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Journal of Professional Services Marketing

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Ethics and Social Responsibility in Marketing

Thomas F. Gilbertson PhD
a a

Baker College of Oswosso , 1020 South Washington Street, Oswosso , MI , 48867 Published online: 16 Mar 2012.

To cite this article: Thomas F. Gilbertson PhD (1999) Ethics and Social Responsibility in Marketing, Journal of Professional Services Marketing, 20:1, 51-61, DOI: 10.1300/J090v20n01_05 To link to this article: http://dx.doi.org/10.1300/J090v20n01_05

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Ethics and Social Responsibility in Marketing

Thomas F. Gilbertson, PhD

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ABSTRACT. Ethics are our belief about what is right and wrong. Although these beliefs may vary from one individual to another or one company to another, ethics and business responsibility are an important part to any companys marketing department. The goals of the marketing department are to target an audience, appeal to that audience, and get the audience to purchase that particular product or service. In doing this, a company must make sure that they are first abiding by all laws and regulations, but they should also strive to be sure that they are acting ethically and honestly. One interpretation of morality may vary greatly among individuals, but it still exists. While the necessity for ethics in business and marketing has been pointed out in numerous sources, many have contended that a good deal of consumer concern is with marketing and its related activities. Within companies, trade organizations, governmental organizations, and professions, one can observe a shift in the way of thinking about codes of ethics. The moral resistance of an organization is referred to as the degree in which the organization can resist the influencing factors, which exercise a downward pressure on the moral content of the organization. The moral content of the organization is the degree in which that organization makes an effort to fulfill its responsibilities with respect to its stakeholders. [Article copies available for a fee from The Haworth Document
Delivery Service: 1-800-342-9678. E-mail address: getinfo@haworthpressinc. com <Website: http://www.haworthpressinc.com>]

CUSTOMER SATISFACTION Customer satisfaction has always been important, but never as important as it has become in the 90s, with the competitive pressures associated with steady markets, information savvy customers, and a
Thomas F. Gilbertson is Dean, Baker College of Oswosso, 1020 South Washington Street, Oswosso, MI 48867. Journal of Professional Services Marketing, Vol. 20(1) 1999 E 1999 by The Haworth Press, Inc. All rights reserved. 51

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tort litigation frenzied public. Moreover, for previous generations, ethical practices and the problems associated with them were less apparent, not because our grandparents didnt care, but because societys expectations were different. In our grandparents generation there was a simple rule for evaluating the ethical behavior of a particular company: caveat emptor, within the rule of the law. If it was legal, then it was also ethical. Basically, if it was legal to sell a product that might be harmful or might not live up to the sellers promises, then marketing the product was acceptable because the decision to buy was the consumers. Consumers were expected to employ the maxim, buyer beware! Today there is widespread concern about ethics in public and private life. This concern extends to many sectors including politics, education, health and business. For marketers, this has meant that standards of acceptable conduct have shifted along the continuum, from a position wherein producer interests are paramount to a position wherein consumer interests are more favored. MARKETING PLANNING PROCESS When a company is drawing up a marketing plan, it seldom features legal concerns or ethical issues, but the law and ethics still influence marketing decision making. The marketing planning process recognizes responsibilities to consumers, channel members, and the company itself. This is accomplished by designing a marketing strategy to satisfy the needs of each of these groups. It is usually assumed that marketing planners are familiar with marketing law and that their decision making is ethical. Most consumers believe what is told to them through advertisements. Consumers have the perception that the company marketing their product would not try to mislead them or try to act dishonestly in their efforts to get the consumer to purchase their product. Consumers tend to believe that if it is in print, or is spoken, that it must be true. Knowing this, it could be very easy for companies to take advantage of the consumer. This is where a business code of ethics comes into play. CODE OF ETHICS A code of ethics is a written set of guidelines for a company to refer to. It can be the mission statement of the organization, or it can be a

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separate tool to be used when cases come up that the marketing department may be unsure of. Some organizations may have an unwritten code of ethics that is part of their corporate culture, but this has to be constantly reminded to all employees in order for it to remain effective. A written guideline of what a company stands for, how they will operate, and what they will not stand for helps all involved with the company when making decisions. The marketing department of a business may be the most delicate area when it comes to ethics. This department has to come up with creative ways to promote their product without violating the many codes of ethics. When developing a code of ethics, there are three stages: organization analysis, system alignment and education. First an analysis should be conducted to fully identify and clarify organization issues and risks; the resulting report should contain detailed, practical recommendations on these issues. Information can be gathered via a combination of interviews, focus groups and quantitative survey instruments, and can include both internal and external groups. The key to corporate responsibility lies in aligning management systems, processes and practices to the companys values and standards of conduct. The system alignment stage is where the company must define and fully integrate its values and standards into management systems. This integration forms the basis of employee education, tailored to functional and management requirements. This is where the company will have to reconcile ethical differences that may impact institutional integrity. The last stage is education. Educating employees so that they can perform their daily responsibilities in the most efficient way so that ethical issues do not arise. It is also important to educate them so that if a situation does arise that may be viewed as unethical, there is a game plan on how to deal with it and resolve it. ETHICS IN MARKETING RESEARCH Why do we need to worry about ethics in marketing research? One reason is the general public perception that within business, marketing is the area most prone to unethical practices. Marketing research is subjected even more strenuously to public scrutiny, as it is not only subject to all the negatives associated with marketing but also involves direct contact with the public, since its frequently the public that comprises the base and thus the very heart of marketing research.

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Therefore, it is imperative that marketers, and marketing researchers in particular, adhere to ethical practices, since public perceptions of the field determine how and even whether marketing research can continue. If we can identity who is affected by marketing research, this enables us to be aware of some readily discernible and easily avoidable ethical pitfalls. Therefore, it benefits us to examine exactly who is damaged by unethical marketing research practices (i.e., who are the stakeholders) and how this damage might occur. Ethical dilemmas surrounding marketing research frequently revolve around the stakeholders in the research, namely the general public, the actual respondents used in a study, the client, and the researcher. With regard to the public as a whole, ethical concerns revolve primarily around the methods of gaining and reporting research results. At all cost, care should be taken to avoid incomplete reporting, misleading reporting, and biased research. Incomplete reporting is just what its name implies. Whenever a client firm or researcher does not reveal the research results in their entirety, incomplete reporting has occurred. Obviously, this type of mistake is more likely to be committed when research uncovers negative information, which might not be favorably received by the client and/or the public at large. Misleading reporting, on the other hand, does not involve the suppression of information, but rather the distortion of information. By distortion, it is meant that although the information presented to the public is correct, it leaves the public with an erroneous impression. And finally, biased research occurs when the research process is performed improperly using incorrect procedures or in a nonobjective manner, resulting in misleading findings. Once the researcher has fulfilled his/her obligation to the client by conducting the project and distributing the findings in an ethical manner, the researcher can and should anticipate that the client firm will return in kind. This means that the client firm should not twist or distort the research findings to their own benefit at the expense of the researchers reputation. CREATING AN ETHICAL MARKETING CORPORATE CULTURE When it comes time to raise the ethical marketing standards of an organization beyond the letter of the law, strong and consistent leader-

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ship is required. In fact, the leaders of a firm are ultimately the ones who determine what the culture of their organization is going to resemble. Schein (1992), believes that leaders can influence the culture of their organizations through the following five primary mechanisms: 1. Attention. Leaders communicate their priorities, values, and concern by their choice of things to ask about, measure, comment on, praise, and criticize. 2. Reactions to crises. Because of the emotionality surrounding crises, a leaders response to them can send a strong message about values and assumptions. A leader who faithfully supports espoused values when the pressure is on for expedient action communicates clearly that the values are really important. 3. Role modeling. Leaders can communicate values and expectations by their own actions, especially actions showing loyalty, self-sacrifice, and service beyond the call of duty. A leader who institutes a policy or procedure but fails to act in accordance with it is communicating the message that it is not really important or necessary. 4. Allocation of rewards. The criteria used as the basis for allocating rewards signal what is valued by the organization. Formal recognition in ceremonies and informal praise communicate a leaders concerns and priorities. Failure to recognize contributions and achievements sends a message that they are not important. 5. Criteria for selection and dismissal. Leaders can influence culture by their choice of criteria for recruiting, selecting, promoting, and dismissing people. Leaders also communicate their values and concerns by providing realistic information about the criteria and requirements for success in the organization. Utilizing Scheins five primary mechanisms, leaders who want to ensure an ethical marketing culture should focus their attention on ethics and communicate those values in the form of a corporate credo or corporate marketing policy. When confronted with ethical crises, the leader should ensure that they send a strong message about their corporate values. The leader should be the role model for everyone concerning ethical issues; in fact, if the leader does not demonstrate these characteristics, the message is clear, they do not matter. The leader should reward ethical behavior formally and informally. Doing

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so openly ensures that everyone understands the importance and value that superiors place on ethical behavior. Finally, the criteria for selection and dismissal should be based on ethical behavior. Those who choose not to follow the corporate marketing ethical guidelines to get ahead should never be promoted over those who follow the guidelines. If someone is discovered to have violated the corporate marketing ethical guidelines, they should be disciplined. ETHICS AND THE TQM PROCESS
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Ethics has played a role in the Total Quality Management (TQM) process, especially since it conforms to doing it right the first time. Throughout the centuries, professionals such as physicians, lawyers, and ministers have worked according to exacting ethical standards, writes Larry Pace, in TQM as an Ethical Imperative (1998), the best-known of these is the Hippocratic Oath, which pledges the medical profession to the preservation of life and the service of humanity. He explains there are, other professional groups, such as nurses, engineers, and psychologists who have developed professional standards as well. One of Paces concerns is how these standards serve to enhance and preserve the status of the profession as well as to guide sanctions when individuals are found to be in violation of the standards. Today, organizations have developed their own codes of conduct or business ethics; they have become part of their mission statements. In fact, Pace says: these codes prescribe acceptable and unacceptable behaviors as well as specify the conditions under which certain behaviors would be considered acceptable or unacceptable. Such codes are based on deontological, teleological, relativistic, or a combination of ethical systems. As organizations are beginning to ask themselves, and stakeholders are demanding it, what is right and wrong? Pace suggests, TQM is implicit in such codes since they deal with the domain of moral judgments as to what is right and wrong, and these judgments apply to business questions of what to do and how to do it. But although TQM has obvious ethical implications, it is not usually considered explicitly in the code of business ethics. Organizations are presently engaged in what Pace describes as poor quality is not only unethical, but also an unwise business practice. Surveys have indicated that customers are demanding higher

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quality, and that price alone is becoming less of a deciding factor in purchasing decisions. In the USA, for example, research has shown that 80% of potential customers consider quality as equal to or more important than price in their purchases. The most recently popular approach to customer value, the so-called total cost of ownership, has obvious TQM and ethical implications as well. SOCIAL RESPONSIBILITY
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Social responsibility in marketing ethics refers to an organizations obligation to maximize its positive impact and minimize its negative impact on society. By contrast, ethics relates to the marketing decisions made primarily by individuals; social responsibility concerns the impact of an organizations decisions on society (Pride and Ferrell, 1991). The difficulty facing firms is determining what will satisfy their target market without offending those who are not in their target market. Accomplishing this mission is by no means easy, nevertheless, it is essential to remaining in business and avoiding the legal and publicity nightmares that may accompany offending the wrong group of people. Pride and Ferrell offer the following two examples of the social responsibility balls marketers and their organizations have to juggle in order to stay in business. 1. In the smoking debate, marketers must balance smokers desires to continue to smoke cigarettes against nonsmokers desires for a smoke-free environment. 2. Society wants a cleaner environment and the preservation of wildlife and habitats, but it also wants low-priced gasoline and heating oil. There are undoubtedly groups on both sides of the issues given in the above examples, which will never be satisfied with whatever approach the marketers and their organizations decide to pursue. This is not a reason to throw in the towel and give up. Perhaps, Sirgy and Lee (1996) put it best when discussing socially responsible quality of life (QOL) marketing objectives. The QOL marketing concept emphasizes four key points. These are: 1. Enhancement of well being of target consumers associated with marketing and/or consumption of products.

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2. Reduction of negative side effects associated with the marketing and/or consumption of the product to target consumers. 3. Reduction of negative side effects associated with the marketing and/or consumption of the product to other publics (beside target consumers). 4. Long-term profitability. These are some very general, yet complex points that do not have easy solutions when dealt with in the business world. Moreover, the acceptable solutions that may work well in one society may not be considered acceptable in another. Marketers must find the best and most workable solutions in order to maintain and/or grow their target market, and ultimately ensure the health of their organization. The Utilitarian Approach Marketing is a human activity directed at satisfying the needs and wants of the consumer through the exchange process (Kolter and Turner, 1981). This is a belief that is very utilitarian in its approach to ethics. This characteristic is typical of the world of marketing with its central theme of satisfying the consumer. Since the satisfaction of the consumers needs is the final objective of marketing, we are inclined to believe that the ethical approach, which dominates, is for the most part utilitarian. Since satisfaction itself is one of the driving forces of the human condition, marketers often focus on that goal instead of the means by which they try to satisfy the needs of the consumer. This is the flaw in the utilitarian approach, because the guidelines and laws dealing with this industry can often times be vague and difficult to apply to the industry in a broad approach. But because the tendency in marketing is fundamentally utilitarian, it is easy to assume that it is ethical on this level regarding the satisfaction of consumers. This fundamental approach suggest that the action of the marketing professional is only ethical if it maximizes the greatest number of positive repercussions for the greatest number of people while at the same time minimizing the negative repercussions for the smallest number of people involved in bringing a product or service to market. The Deontological Approach While acknowledging the benefits which can be attributed to the practice of a utilitarian approach to marketing, it is very possible that

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the industry could gain more credibility if it were to take another approach. Just as the principle of marketing is based on the satisfaction of the consumer, it can also create problems for the consumer and society in general. In order to extend both our social and economic improvements along with the degree of marketing ethics and social responsibilities, many marketing professionals believe we can improve customer satisfaction by adhering to ethical standards which are more deontological in nature. Even though in many organizations the deontological approach may assume various forms, it can generally be found as a basis for the code of ethics within that organization. Of course, the fact that a company may have a code of ethics and a general sense of social responsibility does not guarantee that its conduct will be deontological in practice. On the other hand, in order to define actions which may not be accepted as ethical, the company must have certain specific rules of behavior. These rules, in fact, then become the code of ethics. The company code of ethics often represents what can be called a formalization of a deontological approach which guides the ethical behavior of the company. It is in this way that most professional corporations regulate their practices and procedures regarding ethical behaviors. In the United States, with the exception of most accountant associations, the greatest majority of management practices are not governed by professional corporations. With this in mind, it is safe to say that these ethical standards of the free market serve as the rules for most of the participants in the marketing process. SUMMARY Many individuals would espouse that there are no ethics when it comes to the marketing of a product. Looking closely at all of the scams that entice consumers to try this product or that, it is easy to understand this viewpoint. Consumers today are much more aware of unethical practices that occur. Social responsibility is an expected trait belonging to business right along with profit. When a company markets a product it is expected that the truth be stated about the product. False promises are soon discovered. Many consumer groups have destroyed those firms who misrepresented their product. Creative marketing has led to advertisements that appear to be invoicing for an already ordered product, claims of free product only to recover any

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costs in the charges for handling and postage, limited time offers that never seem to expire, and the list goes on. When information is gained through false research only to be sold as marketing databases, true research is often clouded due to the mistrust of those who would be responding. Global marketing requires an understanding of customs and language. Words and pictures that mean wonderful here in the United States may not reflect the same image in a foreign land. As free-trade agreements and more exporting becomes the way business is being conducted these differences are becoming more important to marketing departments. Technology has increased the consumers knowledge. The ability to surf the net and find information about products and companies should be an indication to the marketing departments to keep their advertising truthful. Disgruntled customers have an easy avenue of reaching more people with negative feedback, which will harm a companys bottom line faster than in the past. As new business and new products are created it is important that marketing ethics remain an important element in the creation formula. Honesty has always been the best policy and with some positive focus the trust of society may someday return. CONCLUSION Marketing ethics is our belief about what is right behavior and wrong behavior in marketing. The failure to apply the right behavior or marketing ethical behavior has forced the federal government to enact legislation that determines minimum acceptable behavior. Firms that wish to raise their ethical marketing practices/behaviors above what the law requires need strong and committed leaders. These leaders communicate their marketing ethics in the form of corporate credos or corporate marketing policies; however, there is still more that these leaders do because they ensure they live and enforce the ethical culture they have established. The leaders also ensure their firm implements and maintains ethical marketing practices in all four phases of the marketing mix. Ethical marketing practices ensure that a firm is on the path to social responsibility. In other words, being ethical and socially responsible go hand-in-hand; these behaviors will allow the firm the opportunity to satisfy its target market, reduce the chances of

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offending their non-target market, and ultimately maintain and/or improve its chances of long-term profitability. There are different approaches used in the social responsibilities and ethics used by marketing managers. A combined approach of using both utilitarian and deontological ethical philosophies is best suited for the methods in which organizations market their products and services. This is based on the very definition of marketing and the fact that this commercialization approach has always distinguished itself from others by the emphasis it places on the needs and satisfaction of the consumer. In order to allow marketing managers to ensure that their actions are indeed ethical, they must continue to approach and analyze the theories of ethical behavior and social responsibility in the strictest sense of the term to continue to improve the quality of marketing practices. REFERENCES
Kotler, P. and Turner, R. (1981). Marketing Management, Prentice-Hall, Englewood Cliffs, NJ. Pride, W.M., and Ferrell, O.C. (1991). Marketing: Concepts and strategies, (7th ed.). Boston: Houghton Mifflin. Schein, E.H. (1992). Organizational culture and leadership, (2nd ed.). San Francisco: Jossey Bass. Sirgy, M.J., and Lee, D.J. (1996, May). Setting socially responsible marketing objectives: A quality of life approach. European Journal of Marketing, v30, n5, p20(15).