CHAPTER 16
Marketing Ethics
and Social
Responsibility
Roadmap: Previewing the Concepts
 Identify the major social criticisms of



marketing.
Define consumerism and environmentalism
and explain how they affect marketing
strategies.
Describe the principles of socially
responsible marketing.
Explain the role of ethics in marketing.
Copyright 2007, Prentice-Hall Inc.
16-2
NIKE – Socially Responsible?
Background
 Nike has been heavily


criticized for NOT being
socially responsible.
Accusation: use of
sweatshops and child
labor overseas, and
horrible working
conditions.
Accusation: targeting
low-income families by
making shoes an
expensive status symbol
for poor urban street kids.
Copyright 2007, Prentice-Hall Inc.
Behavior
 Code of conduct and six-


point plan ensures more
socially responsible labor
practices & commissioned
an independent study of
Nike factories abroad.
Created a huge social
responsibility department
and publishes CRS report.
Donates more than $37
million to sports programs
and 3 percent of earnings
to charity.
16-3
Criticisms of Marketing
 High prices
 Deceptive practices
 High-pressure selling
 Shoddy, harmful, or unsafe products
 Planned obsolescence
 Poor service to disadvantaged
consumers
Copyright 2007, Prentice-Hall Inc.
16-4
High Prices
 Caused by:
– High costs of
distribution
– High advertising
and promotion
costs
Why such a difference between
– Excessive
generic and branded product
markups
prices? Critics contend it is
due to the cost of advertising.
Copyright 2007, Prentice-Hall Inc.
16-5
Let’s Talk!
Many consumers
feel that gasoline
prices are too
high because of
excessively high
markups. Do you
feel this criticism
is justified?
Explain.
Copyright 2007, Prentice-Hall Inc.
16-6
Deceptive Practices
 Deceptive Pricing:
– Falsely advertising “factory” or “wholesale”
prices or large reductions from phony high retail
list prices.
 Deceptive Promotion:
– Overstating a product’s features or performance,
running rigged contests.
 Deceptive Packaging:
– Exaggerating package contents through subtle
design, using misleading labeling, etc.
Copyright 2007, Prentice-Hall Inc.
16-7
High-Pressure Selling
 Salespeople are trained to deliver
smooth, canned talks to entice
purchase.
– High-pressure selling persuades people to
buy goods they had no intent of buying.
– High-pressure selling can occur because
of prizes going to top sellers.
– High-pressure selling is not good for longterm relationships.
Copyright 2007, Prentice-Hall Inc.
16-8
Shoddy or Unsafe Products
 Includes:
– Products that are not made well or
services that are not performed well.
– Products that deliver little benefit or that
may even be harmful.
– Unsafe products due to manufacturer
indifference, increased production
complexity, poorly trained labor, and poor
quality control.
Copyright 2007, Prentice-Hall Inc.
16-9
Marketing in Action
McDonald’s and Obesity
A 2002 lawsuit unsuccessfully sued McDonald’s on
behalf of obese children, claiming McD’s marketed
food that is high in “fat, salt, sugar, and cholesterol.”
Copyright 2007, Prentice-Hall Inc.
16-10
Let’s Talk!
Even otherwise “safe”
products can be used (or
consumed) in an unintended
fashion which is inherently
unsafe.
What can firms do to protect
themselves from misuse of the
product and the annoying (and
typically expensive) lawsuits
which often follow?
Copyright 2007, Prentice-Hall Inc.
16-11
Planned Obsolescence
 Refers to:
– Products needing replacement before they
should because they are obsolete.
– Producers who change consumer
concepts of acceptable styles.
– Intentionally holding back attractive
functional features, then introducing them
later to make old model obsolete.
Copyright 2007, Prentice-Hall Inc.
16-12
Poor Service to
Disadvantaged Consumers
 Disadvantaged consumers are served
poorly when:
– Poor are forced to shop in smaller stores
where they pay more for inferior goods.
– “Redlining” by national chain stores
occurs in disadvantaged neighborhoods.
 Redlining charges have also been
leveled against insurers, banking,
health care providers and others.
– Poor are targeted for “rapid refunds.”
Copyright 2007, Prentice-Hall Inc.
16-13
Marketing’s Impact on
Society as a Whole
 False wants and too much
materialism.
 Producing too few social
goods.
 Cultural pollution.
 Too much political
power.
Copyright 2007, Prentice-Hall Inc.
16-14
Marketing in Action
Marketing and Materialism
Does the Rolex Web site promote materialism?
Copyright 2007, Prentice-Hall Inc.
16-15
Marketing in Action
Cultural Pollution
Critics contend that the constant exposure
to advertisements assaults our senses.
Copyright 2007, Prentice-Hall Inc.
16-16
Marketing’s Impact on Other
Businesses
 Critics charge that a firm’s marketing
practices can harm other companies
and reduce competition.
– Acquisitions of competitors.
– Marketing practices that create barriers to
entry.
– Unfair competitive marketing practices.
Copyright 2007, Prentice-Hall Inc.
16-17
Marketing in Action
Unfair Business Practices?
Microsoft has been accused of predatory
“bundling” practices -- adding features to
Windows system software
that is installed on 90% of
the desktop computers.
This makes it easy to
get consumers to
Use Microsoft’s
other products,
which stifles competition and innovation.
Copyright 2007, Prentice-Hall Inc.
16-18
Key Citizen and Public Actions
 Attempts to regulate marketing include
citizen and public actions.
 Citizen Actions:
– Consumerism
– Environmentalism
 Public Actions:
– Legislative proposals
Copyright 2007, Prentice-Hall Inc.
16-19
Consumerism
Consumerism is an organized
movement of citizens and
government agencies to improve
the rights and power of buyers in
relation to sellers.
Visit the Adventures in Ethical Consumerism
Web site at http://www.ethicaladventures.org/.
Copyright 2007, Prentice-Hall Inc.
16-20
Sellers’ Rights
 The right to . . .
1. 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.
2. charge any price for the product, provided no
discrimination exists among similar kinds of
buyers.
3. spend any amount to promote the product,
provided it is not defined as unfair competition.
4. use any product message, provided it is not
misleading or dishonest in content or execution.
5. use any buying incentive schemes, provided they
are not unfair or misleading.
Copyright 2007, Prentice-Hall Inc.
16-21
Buyers’ Rights
 The right to:
1.
2.
3.
4.
not buy a product that is offered for sale.
expect the product to be safe.
expect the product to perform as claimed.
be well informed about important aspects of the
product.
5. be protected against questionable products and
marketing practices.
6. influence products and marketing practices in
ways that will improve “quality of life.”
Copyright 2007, Prentice-Hall Inc.
16-22
Environmentalism
An organized movement of
concerned citizens and government
agencies to protect and improve
people’s living environment.
Environmentalists are NOT against
marketers, they simply want marketers to
exercise more care for the environment.
Copyright 2007, Prentice-Hall Inc.
16-23
Environmental Sustainability
 A management approach that involves
developing strategies that both sustain
the environment and produce profits
for the company.
 Levels of environmental sustainability:
– Pollution prevention
– Product stewardship
– New environmental technologies
– Sustainability vision
Copyright 2007, Prentice-Hall Inc.
16-24
Marketing in Action
Environmental Sustainability
Dell understands
that sustainability
means handling
their products at the
end of their useful
lives. The Dell
recycling program
helps customers
recycle or donate
old computer
equipment.
Copyright 2007, Prentice-Hall Inc.
16-25
Figure 16-1
The Environmental Sustainability Grid
Copyright 2007, Prentice-Hall Inc.
16-26
Figure 16-2
Marketing Areas That May be Called
into Question Under the Law
Copyright 2007, Prentice-Hall Inc.
16-27
Enlightened Marketing
 A marketing philosophy holding that a
company’s marketing should support
the best long-run performance of the
marketing system.
– Customer-oriented marketing
– Innovative marketing
– Customer-value marketing
– Sense-of-mission marketing
– Societal marketing
Copyright 2007, Prentice-Hall Inc.
16-28
Enlightened Marketing
 Consumer-Oriented Marketing:
– The philosophy of enlightened marketing
that holds that the company should view
and organize its marketing activities from
the consumer’s point of view.
 Innovative Marketing:
– A principle of enlightened marketing that
requires that a company seek real product
and marketing improvements.
Copyright 2007, Prentice-Hall Inc.
16-29
Marketing in Action
Innovative Marketing
In less than a decade,
Samsung has given
its brand a cutting
edge image by
unleashing a torrent
of innovative and
stylish new products
targeted at high-end
users.
Copyright 2007, Prentice-Hall Inc.
16-30
Enlightened Marketing
 Customer-Value Marketing:
– A principle of enlightened marketing that holds
that a company should put most of its resources
into value-building marketing investments.
 Sense-of-Mission Marketing:
– Principle of enlightened
Video Snippet
marketing that holds
Learn more about the
that a company
NFL’s sense-of-mission
should define its
marketing efforts by
mission in broad
watching this clip.
social terms rather
than narrow product terms.
Copyright 2007, Prentice-Hall Inc.
16-31
Enlightened Marketing
 Societal Marketing:
– Principle of enlightened
marketing that holds
that a company makes
marketing decisions by
considering consumers’
wants and interests, the
firm’s requirements, and
society’s long-run
interests.
Copyright 2007, Prentice-Hall Inc.
16-32
Figure 16-3
Societal Classification of Products
Copyright 2007, Prentice-Hall Inc.
16-33
Marketing in Action
Salutary Products
Insurance is one
example of a
salutary product.
Can you think of
some others?
http://www.statefarm.com/
Copyright 2007, Prentice-Hall Inc.
16-34
Let’s Talk!
Based on the societal
classification scheme,
how would you classify
the following products?
Credit cards
Cigarettes
Vitamins
Diapers
Copyright 2007, Prentice-Hall Inc.
16-35
Marketing Ethics
 Corporate Marketing Ethics Policies:
– Broad guidelines that everyone in the
organization must follow.
 These should cover:
–
–
–
–
–
–
Distributor relations
Advertising standards
Customer service
Pricing
Product development
General ethical standards
Copyright 2007, Prentice-Hall Inc.
16-36
Let’s Talk!
The use of sex in advertising is often
criticized. Marketers justify its use
by noting its power to function as an
attentional lure.
What type of advertising
standards would you suggest
to govern the use of sex in
advertising by a firm?
Copyright 2007, Prentice-Hall Inc.
16-37
Marketing in Action
Code of Conduct
PricewaterhouseCoopers
established a thorough
ethics program, which
begins with the
code of conduct.
Click below
to learn more.
Link to code
of conduct
Copyright 2007, Prentice-Hall Inc.
16-38
International Marketing Ethics
 Business standards and practices vary
greatly between countries.
– While bribery and kickbacks are illegal in
the U.S., they are legal, or standard
business practice in other countries.
 Companies should commit to a
standard set of shared standards to be
used worldwide.
Copyright 2007, Prentice-Hall Inc.
16-39
Rest Area: Reviewing the Concepts
 Identify the major social criticisms of



marketing.
Define consumerism and environmentalism
and explain how they affect marketing
strategies.
Describe the principles of socially
responsible marketing.
Explain the role of ethics in marketing.
Copyright 2007, Prentice-Hall Inc.
16-40