marketing strategy

O. C. Ferrell Michael D. Hartline

Marketing Ethics
and Social
Responsibility in
Strategic Planning

C H A P T E R
 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?

Beyond the Pages 3.1 3-2

 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

3-3
 Discussion Question

• Why is marketing ethics a strategic consideration

in organizational decisions? Who is most
important in managing marketing ethics: the
individual or the firm’s leadership? Explain your
answer.

3-4
 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 Ethics
– Principles and standards that define acceptable marketing
conduct as determined by the public, government
regulators, private interest groups, competitors, and the
firm itself

3-5
 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?

3-6
 The Pyramid of
Corporate Social Responsibility

Exhibit 3.1 3-7

 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

3-8
 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

3-9
 Potential Ethical Issues in Marketing

• Overall Issues
• Product Issues
• Pricing Issues
• Distribution Issues
• Promotion Issues

See Exhibit 3.2 in Text 3-10

Government Regulation of
Marketing Activities

Exhibit 3.3 3-11

 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

3-12
 Types of Misconduct
Observed in Organizations

Exhibit 3.4 3-13

 Discussion Question

• Why have we seen more evidence of widespread

ethical marketing dilemmas within firms today?
Is it necessary to gain the cooperation of
marketing managers to overstate revenue and
earnings in a corporation?

3-14
 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 regulated by:
• The firms themselves
• Industry and trade associations

3-15
 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 climate
– Can only be improved by planning and structure
– Likely to occur when modeled by a strong leader

3-16
 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

3-17
 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

3-18
 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. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
• Codes will not resolve every issue encountered in daily
operations
• Codes can help managers deal with ethical dilemmas
3-19
 Key Considerations in Developing and
Implementing a Code of Ethical Conduct

Exhibit 3.5 3-20

 Texas Instruments’
“Ethics Quick Test”
• Is the action legal?
• Does it comply with our values?
• If you do it, will you feel bad?
• How will it look in the newspaper?
• If you know it’s wrong, don’t do it!
• If you’re not sure, ask.
• Keep asking until you get an answer.

3-21
 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

3-22
 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:
1. 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

3-23
 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

3-24
 Discussion Question

• What is the relationship between marketing ethics

and organizational performance? What are the
elements of a strong ethical compliance program
to support responsible marketing and a successful
marketing strategy?

3-25
 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

3-26