Ch03 integrated Marketing

marketing strategy

O. C. Ferrell Michael D. Hartline

Marketing Ethics and Social

Responsibility in Strategic Planning

C H A P T E R

3-2

• 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?

The Auto Industry Tries to Go Green

Beyond the Pages 3.1

3-3

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

3-4

• 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.

Discussion Question

3-5

Dimensions ofSocial 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

3-6

• 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

Marketing Strategy in Action (1 of 2)

3-7

• Coca-Cola :

– Suggested Burger King to invest & promote frozen

Coke as a kid’s snack

– Inflated sales & misled investors by shipping extra

beverage concentrate to bottlers

– Attempt to steal and sell trade secrets to PepsiCo

• Nike claimed no responsibility for the

subcontractors poor working conditions &

extremely low wages

Marketing Strategy in Action (2 of 2)

3-8

The Pyramid of Corporate Social Responsibility

Exhibit 3.1

3-9

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

• Wall-Mart during Hurricane Katrina

3-10

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

3-11

Potential Ethical Issues in Marketing

• Overall Issues

• Product Issues

• Pricing Issues

• Distribution Issues

• Promotion Issues

See Exhibit 3.2 in Text

3-12

Government Regulation of Marketing Activities

Exhibit 3.3

3-13

The Challenges of BeingEthical 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

Types of MisconductObserved in Organizations (1 of 3)

3-14Exhibit 3.4

• Abusive or intimidating behavior toward

employees

• Lying to employees, customers, vendors or the

public

• A situation that places employee interests over

organizational interests

• Violation of safety regulation

• Misreporting of actual time worked

Types of MisconductObserved in Organizations (2 of 3)

3-15Exhibit 3.4

• Email & internet abuse

• Discrimination on the basis of race, color,

gender, age or similar category

• Stealing or theft

• Sexual harassment

• Provision of goods or services that fail to meet

specifications

• Misuse of confidential information

3-16

Types of MisconductObserved in Organizations (3 of 3)

Exhibit 3.4

• Alteration of documents

• Falsification or misrepresentation of financial

records or reports

• Improper use of competitors’ inside

information

• Price fixing

• Giving or accepting bribes, kickbacks or

inappropriate gifts

3-17

• 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?

Discussion Question

3-18

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

3-19

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

3-20

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

3-21

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

3-22

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

3-23

Key Considerations in Developing and Implementing a Code of Ethical Conduct

Exhibit 3.5

3-24

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.

3-25

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

3-26

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

3-27

Connecting Ethics & Social Responsibilityto 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

3-28

• 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?

Discussion Question

3-29

The Connection BetweenEthics 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