CH04TB

CHAPTER 4: MASTER TEST BANK
ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING
Test Item Table by Major Section of the Chapter and Blooms Level of Learning
Blooms Level of Learning (LL)

Level 1 Level 2 Level 3
Major Section Knowledge Comprehension Application
of the Chapter (Knows Basic (Understands (Applies
Terms & Facts) Concepts & Principles)
Principles)
Chapter Opener: 2, 3, 4 1, 5, 6
Anheuser-Busch 186
(pp. 88-89)
Nature and 7, 8, 9, 10 11, 12, 13, 18, 19, 20 14, 15, 16, 17
Significance of 187, 188 189
Marketing Ethics
(pp. 90-91)
Understanding Ethical 25, 26, 27, 30, 35, 21, 22, 23, 24, 28, 29, 31, 32, 33, 34, 41,
Marketing Behavior 38, 39, 40, 43, 44, 36, 37, 53, 54, 62, 65, 42, 55, 56, 57, 58,
(pp. 91-98) 45, 46, 47, 48, 49, 66, 67, 71, 72, 73, 74, 59, 60, 68, 69, 81,
50, 51, 52, 61, 63, 76, 77, 80, 86, 87, 88, 89, 90, 93, 94, 99,
64, 70, 75, 78, 79, 95, 98, 102, 103, 104, 100, 101, 112, 113,
82, 83, 84, 85, 91, 108, 109, 110, 111, 115, 117
92, 96, 97, 105, 116 196
106, 107, 114 190, 192, 193, 194
191, 195
Understanding Social 118, 119, 127, 128, 120, 121, 124, 125, 126, 122, 123, 130, 134,
Responsibility in 131, 132, 136, 137, 129, 133, 145, 155, 156, 135, 138, 139, 146,
Marketing 140, 141, 142, 143, 164, 155, 156, 164, 165, 147, 148, 149, 157,
(pp. 98-103) 144, 150, 151, 152, 168, 169, 170, 173, 175, 158, 159, 160, 161,
153, 154, 163, 166, 176, 177, 178, 179, 180 162, 174
167, 171, 172, 181, 197, 200, 201, 203, 204 198, 199, 202
182
Video Case 4: Toyota 183, 184, 185
(pp. 105-107)
NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.
Test Item Table by Learning Objective and Blooms Level of Learning
Blooms Level of Learning (LL)
Learning Objective Level 1 Level 2 Level 3

(LO) Knowledge Comprehension Application
(Knows Basic (Understands Concepts (Applies Principles)
Terms & Facts) & Principles)
LO1 Explain the 7, 8, 9, 10 11, 12, 13, 18, 19, 20 1, 14, 15, 16, 17
differences 187, 188 189
between legal
and ethical
behavior in
marketing.
(pp. 90-91)
LO2 Identify factors 25, 26, 27, 30, 35, 21, 22, 23, 24, 28, 29, 31, 32, 33, 34, 41,
that influence 38, 39, 40, 43, 44, 36, 37, 53, 54, 62, 65, 42, 55, 56, 57, 58,
ethical and 45, 46, 47, 48, 49, 66, 67, 71, 72, 73, 74, 59, 60, 68, 69, 81,
unethical 50, 51, 52, 61, 63, 76, 77, 80, 86, 87, 88, 89, 90, 93, 94, 99,
marketing 64, 70, 75, 78, 79, 95, 98, 102, 103, 104, 100, 101, 112, 113,
decisions. 82, 83, 84, 85, 91, 108, 109, 110, 111, 115, 117
(pp. 91-98) 92, 96, 97, 105, 116 196
106, 107, 114 190, 192, 193, 194
191, 195
LO3 Describe the 118, 119, 127, 128, 2, 3, 4, 120, 121, 124, 5, 6, 122, 123, 130,
different 131, 132, 136, 137, 125, 125, 126, 129, 133, 134, 135, 138, 139,
concepts of 140, 141, 142, 143, 145, 155, 156, 164, 165, 146, 147, 148, 149,
social 144, 150, 151, 152, 168, 169, 170, 173, 183, 157, 158, 159, 160,
responsibility. 153, 154, 163, 166, 184, 185 161, 162, 174
(pp. 98-102) 167, 171, 172 186, 197, 200, 201, 203 198, 199, 202
LO4 Recognize 181, 182 175, 176, 177, 178, 179,
unethical and 180
socially 204
irresponsible
consumer
behavior.
(pp. 102-103)
NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.
MULTIPLE CHOICE QUESTIONS
4-1 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION
The Family Talk about Drinking guidebook developed by Anheuser-Busch to help parents
address the topic of underage drinking is an example of
a. consumerism.
b. preemptive marketing.
c. ethical behavior in marketing.
d. the social marketing concept.
e. cause marketing.
Answer: c Page(s): 88-89 LO: 1 AACSB: Ethics QD: Hard

Rationale: The Anheuser-Busch guidebook, Family Talk about Drinking, was developed to help
parents address the topic of underage drinking. It is an example of ethics in marketing since
ethics are the moral principles and values that govern the actions and decisions of an individual or
group that serve as guidelines on how to act rightly when faced with moral dilemmas such as
underage drinking.
4-2 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION
Anheuser-Busch acts on what it views as an ethical obligation to its customers and the general
public with its
a. development of a low-carb beer.
b. annual sponsorship of the Super Bowl.
c. exclusive use of ingredients from American manufacturers and suppliers.
d. alcohol awareness and education programs.
e. commitment to maintaining the lowest prices possible without sacrificing taste.
Answer: d Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium

Rationale: Anheuser-Busch has worked to convince people not to abuse its products. It acts on
what it views as an ethical obligation to its customers and the general public with its alcohol
awareness and education programs.
Anheuser-Busch established its Corporate Social Responsibility (CSR) Department to

a. promote the positive aspects of moderate beer consumption.
b. promote responsible drinking and deter underage drinking and alcohol abuse.
c. encourage recycling of both aluminum cans and glass bottles by ultimate consumers and
suppliers.
d. educate employees about the importance of serving as role models by drinking responsibly
themselves.
e. promote Anheuser-Busch as more socially responsible than its competitors.
3
Answer: b Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium
Rationale: Corporate Social Responsibility (CSR) Department was established within Anheuser-
Busch to develop and implement programs, advertising and partnerships that promote responsible
drinking, prevent alcohol abuse, and curb underage drinking before it starts.
By preserving the natural environment, Anheuser-Busch is appealing to environmentalists

through its alcohol abuse awareness initiatives; it is attempting to persuade underage children
from thinking that drinking beer makes them cool. Anheuser-Busch is exhibiting which of the
following?
a. stockholder responsibility
b. profit responsibility
c. utilitarianism
d. cause marketing
e. social responsibility
Answer: e Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium

Rationale: Social responsibility is the view that organizations are part of a larger society and are
accountable to that society for their actions.
Anheuser-Buschs commitment preserving the natural environment caused Fortune magazine to

rank it among the top companies for __________.
a. utilitarianism
b. social responsibility
c. moral idealism
d. green marketing
e. cause marketing
Answer: b Page(s): 88-89 LO: 3 AACSB: Ethics QD: Hard

Rationale: Anheuser-Buschs efforts to preserve the environment reflect its broader social
responsibility, which was recognized by Fortune magazine.
Anheuser-Busch is trying to meet the needs of a very diverse group: its customers who drink beer,
environmentalists, ABRC, shareholders, and underage children who might think drinking is
cool. The primary reason for its desire to satisfy these needs is consistent with the idea of social
responsibility because
a. all of these people or groups are its stakeholders.
b. if Anheuser-Busch is not profitable, too many people will lose their jobs.
c. the larger Anheuser-Buschs profits, the more taxes they will be able to pay.
d. contrary to popular belief, alcohol can be good for you if consumed in moderation.
e. the more highly thought of by potential consumers, the higher companys sales would be.
Answer: a Page(s): 88-89 LO: 3 AACSB: Ethics QD: Hard
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Rationale: Stakeholders is defined in Chapter 1. The term stakeholder refers to any group or
organization that has a stake in the performance of the company. Social responsibility is a key
term in Chapter 4the idea that organizations are part of a larger society and are accountable to
that society for their actions. By preserving the natural environment, Anheuser-Busch is
appealing to the environmentalists. And ABRC, by its alcohol awareness and education
initiatives, appeals to people who drink beer and those who try to educate children from thinking
drinking beer would make them cool.
4-7 ETHICS KNOWLEDGE
Ethics refers to the

a. religious tenets of a country or ethnic region that shape its culture.
b. social norms of a nation, community, or family.
c. societys values and standards that are enforceable in the courts.
d. moral principles and values that govern the actions and decisions of an individual or group.
e. universal laws of man that go beyond individual or a groups beliefs of nations or religions.
Answer: d Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

Rationale: Key term definitionethics.
4-8 ETHICS KNOWLEDGE
The moral principles and values that govern the actions and decisions of an individual or group
are referred to as
a. social norms.
b. cultural values.
c. ethics.
d. societal philosophy.
e. religion.
Answer: c Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

Rationale: Key term definitionethics.
4-9 LAWS KNOWLEDGE
Laws refer to
a. a specific set of behaviors a given society considers ethical.
b. societys values and standards that are enforceable in the courts.
c. the agreed upon codes of behavior for a given nation, community, religious group, or family.
d. written documentation of a prescribed set of attitudes, beliefs, and values.
e. a code of ethics that defines what may be done in specific business circumstances.
Answer: b Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

Rationale: Key term definitionlaws.
4-10 LAWS KNOWLEDGE
Societys values and standards that are enforceable in the courts are referred to as
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a. situational ethics.
b. cultural norms.
c. industry practices.
d. laws.
e. the Consumer Bill of Rights

Rationale: Key term definitionlaws.
4-11 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION
Which of the following statements accurately distinguishes between laws and ethics?
a. Laws reflect the beliefs of the majority of society while ethics reflect the beliefs of the
minority of society.
b. Ethics deal with religious and moral beliefs while laws deal with social, economic, and
environmental behaviors.
c. Ethics deal with internal (personal) issues while laws deal with external (social) issues.
d. There is no significant difference between laws and ethics; these terms can be used
interchangeably.
e. Ethics deal with personal and moral principles whereas laws are societys values that are
enforceable in the courts.

Rationale: Ethics deal with personal and moral principles while laws are societys values that are
enforceable in the courts.
More than 70 percent of the physicians in the Maricopa County (Arizona) Medical Society agreed
to establish a maximum fee schedule for health services to curb rising medical costs. All
physicians were required to adhere to this schedule as a condition for membership in the society.
The U.S. Supreme Court ruled that this agreement violated the Sherman Act and represented price
fixing. This example illustrates that the physicians actions were
a. ethical but illegal.
b. ethical and legal.
c. unethical and illegal.
d. unethical but legal.
e. altruistic but nave.
Answer: a Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium

Rationale: The physicians were acting ethically by trying to keep their fees down; however, the
U.S. Supreme Court ruled they were acting illegally because they were engaged in price fixing, a
behavior that is outlawed by the Sherman Act. See Figure 4-1 in the textbook.
China is the worlds largest tobacco-producing country and has 300 million smokers.
Approximately 700,000 Chinese die annually from smoking-related illnesses. This figure is
expected to rise to more than 2 million by 2025. China restricts tobacco imports. U.S. trade
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negotiators advocate free trade, thus allowing U.S. tobacco companies to market their products in
China. The U.S. trade negotiators are acting
a. ethically but illegally.
b. ethically and legally.
c. unethically and illegally.
d. unethically but legally.
e. in ways that cannot be determined by the information provided.

Rationale: Smoking has been found to cause cancer and death for many people. Because the
U.S. trade negotiators know this, they are acting unethically. They are acting legally because
there is no law preventing U.S. tobacco companies from marketing their products in China. See
Figure 4-1 in the textbook.
4-14 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION
An owner of a small publishing company allowed a friend who was starting a machine
embroidery business to load the publishing companys copy of Microsoft Word on her friends
computer. This activity is
a. both legal and ethical.
b. caveat emptor.
c. illegal but ethical.
d. illegal and unethical.
e. sanctioned by the Business Software Alliance since only one copy is to be transferred.
Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard

Rationale: Ethics are the moral principles and values that govern the actions and decisions of an
individual or group. Laws are societys values and standards that are enforceable in the courts.
When software is purchased, the user agrees not to share the software with others. Not only is
this behavior unethical, it is also illegal. The Business Software Alliance has repeatedly run ads
denouncing software piracy. See Figure 4-1 in the textbook.
Enrons Chief Financial Officer Andrew Fastow was indicted and then pleaded guilty on a
charges of securities fraud in the Enron case and was accused of enriching himself and his family
at the companys expense. Fastow, in his tenure with Enron, acted
a. ethically but illegally.
b. ethically and legally.
c. unethically and illegally.
d. unethically but legally.
e. in a socially responsible manner.

Rationale: Fastow pleaded guilty to two counts of wire and securities fraud, thus acting illegally.
He asked an employee to do something illegal and because of his position as her boss, the illegal
request was also unethical. See Figure 4-1 in the textbook.
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Many media today use pay-to-vote polls, in which respondents use a 900-telephone number to
vote yes or no on a current issue, as a means of generating viewer or listener interest. The
Research Industry Coalition (RIC) has asked all media to inform viewers or listeners that the
validity of such polls is questionable and the results are NOT statistically representative of the
population but are just a frequency distribution of those who happen to call. If a television station
chooses not to make viewers aware of the shortcomings of a pay-to-vote poll, its business
practice would fall into which of the following categories?
a. ethical but illegal.
b. ethical and legal.
c. unethical and illegal.
d. unethical but legal
e. in todays media age, this practice has become universal; any bias is implied and need not be
directly stated under the caveat emptor doctrine.

Rationale: The use of pay-to-vote polls is legal. However, if viewers believe the polls are
scientifically valid or statistically representative of the population, their use may be misleading,
and therefore, unethical. See Figure 4-1 in the textbook.
A recent poll by Environics International, a public-opinion research firm, found that 67 percent of
North Americans are willing to boycott products on ethical grounds. This survey did not ask if
the person who was acting on ethical grounds would first see if the boycott was based on facts.
Which of the following statements describes a conclusion that should be drawn from this
information?
a. If you are an ethical person, you should act according to your instincts.
b. Realistically speaking, in order to stay in business, all businesses must occasionally behave
unethically.
c. All businesses will act unethically unless forced by consumers to act morally.
d. There is nothing consumers can do to stop unethical business activities.
e. Boycotting a product without knowing the facts can be viewed as unethical.
Answer: e Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard

Rationale: The boycott is unethical because it inflicts damage on others needlessly. Ethics are
the moral principles 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. There
are many examples of companies that have been boycotted on the basis of unfounded rumors,
causing short- and long-term harm to its stakeholders until the truth became widely known. See
4-18 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION
Public opinion surveys show that 58 percent of U.S. adults rate the ethical standards of business
executives as
a. outstanding.
b. above average.
c. similar to other professions.
d. typical of businesspeople around the world.
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e. fair or poor.
Answer: e Page(s): 91 LO: 1 AACSB: Ethics QD: Medium

Rationale: Public opinion surveys show that 58 percent of U.S. adults rate the ethical standards
of business executives as fair or poor.
According to public opinion surveys, __________ are considered to be among the LEAST
ethical occupations in the United States.
a. insurance company professionals
b. legal professionals
c. advertising practitioners
d. members of the U.S. Congress
e. the news media
Answer: c Page(s): 91 LO: 1 AACSB: Ethics QD: Medium

Rationale: Advertising practitioners are considered to be among the least ethical occupations in
the United States.
All of the following are reasons for the state of perceived ethical business conduct EXCEPT:
a. a growing tendency for business decisions to be judged publicly by groups with different
values and interests.
b. the increased pressure on business people to make decisions in a society with diverse value
systems.
c. an increase in the publics expectations of ethical business behavior.
d. ethical business conduct may have declined.
e. businesses are behaving more ethically during these difficult economic times.

Rationale: The current low perception of ethical business behavior can be explained by a number
of reasons. Alternative e has not been shown to be the case; in fact the reverse may be true.
4-21 ETHICAL MARKETING BEHAVIOR COMPREHENSION
Factors influencing personal moral philosophy and ethical behavior include __________,
business culture and industry practices, and corporate culture and expectations.
a. religious beliefs and practices
b. societal culture and norms
c. national and regional legislation
d. universal core values
e. the universal concept of good vs. evil

Rationale: Figure 4-2 in the textbook shows a framework with three influences that can have an
effect on ones personal moral philosophy and ethical marketing behavior. These include societal
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culture and norms, business culture and industry practices, and corporate culture and
expectations.
Which of the following is considered one of the major factors that influences ethical behavior?
a. organizational structures
b. societal culture and norms
c. national and local legislation
d. the U.S. Supreme Court
e. a nations moral philosophy

expectations.
Which of the following is considered one of the major factors that influences ethical behavior?
a. organizational structures
b. legislation
c. federal regulatory agencies
d. a nations moral philosophy
e. business culture and industry practices

expectations.
Factors influencing personal moral philosophy and ethical behavior include societal culture and
norms, business culture and industry practices, and __________.
a. religious beliefs and practices
b. corporate culture and expectations
c. national and regional legislation
d. universal core values
e. the universal concept of good vs. evil

expectations.
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4-25 CULTURE KNOWLEDGE
Culture refers to
a. the set of values, ideas, and attitudes that are learned and shared among members of a group.
b. the music, art, theater, etc. that reflects the values of an entire nation.
c. the learned behaviors of a specific racial, ethnic, or religious group based on commonly
shared ethical principles and protected by laws.
d. the combination of beliefs and behaviors accepted as correct regardless of a persons age, sex,
race, or religion.
e. the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the
members of an organization.
Answer: a Page(s): 91 LO: 2 AACSB: Ethics QD: Easy

Rationale: Text term definitionculture.
In marketing, the set of values, ideas, and attitudes that are learned and shared among members of
a group is referred to as __________.
a. ideals
b. morals
c. ethics
d. culture
e. diversity

Culture refers to the set of values, ideas, and attitudes that are learned and shared among members
of a group. It also serves as a socializing force that
a. reflects the will of the largest or most powerful minority.
b. is determined by the largest generational group at a given point in time.
c. becomes the basis of all legislationfederal, state, and localin societies around the world.
d. expresses the diverse backgrounds of a nations subcultures.
e. dictates what is morally right and just.
Answer: e Page(s): 91 LO: 2 AACSB: Ethics QD: Easy

4-28 CULTURE COMPREHENSION
Which of the following is a socializing force that dictates what is morally right and just?
a. federal regulatory agencies like the FTC
b. federal, state, and local legislation
c. the U.S. Supreme Court
d. culture
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e. organizational core values
Answer: d Page(s): 91 LO: 2 AACSB: Ethics QD: Medium

Rationale: Culture refers to the set of values, ideas, and attitudes that are learned and shared
among members of a group and serves as a socializing force that dictates what is morally right
and just.
4-29 CULTURE COMPREHENSION
Culture refers to the set of values, ideas, and attitudes that are learned and shared among members
of a group. Culture also serves as a socializing force that dictates what is morally right and just.
The important thing to remember is that moral standards
a. are relative to particular societies.
b. must be universal in order for cross-cultural marketing to be effective.
c. are fluid and very easy to change.
d. are cyclical so it is important to change with the times.
e. are concrete; something is either right or wrong

Rationale: Moral standards are relative to particular societies. These standards often reflect the
laws and regulations that affect social and economic behavior, which can create ethical dilemmas.
4-30 SOCIETAL CULTURE AND NORMS KNOWLEDGE
Copyrights, trademarks, and patents are

a. public goods.
b. intellectual property.
c. rights granted to individuals or organizations by the WTO for a period of five years.
d. limited to books, music, and software.
e. subject to ISO 14000 requirements.

Rationale: Copyrights, trademarks, and patents are intellectual property. Unauthorized use,
reproduction, or distribution of intellectual property is illegal in the United States and most
countries.
4-31 SOCIETAL CULTURE AND NORMS APPLICATION
The unauthorized use of intellectual property can severely affect the owners of that property.
This practice also
a. levels the playing ground for developing nations by eliminating years of research time.
b. accelerates innovation in that industry, as new and improved offerings enter the marketplace.
c. has a negative impact on the economy through the loss of jobs, royalties, wages, or tax
revenue.
d. has a positive impact on an entire nations cultural value system.
e. ensures that the prices to consumers are minimized as a result of increased competition.
Answer: c Page(s): 92 LO: 2 AACSB: Ethics QD: Hard
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Rationale: Differences in societal culture and norms affect the view of ethical behavior. Annual
lost sales from the theft of intellectual property amounts to $12.5 billion in the music industry,
$20.5 billion in the movie industry, and $51.0 billion in the software industry. Lost sales, in turn,
result in lost jobs, royalties, wages, and tax revenue.
Consider the copying of anothers copyright, trademark, or patent. These are viewed as
intellectual property. In the U.S., unauthorized use, reproduction, or distribution of intellectual
property is illegal. Yet in China, copying enjoys a long tradition and does not carry a stigma. For
example, copying a masterpiece was historically considered an art form in its own right. The
difference between the two countries shows that __________ affect(s) the view of ethica1
behavior held in each country.
a. business culture
b. industry practices
c. corporate culture
d. corporate expectations
e. societal culture and norms

Rationale: Differences in societal culture and norms affect the view of ethical behavior held in
both the U.S., where infringing on intellectual property is illegal, and in China, where it is legal.
As the use of the Internet grows around the world, there must be as easy an exchange of ideas and
information as possible between countries. One important issue is opt-in versus opt-out. In
general, European websites have opt-in policies while U.S. websites have opt-out policies. Opt-
in means customers must ask to be involved in data collection and marketing while opt-out
companies automatically include customers in data collection unless the customer specifically
asks not to be included. Europeans believe it is unethical to invade someones privacy.
Americans are not nearly as protective of their right to privacy. What ethical factor is illustrated
by this example?
a. industry practices
b. social legislation
c. societal culture and norms
d. changes it international law
e. organizational culture and expectations

Rationale: Culture refers to the set of values, ideas, and attitudes that are learned and shared
among members of a group. Culture also serves as a socializing force that dictates what is
morally right and just. This means that moral standards, like the right to privacy, are relative to
particular societies.
Making counterfeit copies of Gucci purses, Tommy Hilfiger sportswear, and other international
brands is pervasive in China because laws protecting intellectual property are unclear and
sporadically enforced. Even when sanctions are applied, sanctions are minimal, typically
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consisting of confiscation, a warning, a public apology, and perhaps a fine. Moreover, copying
enjoys a long tradition in China and does not carry a stigma. A business introducing a product
into China needs to know that its __________ may lead to trademark infringements.
a. religious precepts
b. antecedent states
c. moral idealism
d. societal culture and norms
e. utilitarianism

Rationale: In China, counterfeiting is viewed as a profitable way of doing business. An
international company doing business there must be vigilant in understanding Chinas societal
culture and norms.
4-35 BUSINESS CULTURE KNOWLEDGE
In marketing, the effective rules of the game, the boundaries between competitive and unethical
behavior, and the codes of conduct in business dealings are referred to as
a. societal norms.
b. societal mores.
c. business cultures.
d. fair trade practices.
e. corporate values.

Rationale: Text term definitionbusiness cultures.
4-36 BUSINESS CULTURE COMPREHENSION
Business culture affects ethical conduct both in the exchange relationship between sellers and
buyers and in the
a. competitive behavior among sellers.
b. purchase behavior among buyers.
c. price, service, and product responsibility to the ultimate consumer.
d. accountability of buyers and sellers to federal and state regulators.
e. perception of ethical behavior as viewed by employers of business firms, not nonprofit
organizations.
Answer: a Page(s): 92 LO: 2 AACSB: Ethics QD: Medium

Rationale: Business cultures comprise the effective rules of the game, the boundaries between
competitive and unethical behavior, and the codes of conduct in business dealings. Business
culture affects ethical conduct both in the exchange relationship between sellers and buyers and in
the competitive behavior among sellers.
4-37 ETHICS OF EXCHANGE COMPREHENSION
Ethical exchanges between sellers and buyers should result in

a. the seller making a profit at the expense of the buyer.
b. the buyer getting the product for the best price at the expense of the seller.
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c. both parties to the exchange being better off after a transaction.
d. the seller offering buyers its products and services at cost, especially during a period of
recession.
e. the buyer forming a strategic alliance with the seller.

Rationale: The exchange process is central to the marketing concept. Ethical exchanges between
sellers and buyers should result in both parties being better off after a transaction.
4-38 CAVEAT EMPTOR KNOWLEDGE
The Latin phrase caveat emptor is a legal concept that means

a. Cash on delivery.
b. Let the buyer beware.
c. Lets make a deal.
d. Dont take any wooden nickels.
e. Such is life.

Rationale: Key term definitioncaveat emptor.
The legal concept of let the buyer beware, which was pervasive in the American business
culture prior to the 1960s, is referred to as __________.
a. ad nauseum
b. mea culpa
c. quid pro quo
d. cest la vie
e. caveat emptor

Caveat emptor refers to

a. The legal concept of let the buyer beware, which was pervasive in the American business
culture prior to the 1960s.
b. The marketing concept of be first or be last, implying that the first company to the
marketplace wins.
c. The Latin term meaning that all is fair in love and war, an attitude that was held by most
marketers prior to the 1990s.
d. The legal concept of such is life, which created many illegal as well as legal but unethical
business practices during the 1980s.
e. The Latin phrase meaning empty promises, which was a charge placed upon many firms
during the period after WWII when products failed to meet their marketing claims.
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4-41 CAVEAT EMPTOR APPLICATION
Investors should understand that when purchasing stock, the principle of __________ is in effect.
It behooves investors to do research on the company, so they will make a wise purchase.
a. modus operandi
b. E Pluribus Unum
c. de facto marketing
d. cest la vie
e. caveat emptor
Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Hard

Rationale: Caveat emptor means let the buyer beware. It is up to investors to do the research
on a company. Neither the government nor any other organization guarantees the suitability of or
the positive returns on their investments.
4-42 CAVEAT EMPTOR APPLICATION
The Securities and Exchange Commission (SEC) works hard to prevent unscrupulous companies
from cooking their books to paint investors and regulators a better financial picture than they
really have. Yet, in the end, it is up to investors to research the companies in which they want to
invest because __________ is the norm when investing in the stock market.
a. modus operandi
b. caveat emptor
c. de facto marketing
d. cest la vie
e. anguis in herba
Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Hard

Rationale: Caveat emptor means let the buyer beware. It is up to investors to do the research on
a company. Neither the government nor any other organization guarantees the suitability of or the
positive returns on buyers investments.
4-43 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE
A law that codified the ethics of exchange between buyers and sellers, including the rights to
safety, to be informed, to choose, and to be heard, is referred to as the
a. Lanham Act
b. Fair Practices Act
c. Caveat Emptor Decree
d. Consumer Bill of Rights
e. Customer Consent Decree

Rationale: Key term definitionConsumer Bill of Rights.
- 16 -
The Consumer Bill of Rights refers to a law that
a. codified the ethics of exchange between manufacturers, distributors, and suppliers, including
the right to be paid.
b. codified the ethics of exchange between manufacturers, distributors, and suppliers, including
the rights to safe working conditions, fair pay, and collaborative decision making.
c. codified the ethics of exchange between buyers and sellers, including the rights to safety, to
be informed, to choose, and to be heard.
d. guaranteed consumers the right to be compensated through replacement, repair, or
reimbursement for products that fail to perform as promised by the manufacturer.
e. guaranteed consumers the rights that are enumerated in the First Amendment to the U.S.
Constitution.

Rationale: Key term definitionConsumer Bill of Rights.
The Consumer Bill of Rights codified the ethics of exchange between buyers and sellers. It was
outlined by __________ in __________.
a. President John Kennedy; 1962.
b. President Ronald Reagan; 1983.
c. President William H. Clinton; 1996.
d. President George W. Bush; 2003.
e. President Barack Obama; 2009.

Rationale: The Consumer Bill of Rights was the law that codified the ethics of exchange
between buyers and sellers including the rights to safety, to be informed, to choose, and to be
heard. President John Kennedy outlined it in 1962.
In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of
exchange between buyers and sellers. These were the right: (1) __________; (2) to be informed;
(3) to choose; and (4) to be heard.
a. to privacy
b. to be compensated for product defects
c. to be treated with respect
d. be treated without prejudice
e. to safety

Rationale: In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified
the ethics of exchange between buyers and sellers. These were the right: (1) to safety; (2) to be
informed; (3) to choose; and (4) to be heard.
- 17 -
exchange between buyers and sellers. These were the right: (1) to safety; (2) __________; (3) to
choose; and (4) to be heard.
a. to privacy
b. to be informed
c. to be treated with respect
d. to be treated without prejudice
e. to receive fair prices for both products and services

exchange between buyers and sellers. These were the right: (1) to safety; (2) to be informed; (3)
__________; and (4) to be heard.
a. to have legal representation in a court of law
b. to exchange or return products within a reasonable period of time
c. to choose
d. to demand rain checks if advertised goods are out of stock
e. to be compensated for product defects

exchange between buyers and sellers. These were the right: (1) to safety; (2) to be informed; (3)
to choose; and (4) __________.
a. to have legal representation in a court of law
b. to exchange or return products and services within a reasonable period of time
c. to receive fair prices for both products and services
d. to be compensated for product defects
e. to be heard

4-50 ETHICS OF EXCHANGE KNOWLEDGE
- 18 -
Companies need to be vigilant in product quality testing not simply from an ethical perspective
but from a financial one as well. Personal claims and property damage from consumer product
safety incidents cost companies more than __________ annually.
a. $100 million
b. $900 million
c. $300 billion
d. $500 billion
e. $700 billion

Rationale: The right to safety manifests itself in industry and federal safety standards for most
products sold in the U.S. The Consumer Product Safety Commission monitors over 15,000
consumer products. However, personal claims and property damage from consumer product
safety incidents cost companies more than $700 billion annually.
The FTC is concerned about the amount of personal information that is collected through
websites because the consumer is not made aware of how this information is being used. Over 92
percent of websites collect personal information, yet only about __________ make their
customers aware of how that information is being used.
a. one-quarter
b. one-third
c. one-half
d. two-thirds
e. three-quarters

Rationale: An FTC survey of websites indicated that 92% collect personal information such as
consumer e-mail addresses, telephone numbers, shopping habits, and financial data. Yet, only
two-thirds of websites inform consumers of what is done with this information once obtained.
A current practice whereby retailers may demand cash or free goods in exchange for shelf space
to stock new products is referred to as
a. slotting allowances.
b. kickbacks.
c. economic espionage.
d. tying arrangements.
e. industrial bribes.

Rationale: Relating to the right to choose, many supermarket chains demand slotting
allowances from manufacturers in the form of cash or free goods to stock new products.
- 19 -
The Children's Online Privacy Protection Act (1998) is a law designed to protect consumers right
to
a. choose.
b. be informed.
c. be treated courteously.
d. safety.
e. be heard.
Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Medium

Rationale: The consumer right to be informed has spawned much federal legislation such as the
Childrens Online Privacy Protection Act (1998) and self-regulation initiatives restricting the
disclosure of personal information.
The right to be heard means that

a. the U.S. Department of Commerce has the right to hear consumer complaints.
b. the American Marketing Association has the right to discipline marketers based on customer
complaints.
c. consumers should have access to public policy makers regarding complaints about products
and services.
d. companies should have access to public policy makers regarding complaints about fraudulent
consumer practices.
e. consumers should have access to public policy makers regarding new product ideas.

Rationale: The right to be heard means that consumers should have access to public policy
makers regarding complaints about products and services.
4-55 ETHICS OF EXCHANGE APPLICATION
Mattels Cabbage Patch Snacktime Kids doll was designed to eat plastic toys that were drawn into
the dolls motorized mouth. However, despite extensive testing, the doll was found to eat the
childs hair and was subsequently recalled and discontinued. Mattel discontinued the item
because of consumers right to
a. choose.
b. be informed.
d. safety.
e. happiness.
Answer: d Page(s): 93 LO: 2 AACSB: Ethics QD: Hard

Rationale: Consumers right to safety ensures safe products. Since the doll was unsafe, it was
removed from production and the marketplace.
Recently, a project team for Cosco, the worlds largest childrens products company, developed a
high chair that could be used as an infant feeding seat, a youth chair, a play chair, a booster chair,
- 20 -
and when reclined, an infant bed. Its design could be made and sold for $49. The marketing
manager, in consultation with other middle managers, decided to have the prototypes checked out
by Cosco employees who had small children. This was the only product testing performed on the
product. Before Cosco pulled the unsafe chair from the market, several children were injured and
some died as a result of using the chair. Cosco was charged with being unconcerned about
consumers right to
a. choose.
b. be informed.
d. safety.
e. happiness.

Rationale: The chair was unsafe, so Cosco violated the right to safety. The U.S. Consumer
Product Safety Commission fined Cosco $1.3 million for its misconduct vis--vis the chair.
Dell Inc. learned that the lithium-ion batteries in its notebook computers posed a fire hazard to
consumers. The company recalled 2.7 million batteries and gave consumers a replacement before
any personal injuries resulted. Dell was most likely concerned with consumers right to
a. choose.
b. be informed.
c. safety.
d. be heard.
e. happiness.

Rationale: The batteries posed a safety hazard, so Dell recalled them.
Recently, certain toys that were manufactured in China were found to have unsafe levels of lead
in the paint and were recalled. This action protected consumers right to
a. safety.
b. be informed.
c. be heard.
d. choose.
e. be treated courteously.
Answer: a Page(s): 93 LO: 2 AACSB: Ethics QD: Hard

Rationale: These toys would be harmful to children so the companies who sold them violated
consumers right to safety, and they resolved this by recalling the toys.
When shopping on the Internet, most consumers assume the personal information they give out is
confidential. Subscribers to America Online (AOL) were upset when AOL proposed giving
- 21 -
member information to partners without telling them. This is related most directly to consumers
right to
a. be heard.
b. be treated courteously.
c. safety.
d. happiness.
e. be informed.

Rationale: By giving out information about consumers without the knowledge of the consumers,
their right to be informed about what AOL was planning on doing with their personal information
is denied.
When Toysmart.com filed for bankruptcy in June 2000, it listed its customer database as one of
its assets even though it had assured its customers it would never disclose their information to any
third party. People who had purchased products from Toysmart and were a part of its database
were upset when they learned their private information was being treated as property that was for
sale. These customers believed that according to the Consumer Bill of Rights, they should know
how their private information would be used. In other words, Toysmarts former customers had a
right to
a. choose.
b. be informed.
c. be heard.
d. safety.
e. happiness.

Rationale: The consumers right to be informed was lost when Toysmart threatened to use their
private information in a way not consistent with how it had been gathered.
4-61 DO NOT CALL REGISTRY KNOWLEDGE
The FTC established the Do Not Call Registry in 2003 for consumers who do not want to receive
unsolicited telemarketing calls. Today, a telemarketer can be fined up to __________ for each
call made to a telephone number posted on the registry.
a. $500
b. $750
c. $1,250
d. $8,750
e. $16,000

Rationale: The FTC established to Do Not Call Registry in 2003 for consumers who do not want
to receive unsolicited telemarketing calls. Today, a telemarketer can be fined up to $16,000 for
each call made to a telephone number posted on the registry.
4-62 ETHICS OF COMPETITION COMPREHENSION
- 22 -
Business culture affects ethical behavior in competition. Two kinds of unethical behavior are
most common:
a. economic espionage and bribery.
b. price fixing and copyright infringement.
c. bribery and extortion.
d. price fixing and economic espionage.
e. economic espionage and antitrust infractions.

Rationale: Business culture also affects ethical behavior in competition. Two kinds of unethical
behavior are most common: (1) economic espionage and (2) bribery.
4-63 ECONOMIC ESPIONAGE KNOWLEDGE
Economic espionage refers to

a. the destruction of a competitors products or services through physical damage of property or
damage to their reputation.
b. persuading someone to act in ones favor, typically illegally or dishonestly, by a gift of money
or other inducement.
c. an illicit payment made to someone who has facilitated a transaction or appointment.
d. the clandestine collection of trade secrets from foreign countries.
e. the clandestine collection of trade secrets or proprietary information about a companys
competitors.
Answer: e Page(s): 93-94 LO: 2 AACSB: Ethics QD: Easy

Rationale: Key term definitioneconomic espionage. Alternative b is the definition of a bribe
and alternative c is the definition of a kickback. See Mac OS X 10.6.8 New Oxford American
Dictionary.
4-64 ECONOMIC ESPIONAGE KNOWLEDGE
The clandestine collection of trade secrets or proprietary information about a companys

competitors is referred to as __________.
a. economic espionage
b. industrial espionage
c. marketplace espionage
d. industrial surveillance
e. patent infringement
Answer: a Page(s): 93-94 LO: 2 AACSB: Ethics QD: Easy

Rationale: Key term definitioneconomic espionage.
4-65 ECONOMIC ESPIONAGE COMPREHENSION
All of the following are examples of economic espionage EXCEPT:

a. wiretapping
b. misrepresentation
c. bribery
- 23 -
d. dumpster diving or searching a competitors trash.
e. employment contract violations
Answer: c Page(s): 93-94 LO: 2 AACSB: Ethics QD: Medium

Rationale: Economic espionage is the clandestine collection of trade secrets or proprietary
information about a company's competitors and includes illegal trespassing, theft, fraud,
misrepresentation, wiretapping, the search of a competitors trash, and violations of written and
implicit employment agreements with noncompete clauses. Giving and receiving bribes and
kickbacks are another form of unethical competitive business behavior.
Economic espionage includes such activities as _________.

a. two firms hiring the same musician to write their company jingle
b. hiring people who ever worked in an executive capacity at a competitors firm, especially if
they didnt have a noncompete clause
c. offering to accept all competitors coupons, making their effectiveness as a promotional tool
negligible
d. searching through a competitors trash
e. marrying someone who works for a competitor in an executive position

Rationale: Key term definitioneconomic espionage.
Economic espionage is most likely to occur in which type of industries?

a. fashion design and textiles
b. entertainment
c. high-tech electronics and aerospace
d. intellectual property (print)
e. beverage industry (alcoholic and nonalcoholic)

Rationale: Economic espionage is most prevalent in high-technology industries, such as
electronics, specialty chemicals, industrial equipment, aerospace, and pharmaceuticals, where
technical know-how and trade secrets separate industry leaders from followers.
4-68 ECONOMIC ESPIONAGE APPLICATION
Michael Smolensky is CEO of Lifeway Foods, Inc., based in Skokie, IL. The company sells
kefir, a cultured milk product popular in Smolenskys native Russia. Recently, Smolensky, who
had developed his own secret recipe, got a call from his supplier, saying, Michael, someone is
trying to steal your secrets. Smolensky discovered later that a prospective rival had called to ask
the supplier for certain ingredients by their secret codes, known only to Smolensky and the
supplier. The rival had picked them out of Lifeways refuse. This is an example of
a. corporate shadowing.
b. economic espionage.
c. clandestine trade secrets.
- 24 -
d. industrial sleuthing.
e. competitive surveillance.

information about a companys competitors, which includes the search of a competitors trash.
4-69 ECONOMIC ESPIONAGE APPLICATION
Jay Blooms Pet Assure, a national pet health-care provider network based in Dover, N.J.,
recently took advantage of a rivals navet. When a West Coast provider of catastrophic pet
coverage preannounced the addition of a wellness component (Pet Assures specialty) in an
interview with a tiny community newsweekly six months prior to launching it, Bloom was
notified immediately through a web-based news monitoring service. This not only gave him time
to add catastrophic benefits to one of his own wellness products, but also enabled him to get his
offering to the market first. Jay Bloom relied on __________ to keep him abreast of his
competitors activities.
a. legal environmental scanning
b. economic espionage
c. the use of kickbacks
d. corporate piracy
e. primary market research
Answer: a Page(s): 93-94 LO: 2 AACSB: Ethics QD: Hard

information about a companys competitors. Espionage activities include illegal trespassing,
theft, fraud, misrepresentation, wiretapping, the search of a competitors trash, and violations of
written and implicit employment agreements with noncompete clauses. In this case, Pet Assure
found out about its competitors activities by reading a news story in a local paper. This is a legal
form of secondary, not primary data collection, not economic espionage. Whether Pet Assures
response is ethical or unethical is debatable.
Coke-Pepsi Photo
- 25 -
4-70 MAKING RESPONSIBLE DECISIONS KNOWLEDGE
Consider the Coke-Pepsi photo above. Suppose you are a senior executive at Pepsi-Cola and a
Coca-Cola employee offers to sell you the marketing plan and sample for a new Coke product at
a modest price. When asked this question in an online survey, __________ percent of marketing
and advertising executives said they would buy the plan and product sample if there were no
repercussions.
a. 15
b. 36
c. 52
d. 67
e. 89

Rationale: When this question was posed in an online survey of marketing and advertising
executives, 67 percent said they would buy the plan and product sample if there were no
repercussions.
4-71 MAKING RESPONSIBLE DECISIONS COMPREHENSION
Consider the Coke-Pepsi photo above. An employee of Coca-Cola attempted to share its
marketing plan with an employee of Pepsi for a modest price. What should the Pepsi employee
do?
a. Buy the marketing plan if assured there would be no legal or ethical repercussions.
b. Ignore the offer to buy the marketing plan and hope the ethical dilemma would go away.
c. Immediately contact Coca-Cola to advise them of the plot to sell the marketing plan.
d. Immediately report the offer to the Better Business Bureau.
e. Advise the Coca-Cola employee that it would be ethical to buy the plan if it was offered for
free.

Rationale: The Pepsi employee should immediately report the incident to Coca-Cola who will
take the appropriate steps such as contacting the FBI to investigate the situation.
Consider the Coke-Pepsi photo above. Thirty three percent of Pepsis marketing and advertising
executives say they would decline an offer to buy one of Cokes marketing plans and samples.
Most said that they
a. thought they might go to work for Coke one day and didnt want to spoil their employment
chances.
b. would prefer competing ethically so they could sleep at night.
c. were afraid the media would find out.
d. knew they would get fired.
e. didnt want to disappoint their children.
- 26 -
Rationale: Most of the 33 percent of respondents in the online survey say they would decline the
offer because they would prefer competing ethically so they could sleep at night.
Consider the Coke-Pepsi photo above. What was the consequence to the Coca-Cola employee
who tried to sell classified information to Pepsi?
a. The employee was fired and no other legal action was taken since the practice is
unfortunately too commonplace.
b. The employee was given the choice of quitting or being demoted to a minimum wage job.
c. The employee was arrested for bribery and sentenced to five years house arrest.
d. The employee was sentenced to eight years in prison and ordered to pay $40,000 in
restitution.
e. The employee was permitted to keep her original job (minus any bonuses), but had to
undergo personal psychiatric counseling and attend a seminar on ethical behavior.

Rationale: The consequence to the Coca-Cola employee who tried to sell Pepsi information was
an eight-year prison sentence and a $40,000 fine. The other accomplices were sentenced to five
years in prison.
Why did 33 percent of Pepsis marketing and advertising executives say they would decline an
offer to buy one of Cokes marketing plans and samples?
a. They would prefer competing ethically so they could sleep at night.
b. They thought they might go to work for Coke one day and didnt want to spoil their
employment chances.
c. They were afraid the media would find out.
d. They knew they would get fired.
e. They didnt want to disappoint their children.

Rationale: Most of the 33 percent of respondents in the online survey say they would decline the
offer because they would prefer competing ethically so they could sleep at night.
4-75 BRIBERY KNOWLEDGE
Bribery is most likely to occur when

a. industries experience little competition.
b. the country has reached a high level of economic development.
c. industries are high-tech in nature.
d. industries operate in an oligarchic competitive environment.
e. industries experience intense competition.

Rationale: Bribery is most evident in industries experiencing intense competition and in
countries in earlier stages of economic development. Economic espionage (alternative c) is
most prevalent in high-technology industries.
- 27 -
4-76 GOING ONLINE COMPREHENSION
Transparency International is an organization that

a. monitors how developed nations deal with developing nations.
b. establishes procedures for ethical international business based on the ISO 7000 Code of
Conduct.
c. monitors and ranks nations worldwide according to their perceived use of bribery.
d. creates an acceptable international code of ethics.
e. makes sure federal, state, and local governments in the United States abide by the Consumer
Bill of Rights.

Rationale: Transparency International polls employees and political analysts and ranks countries
on the basis of their perceived level of bribery to win or retain business.
4-77 ETHICS OF COMPETITION COMPREHENSION
Two laws specifically intended to curb economic espionage and bribery in international
marketing are
a. Economic Espionage Act and Foreign Corrupt Practices Act.
b. Transparency International Act and Dumpster Diving Act.
c. Global Rights Protection Act and Foreign Corrupt Practices Act.
d. Consumer Bill of Rights Act and Economic Espionage Act.
e. Fair Trade Practices Act and Bribery Protection Act.

Rationale: The prevalence of economic espionage and bribery in international marketing has
prompted laws to curb these practices. Two significant laws, the Economic Espionage Act (1996)
and the Foreign Corrupt Practices Act (1977), address these practices in the United States.
4-78 CORPORATE CULTURE KNOWLEDGE
Corporate culture refers to

a. a formalized method for controlling the marketing environment.
b. the set of accepted standards and practices within a given industry.
c. the fundamental, passionate, and enduring principles of an organization that guide its conduct
over time.
d. a set of values, ideas, and attitudes that is learned and shared among the members of an
organization.
e. the formal statement of ethical principles and rules of conduct adopted by an organization.

Rationale: Text term definitioncorporate culture.
4-79 CORPORATE CULTURE KNOWLEDGE
- 28 -
The set of values, ideas, and attitudes that is learned and shared among the members of an
organization is referred to as __________.
a. a mission statement
b. core values
c. the socialization process
d. a code of ethics and conduct
e. corporate culture

Rationale: Text term definitioncorporate culture.
4-80 CORPORATE CULTURE COMPREHENSION
Corporate culture manifests itself in many different ways: the ethical behavior of top
management, expectations for ethical behavior present in formal codes of ethics, and
a. contracts and agreements between members of the same industry.
b. state and local laws regarding ethical business behavior.
c. the dress codes, manner of work, and sayings of its employees.
d. the socially responsible behaviors of its customers.
e. the involvement of shareholders with an organizations day-to-day marketing decisions.

Rationale: Corporate culture is a set of values, ideas, and attitudes that is learned and shared
among the members of an organization. The culture of a company demonstrates itself in the
dress, sayings, and manner of work (team efforts) of employees. Culture is also apparent in the
expectations for ethical behavior present in formal codes of ethics and the ethical actions of top
management and co-workers.
4-81 CORPORATE CULTURE APPLICATION
Lava.com is an Internet company that helps other organizations implement marketing strategies
that they hope will let them dominate their industry. Lavas advertising, states, We ignore the
rules, and we let no obstacle stand in your companys wayno matter how bold or impossible
your idea may seem. The company is composed of eighteen bright young Internet experts.
They work in one large room, which also contains dartboards, a pool table, and a meditation
center. If you were to walk into the office, it would be next to impossible to tell the company
owners from its lowest ranking employee. This best describes the Internet companys
a. modus operandi.
b. mission or vision.
c. socialization process.
d. business definition.
e. corporate culture.

Rationale: A corporate culture is a set of values, ideas, and attitudes that is learned and shared
among the members of an organization, such as treating everyone equally and providing a relaxed
atmosphere at work.
4-82 CODE OF ETHICS KNOWLEDGE
- 29 -
A code of ethics is a formal statement of ethical principles and
a. legal restrictions.
b. rules of conduct.
c. cultural values
d. core values.
e. moral laws.

Rationale: Key term definitioncode of ethics.
A code of ethics is a formal statement of rules of conduct and

a. legal restrictions.
b. moral laws.
c. ethical principles.
d. core values.
e. cultural values.

A formal statement of ethical principles and rules of conduct is referred to as a(n)

a. ethical mission.
b. moral code.
c. core value pronouncement.
d. code of conduct.
e. code of ethics.

A code of ethics refers to

a. a formal statement of moral and ethical business attitudes.
b. a formal statement of ethical principles and rules of conduct.
c. an informal guide of ethical principles and moral conduct.
d. the written document stating the beliefs and values of each employee in a firm.
e. a firms itemized list of business activities that are and are not consistent with the companys
mission statement.

- 30 -
4-86 CODE OF ETHICS COMPREHENSION
All of the following are addressed by an organizations code of ethics EXCEPT:

a. the dress, sayings, and work manner of employees.
b. contributions to political parties and government officials.
c. customer and supplier relationships.
d. accurate recordkeeping.
e. conflicts of interest.

Rationale: The dress, sayings, and work manner of employees are part of a corporate culture and
not a code of ethics.
Which of the following statements describes one of the major reasons codes of ethics are
violated?
a. Most companies do not have a formal code of ethics.
b. Most companies overlook infractions if the action is unethical but legal.
c. Many codes of ethics lack specificity.
d. There is often a discrepancy between the written code of ethics of a firm and the personal and
moral beliefs of individual employees.
e. There are very few violations in firms with written codes of ethics.

Rationale: The lack of specificity is one of the major reasons for the violation of ethics codes. A
second reason rests in the perceived behavior of top management and co-workers.
Which of the following is a major reason for the violation of ethics codes?
a. government regulation
b. family influence
c. lack of religious beliefs
d. fear of disciplinary action
e. lack of specificity

Rationale: The lack of specificity is one of the major reasons for the violation of ethics codes.
Employees must often judge whether a specific behavior is really unethical.
4-89 CODE OF ETHICS APPLICATION
HomeWorRx Referral Network profiles home service companies for homeowners looking for a
contractor or handyman. To ensure that companies they recommend are reliable, HomeWorRx
checks the business licenses, insurance coverages, Better Business Bureau records, and three
trade references. The recommended home service company also has to agree to a(n)
__________, which includes maintaining professionalism and guaranteeing the quality of its
work.
- 31 -
a. statement of cultural values
b. statement of values and beliefs
c. industry endorsement
d. code of ethics
e. contract due diligence

Rationale: A code of ethics is a formal statement of ethical principles and rules of conduct. In
this case, rules of conduct include maintaining professionalism and guaranteeing the quality of
work.
4-90 CODE OF ETHICS APPLICATION
In 2001, six executives of Tyson Foods, one of the worlds largest poultry, beef, and pork
processors, were arrested for the illegal smuggling of undocumented foreign workers into the
U.S. to work at Tyson plants. Based on this information, one could conclude that Tysons
violations are the result of __________, one of the major reasons why some company employees
engage in ethical behavior.
a. a mission statement that is too broad
b. the absence of a written core values statement
c. the absence of whistle-blowers
d. top managements behavior
e. the absence of a stakeholder code of ethics

Rationale: Employees often gauge how serious a company is about ethical behavior by looking
at the actions of upper management.
4-91 AMA STATEMENT OF ETHICS KNOWLEDGE
The American Marketing Association Statement of Ethics is centered on three general norms:
marketers must: (1) do no harm; (2) foster trust in the marketing system; and (3) __________.
a. initiate fair and honest dialogues in developing markets
b. embrace, communicate, and practice the fundamental ethical values that will improve
consumer confidence in the integrity of the marketing exchange system
c. champion new legislation that protects ethical business firms and punish those who abuse
consumer trust
d. support governmental agencies in their quest to identify and prosecute those who break the
laws of ethical marketing
e. contribute to societys well-being through charitable contributions and cause-related
marketing efforts
Answer: b Page(s): 95-97 LO: 2 AACSB: Ethics QD: Easy

Rationale: American Marketing Association Statement of EthicsGeneral Norms. See Figure
4-3 in the textbook.
4-92 AMA STATEMENT OF ETHICS KNOWLEDGE
- 32 -
The American Marketing Association Statement of Ethics identifies six key aspirational ethical
values. These include: _________, responsibility, fairness, respect, openness, and citizenship.
a. diversity
b. integrity
c. honesty
d. perseverance
e. charity
Answer: c Page(s): 95-97 LO: 2 AACSB: Ethics QD: Easy

Rationale: American Marketing Association Statement of EthicsEthical Values. See Figure 4-
3 in the textbook.
4-93 AMA STATEMENT OF ETHICS APPLICATION
A health club wishes to follow the American Marketing Association Statement of Ethics and
decides to offer a modified workout class at a very low price for senior citizens who otherwise
might not be able to afford their services. This action exhibits which key AMA ethical value?
a. honesty
b. fairness
c. respect
d. openness
e. responsibility

Rationale: We will recognize our special commitments to economically vulnerable segments of
the market such as children, the elderly, and others who may be substantially disadvantaged.
American Marketing Association Statement of EthicsEthical Values: Responsibility (bullet #4).
See Figure 4-3 in the textbook.
4-94 AMA STATEMENT OF ETHICS APPLICATION
Even though his business is very small, the owner of a LAN center wants to follow the American
Marketing Association Statement of Ethics. Every month there is a company cookout. At the
end of the meal, the employee (from president to members of the cleaning staff) who had the best
idea for improving the center is honored and given a $25.00 gift certificate plus a T-shirt that
reads, Great Minds Think Like Me. This action exhibits which key AMA ethical value?
a. honesty
b. responsibility
c. fairness
d. respect
e. openness

Rationale: We will appropriately acknowledge the contributions of others, such as consultants,
employees, and co-workers, to our marketing endeavors. American Marketing Association
Statement of EthicsEthical Values: Respect (bullet #4). See Figure 4-3 in the textbook.
4-95 BUSINESS ETHICS STUDY COMPREHENSION
- 33 -
A recent study of business executives reported that __________ had been implicitly or explicitly
rewarded for engaging in ethically troubling behavior.
a. 7%
b. 12%
c. 25%
d. 40%
e. 62%

Rationale: A study of business executives reported that 40% had been implicitly or explicitly
rewarded for engaging in ethically troubling behavior.
4-96 WHISTLE-BLOWERS KNOWLEDGE
Employees who report unethical or illegal actions of their employers are referred to as
a. whistle-blowers.
b. scabs.
c. cronies.
d. corporate snitches.
e. ombudsman.

Rationale: Key term definitionwhistle-blowers.
4-97 WHISTLE-BLOWERS KNOWLEDGE
Whistle-blowers refer to
a. employees who are simultaneously employed by competing firms and who trade company
secrets.
b. employees who blackmail or extort money from their employers.
c. employees who are coerced by their employers to participate in illegal or unethical activities.
d. customers who report unethical or illegal actions of the firms that market the offerings they
bought.
e. employees who report unethical or illegal actions of their employers.

Rationale: Key term definitionwhistle-blowers.
4-98 WHISTLE-BLOWERS COMPREHENSION
An employee who reports illegal accounting procedures is an example of a(n)

a. crony.
b. scab.
c. whistle-blower.
d. corporate snitch.
e. ombudsman.
- 34 -
Rationale: Whistle-blowers are employees who report unethical or illegal actions of their
employers.
4-99 WHISTLE-BLOWERS APPLICATION
Which of the following statements best describes a whistle-blower?

a. An employee is unhappy because his company is downsizing.
b. An employee tells the Consumer Product Safety Commission his company falsified safety
reports on a childs car seat.
c. A salesperson for a hardware wholesaler tries to sell insurance to his regular customers in
order to earn some extra income.
d. An employee loses his/her retirement fund due to a downturn in the stock market.
e. An employee spends the afternoon studying at work for her test rather than counting
inventory as she was supposed to be doing.

employersin this case, the falsification of a safety document.
Which of the following statements best describes the activities of a whistle-blower?

a. Mattel employees were sorry that 150 of the 10 million Power Wheels cars and trucks the
company sold had caught on fire.
b. Mattel research engineers proved that the spate of fires in the companys Power Wheels cars
and trucks was the result of consumers tinkering with the engine.
c. A former Mattel employee owned one of the Mattel Power Wheel cars that caught on fire and
slightly burned its rider.
d. The Consumer Product Safety Commission investigated the fires and ordered a recall to
repair all of the 10 million units that had been sold.
e. A Mattel employee reported to the Consumer Product Safety Commission that Mattel
knowingly manufactured an electrical system for Power Wheels that would catch on fire after
long use.

employers. If an employee of Mattel had reported to the CPSC that Mattel was knowingly
manufacturing an electrical system for Power Wheels that would catch on fire after long use, he
or she would have been a whistle-blower.
Two former sales representatives of Amgen, a biotech company, alleged the company strongly
encouraged its sales force to search confidential medical records in physicians offices in an
attempt to find names of patients that would benefit from the use of Amgens drug Enbrel, a
treatment for psoriasis. After reporting this practice, these two people sued Amgen, claiming they
did not go along with the scheme because they objected to it as being unethical. Soon after, one
of the reps was fired and the other resigned after receiving a poor performance review. These two
people are
- 35 -
a. scabs.
b. cronies.
c. whistle-blowers.
d. contrarians.
e. ombudsmen.

employers.
4-102 PERSONAL MORAL PHILOSOPHY COMPREHENSION
Ultimately, ethical choices are based on

a. the personal moral philosophy of the decision maker.
b. societal culture and norms.
c. business culture and industry practices.
d. laws enacted by Congress and regulations by federal and state governments.
e. chance and opportunity.

Rationale: Ultimately, ethical choices are based on the personal moral philosophy of the decision
maker. Two moral philosophies are moral idealism and utilitarianism.
All of the following statements about a persons moral philosophy are true EXCEPT:
a. Moral philosophy cannot be learned through formal education.
b. Moral philosophy is learned through the process of socialization with family.
c. Moral philosophy is influenced by the corporate culture he/she is in.
d. Moral philosophy is learned through the process of socialization with friends.
e. Moral philosophy is influenced by the societal culture he/she is in.

Rationale: Moral philosophy is learned through the process of socialization with friends and
family and by formal education. It is also influenced by the societal, business, and corporate
culture in which a person finds himself/herself.
Two prominent personal moral philosophies that have direct bearing on marketing practice are
a. existentialism and pragmatism.
b. pragmatism and idealism.
c. moral idealism and utilitarianism.
d. social responsibility and personal ethics.
e. moral behaviorism and secular ethics.

Rationale: Two prominent personal moral philosophiesmoral idealism and utilitarianism
have direct bearing on marketing practice.
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4-105 MORAL IDEALISM KNOWLEDGE
A personal moral philosophy that considers individual rights or duties as universal, regardless of
the outcome, is referred to as __________.
a. social responsibility
b. moral idealism
c. utilitarianism
d. hedonism
e. religion
Answer: b Page(s): 97-98 LO: 2 AACSB: Ethics QD: Easy

Rationale: Key term definitionmoral idealism.
Moral idealism refers to a personal moral philosophy that

a. believes that goodwill always triumph over evil.
b. follows the Golden Rule, which is One should treat others as one would like others to treat
oneself.
c. all human beings are basically good.
d. considers individual rights or duties as universal, regardless of the outcome.
e. believes in the greatest good for the greatest number.
Answer: d Page(s): 97-98 LO: 2 AACSB: Ethics QD: Easy

Moral idealism refers to

a. a personal moral philosophy that focuses on the greatest good for the greatest number by
assessing the costs and benefits of the consequences of ethical behavior.
b. a democratic consensus of moral principles and laws that govern the behavior of individuals
based on legislation adopted at the federal, state, and local levels.
c. a societal moral philosophy based on the Golden Rule of the Judeo-Christian ethic embodied
in the U.S. Constitutions Bill of Rights.
d. a formal statement of ethical principles and rules of conduct.
e. a personal moral philosophy that considers individual rights or duties as universal, regardless
of the outcome.

4-108 MORAL IDEALISM COMPREHENSION
A moral philosophy that exists in the Consumer Bill of Rights and is favored by moral
philosophers and consumer interest groups is referred to as __________.
- 37 -
b. moral idealism
c. utilitarianism
d. hedonism
e. the Golden Rule

Rationale: Moral idealism is a personal moral philosophy that considers certain individual rights
or duties as universal, regardless of the outcome. This philosophy exists in the Consumer Bill of
Rights and is favored by moral philosophers and consumer interest groups.
Why did 3M stop production of Scotchgard fabric protector?

a. New advances in fabric manufacturing, such as dirt repellant fibers, made the need for the
product obsolete.
b. The product accidentally violated patent rights of a competitor.
c. Traces of the potentially harmful chemical were found in humans, so the product was
voluntarily halted.
d. New governmental legislation banned the production of one of the products component
chemicals.
e. 3M developed a new product that didnt contain this chemical and which cost less to produce,
resulting in a significantly higher profit margin.

Rationale: 3Ms popular Scotchgard fabric protector had no known harmful health or
environmental effect. However, the company discovered that a chemical used in the product
appeared in miniscule amounts in the tissues of humans and animals. Believing that the
substance could be possibly harmful in large doses, 3M voluntarily stopped its production,
resulting in a $200 million loss in annual sales of the product. This is an example of moral
idealism.
The 3M company stopped production of a chemical it had made for over 40 years when tests
showed the chemical could be harmful in large doses, even though the products in which it was
used had no known harmful health or environmental effect. This is an example of
a. individualism.
b. utilitarianism.
c. existentialism.
d. moral idealism.
e. socialism.

or duties as universal (in this case consumer safety), regardless of the outcome.
- 38 -
3M Scotchgard Photo
Consider the 3M Scotchgard photo above. The personal moral philosophy 3M used when it
voluntarily stopped the production of its popular 3M Scotchgard was because of a minute
chemical used in its manufacture was found in the tissues of both animals and humans was an
example of ___________.
a. moral idealism
b. utilitarianism
c. green marketing
d. stringent laws
e. cause marketing

Rationale: 3Ms popular Scotchgard fabric protector had no known harmful health or
environmental effect. However, the company discovered that a chemical used in the product
appeared in miniscule amounts in the tissues of humans and animals. Believing that the
substance could be possibly harmful in large doses, 3M voluntarily stopped its production,
resulting in a $200 million loss in annual sales of the product. This is an example of moral
idealism.
4-112 MORAL IDEALISM APPLICATION
Western Digital, the Irvine, California-based maker of disk drives, recalled about 400,000 of its
hard drives because of a faulty internal chip. The chip will not affect the disk drive motor until
after six to twelve months of use. This delay in the problems appearance means that many
consumers would not think to blame the disk drive manufacturer. But, instead of taking the less
expensive route of remaining quiet about the problem, Western Digital chose to offer replacement
disk drives for all the disk drives that had the faulty chip. This action is an example of ________.
a. hedonism
b. utilitarianism
c. moral idealism
- 39 -
d. existentialism
e. socialism

or duties as universal (in this case, a product that works as promised), regardless of the outcome.
4-113 MORAL IDEALISM APPLICATION
The owners of Ben & Jerrys Homemade, Inc. adhere to the belief that the company should not
harm the environment in any way but actually improve it. This is an example of _________.
a. altruism.
b. utilitarianism.
c. existentialism.
d. moral idealism.
e. socialism.

Rationale: The philosophy of moral idealism is a personal moral philosophy that considers
certain individual rights or duties as universal, regardless of the outcome.
4-114 UTILITARIANISM KNOWLEDGE
A personal moral philosophy that focuses on the greatest good for the greatest number by
assessing the costs and benefits of the consequences of ethical behavior is referred to as
__________.
a. utilitarianism
b. hedonism
c. existentialism
d. moral idealism
e. socialism

Rationale: Key term definitionutilitarianism.
4-115 UTILITARIANISM COMPREHENSION
According to the personal moral philosophy of __________, if the benefits exceed the costs, the
behavior is ethical.
a. hedonism
b. utilitarianism
c. existentialism
d. moral idealism
e. socialism

Rationale: Utilitarianism assesses the costs and benefits of the consequences of a behavior. If
the benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical.
- 40 -
4-116 UTILITARIANISM COMPREHENSION
The personal moral philosophy of utilitarianism underlies the economic tenets of

a. existentialism.
b. moral idealism.
c. communism.
d. socialism.
e. capitalism.

Rationale: Utilitarianism is a personal moral philosophy that focuses on the greatest good for the
greatest number by assessing the costs and benefits of the consequences of ethical behavior. This
philosophy underlies the economic tenets of capitalism and is embraced by many business
executives and students.
4-117 UTILITARIANISM APPLICATION
Recently, a project team for Cosco, the worlds largest childrens products company, developed a
high chair that could be used as an infant feeding seat, a youth chair, a play chair, a booster chair,
and when reclined, an infant bed. Its design could be made and sold for $49. Cosco rushed the
chair into production to beat its competition before it was properly safety-tested. When some
children were injured as a result of this chair, Cosco denied culpability. The firm said that only a
few consumers had had any trouble with the chairand probably didnt assemble them correctly.
Most consumers, however, were very satisfied with the chair and had no problems with it.
Coscos actions exemplify which of the following philosophies?
a. existentialism
b. moral idealism
c. communism
d. socialism
e. utilitarianism

Rationale: Utilitarianism is a personal moral philosophy that focuses on the greatest good for the
greatest number by assessing the costs and benefits of the consequences of ethical behavior.
Cosco saw the low-priced, multiple-use chair as offering more benefits to consumers as a group,
than costs to recall and redesign them.
4-118 SOCIAL RESPONSIBILITY KNOWLEDGE
The idea that organizations are part of a larger society and are accountable to that society for their
actions is referred to as
a. stakeholder responsibility.
b. social responsibility.
c. profit responsibility.
d. utilitarianism.
e. moral idealism.

Rationale: Key term definitionsocial responsibility.
- 41 -
4-119 SOCIAL RESPONSIBILITY KNOWLEDGE
Social responsibility refers to

a. a personal moral philosophy that focuses on the greatest good for the greatest number by
assessing the costs and benefits of the consequences of ethical behavior.
b. a democratic consensus of moral principles and laws that govern the behavior of individuals
based on legislation adopted at the federal, state, and local levels.
c. a societal moral philosophy based on the Golden Rule of the Judeo-Christian ethic found in
the U.S. Constitutions Bill of Rights.
d. the view that organizations are part of a larger society and are accountable to that society for
their actions.
e. a personal moral philosophy that considers individual rights or duties as universal, regardless
of the outcome.

Rationale: Key term definitionsocial responsibility.
4-120 SOCIAL RESPONSIBILITY COMPREHENSION
Profit responsibility, societal responsibility, and stakeholder responsibility are three concepts of
a. cause marketing.
b. moral idealism.
c. social responsibility.
d. utilitarianism.
e. green marketing.

Rationale: Figure 4-4 in the textbook shows three concepts of social responsibility: (1) profit
responsibility; (2) stakeholder responsibility; and (3) societal responsibility.
Which of the following statements about social responsibility is most accurate?

a. The three concepts of social responsibility are economic responsibility, internal social
responsibility, and external social responsibility.
b. Organizations are part of a larger society and are accountable to that society for their actions.
c. Societal responsibility focuses on the obligations an organization has to its customers,
employees, suppliers, and distributors.
d. The duty of an organization is most easily understood at the societal responsibility level.
e. Social responsibility cannot be taught; it is an innate outgrowth of a persons moral and
ethical belief system.

Rationale: The three concepts of social responsibility are profit responsibility, stakeholder
responsibility, and societal responsibility. Alternative c is the definition of stakeholder
responsibility. The simplest form of social responsibility is profit responsibility: maximize profits
for the company owners or stockholders. Social responsibility means that organizations are part
- 42 -
of a larger society and are accountable to that society for their actions. See Figure 4-4 in the
textbook.
4-122 SOCIAL RESPONSIBILITY APPLICATION
In 2007, Gap Inc. ended its relationship with 23 foreign production facilities due to code
violations. Several closings occurred because of the use of child labor. In response to these
events, the Gap created a large team whose purpose is to travel worldwide to ensure compliance
with its Code of Vendor Conduct. This is an example of
a. cause marketing.
b. profit responsibility.
c. utilitarianism.
d. moral idealism.
e. social responsibility.

Rationale: Social responsibility is the view that organizations are part of a larger society and are
accountable to that society for their actions.
The residents of Alaska and people throughout the world were outraged when the Exxon Valdez
crashed into a shoal and dumped millions of gallons of crude oil into the pristine waters of Prince
William Sound. People were upset with Exxons response to the disaster. The company was slow
to admit its mistake and even slower to implement cleanup activities. Exxon was criticized for
acting in a manner that would benefit the organization but not society. In short, Exxon did not
demonstrate
a. social responsibility.
b. value consciousness.
c. green marketing.
d. profit responsibility.
e. cause marketing.

Rationale: Social responsibility means that marketing firms, as well as other organizations, exist
as part of a larger society and are accountable to that society for their actions. Exxon acted, at
least initially, with only the organizations interests in mind.
- 43 -
Figure 4-4
There are three concepts of social responsibility, each relating to particular constituencies.
According to Figure 4-4 above, A represents __________ responsibility.
a. societal
b. stakeholder
c. profit
d. customer
e. seller

Rationale: There are three concepts of social responsibility, each of which relates to particular
constituencies. Societal responsibility includes public interest groups, ecological environment,
and the general public. Stakeholder responsibility includes suppliers and distributors, employees,
and consumers. Profit responsibility includes owners and stockholders. There is often conflict in
satisfying all constituencies at the same time. See Figure 4-4 in the textbook.
According to Figure 4-4 above, B represents __________ responsibility.
a. societal
b. stakeholder
c. profit
d. customer
e. seller

- 44 -
According to Figure 4-4 above, C represents __________ responsibility.
a. societal
b. stakeholder
c. profit
d. customer
e. seller

4-127 PROFIT RESPONSIBILITY KNOWLEDGE
Profit responsibility refers to

a. the obligation of a firm to price its products or services at a level whereby the consumer is
treated fairly and the firm is still able to make a profit.
b. the view that an organization has an obligation to those who can affect the achievement of its
objectives.
c. the concept that no expansion or additional research and development will occur until a
company is making a profit.
d. the idea that organizations are part of a larger society and are accountable to that society for
their actions.
e. the duty of a firm to maximize profits for its owners or stockholders.

Rationale: Text term definitionprofit responsibility.
4-128 PROFIT RESPONSIBILITY KNOWLEDGE
The duty of a firm to maximize profits for its owners or stockholders is referred to as _________.
b. value consciousness
c. benefit marketing
d. profit responsibility
e. stakeholder responsibility

Rationale: Text term definitionprofit responsibility.
- 45 -
4-129 PROFIT RESPONSIBILITY COMPREHENSION
The groups primarily served by a firm exhibiting profit responsibility include

a. the general public, public interest groups, and the environment.
b. consumers, employees, and supplier/distributors.
c. owners and stockholders.
d. the general public, owners, and stockholders.
e. government, owners, and stockholders.

Rationale: Companies practicing profit responsibility serve owners and stockholders.
Companies practicing stakeholder responsibility primarily serve consumers, suppliers,
distributors, and employees. Companies practicing societal responsibility primarily have
obligations to the preservation of the ecological environment and to the general public. See
4-130 PROFIT RESPONSIBILITY APPLICATION
Burroughs Wellcome is the developer and maker of AZT, which is a drug to treat persons afflicted
with AIDS. The firm charges each patient $6,500 annuallymore than many AIDS patients can
afford. This is an example of the manufacturer adhering to its
a. utopian responsibility.
b. moral idealism.
c. social responsibility.
d. cause marketing strategy.
e. profit responsibility.

Rationale: Profit responsibility holds that companies have a simple duty: to maximize profits for
their owners or stockholders. Important considerations here are (1) how companies can recover
costs of their research and development if they give away their discoveries and/or (2) how they
can compensate their stakeholders if they sell their products at a loss.
4-131 STAKEHOLDER RESPONSIBILITY KNOWLEDGE
Stakeholder responsibility refers to

a. the view that an organization has an obligation to those who can affect the achievement of its
objectives.
b. the obligation of a firm to price its products or services at a level whereby the consumer is
c. the duty of a firm to maximize profits for its owners or stockholders.
d. the concept that no expansion or additional research and development will occur until a
company is making a profit.
e. the idea that organizations are part of a larger society and are accountable to that society for
their actions.
Answer: a Page(s): 99-100 LO: 3 AACSB: Ethics QD: Easy

Rationale: Text term definitionstakeholder responsibility.
- 46 -
4-132 STAKEHOLDER RESPONSIBILITY KNOWLEDGE
The view that an organization has an obligation to those who can affect the achievement of its
objectives is referred to as _________.
b. value consciousness
d. stakeholder responsibility
e. profit responsibility

Rationale: Text term definitionstakeholder responsibility.
4-133 STAKEHOLDER RESPONSIBILITY COMPREHENSION
The groups primarily served by a firm exhibiting stakeholder responsibility include

a. the general public, public interest groups, and the environment.
b. consumers, employees, and supplier/distributors.
c. owners and stockholders.
d. the general public, owners, and stockholders.
e. government, owners, and stockholders.

Rationale: Companies practicing profit responsibility serve owners and stockholders.
Companies practicing stakeholder responsibility primarily serve consumers, suppliers,
distributors, and employees. Companies practicing societal responsibility primarily have
obligations to the preservation of the ecological environment and to the general public. See
4-134 STAKEHOLDER RESPONSIBILITY APPLICATION
Source Perrier S.A., the supplier of Perrier bottled water, exercised __________ when it recalled
160 million bottles of water in 120 countries after traces of a toxic chemical was found in 13
bottles. The recall cost the company $35 million, and the profit from $40 million in lost sales.
Even though the chemical was not harmful to humans, the president of the company believed it
was his duty to remove the least doubt, as minimal as it might be, to weigh on the image of the
quality and purity of our product.
a. moral idealism
b. utilitarianism
c. cause marketing
d. profit responsibility
e. stakeholder responsibility

Rationale: Stakeholder focuses on the obligations an organization has to those who can affect
achievement of its objectives. Source Perrier was protecting its customers.
4-135 STAKEHOLDER RESPONSIBILITY APPLICATION
- 47 -
Toyota Motor Corporation executives were widely criticized for their failure in practicing
__________ when selected Toyota brands had been linked to sticky gas pedals, which can lead to
sudden acceleration problems. The company recalled over 9 million cars worldwide under
pressure from the National Highway Traffic Safety Administration and thousands of consumer
complaints. After the recall, Toyota sales fell, which affected Toyota employees, suppliers,
shareholders, and distributors.
a. moral idealism
b. stakeholder responsibility
c. utilitarianism
d. cause marketing

Rationale: Stakeholder focuses on the obligations an organization has to those who can affect
achievement of its objectives. Toyota was criticized for not responding quickly to stakeholder
(particularly customer) concerns.
4-136 SOCIETAL RESPONSIBILITY KNOWLEDGE
Societal responsibility refers to

a. the obligation that organizations have to (1) the preservation of ecological environment and
(2) the general public.
b. the obligation of a firm to price its products or services at a level whereby the consumer is
c. the view that an organization has an obligation to those who can affect the achievement of its
objectives.
d. the duty of a firm to maximize profits for its owners or stockholders.
e. the idea that organizations are part of a larger society and are accountable to that society for
their actions.

Rationale: Text term definitionsocietal responsibility.
4-137 SOCIETAL RESPONSIBILITY KNOWLEDGE
The obligation organizations have to (1) the preservation of ecological environment and (2) the
general public is referred to as _________.
b. stakeholder responsibility
d. societal responsibility

Rationale: Text term definitionsocietal responsibility.
4-138 SOCIETAL RESPONSIBILITY APPLICATION
- 48 -
Most paint is neither biodegradable nor friendly to the environment because it is made with
petroleum solvents. A builder who decided to build a subdivision with 500 homes and paint each
with an environmentally friendly, soy-based paint (even though it costs more) would be practicing
a. profit responsibility.
b. cause marketing.
c. stakeholder responsibility.
d. mass marketing.
e. societal responsibility.

Rationale: Societal responsibility is the view that organizations have obligations to the general
public and to the preservation of the ecological environment. Many more people besides those
who live in the subdivision will benefit from the use of environmentally friendly paint.
4-139 SOCIETAL RESPONSIBILITY APPLICATION
The maker of Wrigley chewing gum funded a $10 million ad campaign aimed at getting African
Americans to use doctors for regular health care maintenance instead of only when they are sick.
This is an example of
a. profit responsibility.
b. cause marketing.
d. societal responsibility.
e. mass marketing.

Rationale: Societal responsibility is the view that organizations have obligations to the general
public and to the preservation of the ecological environment. Wrigley is taking responsibility for
the general public by trying to help people who are not necessarily its stakeholders.
4-140 TRIPLE-BOTTOM LINE KNOWLEDGE
The recognition of the need for organizations to improve the state of people, the planet, and profit
simultaneously if they are to achieve sustainable, long-term growth is referred to as
a. social responsibility.
b. the triple-bottom line.
c. the marketing concept.
d. sustainability.
e. social entrepreneurship.

Rationale: Key term definitiontriple-bottom line.
Triple-bottom line refers to

a. the recognition of the need for organizations to improve the state of people, the planet, and
profit simultaneously if they are to achieve sustainable, long-term growth.
- 49 -
b. the obligations an organization has to those who can affect achievement of its sales, profit,
and market share objectives simultaneously.
c. the recognition of the need for organizations to be responsible simultaneously to
shareholders, employees, and customers.
d. the obligations an organization has to practice profit, stakeholder, and societal responsibility
simultaneously.
e. three different financial statements prepared in three different formats: one for governmental
regulators, one for shareholders, and one for internal use.

Rationale: Key term definitiontriple-bottom line.
All of the following are the result of an interest in the triple-bottom line EXCEPT:
a. sustainable development.
b. cause marketing.
c. ISO 9000.
d. green marketing.
e. social audits.

Rationale: Green marketing, cause marketing, social audits, and sustainable development reflects
the growing interest in the concept of the triple-bottom line, which is the recognition of the need
for organizations to improve the state of people, the planet, and profit simultaneously if they are
to achieve sustainable, long-term growth. Alternative c (ISO 9000) consists of standards for
the registration and certification of a manufacturers quality management and assurance system
based on an on-site audit of practices and procedures developed by the International Standards
Organization (ISO).
4-143 GREEN MARKETING KNOWLEDGE
Marketing efforts to produce, promote, and reclaim environmentally sensitive products are
referred to as
a. green marketing.
b. recycle marketing.
c. cause marketing.
d. environmental marketing.
e. recycling.

Rationale: Key term definitiongreen marketing.
4-144 GREEN MARKETING KNOWLEDGE
Green marketing refers to

a. the purchasing of products from producers whose farming practices are Fair Trade certified.
b. the marketing efforts taken by new and smaller companies that lack both the experience and
resources of their major competitors.
- 50 -
c. the marketing efforts to produce, promote, and reclaim environmentally sensitive products.
d. the marketing of products that have in no way been altered or reprocessed by artificial means.
e. the marketing of those products made exclusively from recycled materials.

Rationale: Key term definitiongreen marketing.
4-145 GREEN MARKETING COMPREHENSION
At 3M, the Pollution Prevention Pays program has generated over 8,000 ideas that eliminated
more than 3 billion pounds of air, water, and solid-waste pollutants from the environment. This is
an example of
a. proactive marketing.
b. green marketing.
c. consumerism.
d. an ecological code of ethics.
e. cause marketing.

Rationale: Green marketing is defined as marketing efforts designed to produce, promote, and
reclaim environmentally sensitive products. The 3M program has reduced the amount of
pollutants in the environment.
4-146 GREEN MARKETING APPLICATION
Which of the following is an example of green marketing?

a. McDonalds adding apple snacks to its Happy Meals targeted at children.
b. Lowes and Home Depot discontinuing the sale of lumber and other wood products.
c. Levi-Strauss marketing prewashed jeans.
d. Joes Lawn Service offering a special spring cleanup promotion.
e. Walmart implementing buying practices that encourage it suppliers to use containers and
packing made from corn, not oil-based resins.

reclaim environmentally sensitive products.
Chrysler recycles thousands of tons of wooden pallets, cardboard, and paper annually. Chrysler
cars are 75 percent recyclable. Chryslers recycling programs are examples of
a. recycle marketing.
b. cause marketing.
c. green marketing.
d. environmental marketing.
e. triple-top line marketing.
- 51 -
Rationale: Green marketing is defined as marketing efforts to produce, promote, and reclaim
environmentally sensitive products.
Many fast food restaurants, including Burger King, McDonalds, and Wendys, no longer use
STYROFOAM containers (which do not degrade as quickly as paper in a landfill) for
packaging their products. Rather, these firms wrap their burgers in recycled paper wrappers,
containers, and bags. These fast-food restaurants are practicing
a. triple-top line marketing.
b. green marketing.
c. consumerism.
d. an ecological code of ethics.
e. cause marketing.

reclaim environmentally sensitive products. STYROFOAM does not degrade as quickly as
paper in a landfill. Using recycled paper reduces the amount of solid waste sent to landfills.
FedEx and UPS are converting their delivery trucks with standard diesel engines to more fuel-
efficient and cleaner hybrid-electric vehicles, which can cut fuel costs by half and lower fuel
emissions by 90 percent. This is an example of
a. demarketing.
b. triple-top line marketing.
c. preemptive compliance.
d. green marketing.
e. cause marketing.

reclaim environmentally sensitive products.
4-150 ISO 14000 KNOWLEDGE
ISO stands for

a. International Service Organizations.
b. Integrated Standards Organization.
c. International Standards Organization.
d. International Sustainable Offerings.
e. Integrated Solutions Organization.

Rationale: Text term definitionISO 14000.
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ISO 14000 refers to
a. a plan to encourage the purchase of Made in America products.
b. a global plan to further green marketing.
c. an initiative for organizations to support the International Special Olympics Committee and
its athletes without endangering its nonprofit status.
d. the name of the agreement that created the North American Free Trade Association (NAFTA).
e. a set of standards for registration and certification of a manufacturers quality management
and assurance system based on an on-site audit of practices and procedures developed by the
International Standards Organization (ISO).

A global undertaking to further green marketing efforts is the

a. ISO 14000 initiative.
b. Kyoto Protocol.
c. Green World (GW) initiative.
d. ISO 9000 initiative.
e. ISO Trans-Global initiative.

4-153 CAUSE MARKETING KNOWLEDGE
When the charitable contributions of a firm are tied directly to the customer revenues produced
through the promotion of one of its products, this marketing practice is referred to as
a. marketing philanthropy.
b. marketing allegiance.
c. relationship marketing.
d. transactional marketing.
e. cause marketing.

Rationale: Key term definitioncause marketing.
4-154 CAUSE MARKETING KNOWLEDGE
Cause marketing refers to

a. when the charitable contributions of a firm are tied directly to the customer revenues
produced through the promotion of one of its products.
b. the recognition of the need for organizations to improve the state of people, the planet, and
c. marketing services provided at little or no cost for the purpose of promoting or supporting a
worthy cause.
d. marketing efforts to produce, promote, and reclaim environmentally sensitive products.
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e. when marketing actions that took place actually caused more harm than good.

Rationale: Key term definitioncause marketing.
4-155 CAUSE MARKETING COMPREHENSION
A key difference between cause marketing and a charitable contribution is

a. a charitable contribution provides an organization with a lower tax deduction.
b. there is no limit to the amount of charitable deductions a firm can make, but a firm is limited
to the number of cause marketing efforts it can make during a fiscal year.
c. charitable donations are contributed at the sole discretion of the firm; cause marketing is the
amount is directly affected by consumers purchases.
d. cause marketing is generally linked to public causes and concerns while straight charitable
contributions are generally given to private institutions.
e. there is essentially no difference between a charitable contribution and cause marketing.

Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to
the customer revenue produced through the promotion of one of its products. Charitable
contributions are outright donations.
Cause marketing programs incorporate all three concepts of social responsibility by addressing
public concerns, satisfying customer needs, and
a. protecting the environment.
b. enhancing corporate sales and profits.
c. following industry-specific codes of ethics.
d. fulfilling societal objectives.
e. demonstrating ethical behavior.

Rationale: Socially responsible efforts on behalf of the general public are becoming more
common. Cause marketing programs incorporate all three concepts of social responsibility by
addressing public concerns, satisfying customer needs, and enhancing corporate sales and profits.
4-157 CAUSE MARKETING APPLICATION
Procter & Gamble raises funds for the Special Olympics when consumers purchase selected
company products. This is an example of
a. cause marketing.
b. philanthropic marketing.
c. green marketing.
d. public relations.
e. societal promotions.
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the customer revenue produced through the promotion of one of its products. The amount of
money received by the Special Olympics is directly related to how many P&G products are
purchased by customers.
Avon Ad
Consider the Avon ad above. Avon has already donated millions toward breast cancer research.
One contributing factor was the sale of a bag designed by Marimekko exclusively for the Avon
Breast Cancer Crusade. One hundred percent of net profits were donated to the crusade. This is
an example of
a. philanthropic marketing.
b. corporate altruism.
c. the marketing concept.
d. green marketing.
e. cause marketing.

the customer revenue produced through the promotion of one of its products.
Spiegel Inc. sold Christmas cards on page two of its holiday retail catalog. Spiegel designed and
printed the cards. Proceeds from the sales of the Christmas cards purchased through the catalog
went to benefit the Starlight Childrens Foundation and the National Center for Missing and
Exploited Children. This is an example of
b. corporate altruism.
c. cause marketing.
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d. the marketing concept.
e. societal marketing.

the customer revenue produced through the promotion of one of its products. How much Spiegel
donates to the two nonprofit organizations is based on how many cards it sells.
A Toyota dealership in British Columbia, Canada, donated $50 to the Make-A-Wish Foundation
of Canada for each Toyota purchased during a particular month. This is an example of how a
small business can engage in
b. cause marketing.
c. marketing altruism.
d. public relations marketing.

the customer revenue produced through the promotion of one of its products. The amount
donated by the car dealership was directly related to how many Toyotas it sold.
Post supports the Boys & Girls Clubs. For every coupon found on a box of any of the Post
brands redeemed, Post promises to donate $0.10 to the organization. This is an example of
a. cause marketing.
b. philanthropic marketing.
c. goodwill marketing.

the customer revenue produced through the promotion of one of its products. The amount of
money received by the Boys & Girls Clubs is directly related to how many coupons Post
consumers redeem.
Cadbury Canada recognized that education is crucial to lifting Ghanaian children out of poverty.
Cadbury worked with its lead partner, World Vision Ghana, to identify every child in cocoa-
farming villages who had to walk at least three kilometers or more each way to school. In the
spring of 2009, Cadbury Canada launched a program that encouraged consumers to enter the bar
codes of their candy and chocolate bars online. Each entry represented one bicycle part and 100
parts built one bike. The biggest-ever shipment of bicycles to Ghana5,000 in totalis
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helping thousands of kids get to school and get a head start on a brighter future. The is an
example of
b. cause marketing.
c. societal marketing.
e. transactional marketing.

the customer revenue produced through the promotion of one of its products. In this case,
Cadburys sales of candy and chocolate products were directly tied to the number of bicycles
given to Ghanaian children.
4-163 MARKETING MATTERS KNOWLEDGE
American Express Company pioneered cause marketing when it sponsored the renovation of
a. Carnegie Hall.
b. Madison Square Garden.
c. Liberty Hall.
d. the Statue of Liberty.
e. the Lincoln Memorial.

Rationale: American Express Company pioneered cause marketing when it sponsored the
renovation of the Statue of Liberty. This effort raised $1.7 million for the renovation, increased
card usage among cardholders, and attracted new cardholders.
4-164 MARKETING MATTERS COMPREHENSION
When American Express pioneered cause marketing, it raised $1.7 million to renovate a national
icon, increased usage among cardholders, and
a. became the only credit card accepted for admission to the sight.
b. decreased outstanding debt on previously unpaid credit cards.
c. was able to raise interest rates without facing customer complaints.
d. received a tax credit that more than paid for the original campaign.
e. attracted new cardholders.

Rationale: American Express Company pioneered cause marketing when it sponsored the
renovation of the Statue of Liberty. This effort raised $1.7 million for the renovation, increased
card usage among cardholders, and attracted new cardholders.
4-165 MARKETING MATTERS COMPREHENSION
Which of the following statements concerning cause marketing is MOST accurate?

a. The vast majority of consumers say they will switch to a brand that supports a good cause
provided the price and quality of the brands are equal.
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b. The profits generated by cause marketing are usually paid in goodwill rather than actual
revenue.
c. The positive effects of cause marketing are significant during the promotion, but they lose
their benefit almost immediately after the promotion runs its course.
d. Cause marketing rarely creates a point of difference for the firm that engages in this
marketing practice.
e. Women are much more suspicious about the sincerity of cause marketing programs than men;
therefore, their contributions are significantly less.

Rationale: Cause marketing benefits companies as well as causes. Research indicates that 85
percent of U.S. consumers say they have a more favorable opinion of companies that support
causes they care about. Also, 80 percent of consumers say they will switch to a brand or retailer
that supports a good cause if the price and quality of brands or retailers are equal.
4-166 SOCIAL AUDIT KNOWLEDGE
A systematic assessment of a firms objectives, strategies, and performance in terms of social

responsibility is referred to as
a. a business mission.
b. the strategic marketing process.
c. a SWOT analysis.
d. a social audit.
e. an accountability analysis.

Rationale: Key term definitionsocial audit.
4-167 SOCIAL AUDIT KNOWLEDGE
A social audit refers to

a. a systematic assessment of a firms compliance to fair hiring practices and commitment to
diversity.
b. a company-wide assessment of employees at all levels to determine the compliance to the
organizations code of ethics.
c. conducting business in a way that protects the natural environment while making economic
progress.
d. a systematic assessment of a firms objectives, strategies, and performance in terms of social
responsibility.
e. the ability to understand ones own emotions and the emotions of people with whom one
interacts on a daily basis.

Rationale: Key term definitionsocial audit.
4-168 SOCIAL AUDIT COMPREHENSION
- 58 -
Converting socially responsible ideas into actions involves careful planning and monitoring of
programs. Many companies develop, implement, and evaluate their social responsibility efforts
by means of a(n)
a. social audit.
b. financial audit
c. action plan.
d. tactical plan.
e. research plan.

Rationale: Many companies develop, implement, and evaluate their social responsibility efforts
by means of a social audit, which is a systematic assessment of a firms objectives, strategies, and
performance in terms of social responsibility.
The first step in any social audit is to

a. evaluate current social responsibility programs.
b. determine the amount of money that can be allocated for societal marketing programs.
c. recognize a firms social expectations and the rationale for engaging in social responsibility
endeavors.
d. identify social responsibility causes consistent with the companys mission.
e. determine the types of resources needed to achieve social responsibility objectives.

Rationale: A social audit consists of five steps, the first of which is the recognition of a firms
social expectations and the rationale for engaging in social responsibility endeavors.
A social audit is a systematic assessment of a firms objectives, strategies, and performance in

terms of social responsibility. The five steps of the audit are: (1) recognition of a firms social
expectations and the rationale for engaging in social responsibility endeavors; (2) identification of
social responsibility causes or programs consistent with the companys mission; (3) determination
of organizational objectives and priorities for programs and activities it will undertake; (4)
specification of the type and amount of resources necessary to achieve social responsibility
objectives; and (5)
a. identification of environmental forces that could interfere with the firms plans.
b. evaluation of possible benefits both tangible and intangible to the firms triple-bottom line.
c. evaluation of social responsibility programs and activities undertaken and assessment of
future involvement.
d. selection of a team leader and assignment of tasks and task deadlines for team members.
e. creation or selection of a theme, slogan, spokesperson, etc. for marketing cohesiveness.

Rationale: A social audit is a systematic assessment of a firms objectives, strategies, and
performance in terms of social responsibility. The five steps of the audit are: (1) recognition of a
firms social expectations and the rationale for engaging in social responsibility endeavors; (2)
identification of social responsibility causes or programs consistent with the companys mission;
(3) determination of organizational objectives and priorities for programs and activities it will
- 59 -
undertake; (4) specification of the type and amount of resources necessary to achieve social
responsibility objectives; and (5) evaluation of social responsibility programs and activities
undertaken and assessment of future involvement.
4-171 SUSTAINABLE DEVELOPMENT KNOWLEDGE
Conducting business in a way that protects the natural environment while making economic
progress is referred to as
a. sustainable development.
b. green marketing.
d. the marketing concept.
e. environmental marketing.

Rationale: Key term definitionsustainable development.
4-172 SUSTAINABLE DEVELOPMENT KNOWLEDGE
Sustainable development refers to

a. placing restraints on a companys growth until all ancillary support services are in place to
ensure a new ventures success.
b. global economies that are slowly moving from an agrarian-base to an industrial base.
c. adhering to worldwide standards for environmental quality and green marketing practices.
d. marketing efforts to produce, promote, and reclaim environmentally sensitive products.
e. conducting business in a way that protects the natural environment while making economic
progress.

Rationale: Key term definitionsustainable development.
4-173 SUSTAINABLE DEVELOPMENT COMPREHENSION
Which of the following statements about sustainable development is most accurate?

a. A company that always makes its furniture from rare tropical woods is practicing sustainable
development.
b. At this point in time, sustainable development is a luxury that only large international
companies can achieve.
c. Sustainable development is achieved when a firms sales growth rate increases an average of
1-2% per year for a period of at least five years.
d. A company that uses overseas child laborers to manufacturer its products to reduce costs does
not practice sustainable development.
e. Unfortunately, only a small number of consumers care whether a company practices
sustainable development.

Rationale: Over 90 percent of Americans surveyed are concerned with working conditions under
which products are made. Sustainable development involves conducting business in a way that
protects the natural environment while making economic progress.
- 60 -
4-174 SUSTAINABLE DEVELOPMENT APPLICATION
Arrowhead Brand Mountain Spring Water recently changed its bottle by reducing the size of its
label by one-third, using 30% less plastic, and making the bottle more flexible for easier
recycling. These efforts are part of the companys goal to engage in __________.
a. sustainable development
b. market development
c. ISO 9000 compliance
d. cause marketing
e. environmental downsizing

Rationale: Arrowheads bottle changes are an example of sustainable development, which
involves conducting business in a way that protects the natural environment while making
economic progress.
4-175 CONSUMER ETHICS COMPREHENSION
Consumers have an obligation to __________ in the exchange process and in the use and
disposition of products.
a. get as much as they can for their money
b. support cause marketing efforts
c. reveal any and all pertinent personal information
d. act ethically and responsibly
e. seek products without ISO 14000

Rationale: Consumers have an obligation to act ethically and responsibly in the exchange
process and in the use and disposition of products. Unfortunately, consumer behavior is spotty on
both counts.
Practices that include filing warranty claims after the claim period, misredeeming coupons, and
making fraudulent returns of merchandise are examples of
a. normal and reasonable consumer behavior.
b. unethical practices by consumers.
c. acceptable consumer code of ethics.
d. costs to be passed along to shareholders as a part of doing business.
e. violations of the Consumer Bill of Rights.

Rationale: Consumers also have an obligation to act ethically and responsibly in the exchange
process and in the use and disposition of products. The examples cited are examples of unethical
consumer practices, all of which have a cost to marketers in terms of lost sales revenue and
prevention expenses.
- 61 -
Which of the following statements about consumer ethics is most accurate?

a. Consumer complaints about online auction fraud outnumber all reports of online crime.
b. The cost to marketers of unethical consumer behavior is negligible in terms of lost sales.
c. The potential cost to marketers of unethical consumer behavior is dramatically reduced by
investing in loss prevention training.
d. Retailers lose about $1 million dollars a day from shoplifting.
e. At some point, every person shoplifts or participates in an unethical exchange; to retailers, it
is simply the cost of doing business.

Rationale: Consumer complaints about online auction fraud outnumber all reports of online
crime. The cost to marketers of unethical consumer behavior is huge in terms of lost sales and
prevention expenses. Retailers lose about $30 billion yearly from shoplifting.
Which of the following statements about consumer ethics is most accurate?

a. Most consumers unethical acts are motivated by economic need.
b. Some consumers believe that if they can get away with unethical behavior, it is worth it.
c. If everyone else does it, then that becomes the norm so, ultimately, there is no such thing as
unethical consumer behavior.
d. Most consumers who shoplift do so because a salesperson has been insulting or rude.
e. Few customers behave unethically toward smaller, independently owned businesses. Most
unethical consumer behavior is against big business.

Rationale: Research on unethical consumer behavior indicates that these acts are rarely
motivated by economic need. This behavior appears to be influenced by (1) a belief that a
consumer can get away with the act and it is worth doing and (2) the rationalization that the act is
justified or driven by forces outside the individual because everybody does it.
Although research shows consumers are sensitive to ecological issues, they may not be willing to
purchase a given product or service solely on the basis of its environmental claims. They may (1)
be unwilling to sacrifice convenience and pay higher prices to protect the environment, and (2)
a. be unable to make an ecologically sound purchase because eco-friendly products are
significantly less expensive, indicating that they are of lesser quality.
b. lack the knowledge to make informed decisions dealing with the purchase, use, and
disposition of products.
c. believe that protecting the environment in one area actually can create disruptions in another
areas.
d. believe that ecological issues are still a matter of opinion even within the scientific
community itself.
e. believe that public sentiment toward ecological issues has now reached a consensusin
todays economic downturn, jobs are more important than environmental issues.
- 62 -
Rationale: Inconvenience, higher prices, lack of knowledge, and confusion influence consumers
disposition toward environmentally sensitive products.
Practices such as filing warranty claims after the claim period, misredeeming coupons, making
fraudulent returns of merchandise, etc. are
a. acceptable provided the merchant providing the service has not violated the Consumer Bill of
Rights.
b. acceptable provided the salesperson doesnt mind.
c. occasionally permitted when two different firms are competing for a customers business and
both are using equally less than ethical practices.
d. not acceptable because consumers also have an obligation to act ethically and responsibly.
e. not acceptable unless the participants are nonprofit organizations or charities.

Rationale: Consumers also have an obligation to act ethically and responsibly in the exchange
process and in the use and disposition of products, which have a cost to marketers in terms of lost
sales revenue and prevention expenses.
4-181 GREENWASHING KNOWLEDGE
Making an unsubstantiated or misleading claim about the environmental benefits of a product,

service, technology, or company practice is referred to as ___________.
a. greenwashing
b. whitewashing
c. environmental slander
d. green gouging
e. demarketing

Rationale: Text term definitiongreenwashing.
4-182 GREENWASHING KNOWLEDGE
Greenwashing refers to
a. marketing efforts to produce, promote, and reclaim environmentally sensitive products.
b. conducting business in a way that protects the natural environment while making economic
progress.
c. the practice of making an unsubstantiated or misleading claim about the environmental
benefits of a product, service, technology, or company practice.
d. the practice of deliberately concealing the mistakes that polluters make regarding the
environmental disasters they perpetrated.
e. the recognition of the need for organizations to improve the state of people, the planet, and

Rationale: Text term definitiongreenwashing.
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4-183 VIDEO CASE 4: TOYOTA COMPREHENSION
Toyota employs all of the following business practices as part of The Toyota Way EXCEPT:
a. to continuously improve business operations, always striving for innovation and evolution.
b. to maximize individual and team performance.
c. to always go to the source to find the facts and make correct decisions.
d. to build trust and take responsibility.
e. to contribute to society and the economy by producing high-quality products and services.

Rationale: Alternative e is Toyotas core principle or value that forms The Toyota Way.
One of Toyotas top goals has been to develop advanced vehicle technologies to complement
existing ones. The G21 vision arose out of this goal, which eventually led to the production of
which of the following vehicles?
a. Lexus 450 all-electric car
b. Toyota Tundra gas-electric hybrid truck
c. Scion iQ micro-subcompact compressed natural gas car
d. Toyota Prius gas-electric hybrid car
e. Toyota Camry hydrogen fuel cell hybrid car

Rationale: Implementation of Toyotas G21 vision led to the development and deployment of the
Toyota Prius gas-electric hybrid car.
In a recent survey, consumers were asked the following question: Who should take the lead in
addressing environmental issues? The results suggest that __________ should.
a. the federal government
b. businesses
c. individuals
d. environmental groups
e. the state government

Rationale: In a recent survey, consumers were asked the following question: Who should take
the lead in addressing environmental issues? The results suggest that businesses should,
followed by individuals, state government, federal government, and environmental groups. See
Figure 1 in the textbook
- 64 -
SHORT ESSAY QUESTIONS
Explain how Anheuser-Busch acts with societal responsibility.
Answer:
Societal responsibility refers to obligations that organizations have (1) to the preservation of the
ecological environment and (2) to the general public. Anheuser-Busch has been an advocate for
responsible drinking for nearly three decades through its Know When to Say When campaign
in 1982, its newly renamed Corporate Social Responsibility Department, which was established
in 1989, and its Family Talk about Drinking guidebook distributed free to parents and educators.
In 2004, the brewer launched its Responsibility Matters campaign that implemented effective
education and awareness programs to promote responsibility and responsible behaviors. In
addition, Anheuser-Busch, through its ABRC subsidiary, annually recycles over 27 billion
aluminum cans.
Page(s): 89 LO: 3 AACSB: Ethics QD: Medium
Describe the difference between ethics and laws
Answer:
Ethics are the moral principles 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. While ethics deal with personal moral principles and values, laws are societys values
and standards that are enforceable in the courts.
Explain the four ways to classify marketing decisions according to ethical and legal relationships.
Answer:
The four ways can be determined by placing ethicality (vertical) and legality (horizontal) as the
axes of a two-by-two dimensional grid. The four combinations are: (1) ethical and legal, (2)
ethical but illegal, (3) unethical but legal, and (4) unethical and illegal. See Figure 4-1 in the
textbook.
Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium
- 65 -
Provide concrete examples for the four classifications marketing decisions according to ethical
and legal relationships.
Answer:
Answers will vary, but they should include examples of behaviors that are ethical and legal,
ethical but illegal, unethical but legal, unethical and illegal, such as those cited in the textbook.
See Figure 4-1 in the textbook.
Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard
4-190 UNDERSTANDING ETHICAL MARKETING BEHAVIOR COMPREHENSION
Figure 4-2
Identify and briefly describe each of the three factors identified in Figure 4-2 above that influence
ones personal moral philosophy and ethical behavior.
Answer:
The three major factors affecting business ethics are A societal culture and norms, B business
culture and industry practices, and C corporate culture and expectations. Culture is the set of
values, ideas, and attitudes that are learned and shared among members of a group. Culture also
serves as a socializing force that dictates what is morally right and just. This means that moral
standards are relative to particular societies. Business cultures are made up of the effective rules
of the game, the boundaries between competitive and unethical behavior, and the codes of
conduct in business dealings. Corporate culture is a set of values, ideas, and attitudes that is
learned and shared among the members of an organization.
4-191 BUSINESS CULTURE AND INDUSTRY PRACTICES KNOWLEDGE
- 66 -
Explain the difference between societal culture and business culture.
Answer:
Societal culture provides a foundation for understanding moral behavior in business activities.
Business cultures comprise the effective rules of the game, the boundaries between competitive
and unethical behavior, [and] the codes of conduct in business dealings. Business culture affects
ethical conduct both in the exchange relationship between sellers and buyers and in the
competitive behavior among sellers.
Page(s): 92 LO: 2 AACSB: Ethics QD: Easy
4-192 CONSUMER BILL OF RIGHTS (1962) COMPREHENSION
How did President John F. Kennedy change the concept of American business culture away from
caveat emptor in the 1960s?
Answer:
Before the 1960s, the legal concept of caveat emptor (let the buyer beware) was pervasive in
American business culture. In 1962, President Kennedy codified a Consumer Bill of Rights that
was intended to regulate the ethics of exchange between buyers and sellers. Ethical exchanges
between buyers and sellers should result in both parties being better off after a transaction. The
Consumer Bill of Rights includes the rights to safety, to be informed, to choose, and to be heard.
4-193 ESPIONAGE AND BRIBERY COMPREHENSION
Business culture affects ethical behavior in competition. Briefly discuss the two most common
kinds of unethical competitive behavior. In answering, provide concrete examples for both.
Answer:
The two kinds of unethical behavior that are most common are: (1) economic espionage and (2)
bribery. Economic espionage is the clandestine collection of trade secrets or proprietary
information about a companys competitors. This practice is illegal and unethical and carries
serious criminal penalties for the offending individual or business. Espionage activities include
illegal trespassing, theft, fraud, misrepresentation, wiretapping, the search of a competitors trash,
and violations of written and implicit employment agreements with noncompete clauses. The
second form of unethical competitive behavior is giving and receiving bribes and kickbacks.
Bribes and kickbacks are often disguised as gifts, consultant fees, and favors. This practice is
more common in business-to-business and government marketing than in consumer marketing. In
general, bribery is most evident in industries experiencing intense competition and in countries in
the earlier stages of economic development.
Identify and describe the two types of personal moral philosophy.
- 67 -
Answer:
Ultimately, ethical choices are based on the personal moral philosophy of the decision maker.
Moral philosophy is learned through the process of socialization with friends and family and by
formal education. It is also influenced by the societal, business, and corporate culture in which a
person finds him- or herself. Two prominent personal moral philosophies have direct bearing on
marketing practice: (1) moral idealism and (2) utilitarianism. Moral idealism and utilitarianism
are two types of moral philosophy. Moral idealism is a personal moral philosophy that considers
certain individual rights or duties as universal, regardless of the outcome. It exists in the
Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups.
Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest
number by assessing the costs and benefits of the consequences of ethical behavior. If benefits
exceed the costs, then the behavior is considered ethical, if not, then the behavior is considered
unethical. This philosophy underlies the economic tenets of capitalism and is embraced by many
business executives and students.
4-195 UTILITARIANISM KNOWLEDGE
Define the moral philosophy of utilitarianism and explain its relationship to capitalism.
Answer:
Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest
number by assessing the costs and benefits of the consequences of ethical behavior. If the
benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical. This
philosophy underlies the economic tenets of capitalism and is embraced by many business
executives and students.
Page(s): 98 LO: 2 AACSB: Ethics QD: Easy
4-196 MORAL IDEALISM/UTILITARIANISM APPLICATION
Body Bazaar: The Market for Human Tissue in the Biotechnology Age is a book by Lori Andrews
and Dorothy Nelkin. According to the book, Body parts are bought and sold for medical
research, diagnostics, and therapies. They are marketed to museums and personal collectors.
And pieces of people are increasingly being used as raw materials for products-from placenta-
enriched shampoos to experimental DNA-run computers. Blood has become one of the most
valuable commodities on Earth. While petroleum sells for $100 a barrel, an equivalent quantity
of blood products is worth $67,000. Use this quote to explain why ethics is such a difficult
concept to understand.
Answer:
This example makes it obvious why ethics is such a difficult topic. Students should realize that
they must weigh their personal philosophy of moral idealismthe way the remains of a loved
one should be treated respectfullywith a more utilitarian philosophy, which focuses on how
much can be learned from research on body parts. The cost of the blood is a supply and demand
issuejust like the price of rocks compared to the price of diamonds. It is not really an ethical
issue. It is included to demonstrate that subjects can be made to appear to be an ethical issue
when they are not.
- 68 -
Describe the three major concepts of social responsibility.
Answer:
The three concepts of social responsibility include profit responsibility, stakeholder responsibility,
and societal responsibility. Profit responsibility holds that companies have a simple duty to
maximize profits for their owners or stockholders. Stakeholder responsibility focuses on the
obligations organizations have to those who can affect achievement of their objectives, including
customers, employees, suppliers, and distributors. Societal responsibility refers to obligations
that organizations have to the preservation of the ecological environment and to the general
public. See Figure 4-4 in the textbook.
An increasing percentage of turkeys are now being marketed as free range. Consumers
typically pay $1 more per pound for free-range turkeys, which are thought to have lived more
humane livesand as a result, to taste better than conventionally-raised turkeys. The USDA
defines a free-range bird as one that has been allowed access to the out-of-doors. Are turkey
growers who allow their birds to access the out-of-doors only moments before they are killed
acting socially responsible?
Answer:
To answer this question, students will need to consider the three concepts of social responsibility.
If the turkey grower feels that its responsibility is to maximize profits for its owners and
stockholders, then it is taking profit responsibilitythis is one of the concepts of social
responsibility. It is not acting socially responsible if it believes in stakeholder responsibility.
Customers who actually desire a more humanely treated animal are being deceived. There is
nothing to indicate that the grower is taking any societal responsibility.
A recent survey found that 79 percent of Internet and e-commerce companies take absolutely no
social responsibility. Even more worrying is the finding that 75 percent of these Internet
companies justify this omission on the grounds that they dont have any environmental or social
impacts, while 55 percent said they didnt have time to think about these issues, and 50 percent
said they didnt have the expertise to address them. Would these Internet-based companies
benefit from acting more socially responsible? Explain your answer.
Answer:
Social responsibility encompasses profit responsibility, stakeholder responsibility, and societal
responsibility. Societal responsibility refers to obligations that organizations have (1) to the
preservation of the ecological environment and (2) to the general public. A formal practice of
giving service to the general public is referred to as cause marketing, which occurs when the
charitable contributions of a firm are tied directly to the customer revenues produced through the
- 69 -
promotion of one of its products. They can also enhance corporate sales and profits. Today,
emphasis is placed on what is termed the triple-bottom linerecognition of the need for
organizations to improve the state of people, the planet, and profit simultaneously if they are to
achieve sustainable, long-term growth. Growing interest in green marketing, cause marketing,
social audits, and sustainable development reflect this recognition. Green marketingmarketing
efforts to produce, promote, and reclaim environmentally sensitive products. Cause marketing
programs incorporate all three concepts of social responsibility by addressing public concerns and
satisfying customer needs. A social audit is a systematic assessment of a firms objectives,
strategies, and performance in terms of social responsibility. Frequently, marketing and social
responsibility programs are often integrated. Sustainable development involves conducting
business in a way that protects the natural environment while making economic progress.
Ecologically responsible initiatives such as green marketing represent one such initiative.
4-200 GREEN MARKETING COMPREHENSION
Define green marketing and provide an example of it.
Answer:
Green marketing refers to a companys marketing efforts to produce, promote, and reclaim
environmentally sensitive products. Examples from the textbook include 3Ms Pollution
Prevention Pays program and Xeroxs Design for the Environment program. Students, of
course, may think of other equally appropriate examples.
What is the difference between standard charitable contributions and cause marketing?
Answer:
A firms standard charitable contributions are outright donations. Cause marketing occurs when
the charitable contributions of a firm are tied directly to the customer revenues produced through
the promotion of a specific product. Cause marketing programs incorporate all three concepts of
social responsibility by addressing public concerns, satisfying customer needs, and enhancing
corporate sales and profits.
MasterCard International links usage of its card with fund raising for institutions that combat
cancer, heart disease, child abuse, and muscular dystrophy. MasterCard gives a modest
percentage of charges from its credit card charges to the institutions. What is this called and how
does it affect cardholders behavior?
Answer:
This practice is called cause marketing, which occurs when the charitable contributions of a firm
are tied directly to the customer revenues produced through the promotion of its products. It may
- 70 -
have the effect of encouraging the cardholders to charge more on their MasterCards (rather than
Visa or American Express)especially if they believe in the charity receiving the contribution.
Page(s): 100 LO: 3 AACSB: Ethics QD: Hard
What are the five steps in a social audit?
Answer:
A social audit consists of the following steps: (1) Recognition of a firms social expectations and
the rationale for engaging in social responsibility endeavors; (2) Identification of social
responsibility causes or programs consistent with the companys mission; (3) Determination of
organizational objectives and priorities for programs and activities it will undertake; (4)
Specification of the type and amount of resources necessary to achieve social responsibility
objectives; and (5) Evaluation of social responsibility programs and activities undertaken and
assessment of future involvement.
4-204 CONSUMER ETHICS AND SOCIAL RESPONSIBILITY COMPREHENSION
Research on unethical consumer behavior, such as fraudulent automobile insurance claims or

unauthorized downloading of music, movies, and software, indicates that these acts are rarely
motivated by economic need. What influences these behaviors?
Answer:
These behaviors appear to be influenced by (1) a belief that a consumer can get away with the act
and it is worth doing and (2) the rationalization that the act is justified or driven by forces outside
the individualeverybody does it.
- 71 -

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CHAPTER 4: MASTER TEST BANK

ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING

Blooms Level of Learning (LL)

ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING

Test Item Table by Learning Objective and Blooms Level of Learning

Blooms Level of Learning (LL)

Learning Objective Level 1 Level 2 Level 3

ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING

MULTIPLE CHOICE QUESTIONS

4-1 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION

Answer: c Page(s): 88-89 LO: 1 AACSB: Ethics QD: Hard

4-2 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION

Answer: d Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium

4-3 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION

Anheuser-Busch established its Corporate Social Responsibility (CSR) Department to

4-4 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION

By preserving the natural environment, Anheuser-Busch is appealing to environmentalists

Answer: e Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium

4-5 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION

Anheuser-Buschs commitment preserving the natural environment caused Fortune magazine to

Answer: b Page(s): 88-89 LO: 3 AACSB: Ethics QD: Hard

4-6 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION

Answer: a Page(s): 88-89 LO: 3 AACSB: Ethics QD: Hard

4-7 ETHICS KNOWLEDGE

Ethics refers to the

Answer: d Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

4-8 ETHICS KNOWLEDGE

Answer: c Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

4-9 LAWS KNOWLEDGE

Answer: b Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

4-10 LAWS KNOWLEDGE

Answer: d Page(s): 90 LO: 1 AACSB: Ethics QD: Easy

4-11 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION

Answer: e Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium

4-12 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION

Answer: a Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium

4-13 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION

Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium

4-14 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION

Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard

4-15 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION

Answer: c Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard

4-16 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION

Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard

4-17 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION

Answer: e Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard

4-18 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION

Answer: e Page(s): 91 LO: 1 AACSB: Ethics QD: Medium

4-19 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION

Answer: c Page(s): 91 LO: 1 AACSB: Ethics QD: Medium

4-20 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION

Answer: e Page(s): 91 LO: 1 AACSB: Ethics QD: Medium

4-21 ETHICAL MARKETING BEHAVIOR COMPREHENSION

Answer: b Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium

4-22 ETHICAL MARKETING BEHAVIOR COMPREHENSION

Answer: b Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium

4-23 ETHICAL MARKETING BEHAVIOR COMPREHENSION

Answer: e Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium

4-24 ETHICAL MARKETING BEHAVIOR COMPREHENSION

Answer: b Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium

Answer: a Page(s): 91 LO: 2 AACSB: Ethics QD: Easy

4-26 CULTURE KNOWLEDGE

Answer: d Page(s): 91 LO: 2 AACSB: Ethics QD: Easy