Marketing Ethics and Social ResponsibilityDr. Ananda Sabil Hussein

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The Role of Ethics and Social Responsibility in Marketing Strategy

Grown in importance recentlyDue to firms having problems in this area

Have become necessities due to:Stakeholder demandsChanges in Federal law

Improve marketing performance and profits

Are important to development of marketing strategy

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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

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The Pyramid of Corporate Social Responsibility

3-4Exhibit 3.1

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

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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

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Potential Ethical Issues in Marketing

Overall Issues

Product Issues

Pricing Issues

Distribution Issues

Promotion Issues

3-7See Exhibit 3.2 in Text

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

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Types of MisconductObserved in Organizations

3-9Exhibit 3.4

Deceptive Practices in Marketing

Deceptive Communications and PromotionFraud or any false communicationExaggerated claims or statementsAmbiguous statementsProduct labeling issuesSelling abuses

Regulating Deceptive Marketing PracticesTypically regulated by:

The firms themselves Industry and trade associations

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Organizational Determinants of Marketing Ethics & Social

Responsibility

Ethical Decision MakingDetermined by an individual’s background

and business colleaguesAffected by personal values, opportunity for

unethical behavior, and exposure to others Intricately tied to the firm’s culture and

ethical climateCan only be improved by planning and

structureLikely to occur when modeled by a strong

leader 3-11

Ethical Climate

Part of a corporate culture that relates to an organization’s expectations about appropriate conductThe character component of an

organizationSets the tone for ethical decisionsDetermines whether or not an individual

perceives an issue to be an ethical issue

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Codes of Conduct (1 of 2)

Codes of Conduct (Codes of Ethics)Formal statement that describes what an

organization expects of its employeesNot an effective means of controlling

ethical behavior unless integrated into daily decision making

Not effective unless the code has support of top management

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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. Trustworthiness2. Respect3. Responsibility4. Fairness5. Caring6. Citizenship

Codes will not resolve every issue encountered in daily operations

Codes can help managers deal with ethical dilemmas

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Key Considerations in Developing and Implementing a Code of Ethical

Conduct

3-15Exhibit 3.5

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.3-16

Market Orientation

Market OrientationThe 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

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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

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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

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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 words3-20