Social Responsibility

and Ethics in Marketing

Module Five

Franklin E. Ayuson
 Introduction
Advertisement is all around us. Public spaces such
as billboards, subways turnstiles, bus shelters,
kiosk and public bench have been taken over by
advertisement. Celebrities and sports stars act as
human billboards on television and print media. In
our private homes, we are constantly bombarded
with various forms of digital advertising on
television, radio, mobile phones, tablet and laptop
connecting us to the internet and social media
such as Facebook and twitter. Some advertiser
use aircraft, balloons and airships to lunch their
aerial advertisements.
 Introduction
From the business perspective, advertising
generates huge revenues. In 2014, global
spending on advertising exceed US$500 billion
and is forecasted to increase even further. It has
been predicted that internet advertising via mobile
phone and tablets will overtake television
advertising.
Objectives

 Understand concept and dimensions of social

responsibility
 Define/describe importance of marketing ethics
 Familiarize self with ways to improve ethical
decisions in marketing
 Understand role of social responsibility and
ethics in improving marketing performance
The Nature of Social Responsibility

Social responsibility – an organization’s

obligation to maximize its positive impact and
minimize its negative impact on society
100 Best
Corporate
Citizens
Dimensions Of
Social Responsibility
 Social Responsibility
 Marketing/Corporate Citizenship
 Stakeholders
 Marketing Ethics
 Cause-Related Marketing
 Strategic Philanthropy
Marketing Citizenship

The adoption of a strategic focus for fulfilling the

economic, legal, ethical, and philanthropic social
responsibilities expected by stakeholders.
Pyramid Of
Corporate Social Responsibility

Source: From Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of
Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug. 1991.
Copyright © 1991 by the Foundation for the School of Business at Indiana University. Reprinted with permission.
Marketing Ethics

Principles and standards that define

acceptable marketing conduct as determined
by various stakeholders.

BBB Code of Advertising

Cause-Related Marketing

The practice of linking products to a particular

social 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.

IBM - Overview | Corporate Community Relations

Social Responsibility Issues
Green marketing

The specific development, pricing, promotion, and

distribution of products that do not harm the
natural environment.
Europe’s Eco-Label

EUROPA - Environment - Ecolabel - Latest News

Corporate Goals For
The Natural Environment
 Eliminate concept of waste
 Reinvent concept of a product
 Make prices reflect the cost
 Make environmentalism profitable
Marketing Ethics

Ethical Issue – An identifiable problem,

situation, or opportunity requiring a choice
among several actions that must be evaluated
as right or wrong, ethical or unethical.
Marketing ethics
 Marketing ethics addresses
principles and standards that define
acceptable conduct in the market
place. Marketing usually occurs in
the context of an organization, and
unethical activities usually develop
from the pressure to meet
performance objectives.
 Some obvious ethical issues in
marketing involves clear cut
attempts to deceive or take
advantage of a situation
Marketing Ethics & Consumer Rights
 The law and regulations are
generally designed to protect the
consumers from unethical
practices by businesses
 These laws and regulations
recognize that consumers have
certain basic rights in the market
place
 Each marketer must relay on
his/her own value system to
determine what is and is not
ethical
THE POLITICAL-LEGAL ENVIRONMENT
• Political-legal environment Component of the
marketing environment consisting of laws and their
interpretations that require firms to operate under
competitive conditions and to protect consumer rights.

GOVERNMENT REGULATION
• Antimonopoly period of the late 19th and early 20th
centuries.
• Protecting competitors during the Great Depression.
• Consumer protection in past 40 years.
• Industry deregulation began in the 1970s and
continues today.
• Newest regulatory frontier is cyberspace.
GOVERNMENT REGULATORY AGENCIES
• Federal Trade Commission has broadest regulatory
powers over marketing.
• Others include Consumer Product Safety Commission,
the Federal Power Commission, the EPA, and FDA.
OTHER REGULATORY FORCES
• Consumer interest organizations.
• Self-regulatory groups.
CONTROLLING THE POLITICAL-LEGAL
ENVIRONMENT
• Complying with laws and regulations serves
customers and avoids legal problems.
• Influencing the outcome of legislation through
lobbying or boycotts.
ETHICAL ISSUES IN MARKETING

• Marketing ethics Marketers’ standards of

conduct and moral values.
• Many companies create ethics programs to train
employees to act ethically.
• Employees’ personal values sometimes conflict
with employers’ ethical standards.
ETHICS IN MARKETING RESEARCH
• Invalid or unreliable research studies
• Invasion of consumer privacy, not respecting
confidentiality
• Disguising sales as research
• Failure to secure voluntary and informed
participation
• Competitive intelligence gathering
• Consumers are concerned about privacy, and
Internet has increased privacy concerns
• FTC provides consumer information about
privacy online
• The U.S. government also maintains a Do Not
Call registry to prevent unwanted telemarketing.
ETHICS IN PRODUCT/PACKAGE STRATEGY
• Example: Package strategy.
• Larger packages are more noticeable on the shelf.
• Oddly sized packages make price comparison
difficult
• Actual versus apparent size
• Example: Product strategy.
• Misleading or inadequate information
• Excessive or environmentally-unfriendly packaging
• Product testing: on animals or insufficient testing to
reveal safety concerns
• Marketing socially controversial products
• Marketing unsafe products
ETHICS IN DISTRIBUTION
• What is the appropriate degree of control over the
distribution channel?
• Should a company distribute its products in marginally
profitable outlets that have no alternative source of supply?

ETHICS IN PROMOTION
• Truth in advertising is the bedrock of ethics in promotion.
• Marketing to children has come under increased scrutiny.
• Marketing beer to college students, including through
providing promotional items such as shirts and hats, raises ethical
questions.

ETHICS IN PRICING
• Most regulated aspect of a firm’s marketing activities.
FOUR AREAS OF PRICING ARE CONSIDERED UNETHICAL AND ILLEGAL:

 Deceptive Pricing: Where a salesperson tries to

influence lure customers into a store. Thereafter,
a salesperson tries to influence to buy a higher-
priced item.
 Unfair Pricing: When competitors are driven out
by low prices the company raises price back to
their former level.
 FOUR AREAS OF PRICING ARE CONSIDERED UNETHICAL AND ILLEGAL:

 Price Discrimination: It can be unethical if

similar buyers are charged different prices for the
same based on their ability to pay.
 Price fixing: It is an agreement among firms in an
industry to set up prices at certain levels. Two types
of price fixing:
1. Horizontal price fixing
2. vertical price fixing
SOCIAL RESPONSIBILITY IN MARKETING
• Social responsibility
Marketing philosophies,
policies, procedures, and
actions that have the
enhancement of society’s
welfare as a primary
objective.
MARKETING’S RESPONSIBILITIES
• Marketing decisions must involve consideration of
general well-being and even potential global effects.
• Some organization help promote social causes or
practice socially responsible investing.
MARKETING AND ECOLOGY
• Ecology is the study of the relationship between
natural things and their environment.
• Protection of the environment influences all areas
of marketing decision making.
• Marketing system produces billions of tons of
packaging materials annually.
• Green marketing Production, promotion, and
reclamation of environmentally sensitive products.
 Marketing Ethics & Consumer Rights

• AMA has established a codes of ethics to provide

guidelines for ethical conduct. It says, in part, that,
“Marketers shall uphold and advance the
integrity, honor and dignity of the marketing
profession, by being honest in serving
consumers, clients, employees, suppliers,
distributors, and the public.”
 ETHICAL VALUES

• Honesty: to be truthful and forthright in our

dealings with customers and stakeholders.
• Responsibility: to accept the consequences
of our marketing decisions and strategies.
• Fairness: to try to balance justly the needs of
the buyer with the interests of the seller.
• Respect: to acknowledge the basic human
dignity of all stakeholders.
CONTD…….

Openness: to create transparency in our

marketing operations.

Citizenship: to fulfill the economic, legal

and societal responsibilities that serve
stakeholders in a strategic manner.
 NATURE of MARKETING ETHICS

• Ethics –doing the“right” thing

Ethical vs Legal
Personal & not punishable - Societal and Punishable

 Laws
 UNDERSTANDING ETHICAL BEHAVIOR

1st Influence - Societal Culture and Norms

 Culture dictates what is right and wrong,

so “right” changes from culture to culture.
 2nd Influence - Business Culture & Industry
Practices - B to C
•Early 1900s: Caveat Emptor
–A Latin phrase meaning “let the buyer beware” - what you see is what you
get,… not what you expected, too bad
–Belief that competition in the marketplace corrects abuses

• 1962, Kennedy’s Consumer Bill of Rights

Consumer Bill of Rights (1962)

The Consumer Bill of Rights (1962)

is a law that codified (standardized what
was not previously written down) the
ethics of exchange between buyers and
sellers. It includes the buyers rights:
(1) to safety
(2) to be informed
(3) to choose, and
(4) to be heard.
TODAY: Seller’s Versus Consumers’ Rights

Sellers’ rights: Consumers’ rights:

– To introduce products – To choose
of different styles and – To be informed
sizes, provided they – To safety
are not hazardous
– To be heard
– To set its own prices,
provided no – To redress
discrimination occurs – To consumer education
– To spend to promote – To participate in
the product marketplace decision
– To use any product making
message, provided it is – To have access to basic
not misleading services
– To use buying – To a sustainable
incentives environment
Business Culture & Industry Practices - B to B

 Ethics of Competition
• Economic Espionage – stealing trade secrets
•Includes trespassing, wiretapping, dumpster diving

• Bribes -payment before service

• Kickbacks-payment after service

Both are illegal in U.S.,

…but very common in developing nations
 3rd Influence- Corporate Culture &
Expectations

 Corporate Culture – shown in dress codes,

work space, compensation
 Code of Ethics
What’s in it?
What if its breached?

 Whistle-blowers
 Personal Moral Philosophy and
Ethical Behavior

 Moral Idealism
 There is a right thing to do,
…no matter what the cost
 Favored by religious &consumer groups

 Utilitarianism
 The right thing to do is what hurts the fewest
 Favored by business executives and the military
 Concept of Social Responsibility

 Profit Responsibility-
 company’s duty is to maximize profits
 Profiteering- shrink supply to raise price & profit

 Stakeholder Responsibility-
 company’s duty is to protect the interests of owners
 people who gain from it

 Societal Responsibility –
 company’s duty is to preserve environment
 protect users of their products
 while reaping profit

• Green Marketing
Sample Ethical Issues
Related to the Marketing Mix
Improving Ethical
Conduct In Marketing
 Codes of conduct
 Ethics Officers
 Implementing Ethical and Legal
Compliance Programs
Top Management & Ethics

 Talk about importance of ethics

 Inform employees
 Keep promises
 Model ethical behavior
Challenges Of Ethical and
Socially Responsible Behavior
 Introduction/adaptation of new products
 More user-friendly
 Transparency/openness
 Management responsibility
 Predict long-term effects
 Balancing society’s demands
Social Responsibility
and Ethics Improve Performance
$ Consumers want to buy from company
associated with cause
$ Company’s citizenship
 Sometimes….
It’s better to be kind,
than to be always right!!!!

End of Module Two

Thank you and God Bless…
See you Next Sunday
Let’s Call it a Day