Sustainable Marketing Social Responsibility and Ethics Chapter 16

Rest Stop: Previewing the Concepts 1. 2. 3. 4. 5. Define sustainable marketing and discuss its importance. Identify the major social criticisms of marketing. Define consumerism and environmentalism and explain how they affect marketing strategies. Describe the principles of sustainable marketing. Explain the role of ethics in marketing. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 2

First Stop Patagonia’s Sustainability Mission: Do No Harm • • • Background Business Approach: To produce the highest-quality products while doing the least possible harm to the environment. Environmental Review Process examines all of the methods and materials used in making clothing. Socially Responsible: Donates time, services, and 1% of sales to grassroots environmental groups. Challenge: Eco-savvy buyers are asking hard questions about product origins. • • Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall Patagonia’s Response Created Footprint Chronicles: Documents and shares with customers information about the environmental effects of every link in the firm’s supply chain. Both positive and negative information is provided. Results: Manufacturing, not transportation, takes the most energy and often creates bad by -products. PFOA used in rain shell jacket was found to be toxic, requiring a product change. CEO believes benefits outweigh the costs, and that firm is setting a new competitive bar. 16 - 3

Sustainable Marketing • Sustainable marketing: Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. • E. g. , Mc. Donald’s “Play to Win” strategy. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 4

Social Criticisms of Marketing • Marketing’s impact on individual consumers has been criticized in terms of: High prices. Deceptive practices. High-pressure selling. Shoddy, harmful, or unsafe products. Planned obsolescence. Poor service to disadvantaged consumers. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 5

Social Criticisms of Marketing • Three factors are cited as leading to high prices: High costs of distribution. High advertising and promotion costs. Excessive markups. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 6

Social Criticisms of Marketing • Marketers are often accused of deceptive practices such as: Deceptive Pricing: Falsely advertising “factory” or “wholesale” prices or large reductions from phony high retail list prices. Deceptive Promotion: Misrepresenting a product’s features or performance, or luring consumers to store for out-of-stock item. Deceptive Packaging: Exaggerating package contents through subtle design, using misleading labeling, etc. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 7

Social Criticisms of Marketing • Deceptive practices have led to legislation and other protective consumer actions. FTC governs deceptive practices. Use of puffery is legal, but may harm consumers in subtle ways. Deceptive practices are not sustainable as they harm a firm’s business in the long-run. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 8

Social Criticisms of Marketing • Salespeople are often accused of using high-pressure selling tactics: In persuading people to buy goods they had no intention of buying. Because prizes are often given to top sellers. • Marketers have little to gain from highpressure tactics. Such actions damage relationships with the firm’s customers. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 9

Social Criticisms of Marketing • Shoddy or unsafe product criticisms include complaints that: Products are not made well or services are not performed well. Products deliver little benefit or are even harmful. Products are unsafe due to manufacturer indifference, increased product complexity, and poor quality control. • Manufacturers provide desirable, quality goods. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 10

Social Criticisms of Marketing • Planned obsolescence refers to: Products needing replacement before they should because they are obsolete. • Criticisms include: Use of materials and components that will break, wear, rust, or rot before they should. Continually changing consumer concepts of acceptable styles. Intentionally holding back attractive functional features, then introducing them later to make older models obsolete. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 11

Social Criticisms of Marketing • Marketers are also accused of serving disadvantaged consumers poorly as: The poor are forced to shop in smaller stores where they pay more for inferior goods. National chain stores, insurers, and health care providers practice “redlining” and refuse to open businesses in poor neighborhoods. Banks and mortgage firms have targeted and exploited the disadvantaged for subprime loans via “reverse redlining” practices. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 12

Marketing’s Impact on Society as a Whole • Marketing’s impact on society as a whole has been criticized in terms of: Creating false wants and encouraging too much materialism. • This criticism overstates the power of business and ignores consumers’ ability to defend themselves against advertising. Overselling private goods at the expense of public (social) goods. Creating cultural pollution, stemming from constant exposure to marketing messages. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 13

Marketing’s Impact on Other Businesses • Critics charge that a firm’s marketing practices can harm other companies and reduce competition via: Acquisitions of competitors. • Shrinking number of competitors. Marketing entry. practices that create barriers to • Patents, heavy promotional spending can limit competition. Unfair competitive marketing practices. • Predatory pricing and other practices. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 14

Consumer Actions to Promote Sustainable Marketing • Two major movements include: Consumerism Environmentalism Consumerism: An organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 15

Consumer Actions to Promote Sustainable Marketing • Traditional seller’s rights include the right to: 1. Introduce any product in any size and style, provided it is not hazardous to personal health or safety; or, if it is, to include proper warnings and controls. 2. Charge any price for the product, provided no discrimination exists among similar kinds of buyers. 3. Spend any amount to promote the product, provided it is not defined as unfair competition. 4. Use any product message, provided it is not misleading or dishonest in content or execution. 5. Use any buying incentive schemes, provided they are not unfair or misleading. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 16

Consumer Actions to Promote Sustainable Marketing • • Traditional buyers’ rights include the right to: 1. 2. 3. Not buy a product that is offered for sale. Expect the product to be safe. Expect the product to perform as claimed. Consumer advocates call for more rights to: 4. 5. 6. 7. Be well informed about important aspects of the product. Be protected against questionable products and marketing practices. Influence products and marketing practices in ways that will improve “quality of life. ” Consume now in a way that will preserve the world for future generations of consumers. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 17

Consumer Actions to Promote Sustainable Marketing • Environmentalism: An organized movement of concerned citizens and government agencies to protect and improve people’s living environment. • Those who subscribe to environmentalism believe that a marketing system’s goal should be to maximize quality of life. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 18

Consumer Actions to Promote Sustainable Marketing • Environmentalism: First wave in the 1960 s– 1970 s was driven by environmental groups and concerned consumers. Second wave in the 1970 s and 1980 s was driven by government and resulted in environmental laws. Third wave is occurring now. Firms are accepting more responsibility and many have adopted a policy of environmental sustainability. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 19

Consumer Actions to Promote Sustainable Marketing • Environmental sustainability: A management approach that involves developing strategies that both sustain the environment and produce profits for the company. • Environmental sustainability portfolio: Pollution prevention. Product stewardship. New clean technologies. Sustainability vision. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 20

Consumer Actions to Promote Sustainable Marketing • Public actions to regulate marketing involve applications of law. Marketing management decisions face legal issues regarding: Selling decisions. Advertising decisions. Channel decisions. Product decisions. Packaging decisions. Pricing decisions. Competitive relations decisions. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 21

Business Actions Toward Sustainable Marketing • Consumer-oriented marketing: The philosophy of sustainable marketing that holds that the company should view and organize its marketing activities from the consumer’s point of view. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 22

Business Actions Toward Sustainable Marketing • Customer-value marketing: A principle of sustainable marketing that holds that a company should put most of its resources into customer-valuebuilding marketing investments. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 23

Business Actions Toward Sustainable Marketing • Innovative marketing: A principle of sustainable marketing that requires that a company seek real product and marketing improvements. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 24

Business Actions Toward Sustainable Marketing • Sense-of-mission marketing: A principle of sustainable marketing that holds that a company should define its mission in broad social terms rather than narrow product terms. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 25

Business Actions Toward Sustainable Marketing • Societal marketing: A principle of sustainable marketing that holds that a company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, consumers’ long -run interests, and society’s long-run interests. • Seeks to introduce desirable products, rather than those that are deficient, salutary, or simply pleasing. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 26

Business Actions Toward Sustainable Marketing • Firms need to develop corporate • marketing ethics policies to serve as broad guidelines that everyone in the organization must follow. Ethics policies should cover: Distributor relations. Advertising standards. Customer service. Pricing. Product development. General ethical standards. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 27

Business Actions Toward Sustainable Marketing • What principle should guide firms and marketing managers on issues of ethics and social responsibility? Free market and legal system is one option. Letting responsibility fall to individual companies and managers to develop a “social conscience” is a second option. • International marketers face special challenges. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 28

Rest Stop: Reviewing the Concepts 1. Define sustainable marketing and discuss its importance. 2. Identify the major social criticisms of marketing. 3. Define consumerism and environmentalism and explain how they affect marketing strategies. 4. Describe the principles of sustainable marketing. 5. Explain the role of ethics in marketing. Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 16 - 29