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CHAPTER
FOUR
ETHICS AND SOCIAL
RESPONSIBILITY IN MARKETING
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AFTER READING CHAPTER 6
YOU SHOULD BE ABLE TO:
• Appreciate the nature and significance of ethics in
marketing.
• Understand the differences between legal and ethical
behavior in marketing.
• Identify factors that influence ethical and unethical
marketing decisions.
• Distinguish among the different concepts of ethics
and social responsibility.
• Recognize the importance of ethical and socially
responsible consumer behavior.
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PP4-AA Anheuser Busch’s campaign for responsible drinking
and environment-conscious disposition of packaging
• “Know When to Say When” campaign for
responsible drinking appeared first via posters in
1983 and two years later with TV commercials. Such
efforts have contributed to a sizeable decline in fatal
drunk-driving accidents and a 64% drop in teen
drunk-driving deaths since 1982.
• Anheuser Busch is an advocate and sponsor or
numerous efforts to preserve the environment and is
the world’s largest recycler of aluminum cans.
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PP4-C Trends in alcoholic consumption by high school seniors
80
75
Percentage
70
65
60
55
50
'79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95
Year
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PP4-A Definition of Ethics
Ethics are . . . .
the moral principals and values that
govern the actions and decisions of
an individual or group. They serve
as guidelines on how to act rightly
and justly when faced with moral
dilemmas.
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© The McGraw-Hill Companies, Inc., 2000
PP4-1 Classifying marketing decisions according to ethical and
legal relationships
Ethical
but
illegal
Ethical
and
legal
Unethical
and illegal
Unethical
but
legal
Ethicality
Ethical
Unethical
Illegal
Legal
Legality
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© The McGraw-Hill Companies, Inc., 2000
PP4-BB Concept Check
1. What are ethics?
2. What are 4 possible reasons for
the present state of ethical
conduct in the United States?
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KERIN
HARTLEY
RUDELIUS
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© The McGraw-Hill Companies, Inc., 2000
PP4-CC Understanding Ethical Marketing Behavior
Consider the use of another’s ideas:
• In the US copyrights, trademarks and patents are
considered intellectual property, and unauthorized
use is illegal and unethical.
• Outside the US, sometimes due to the culture of a
country, unauthorized use of copyrights, patents and
trademarks is not considered unethical or illegal.
Such is the case in countries like China, Mexico and
Korea.
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PP4-D International comparison of the percent of U.S.
software package sales that are illegal copies
Percentage
100
80
60
40
20
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Benelux
Germany
Benelux
Japan
Italy
Korea
Switzerland
Iberia
Taiwan
China
0
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PP4-2 A framework for understanding ethical behavior
Societal culture and
norms
Personal moral
philosophy and ethical
behavior
Business culture and
industry practices
Organizational culture
and expectations
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PP4-Ea Consumer Bill of Rights
In 1962 President John F. Kennedy
outlined the Consumer Bill of
Rights that codified the ethics of
exchange between buyers and
sellers.
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PP4-Eb Consumer bill of rights - continued
Safety
Be informed
Right to
Choose
Be heard
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PP4-DDa Two kinds of unethical behavior
1.
Industrial Espionage is the clandestine collection
of trade secrets or proprietary information about
a company’s competitors.
Industrial espionage is most prevalent in hightechnology industries, such as electronics,
specialty chemicals, industrial equipment,
aerospace, and pharmaceuticals, where technical
know-how and trade secrets separate industry
leaders from followers.
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PP4-DDb Two kinds of unethical behavior
2.
The giving and receiving of bribes and kickbacks
is the second form of unethical competitive
behavior.
Bribes and kickbacks are often disguised as gifts,
consultant fees and favors. They are more
common in business-to-business and government
marketing than in consumer marketing.
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PP4-EE Foreign Corrupt Practices Act
This act makes it a crime for U.S. corporations
to bribe an official of a foreign government or
political party to obtain or retain business in a
foreign country.
Generally, ethical standards are more likely to
be compromised in industries experiencing
intense competition and in countries in earlier
stages of economic development.
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PP4-3 American Marketing Association Code of Ethics
Members of the American Marketing Association have
joined together in subscribing to its code of ethics
embracing the following topics:
1.
Responsibilities of the Marketer
2.
Rights and Duties of Parties in the Marketing
Exchange Process
3.
Organizational Relationships
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PP4-F Personal moral philosophies
MORAL IDEALISM
Considers certain individual rights or duties universal
regardless of the outcome
UTILITARIANISM
Considers the “greatest good for the greatest number”
by assessing the costs and benefits of the consequences
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© The McGraw-Hill Companies, Inc., 2000
PP4-FF Concept Check
1.
What rights are included in the
Consumer Bill of Rights?
2.
What ethical practice is addressed in
the Foreign Corrupt Practices Act?
3.
What is meant by moral idealism?
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© The McGraw-Hill Companies, Inc., 2000
PP4-4 Three concepts of social responsibility
Societal
responsibility
Customers
Owners/
Stockholders
Ecological
environment
Profit responsibility
Employees
General
public
Stakeholder
responsibility
Suppliers/Distributors
Public interest groups
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PP4-G Elements of a social audit
Recognition
Of social expectations and rationale for
engaging in social responsibility endeavors
Identification
Of causes or programs consistent with the
company’s mission
Of objectives and priorities for programs
Determination and activities to be undertaken
Specification
Of the type and amount of resources
necessary to achieve objectives
Evaluation
Of programs and activities and assessment of
future involvement
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PP4-GGa Valdez Principles
The Valdez Principles encourage companies to:
1.
eliminate pollutants, minimize hazardous wastes,
and conserve nonrenewable resources;
2.
market environmentally safe products and
services;
3.
prepare for accidents and restore damaged
environments;
4.
provide protection for employees who report
environmental hazards;
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PP4-GGb Valdez Principles
5.
appoint an environmentalist to their
boards of directors, name an
executive for environmental affairs,
and develop an environmental audit
of their global operations to be made
available for public inspection.
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© The McGraw-Hill Companies, Inc., 2000
PP4-HH Concept Check
1.
2.
3.
What is meant by social
responsibility?
Marketing efforts to produce,
promote, and reclaim
environmentally sensitive products
are called ________________ .
What is a social audit?
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Irwin/McGraw-Hill
© The McGraw-Hill Companies, Inc., 2000