CHAPTER
FOUR
ETHICS AND SOCIAL
RESPONSIBILITY IN MARKETING
Irwin/McGraw-Hill
4-1
© 2000 McGraw-Hill Ryerson Limited
AFTER READING CHAPTER 4
YOU SHOULD BE ABLE TO:
• Appreciate the nature and significance of ethics in
marketing.
• Understand the differences between legal and ethical
behaviour in marketing.
• Identify factors that influence ethical and unethical
marketing decisions.
• Distinguish among the different concepts of ethics
and social responsibility.
• Recognize the importance of ethical and socially
responsible consumer behaviour.
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© 2000 McGraw-Hill Ryerson Limited
Molson Breweries Responsible Drinking Campaign and Protection
of the Environment
• Molson’s acts on an ethical obligation to its
customers with its “Take Care” campaign for
responsible drinking
• Molson is a strong advocate and sponsor of
numerous efforts to protect the environment; 98% of
its bottles and 75% of its cans are returned for reuse
or recycling.
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© 2000 McGraw-Hill Ryerson Limited
Definition of Ethics
Ethics
Ethics are
are .. .. .. ..
the
the moral
moral principals
principals and
and values
values that
that
govern
govern the
the actions
actions and
and decisions
decisions of
of
an
an individual
individual or
or group.
group. They
They serve
serve
as
as guidelines
guidelines on
on how
how to
to act
act rightly
rightly
and
and justly
justly when
when faced
faced with
with moral
moral
dilemmas
dilemmas..
4-4
© 2000 McGraw-Hill Ryerson Limited
PP4-1 Classifying marketing decisions according to ethical and
legal relationships
Ethical
Ethical
but
but
illegal
illegal
Ethical
Ethical
and
and
legal
legal
Unethical
Unethical
and
andillegal
illegal
Unethical
Unethical
but
but
legal
legal
Ethicality
Ethical
Unethical
Illegal
Legal
Legality
4-5
© 2000 McGraw-Hill Ryerson Limited
Concept Check
1. What are ethics?
2. What are laws?
4-6
© 2000 McGraw-Hill Ryerson Limited
Understanding Ethical Marketing Behaviour
Consider the use of another’s ideas:
• In Canada copyrights, trademarks and patents are
considered intellectual property, and unauthorized
use is illegal and unethical.
• Outside Canada, sometimes due to the culture of a
country, unauthorized use of copyrights, patents,
and trademarks is not considered unethical or illegal.
Such is the case in countries like China, Mexico, and
Korea.
4-7
© 2000 McGraw-Hill Ryerson Limited
PP4-2 A Framework for Understanding Ethical Behaviour
Societal
Societalculture
cultureand
and
norms
norms
Business
Businessculture
cultureand
and
industry
industrypractices
practices
Personal
Personalmoral
moral
philosophy
philosophyand
and
ethical
ethicalbehaviour
behaviour
Corporate
Corporateculture
culture
and
andexpectations
expectations
4-8
© 2000 McGraw-Hill Ryerson Limited
MNN International comparison of the percent of U.S.
software package sales that are illegal copies
Percentage
100
80
60
40
20
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Benelux
Germany
Benelux
Japan
Italy
Korea
Switzerland
Iberia
Taiwan
China
0
© 2000 McGraw-Hill Ryerson Limited
Two Kinds of Unethical Behaviour
1.
Industrial Espionage is the clandestine collection
of trade secrets or proprietary information about
a company’s competitors.
Industrial espionage is most prevalent in hightechnology industries, such as electronics,
specialty chemicals, industrial equipment,
aerospace, and pharmaceuticals, where technical
know-how and trade secrets separate industry
leaders from followers.
4-10
© 2000 McGraw-Hill Ryerson Limited
Two Kinds of Unethical Behaviour
2.
The giving and receiving of bribes and kickbacks
is the second form of unethical competitive
behaviour.
Bribes and kickbacks are often disguised as gifts,
consultant fees and favours. They are more
common in business-to-business and government
marketing than in consumer marketing.
4-11
© 2000 McGraw-Hill Ryerson Limited
Code of Ethics
A
A code
code of
of ethics
ethics is
is .. .. .. ..
the
the formal
formal statement
statement of
of ethical
ethical
principals
principals and
and rules
rules of
of conduct.
conduct.
4-12
© 2000 McGraw-Hill Ryerson Limited
PP4-3 American Marketing Association Code of Ethics
Members of the American Marketing Association have
joined together in subscribing to its code of ethics
embracing the following topics:
1.
Responsibilities of the Marketer
2.
Rights and Duties of Parties in the Marketing
Exchange Process
3.
Organizational Relationships
4-13
© 2000 McGraw-Hill Ryerson Limited
Personal Moral Philosophies
MORAL
MORAL IDEALISM
IDEALISM
Considers
Considers certain
certain individual
individual rights
rights or
or duties
duties universal
universal
regardless
regardless of
ofthe
theoutcome
outcome
UTILITARIANISM
UTILITARIANISM
Considers
Considers the
the“greatest
“greatestgood
good for
forthe
the greatest
greatest number”
number”
by
by assessing
assessing the
thecosts
costs and
and benefits
benefitsof
of the
theconsequences
consequences
4-14
© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
What is caveat emptor?
2.
What is a code of ethics?
3.
What is meant by moral idealism?
4-15
© 2000 McGraw-Hill Ryerson Limited
PP4-4 Three Concepts of Social Responsibility
Societal
Societal
responsibility
responsibility
Customers
Owners/
Stockholders
Ecological
environment
Profit responsibility
Employees
General
public
Stakeholder
responsibility
Suppliers/Distributors
Public
Publicinterest
interestgroups
groups
4-16
© 2000 McGraw-Hill Ryerson Limited
Elements of a Social Audit
Recognition
Of
Ofsocial
socialexpectations
expectationsand
andrationale
rationalefor
for
engaging
engagingin
insocial
socialresponsibility
responsibilityendeavors
endeavors
Identification
Of
Ofcauses
causesor
orprograms
programsconsistent
consistentwith
withthe
the
company’s
company’smission
mission
Of
Ofobjectives
objectivesand
andpriorities
prioritiesfor
forprograms
programs
Determination and
andactivities
activitiesto
tobe
beundertaken
undertaken
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Specification
Of
Ofthe
thetype
typeand
andamount
amountof
ofresources
resources
necessary
necessaryto
toachieve
achieveobjectives
objectives
Evaluation
Evaluation
Of
Ofprograms
programsand
andactivities
activitiesand
andassessment
assessment
of
offuture
futureinvolvement
involvement
© 2000 McGraw-Hill Ryerson Limited
Sustainable Development
Sustainable
Sustainable Development...
Development...
involves
involves conducting
conducting business
business in
in aa way
way that
that
protects
protects the
the natural
natural environment
environment while
while also
also
making
making economic
economic progress.
progress.
4-18
© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
2.
3.
4-19
What is meant by social
responsibility?
Marketing efforts to produce,
promote, and reclaim
environmentally sensitive products
are called ________________ .
What is a social audit?
© 2000 McGraw-Hill Ryerson Limited