ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING

You should be able to

• Appreciate the nature and significance of ethics in marketing.

• Understand the differences between legal and ethical behavior 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 behavior.

Anheuser Busch’s campaign for responsible drinking and environment-conscious disposition of packaging

• “Know When to Say When” campaign for responsible

drinking appeared first via posters in 1983 and two

years later with TV commercials. Such efforts have

contributed to a sizeable decline in fatal drunk-driving

accidents and a 64% drop in teen drunk-driving deaths

since 1982.• Anheuser Busch is an advocate and sponsor or

numerous efforts to preserve the environment and is the world’s largest recycler of aluminum cans.

Trends in alcoholic consumption by high school seniors

50

55

60

65

70

75

80

'79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95

Per

cen

tage

Year

Definition of Ethics

Ethics are . . . .Ethics are . . . .

The moral principals and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.

The moral principals and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.

Classifying marketing decisions according to ethical and legal relationships

Ethical

Eth

ical

ity

Illegal LegalLegality

Ethical butillegal

Ethical butillegal

Unethical and illegal

Unethical and illegal

Unethical butlegal

Unethical butlegal

Ethicalandlegal

Ethicalandlegal

Unethical

Concept Check

1. What are ethics?

2. What are 4 possible reasons for the present state of ethical conduct in our country?

Understanding Ethical Marketing Behavior

Consider the use of another’s ideas:• In the US copyrights, trademarks and patents are

considered intellectual property, and unauthorized use is illegal and unethical.

• Outside the US, 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.

International comparison of the percent of U.S. software package sales that are illegal copies

0

20

40

60

80

100

Per

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age

Ch

ina

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wan

Iber

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Sw

itze

rlan

d

Kor

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Jap

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Ital

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Ben

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Ger

man

y

Ben

elu

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A framework for understanding ethical behavior

Societal culture and norms

Societal culture and norms

Business culture and industry practices

Business culture and industry practices

Organizational culture and expectations

Organizational culture and expectations

Personal moral philosophy and ethical behavior

Personal moral philosophy and ethical behavior

Consumer Bill of Rights

In 1962 President John F. Kennedy

outlined the Consumer Bill of

Rights that codified the ethics of

exchange between buyers and

sellers.

Consumer bill of rights - continued

SafetySafety

Be informedBe informed

ChooseChoose

Be heardBe heard

Right to Right to

Two kinds of unethical behavior

1. Industrial Espionage is the clandestine collection of trade secrets or proprietary information about a

company’s competitors.

Industrial espionage is most prevalent in high-technology industries, such as

electronics, specialty chemicals, industrial equipment,

aerospace, and pharmaceuticals, where technical know-how and trade secrets separate industry leaders from followers.

Two kinds of unethical behavior

2. The giving and receiving of bribes and kickbacks

is the second form of unethical competitive

behavior.

Bribes and kickbacks are often disguised as gifts,

consultant fees and favors. They are more

common in business-to-business and government

marketing than in consumer marketing.

Foreign Corrupt Practices Act

This act makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country.

Generally, ethical standards are more likely to be compromised in industries experiencing intense competition and in countries in earlier stages of economic development.

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

Personal moral philosophies

MORAL IDEALISMMORAL IDEALISM

Considers certain individual rights or duties universal regardless of the outcome

Considers certain individual rights or duties universal regardless of the outcome

UTILITARIANISMUTILITARIANISM

Considers the “greatest good for the greatest number” by assessing the costs and benefits of the consequences

Considers the “greatest good for the greatest number” by assessing the costs and benefits of the consequences

Concept Check

1. What rights are included in the

Consumer Bill of Rights?

2. What ethical practice is addressed in

the Foreign Corrupt Practices Act?

3. What is meant by moral idealism?

Three concepts of social responsibility

Profit responsibility

Owners/Stockholders

Stakeholder responsibility

Societal responsibility

Societal responsibility

Gen

eral

pu

blicE

cological environm

entCus

tom

ers E

mployees

Suppliers/Distributors

Public interest groupsPublic interest groups

Elements of a social audit

Of social expectations and rationale for engaging in social responsibility endeavors

Of social expectations and rationale for engaging in social responsibility endeavors

Of causes or programs consistent with the company’s mission

Of causes or programs consistent with the company’s mission

Of objectives and priorities for programs and activities to be undertaken

Of objectives and priorities for programs and activities to be undertaken

Of the type and amount of resources necessary to achieve objectives

Of the type and amount of resources necessary to achieve objectives

Recognition

Identification

Determination

Specification

Evaluation Evaluation Of programs and activities and assessment of future involvement

Of programs and activities and assessment of future involvement

Valdez Principles

The Valdez Principles encourage companies to:

1. eliminate pollutants, minimize hazardous wastes,

and conserve nonrenewable resources;

2. market environmentally safe products and services;

3. prepare for accidents and restore damaged

environments;

4. provide protection for employees who report

environmental hazards;

Valdez Principles

appoint an environmentalist to their boards of directors, name an executive for environmental affairs, and develop an environmental audit of their global operations to be made available for public inspection.