ford/Firestone
class-action’, FT.com (2 May 2002); James Mackintosh and Richard Milne, ‘Electronic bugs cause recall
of 1.3m cars by Mercedes’, Financial Times (1 April 2005); James Mackintosh, ‘Jaguar recalls luxury car
over gears fault’, Financial Times (17 April 2004); ‘Timeline: Recent safety recalls in Japan’, FT.com
(25 August 2006).
12. For the little tin lamp tale, see http://www.exxonmobilchemical.com.cn/China-English/LCW/
About_ExxonMobil/Our_History_in_China.asp; Mark Fagan, ‘Commodity driven market’, Lawrence
Journal-World (4 May 2005), p. 1. Also see Clint Swett, ‘High prices on printer cartridges feeds
marketing for alternative industry’, Knight Ridder Tribune Business News (15 February 2006), p. 1; John
Gapper, ‘A bid to reprint the pricing rule book’, The Economist (21 May 2007).
13. For more discussion, see Denver D’Rozario and Jerome D. Williams, ‘Retail redlining: definition, theory,
typology, and measurement’, Journal of Macromarketing (December 2005), p. 175; Jeremy Warner,
‘Tragedy of Post Office closures’, The Independent (18 May 2007).
14. See Brian Grow and Pallavi Gogoi, ‘A new way to squeeze the weak?’, Business Week (28 January 2002),
p. 92; Marc Lifsher, ‘Allstate settles over use of credit scores’, Los Angeles Times (2 March 2004), p. C1;
Judith Burns, ‘Study finds links in credit scores, insurance claims’, Wall Street Journal (28 February
2005), p. D3; Erik Eckholm, ‘Black and Hispanic home buyers pay higher interest on mortgages, study
finds’, New York Times (1 June 2006), p. A22.
15. Jane Croft, ‘Banks target poor as loan sharks face crackdown’, Financial Times (25 November 2004);
‘Tesco plans to spend PLN600mn on new store openings in Poland in 2007’, Business Wire (18 May
2007); ‘Tesco PLC, one of the most ubiquitous retail names in Britain, said Wednesday it is to open
up to 25 “Tesco Express” convenience stores in the Tokyo area this year’, Kyodo News Service (18 April
2007).
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16. Information from ‘Shop ’til they drop?’, Christian Science Monitor (1 December 2003), p. 8; Gregg
Easterbrook, ‘The real truth about MONEY’, Time (17 January 2005), pp. 32–5; Bradley Johnson, ‘Day in
the life: How consumers divvy up all the time they have’, Advertising Age (2 May 2005); Rich Miller, ‘Too
much money’, Business Week (11 July 2005), pp. 59–66; ‘Bankers encourage “consumer generation” to
save’, Texas Banking (March 2006), pp. 25–6; Ralph Atkins and Andrew Bounds, ‘EU needs careful
nurturing to flourish’, Financial Times (4 June 2007), p. 4; ‘The future of Europe’, Financial Times Special
Report (4 June 2007).
17. Paul Metzner, Crescendo of the Virtuoso: Spectacle, skill, and self-promotion in Paris during the age of revolution (Berkeley: University of California Press, 1998); Bronislaw Malinowski, Argonauts of the Western
Pacific (London: Routledge, 1922).
18. See Michael Cabanatuan, ‘Toll lanes could help drivers buy time’, San Francisco Chronicle (28 December
2004), accessed at www.sfgate.com; ‘London mayor increases traffic toll, angers drivers, retailers’
(3 July 2005), accessed at www.bloomberg.com; Dan Sturges, Gregg Moscoe and Cliff Henke,
‘Innovations at work: Transit and the changing urban landscapes’, Mass Transit (July/August 2006),
pp. 34–8; for London’s latest ploys, see http://www.cclondon.com/.
19. ‘Marketing under fire’, Marketing Management (July/August 2004), p. 5. Also see ‘Media: The public
wants a permanent break from ad bombardment’, Marketing Week (1 December 2005), p. 27.
20. Gail Kemp, ‘Commercial break: Should kids’ TV ads be banned?’, Marketing Business (September 1999),
pp. 16–18; John Clare, ‘Marketing’s “material girls” aged only three’, Daily Telegraph (23 November
1999), p. 9; Martin Lindstrom and Patricia B. Seybold, Brandchild (Kogan Page, 2003); see also Jonathan
Hall, ‘Children and the money machine’, Financial Times FT Creative Business (18 March 2003), p. 6.
21. Paul Betts, ‘Germany cannot afford EADS dogfight with France’, Financial Times (17 May 2007); Demetri
Sevastopulo, Stephanie Kirchgaessner and James Boxell, ‘US scrutiny on BAE increases over halting of
Saudi probe’, Financial Times (8 May 2007); Michael Peel, Jimmy Burns and James Boxell, ‘Swiss look at
BAE’s Saudi sales’, Financial Times (15 May 2007); ‘US scrutiny on BAE increases over halting of Saudi
probe’, AFX Europe (Focus) (8 May 2007); Michael Peel, ‘UK role in arms trade puts PM’s reputation at
stake’, Financial Times (31 May 2007), p. 2.
22. Greg Winter, ‘Hershey is put on the auction block’, New York Times (26 July 2002), p. 5; Adam Jones,
‘Danone to place emphasis on acquisitions’, FT.com (2 August 2006); ‘France’s Danone to buy 49 percent
of Denmark’s Aqua d’Or for undisclosed sum’, AP Worldstream (19 September 2006); Haig Simonian,
‘Nestlé buys Gerber for $5.5bn’, FT.com (11 April 2007).
23. Oliver Wihofszki, ‘Daimler wird Chrysler gunstig los’, Financial Times Deutschland (15 May 2007).
24. R.A.F. Casert, ‘Europe threatens new Microsoft fines’, AP Online (1 March 2007).
25. For more discussion, see Jeremiah McWilliams, ‘Big-box retailer takes issue with small documentary’,
Knight Ridder Tribune Business News (15 November 2005), p. 1; Nicole Kauffman, ‘Movie paints a dark
picture of Wal-Mart’s impact on communities’, Knight Ridder Tribune Business News (19 January 2006),
p. 1; John Reid Blackwell, ‘Documentarian defends Wal-Mart’, Knight Ridder Tribune Business News (12
May 2006), p. 1; ‘The global merger boom: The beat goes on’, The Economist (10 May 2007).
26. For more details, see Paul N. Bloom and Stephen A. Greyser, ‘The maturing of consumerism’, Harvard
Business Review (November–December 1981), pp. 130–9; Douglas A. Harbrecht, ‘The second coming
of Ralph Nader’, Business Week (6 March 1989), p. 28; George S. Day and David A. Aaker, ‘A guide to
consumerism’, Marketing Management (Spring 1997), pp. 44–8; Benet Middleton, ‘Consumerism: a
pragmatic ideology’, Consumer Policy Review (November/December 1998), pp. 213–7; Colin Brown,
‘Consumer activism in Europe’, Consumer Policy Review, 8, 6 (1998), pp. 209–12.
27. ‘Slavery: Breaking the chains’, The Economist (22 February 2007); Jonathan Birchall, ‘Nike to strengthen
effort to combat worker abuse’, Financial Times (31 May 2007), p. 9.
28. Sylvie Laforet and John Saunders, ‘Managing brand portfolios: How strategies have changed’, Journal of
Advertising Research, 45, 3 (September 2005), pp. 314–27.
29. Peter M. Senge, Goran Carstedt and Patrick L. Porter, ‘Innovating our way to the next industrial revolution’, MIT Sloan Management Review (Winter 2001), pp. 24–38; information from ‘BP Launches World’s
Greenest Service Station’, BP press release, 25 April 2002.
30. See ‘Sustainability Key to UPS Environmental Initiatives’, UPS press release, accessed at www.pressroom.
ups.com, July 2006; http://www.ricoh.co.uk/environment/index.cfm, May 2007; John Reed, ‘Diesel could
outpace hybrids in US’, Financial Times (27 May 2007); speech by Sir Terry Leahy given to invited stakeholders at a joint ‘Forum for the Future’ and Tesco event in London on 18 January 2007.
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31. Information from ‘Xerox Equipment Remanufacture and Parts Reuse’, accessed at www.xerox.com,
August 2006; speech by Sir Terry Leahy given to invited stakeholders at a joint ‘Forum for the Future’
and Tesco event in London on 18 January 2007.
32. Adapted from information found in Joseph Tarnowski, ‘Green monster’, Progressive Grocer (1 April
2006), pp. 20–6.
33. Adapted from ‘The top 3 in 2005’, Global 100, accessed at http://www.global100.org, July 2005. See
also ‘Alcoa named one of the most sustainable corporations in the world for second straight year’,
27 January 2006, accessed at www.alcoa.com. For further information on Alcoa’s sustainability
programme, see Alcoa’s Sustainability Report at www.alcoa.com.
34. ‘Cleaning up the act: Charging for household waste is a good idea’, The Economist (31 August 2007).
35. Robert K. Merton, ‘The unanticipated consequences of purposive social action’, American Sociological
Review, 1, 6 (December 1936), pp. 894–904; Edward Tenner, Why Things Bite Back: Technology and the
revenge of unintended consequences (Vantage Books, 1997); Jared Diamond, Collapse: How societies
choose to fail or survive (London: Penguin, 2005); Doug Cameron, ‘Cargill chief in warning over biofuels
boom’, Financial Times (30 May 2007); Robert Mathews, ‘Unforeseen consequences’, Financial Times
(24 May 2007), p. 16.
36. Robert Mathews, ‘Unforeseen consequences’, Financial Times (24 May 2007), p. 16; ‘Viagra and jet lag:
Mile-high hamsters’, The Economist (24 May 2007).
37. Carlos Grande, ‘Ethical consumption makes mark on branding’, Financial Times (20 February 2007).
38. Information and quotes from Andy Milligan, ‘Samsung points the way for Asian firms in global brand
race’, Media (8 August 2003), p. 8; Gerry Khermouch, ‘The best global brands’, Business Week (5 August
2002), p. 92; Leslie P. Norton, ‘Value brand’, Barron’s (22 September 2003), p. 19; ‘Cult brands’,
BusinessWeek Online (2 August 2004) accessed at www.businessweek.com; Bill Breen, ‘The Seoul of
design’, Fast Company (December 2005), pp. 91–8; and Samsung Annual Reports and other information
accessed at www.samsung.com, September 2006.
39. Information from Mike Hoffman, ‘Ben Cohen: Ben & Jerry’s Homemade, established in 1978’, Inc.
(30 April 2001), p. 68; and Ben & Jerry’s website at www.benjerrys.com, September 2006.
40. Quotes and other information from Thea Singer, ‘Can business still save the world?’, Inc. (30 April 2001),
pp. 58–71; and www.honesttea.com, September 2006. Also see Elizabeth Fuhrman, ‘Honest Tea Inc.:
Social and environmental sinceri-tea’, Beverage Industry (April 2005), p. 44.
41. Joseph Webber, ‘3M’s big cleanup’, Business Week (5 June 2000), pp. 96–8. Also see Kara Sissell, ‘3M
defends timing of Scotchgard phaseout’, Chemical Week (11 April 2001), p. 33; Peck Hwee Sim, ‘Ausimont
targets former Scotchgard markets’, Chemical Week (7 August 2002), p. 32; Jennifer Lee, ‘E.P.A. orders
companies to examine effect of chemicals’, New York Times (15 April 2003), p. F2; and Kara Sissell,
‘Swedish officials propose global ban on PFOS’, Chemical Week (22 June 2005), p. 35.
42. See ‘Transparency International Bribe Payers Index’ and ‘Transparency International Corruption
Perception Index’, accessed at www.transparency.org, August 2006; Minxin Pei, ‘The dark side of China’s
rise’, Foreign Policy (March/April 2006), pp. 32–40; ‘Everybody’s doing it’, Middle East (April 2006),
pp. 20–1; and Transparency International’s web page at www.transparency.org.
43. See Social Accountability International’s web page at www.sa-intl.org.
44. See Samuel A. DiPiazza, ‘Ethics in action’, Executive Excellence (January 2002), pp. 15–16, ‘It’s all down
to personal values’, accessed online at www.pwcglobal.com, August 2003, and ‘Code of conduct: The way
we do business’, accessed at www.pwcglobal.com/gx/eng/ins-sol/spec-int/ethics/index.html, June 2006.
45. For details see http://www.fordpinto.com/blowup.htm.
46. Richard Kluger, Ashes to Ashes: America’s hundred-year cigarette war, the public health and the unabashed
triumph of Philip Morris (Vintage Books, 1997); Stanton A. Glantz, John Slade, Lisa A. Bero, Peter
Hanauer and Deborah E. Barnes (eds), The Cigarette Papers (Berkeley: University of California Press,
1998); Peter Pringle, Cornered: Tobacco companies at the bar of justice (Henry Holt, 1998); Allan Brandt,
Cigarette Century: The rise, fall and deadly persistence of the product that defined America (Basic Books,
2007); also see the star-studded Walt Disney film The Insider (2000) – it is not animation.
47. Andrew Ward, ‘McDonald’s selects oil to avoid trans fat risk’, Financial Times (30 January 2007); Andrew
Clark, ‘McDonald’s health drive delivers fatter profits’, The Guardian (21 April 2007).
48. Tessa R. Salazar, ‘Is the bull bar just a lot of bull?’, Philippine Daily Inquirer (30 October 2003); ‘America’s
favourite mode of transport is under attack’, The Economist (16 January 2003).
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49. Lloyd observed that when pastureland is in commons, so available to all, cattle-owners have a shortterm interest in increasing the size of their herds. Left unchecked, the size of the herds on the commons
will soon exceed their capacity and so be doomed by overgrazing. Garrett Hardin popularised and
extended the term in his essay The Tragedy of the Commons (Science, 1968). For an example, see Tricia
Holly Davis, ‘Overfishing causes havoc in the global food chain’, The Times Focus Report, World
Environment Day (5 June 2007), p. 4; and ‘Still waters: The global fish crisis’, National Geographic (April
2007), pp. 32–99.
50. ‘Branson to launch eco-friendly train’, Sky News (7 June 2007); ‘Cleaning up’, Special report on business
and climate change, The Economist (2 June 2007), pp. 3–4; ‘Fairfield v the valley’, Special report on business and climate change, The Economist (2 June 2007), pp. 14–18; ‘Sunlit uplands’, Special report on
business and climate change, The Economist (2 June 2007), pp. 20–4.
51. ‘The drive for low emissions’, Special report on business and climate change, The Economist (2 June
2007), pp. 32–4.
52. Oliver Tickell, ‘Rich countries set to make poor pay’, The Times Focus Report, World Environment Day
(5 June 2007), p. 11; ‘The final cut’, Special report on business and climate change, The Economist
(2 June 2007), pp. 34–6; Joshi Venugopal, ‘Drug imports: The free-rider paradox’, Express Pharma Pulse,
11, 9 (2005), p. 8.
53. ‘Irrational incandescence’, Special report on business and climate change, The Economist (2 June 2007),
p. 12; ‘The drive for low emissions’, Special report on business and climate change, The Economist
(2 June 2007), pp. 32–4; www.greencarcongress.com/2006/05/fuel_consumptio.html.
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Company case 2
Nestlé: singled out again and again
During the first few months, the mother’s milk will
always be the most natural nutriment, and every
mother able to do so, should herself suckle her
children.
Henri Nestlé, 1869
Nothing is a substitute for or equivalent or superior to
breastmilk.
Nestlé warning, 2007
The corporate affairs department at Nestlé UK’s headquarters were bracing themselves for another burst of
adverse publicity. At the forthcoming General Synod
of the Church of England a motion would call for a
continued ban on Nescafé by the Church. They also
wanted the Church Commissioners to disinvest their
£1.1m (€1.6m) in Nestlé. The Church’s much publicised
boycott of Nescafé first occurred, amid much ridicule,
in 1991, as a protest against the use of breast milk
substitutes in Third World countries. In the aftermath of
the 1991 vote, Nescafé claimed that its sales increased,
although many churchgoers said they stopped using
the brand-leading coffee. The new protest would be
one of many the company had faced from Baby Food
Action (BFA) protesters over decades although, according
to Nestlé, the protesters’ complaints had no foundation.
Nestlé SA, whose headquarters are in Vevey,
Switzerland, is the world’s largest food company, with
annual sales of CHF 98.5bn (€60bn) and with a net profit
of CHF 9bn (€5.4bn). It employs around 260,000 people in
factories or operations in almost every country in the
world. Henri Nestlé invented manufactured baby food ‘to
save a child’s life’ and the company have been suppliers
ever since. Then, in the late 1970s and early 1980s,
Nestlé came under heavy fire from activists who charged
the company with encouraging Third World mothers to
give up breast feeding and use a company-prepared
formula. In 1974 the British charity War on Want
published a pamphlet, The Baby Killer, that criticised
Unigate and Nestlé’s ill-advised marketing efforts in
Africa. While War on Want criticised the entire infant
formula industry, the German-based Third World Action
Group issued a ‘translation’ of the original pamphlet
retitled Nestlé Kills Babies, which singled out the
company for ‘unethical and immoral behaviour’. The
pamphlets generated much publicity. Enraged at
the protest, Nestlé sued the activists for defamation.
The two-year case kept media attention on the issue.
‘We won the legal case, but it was a public-relations
disaster’, commented a Nestlé executive.
In 1977, two American social-interest groups, the
Interfaith Center on Corporate Responsibility and the
Infant Formula Action Coalition (INFACT), spearheaded
a worldwide boycott against Nestlé. The campaign
continued despite the fact that many organisations
rejected the boycott. The US United Methodist Church
concluded that the activists were guilty of ‘substantial
and sometimes gross misrepresentation’, of ‘inflammatory rhetoric’, and of using ‘wildly exaggerated
figures’. The boycott was called off in 1984
when the activists accepted that the
company was complying with an infant
‘Every day 4,000
formula marketing code adopted by the
babies die from
World Health Organization (WHO). Since
unsafe bottle
then, church, university, local government
feeding’, explain
and other action groups periodically
rediscover the controversy and create
BMA.
publicity by calling for a boycott.
The main accusation now is that
Nestlé’s use of promotions persuaded hundreds of thousands of poverty-stricken, poorly educated mothers that
formula feeding was better for their children. ‘Every day
4,000 babies die from unsafe bottle feeding’, explain
BMA. They continue, ‘Donations of infant formula can do
more harm than good.’ Their concern is the donation of
free or low-cost supplies of infant formula to maternity
wards and hospitals in developing countries. Formula
feeding is usually an unwise practice in such countries
because of poor living conditions and habits; people
cannot or do not clean bottles properly and often mix
formula with impure water. Income level does not permit
many families to buy sufficient quantities of formula. The
protesters hit out at industry practices generally but
keep Nestlé as their prime target:
●
Promotional baby booklets ignoring or de-emphasising
breast feeding.
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●
●
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Misleading advertising encouraging mothers to bottlefeed their babies and showing breast feeding to be oldfashioned and inconvenient.
Gifts and samples inducing mothers to bottle-feed their
infants.
Posters and pamphlets in hospitals.
Endorsements of bottle-feeding by milk nurses.
Formula so expensive that poor customers dilute to
non-nutritious levels.
A WHO code eliminates all promotional efforts,
requiring companies to serve primarily as passive ‘order
takers’. It prohibits advertising, samples and direct
contact with consumers. Contacts with professionals
(such as doctors) occur only if professionals seek such
contact. Manufacturers can package products with some
form of visual corporate identity, but they cannot picture
babies. The WHO code effectively allows almost no
marketing. However, the code contains only
recommended guidelines. They become mandatory only if
individual governments adopt national codes through
their own regulatory mechanisms.
WHO allows the donation of free or low-cost supplies
of infant formulas for infants who cannot be breast-fed.
However, the International Association of Infant Food
Manufacturers (IFM) is working with WHO and UNICEF to
secure country-by-country agreements with countries to
end free and low-cost supplies.
Nestlé itself has a policy on low-cost supplies in
developing countries, as follows:
●
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●
Where there is government agreement, Nestlé will
strictly apply the terms of that agreement.
Where there is no agreement Nestlé, in cooperation
with others, will be active in trying to secure early
government action.
Where other companies break an agreement, Nestlé
will work with IFM and governments to stop the
breach.
Nestlé will take disciplinary measures against any
Nestlé personnel or distributors who deliberately
violate Nestlé policy.
Given the repeated public relations problems that
Nestlé faces, why does it not take unilateral action in
ending free supplies? Since the Third World infant
formula market is so small compared with Nestlé’s
worldwide interests, why bother with it?
Part of the answer is in Henri Nestlé’s desire ‘to save
a child’s life’. The European Commission’s directive on
baby food concludes that infant formula is ‘the only
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processed foodstuff that wholly satisfies the nutritional
requirements of infants’ first four to six months of life.’
In addition, a recent study by the American Dietetic
Association concluded that ‘on average, babies of 6 to
8 months who are fed with human milk receive less than
50% of the Recommended Daily Allowance (RDA) for iron
and zinc, and less than 50% of the Adequate Intake (AI)
for manganese, fluoride, vitamin D, vitamin B6, niacin,
vitamin E, magnesium, phosphorus, biotin and thiamine.’
Another consideration is that the campaigns by North
European activists have little impact on Nestlé sales,
especially among poor people – a market that both
Nestlé and Unilever are developing.
Few mothers in countries with very high infant
mortality rates use anything other than breast milk.
However, Kenya is probably typical of what happens
when mothers do supplement breast milk with something else:
●
●
●
●
●
●
33 per cent use uji, a local food made from maize;
33 per cent use cow’s milk;
28 per cent use water;
14 per cent use glucose;
11 per cent use milk powder, of which some is infant
formula;
3 per cent use tea.
A study in the Ivory Coast shows the sort of problems
that arise when Nestlé withdraws unilaterally. Other
companies replaced the supplies to the affluent private
nurseries, but supplies for mothers in need collapsed.
As a result the main hospital was not able to ‘afford to
buy enough to feed abandoned babies or those whose
mothers are ill’.
Questions
1. Was and is Nestlé’s and the other IFM members’ marketing
of infant formula ‘unethical and immoral’?
2. Is it the case that ethical standards should be the responsibility of organisations such as WHO and UNESCO, and
that the sole responsibility of firms is to work within the
bounds set?
3. Is Nestlé just unlucky or did its actions precipitate its being
singled out by activists? Is the activists’ focus on Nestlé
unjust and itself dangerous? What accounts for Nestlé’s
continuing in the infant formula market despite the
protests?
4. Did Nestlé benefit from confronting the activists directly in
court and winning? Should firms ever confront activists
directly? What other forms of action are available to the
Chapter 2 Sustainable marketing: marketing ethics and social responsibility
company? Should firms withdraw from legitimate markets
Commission, Commission Directive on Infant Formula and Follow-
because of the justified or unjustified actions of pressure
on Formula, 91/321/EEC; UNICEF, The State of the World’s Children
groups?
5. The WHO code is a recommendation to government. Is it
Nestlé’s responsibility to operate according to the national
legislation of any given country, or to follow WHO’s
recommendations to that country? Do international bodies
setting international standards, such as WHO and UNICEF,
(1992); RBL, Survey of Baby Feeding in Kenya (1992); Nestlé, Nestlé
and Baby Milk (1994); Andrew Brown, ‘Synod votes to end Nestlé
boycott after passionate debate’, The Times (12 July 1994); World
Health Assembly Resolution 54.2 ‘Infant and young child nutrition’
(2001); Jonathan Wheatley and Jenny Wiggins, ‘The Americas: Little
by little Nestlé aims to woo Brazil’s poor’, Financial Times
(20 February 2007); Joanna Moorhead, ‘Milking it: It was in 1977
have a moral responsibility to make those standards clearly
that campaigners first called for a boycott of Nestlé because of its
understood by all parties and to demand action by national
aggressive marketing of formula milk in the developing world. Thirty
governments to enact them?
years on, have Nestlé and the other baby-milk firms cleaned up
6. How should Nestlé respond to the threats from the General
their act?’, The Guardian (15 May 2007); Hilary Parsons, ‘Response:
Synod? Since Nestlé claimed sales increased after the
We’re not trying to undermine the baby-milk code: Nestlé is
Nescafé boycott in 1991, should it just ignore the problem?
committed to the health of mothers and infants in the developing
world’, The Guardian (22 May 2007); Nestle.com (June 2007),
SOURCES: John Sparks, ‘The Nestlé controversy – anatomy of a
competing websites babymilk.nestle.com (June 2007) and
boycott’, Public Policy Education Fund, Inc. (June 1981); European
babymilkaction.org (June 2007).
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