Marketing Ethics and Social Responsibility 20 Principles of Marketing.

Marketing Ethicsand

Social Responsibility

2020

Principles of Marketing

Learning Objectives

After studying this chapter, you should be able to:

1. Identify the major social criticisms of marketing

2. Define consumerism and environmentalism and explain how they affect marketing strategies

3. Describe the principles of socially responsible marketing

4. Explain the role of ethics in marketing20-2

Chapter Outline

1. Social Criticisms of Marketing2. Citizen and Public Actions to

Regulate Marketing3. Business Actions Toward Socially

Responsible Marketing

20-3

Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

• High cost of distribution• High advertising and promotion costs• Excessive markups• Deceptive practices

20-4


Complaint: Intermediaries mark up prices beyond their value due to inefficiencies and unnecessary or duplicative services

Response: Markups reflect the cost

of the services that consumers expect

• Convenience• Larger stores and

assortments• More service• Return privileges 20-5

Marketing’s Impact on Individual ConsumersHigh Cost of Distribution


Complaint: Prices are inflated to

absorb advertising and sales promotion costs, and packaging only adds to the psychological, not functional, value of the product

Response: Advertising does add to

product cost but also to product value by informing potential customers of the availability and merits of the product

20-6

Marketing’s Impact on Individual ConsumersHigh Advertising and Promotion costs


Complaint: Companies mark up

products excessively

Response: Most businesses try to

deal fairly with consumers because they want to build relationships and repeat business

20-7

Marketing’s Impact on Individual ConsumersExcessive Markups


Marketing’s Impact on Individual ConsumersDeceptive Practices

Complaint: Companies use deceptive practices that lead customers to believe they will get more value than they actually do. These practices fall into three categories:

• Deceptive pricing• Deceptive promotion• Deceptive packaging

20-8



Deceptive pricing includes practices such as falsely advertising “factory” or “wholesale” prices or a large price reduction from a phony high retail list price

Deceptive promotion includes practices such as misrepresenting the product’s features or performance or luring the customer to the store for a bargain that is out of stock

Deceptive packaging includes exaggerating packaging contents through subtle design, using misleading labeling or describing size in misleading terms

20-9



Legislation to protect consumer from deceptive practices• Wheeler-Lea Act—gives the Federal Trade Commission

(FTC) power to regulate “unfair or deceptive acts or practices”

Is it deception or alluring or puffery that is just an exaggeration for effect?

• Products that are harmful• Products that provide little benefit• Products that are not made well

20-10


Complaint: Salespeople use high-

pressure selling that persuades people to buy goods they had no intention of buying

Response: Most selling involves

building long-term relationships and valued customers. High pressure or deceptive selling can damage these relationships.

20-11


High-Pressure Selling


Complaint: Products have poor

quality, provide little benefit, and can be harmful

Response: Today’s marketers know that

customer-driven quality results in customer value and satisfaction that creates profitable customer relationships. There is no value in marketing shoddy, harmful, or unsafe products.

20-12


Shoddy, Harmful, or Unsafe Products


Complaint: Producers follow a program

of planned obsolescence, causing their products to become obsolete before they actually need replacement. Producers also continually change consumers’ concepts of acceptable styles to encourage more and earlier buying.

Response: Planned obsolescence is

really the result of competitive market forces leading to ever-improving goods and services. Marketers know that customers like style changes and want the latest innovations even if older models still work.

20-13


Planned Obsolescence


Complaint: American marketers

serve disadvantaged customers poorly. Some retail companies “redline” poor neighborhoods and avoid placing stores there.

Response: Some marketers

profitably target these customers, and the FTC has taken action against marketers that do advertise false values, wrongfully deny service, or charge disadvantaged customers too much.

20-14


Poor Service to Disadvantaged Consumers


Complaint: The marketing system

urges too much interest in material possessions. People are judged by what they own rather than who they are, creating false wants that benefit industry more than they benefit consumers.

Response: People do have strong

defenses against advertising an other marketing tools. Marketers are most effective when they appeal to existing wants rather than creating new ones. The high failure rate of new products shows that companies cannot control demand.

20-15

Marketing’s Impact on Society as a WholeFalse Wants and Too Much Materialism


Complaint: Businesses oversell private

goods at the expense of public goods and require more public goods to support them

Response: There needs to be a

balance between private and public goods

• Producers should bear full social costs of their operations

• Consumers should pay the social costs of their purchases

20-16

Marketing’s Impact on Society as a WholeToo Few Social Goods


Complaint: Marketing and

advertising creates cultural pollution

Response: Marketing and advertising are

planned to reach only a target audience, and advertising makes radio and television free to users and helps to keep the cost of newspapers and magazines down. Today’s consumers have alternatives to avoid marketing and advertising from technology.

20-17

Marketing’s Impact on Society as a WholeCultural Pollution


Complaint: Businesses wield too

much political power over mass media, limiting media to report independently and objectively

Response: American industries do

promote their own interests, and regulators are seeking to balance the interests of big businesses against the public

• Microsoft• Tobacco

20-18

Marketing’s Impact on Society as a WholeToo Much Political Power


Marketing’s Impact on Other Businesses

• Acquisition of competitors• Marketing practices• Unfair competitive marketing practices

20-19


Marketing’s Impact on Other Businesses

Acquisition of competitors can sometimes be good for society when the acquiring company gains economies of scale that lead to lower prices

Marketing practices can also bar new competitors from entering an industry and can create use patents, heavy promotional spending to drive out existing competitors

Unfair competitive marketing practices such as setting prices below cost, threatening to cut off business with suppliers, or discouraging the buying of a competitor’s product can hurt or destroy other firms

20-20

Citizen and Public Actions to Regulate Marketing

Consumerism is the organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers

Environmentalism is an organized movement of concerned citizens, businesses, and government agencies to protect and improve people’s living environment

20-21


ConsumerismTraditional sellers’ rights include:• The right to 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 warning and controls

• The right to charge any price for the product, provided no discrimination exists among similar kinds or buyers

• The right to spend any amount to promote the product, provided it is not defined as unfair competition

• The right to use any product message, provided it is not misleading or dishonest in content or execution

• The right to use any buying incentive programs, provided they are not unfair or misleading

20-22


Environmentalism

People and organizations should operate with more care for the environment

The marketing system’s goal should not be to maximize consumption, consumer choice, or satisfaction, but rather to maximize life quality. Environmental costs should be included in both producer and consumer decision making. 20-23


EnvironmentalismEnvironmental Sustainability

• Pollution prevention• Product stewardship• Design for environment (DFE)• New environmental technologies• Sustainability vision

20-24



Pollution prevention involves not just cleaning up waste but also eliminating or minimizing waste before it is created

Product stewardship involves minimizing the pollution from production and all environmental impact throughout the full product life cycle

Design for environment (DFE) involves thinking ahead to design products that are easier to recover, reuse, or recycle

20-25



New environmental technologies involve looking ahead and planning new technologies for competitive advantage

Sustainability vision is a guide to the future that shows the company that the company’s products, process, and policies must evolve and what is needed to get there

20-26

Business Actions Toward Socially Responsible Marketing

Enlightened Marketing

Enlightened marketing refers to a company’s marketing effort supporting the best long-run performance of the marketing system and consists of five principles:

• Consumer-oriented marketing• Customer-value marketing• Innovative marketing• Sense-of-mission marketing• Societal marketing

20-27



Consumer-oriented marketing means that a company should view and organize its marketing activities from the consumer’s perspective

Customer-value marketing means that the company should put most of its resources into customer-value-building marketing investments—long-term customer loyalty and relationships—by continually improving the value consumers receive from the firm’s market offerings

Innovative marketing requires the company to continually seek real product and marketing improvements

20-28



Sense-of-mission marketing means the company should define its mission in broad social terms rather than narrow product terms

Societal marketing means the company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, and society’s long-run interests

• Views societal problems as opportunities• Designs pleasing and beneficial products

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Deficient products have neither immediate appeal nor long-term benefits

• Bad-tasting and ineffective medicine

Pleasing products have high immediate satisfaction but may hurt consumers in the long run

• Cigarettes and junk food

20-30



Salutary products have low appeal but may benefit consumers in the long run

• Seat belts and air bags

Desirable products give both immediate satisfaction and high long-term benefits

• Tasty and nutritious breakfast food

20-31


Marketing Ethics

Corporate marketing ethics are broad guidelines that everyone in the organization must follow that cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards

20-32


Marketing EthicsPhilosophies

Issues are decided by the free market and legal system

Responsibility is not on the system but in the hands of the individual company and managers

20-33

The End

Marketing Ethics and Social Responsibility 20 Principles of Marketing.

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