Marketing Chapter 3 Marketing Ethics Dhruv Grewal Michael

Marketing Chapter 3 Marketing Ethics Dhruv Grewal Michael Levy Mc. Graw-Hill/Irwin Copyright © 2008 by the Mc. Graw-Hill Companies, Inc. All rights reserved.

3 -2 Johnson & Johnson l l Credo Customers first Employees second Stockholders last © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -3 Firm Goals l l Greed and short term profit seeking lead to serious long term consequences Creating value over the long run leads to long term success © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -4 The Scope of Marketing Ethics Business ethics l Marketing ethics l © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -5 Attitudes About the Ethical Standards of Various Professions Discussion question Why do you feel marketers rank so low on this scale? What can marketers do to improve their ranking? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -6 Creating an Ethical Climate in the Workplace l Values – – – l Rules – – l Establish Share Understand Management commitment Employee dedication Controls – – Reward Punishment © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -7 Test Your Knowledge Creating a strong ethical climate within a firm includes having a set of _____ that guide decision making and behavior. A) employee opinions B) values C) religious decrees D) morals

3 -8 Exhibit 3. 2: American Marketing Association Code of Ethics l Generally accepted code in marketing l Flows from general norms of conduct to specific values l Subareas within marketing have their own code of ethics to deal with specific issues © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -9 The Influence of Personal Ethics l l Values Genetics Religion Upbringing © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -10 Why People Act Unethically What makes people take actions that create so much harm? Are all the individuals who engage in questionable behavior just plain immoral or unethical? Decisions often have conflicting outcomes, where both options have positive and negative consequences © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -11 Competing Outcomes Dangerous flaw in new model Continue production Delay production l l l Delayed revenue Possible layoffs Loss of bonuses l l Potential injury to consumers Loss of revenue © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -12 Aligning Goals l l Individual short term goals not in line with firm long term goals. Reward and incentive structures ensure that goals are aligned. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -13 Test Your Knowledge To align personal and corporate goals, firms need to have a strong ethical climate, explicit rules for governing a firm’s transactions including a code of ethics, and a system for________. A) rewarding and punishing behavior B) covering up questionable activities C) assuring the long term goals of the firm are met D) protecting stockholder interests

3 -14 The Link Between Ethics and Corporate Social Responsibility Firms should implement programs that are socially responsible Employees should act in an ethically responsible manner © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -15 Adding Value 3. 1: Coca Cola Fights HIV/AIDS in Africa Cola Africa Foundation

3 -16 Corporate Social Responsibility in Practice How does a firm link the economic and social functions of the business to create value for all stakeholders?

3 -17 Case in Point: Whole Foods Market Challenge Answer Results To find success in customer satisfaction and wellness, employee excellence and happiness, enhanced shareholder value, community support, and environmental improvement. Support organic farming, invest in the firm’s “team members” and donate at least 5% of net profits to non-profits. Sales in excess of $1. 8 Billion and being listed on Fortune’s Best Companies to Work For, establishment of two successful foundations. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -18 A Framework for Ethical Decision Making © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -19 Step One: Identify Issues Using results to mislead or even harm the public Data collection methods Marketing research Hiding the real firm issues purpose of the study © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -20 Step Two: Gather Information and Identify Stakeholders 1 2 Identify all ethical issues and relevant legal information Identify all relevant stakeholders and get their input on any identified ethical issues © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -21 Stakeholder Analysis Matrix for a Marketing Research Firm Discussion question How are stakeholders interrelated? How do the responsibilities of one overlap the other? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -22 Step Three: Brainstorm Alternatives l l l Halt the market research project Make responses anonymous Instituting training on the AMA Code of Ethics for all researchers © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -23 Step Four: Choose a Course of Action Weigh the alternatives Take a course of action © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -24 Test Your Knowledge Which step in the ethical decision making framework involves collecting legal information? A) Identify issues B) Gather information and identify stakeholders C) Brainstorm alternatives D) Choose a course of action

3 -25 Ethical Decision-Making Evaluation Questionnaire © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -26 Integrating Ethics Into Marketing Strategy © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -27 Planning Phase l l The mission or vision statement sets the overall ethical tone for planning. Firms often go beyond the mission or vision statement by including a values statement.

3 -28 Newman’s Own

3 -29 Test Your Knowledge During planning, ethical mission statements can take on another role as a means to guide a firm’s _____. A) profit and loss B) marketing strategy C) performance evaluation D) SWOT analysis

3 -30 Putting an Ethical Mission Into Practice How does a firm live up to the ethical goals of its mission statement?

3 -31 Case in Point: Ben and Jerry’s Challenge Answer Results To promote business practices that respect the earth and the environment. Ethical sourcing of production and suppliers. The company only uses milk that does not contain growth hormones, and now has transitioned to “certified humane” cage free eggs, also using fair trade certified ingredients such as coffee and vanilla. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -32 Implementation Phase Should the firm be relocating production to another country? Should the firm be targeting this market with this product? Should the firm be selling its product in this market in this manner? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -33 Entrepreneurial Marketing 3. 1: Fetzer Vineyards “We Make Our Wines Responsibly Please Drink Them Responsibly. ” Environmentally conscious Socially conscious Committed to the development of both their business and their people © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -34 Control Phase l l Check successful implementation React to change © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -35 Adding Value 3. 2: Tragedy Hits Six Flags Discussion question What were the keys to Six Flags handling of this tragedy?

3 -36 Exhibit 3. 8: The Six Tests of Ethical Action 1. 2. 3. 4. 5. 6. The Publicity Test The Moral Mentor Test The Admired Observer Test The Transparency Test The Person in the Mirror Test The Golden Rule Test © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -37 Test Your Knowledge Which test of ethical action asks what the person you most admire would do in that situation? A) The Publicity Test B) The Admired Observer Test C) The Moral Mentor Test D) The Golden Rule Test

3 -38 Understanding Ethics Using Scenarios Scenario 1: Who Is on the Line? Scenario 2: West Virginia T-Shirts Scenario 3: Giving Credit Where Credit Isn’t Due Scenario 4: The Jeweler’s Tarnished Image Scenario 5: No Wonder It’s So Good Scenario 6: Bright Baby’s Bright Idea © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -39 Ethical Dilemma 3. 1: A Questionable Promotion l l l What alternatives did Steve come up with? How did Steve evaluate these alternatives? Which alternative did Steve select, and why? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

3 -40 Scenario 1: Who Is on the Line? l l What are the ethical issues in this scenario? Why would a firm use this service? How do you think consumers will respond to firms who use this service? Would you advise purchasing this service? Back to list of scenarios

3 -41 Scenario 2: West Virginia T-Shirts l l l What are the ethical issues in this scenario? If you were the retailer how would you have responded? Does a history of previous inappropriate business practices impact your opinion of the retailer? Back to list of scenarios

3 -42 Scenario 3: Giving Credit Where Credit Isn’t Due l l l Is this an inappropriate target market? Could you argue that the firm provides a valuable service to this market? Would you advise the cataloger to pursue this new strategy? Back to list of scenarios

3 -43 Scenario 4: The Jeweler’s Tarnished Image l l Is the manufacturer responsible for the acts of independent sales people? How do you feel the Billing’s should respond? Back to list of scenarios

3 -44 Scenario 5: No Wonder It’s So Good l l l Is the legal non disclosure of the alcohol content and ethical issue? Should the firm be required to disclose the alcohol content? What would you do if you were Mia? Back to list of scenarios

3 -45 Scenario 6: Bright Baby’s Bright Idea l l l Is the potential for injury enough to merit removal of the product from the market? Do you feel it is ethical to move the product to a less regulated market? What would you have advised the CEO? Back to list of scenarios

3 -46 Chapter 3 Glossary l l l Business ethics: Refers to a branch of ethical study that examines ethical rules and principles within a commercial context, the various moral or ethical problems that might arise in a business setting, and any special duties or obligations that apply to persons engaged in commerce. Corporate social responsibility: The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders. Marketing ethics: Examines those ethical problems that are specific to the domain of marketing.