Marketing Ethics and
Social Responsibility in
st
1
Group
• Ary Suryo W
• Masruroh
Strategic Planning
The Auto Industry Tries to Go Green

Car manufacturers have gone to great lengths to
promote hybrid cars.

These cars are generally much more expensive to
develop and produce. Do corporations have a social
responsibility to develop environmentally friendly
cars? Why or why not?
The Role of Ethics and Social
Responsibility in Marketing Strategy

Grown in importance recently


Due to firms having problems in this area
Have become necessities due to:
Stakeholder demands
 Changes in Federal law



Improve marketing performance and
profits
Are important to development of
marketing strategy
The Nature of Social Responsibility

The Dimensions of Social Responsibility
 Social
Responsibility
A
broad concept that relates to an organization’s
obligation to maximize its positive impacts on
society while minimizing its negative impacts
 Marketing
citizenship
 The
adoption of a strategic focus for fulfilling
the economic, legal, ethical, and philanthropic
social responsibilities expected by stakeholders
 Stakeholders
who have a “stake” or claim in
some aspect of the company’s products,
operations, markets, industry, and outcomes
 Constituents
The Nature of Social Responsibility (cont’d)

The Dimensions of Social Responsibility

Marketing ethics
 Principles
and standards that define acceptable
marketing conduct as determined by various
stakeholders

Cause-related marketing
 The
practice of linking products to a particular cause
on an ongoing or short-term basis

Strategic philanthropy
 The
synergistic use of organizational core
competencies and resources to address key
stakeholders’ interests and achieve both
organizational and social benefits
Best Corporate Citizens
1
General Mills
11
AT&T
2
Cummins Inc.
12
Fannie Mae
3
Intel
13
Bank of America
4
Procter & Gamble
14
Motorola
5
IBM
15
Herman Miller
6
Hewlett-Packard
16
Expedia
7
Avon Products
17
Autodesk
8
Green Mountain Coffee
Roasters
18
Cisco Systems
9
John Nuveen
19
Wild Oats Markets
10
St. Paul
20
Deluxe
Source: Peter Asmus, with Sandra Waddock and Samuel Graves, “100 Best Corporate Citizens of 2003,” Business Ethics,
www.business-ethics.com/100best.htm (accessed Oct. 24, 2003).
Marketing Strategy in Action

R.J. Reynolds has been accused by critics of using its
“Joe Camel” cartoon character, to target children
for cigarette consumption.

How has society acted to protect children from
advertising such as this? What obligations do
companies have to protect children?
The Pyramid of
Corporate Social Responsibility
Exhibit 3.1
Social Responsibility

Includes:
 Economic
responsibility of making a profit
 Legal
responsibility of obeying laws and
regulations
 Ethical
responsibility to uphold principals and
standards
 Philanthropic
responsibility to increase the firm’s
positive impact on society
Marketing Ethics and Strategy





Requires that organizations and
individuals accept responsibility
Can lead to violations of public trust
Involves complex and detailed
decisions in gray areas
Deals with experiences and decisions
made at work
Comes into play anytime individuals
feel manipulated or cheated
The European Eco-label
Social Responsibility Issues

Green Marketing


The specific development, pricing,
promotion, and distribution of
products that do not harm
the natural environment
Green Marketing Goals
Eliminate the concept of waste
 Reinvent the concept of a product
 Make prices reflect actual and
environmental costs
 Make environmentalism profitable

Social Responsibility Issues (cont’d)

Consumerism

The efforts of independent individuals, groups, and
organizations to protect the rights of consumers
 Lobbying
government officials and agencies
 Letter-writing
 Public
service announcements
 Coverage

campaigns and boycotts
by the news media and the Internet
Consumer “Bill of Rights”
 Right
to safety
 Right
to be informed
 Right
to choose
 Right
to be heard
Social Responsibility Issues (cont’d)

Community Relations
 Expectations
of firms as “good corporate citizens”
 Philanthropic
contributions to civic projects and
institutions
 Educational,
 Employee
health, cultural, and recreational
volunteer participation
 Employment
opportunities and economic development
The Nature of Ethics
Company
Industry
Government
Customers
Interest Groups
Society
Influence
Factors
Ethical Standards
The Nature of Ethics (cont’d)
Legal
Issues
Legal
Issues
Ethical
Issues
Gray
Areas
Ethical
Issues
The Nature of Ethics (cont’d)

Ethical Issues in Marketing
 An
identifiable problem, situation, or
opportunity requiring a choice
among several actions that
must be evaluated as right
or wrong, ethical or
unethical
The Challenges of Being
Ethical and Socially Responsible

Business decisions involve complex
decisions in which correctness may not be
clear cut



e.g. Internet privacy, protecting
trademarks and brand names
Ethical conflict may emerge from an
inconsistency between personal values
and the values held by members of the
work group
Ethical issues can develop into legal
problems
Types of Misconduct
Observed in Organizations
Exhibit 3.4
Deceptive Practices in Marketing

Deceptive Communications and Promotion
 Fraud
or any false communication
 Exaggerated claims or statements
 Ambiguous statements
 Product labeling issues
 Selling abuses

Regulating Deceptive Marketing Practices
 Typically
 The
regulated by:
firms themselves
 Industry
and trade associations
Organizational Determinants of
Marketing Ethics & Social Responsibility

Ethical Decision Making

Determined by an individual’s background and business
colleagues

Affected by personal values, opportunity for unethical
behavior, and exposure to others

Intricately tied to the firm’s culture and ethical climatea

Can only be improved by planning and structure

Likely to occur when modeled by a strong leader
Ethical Climate

Part of a corporate culture that relates
to an organization’s expectations
about appropriate conduct
 The
character component of an
organization
 Sets
the tone for ethical decisions
 Determines
whether or not an
individual perceives an issue to be an
ethical issue
Codes of Conduct (1 of 2)

Codes of Conduct (Codes of Ethics)
 Formal
statement that describes what
an organization expects of its
employees
 Not
an effective means of controlling
ethical behavior unless integrated into
daily decision making
 Not
effective unless the code has
support of top management
Codes of Conduct (2 of 2)


Codes must reflect management’s desire for
compliance with values, rules, and policies
Codes should have six core values:
1.
2.
3.
4.
5.
6.


Trustworthiness
Respect
Responsibility
Fairness
Caring
Citizenship
Codes will not resolve every issue encountered in
daily operations
Codes can help managers deal with ethical dilemmas
Key Considerations in Developing and
Implementing a Code of Ethical
Conduct
Exhibit 3.5
Market Orientation

Market Orientation
 The
development of an organizational
culture that effectively and efficiently
promotes the necessary behaviors for
the creation of superior value for
buyers and, thus, continuous superior
performance of the firm.
 Strongly tied to ethics and social
responsibility
 Means fostering a sense of cooperation
and information exchange
Stakeholder Orientation

Stakeholder Orientation



The degree to which a firm understands
and addresses stakeholder demands
Strongly tied to ethics and social
responsibility
Comprised of three activities:
Generation of stakeholder groups data
and assessment of firm effects on these
groups
2. Distribution of this information
throughout the firm
3. Responsiveness as a whole to this
intelligence
1.
Connecting Ethics & Social Responsibility
to Marketing Performance

Strong ethics causes employees to be:
Motivated to serve customers
 Committed to the firm
 Committed to high quality standards
 Satisfied with their job



Can lead to trust among firm’s
stakeholders
Is so important that it can have major
negative impacts on firms that don’t
uphold ethical standards
The Connection Between
Ethics and Strategic Planning



Typically done through ethical compliance
programs or integrity initiatives
Vested in the marketing plan
Based on an understanding of:
 1)
Risks associated with misconduct
 2) Ethical and social consequences of
strategy
 3) Values of organizational members and
stakeholders

Manifested through actions … not just words