Chapter 4 – Ethical and Social Responsibility for Sustainable Marketing

Ethics
These are the moral principles and values that govern the actions and decisions of individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas
Laws
These are society’s values and standards that are enforceable in the courts
Four possible reasons the state of perceived ethical business conduct is at its present level.
1. There is increased pressure on business people to make decisions in a society characterized by diverse value systems
2. There is a growing tendency for business decisions to be judged publicly by groups with different values and interests
3. The public’s expectations of ethical business behavior have increased
4. Most disturbing, ethical business conduct may have declined
Four factors influencing Ethical marketing Behavior
1. Societal culture and norms
2. Business culture and industry practices
3. Corporate culture and expectations
4. Personal and moral philosophy and ethical behavior
Culture
To a set of values, ideas, and attitudes that are learned and shared among the members of a group. This also serves a s a socializing force that dictates what is morally right or just
Societal culture
This provides a foundation for understanding moral behavior in business activities
Ethics of exchange
The exchange process is central to the marketing concept. Ethical exchanges between sellers and buyers should result in both parties being better off after a transaction.
Caveat emptor
Let the buyer be aware
Consumer bill of Rights
(1) The right to safety
(2) The right to be informed
(3) The right to choose
(4) The right to be heard
Right to safety
Manifests itself in industry and federal safety standards for most products sold in the United States. In fact, the U.S. Consumer Product Safety Commission routinely monitors the safety of 15,000 consumer products.
Right to be informed
The right to be informed means that marketers have an obligation to give consumers complete and accurate information about products and services. This right also applies to the solicitation of personal information over the Internet and its subsequent use by marketers. The consumer right to be informed has spawned much federal legislation, such as the Children’s Online Privacy Protection Act (1998) and self-regulation initiatives restricting disclosure of personal information.
The Federal Trade Commission
Plays an active role in educating consumers and businesses about the importance of personal information privacy on the Internet. Initiatives, including proposals concerning children’s online privacy, are detailed on its website.
Right to be heard
Means that consumers should have access to public-policy makers regarding complaints about products and services. This right is illustrated in limitations put on telemarketing practices.
Economic Espionage
Is the clandestine collection of trade secrets or proprietary information about a company’s competitors. This practice is illegal and unethical and carries serious criminal penalties for the offending individual or business.
Bribery
Are often disguised as gifts, consultant fees, and favors. This practice is more common in business-to-business and government marketing than in consumer marketing. In general, bribery is most evident in industries experiencing intense competition and in countries in the earlier stages of economic development.
Corporate culture
Is the set of values, ideas, and attitudes that is learned and shared among the members of an organization.
Code of ethics
It is a formal statement of ethical principles and rules of conduct. It is estimated that 86 percent of U.S. companies have some sort of ethics code and one of every four large companies has corporate ethics officers
Whistle-blowers
States have enacted laws designed to protect employees who report unethical or illegal actions of their employers.
Moral idealism
A personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. This philosophy exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups. For example, the right to know applies to probable defects in an automobile that relate to safety.
Utilitarianism
which is a personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. If the benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical. This philosophy underlies the economic tenets of capitalism and, not surprisingly, is embraced by many business executives and students
Social Responsibility
Means that organizations are part of a larger society and are accountable to that society for their actions.
Three concepts of Social Responsibility
1. Profit responsibility
2. Stakeholder
3. Societal Responsibility
Profit responsibility
Holds that companies have a simple duty: to maximize profits for their owners or stockholders. There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud
Stakeholder responsibility
Focuses on the obligations an organization has to those who can affect achievement of its objectives. These constituencies include consumers, employees, suppliers, and distributors.
Societal Responsibility
Refers to obligations that organizations have (1) to the preservation of the ecological environment and (2) to the general public
Triple bottom line
Recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.
Sustainable Marketing
Which seeks to meet today’s (global) economic, environmental, and social needs without compromising the opportunity for future generations to meet theirs. Green marketing, cause marketing, social audits, and sustainable development reflect this recognition.
Green Marketing
Marketing efforts to produce, promote, and reclaim environmentally sensitive products—takes many forms
Cause Marketing
Which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. For example, when consumers purchase selected company products, Procter & Gamble directs part of that revenue toward programs that support disadvantaged youth and provide disaster relief
Social audit
which is a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility
Sustainable Development
Involves conducting business in a way that protects the natural environment while making economic progress.
Unethical practices by consumers
These practices include filing warranty claims after the claim period; misredeeming coupons; making fraudulent returns of merchandise; providing inaccurate information on credit applications; buying counterfeit products; pirating music, movies, and software from the Internet; and submitting phony insurance claims.