CHAPTER

FOUR

ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING

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AFTER READING CHAPTER 6 YOU SHOULD BE ABLE TO:

Appreciate the nature and significance of ethics in marketing. Understand the differences between legal and ethical behavior in marketing. Identify factors that influence ethical and unethical marketing decisions. Distinguish among the different concepts of ethics and social responsibility. Recognize the importance of ethical and socially responsible consumer behavior.
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PP4-AA Anheuser Buschs campaign for responsible drinking and environment-conscious disposition of packaging

Know When to Say When campaign for responsible drinking appeared first via posters in 1983 and two years later with TV commercials. Such

efforts have contributed to a sizeable decline in fatal

drunk-driving accidents and a 64% drop in teen drunk-driving deaths since 1982. Anheuser Busch is an advocate and sponsor or numerous efforts to preserve the environment and is the worlds largest recycler of aluminum cans.
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PP4-C Trends in alcoholic consumption by high school seniors

80 75 70

Percentage

65 60 55 50 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95

Year
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PP4-A Definition of Ethics

Ethics are . . . .
the moral principals and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.
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PP4-1 Classifying marketing decisions according to ethical and legal relationships

Ethical

Ethical but illegal

Ethical and legal

Ethicality

Unethical and illegal

Unethical
Illegal

Unethical but legal

Legal

Legality
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PP4-BB Concept Check

1. What are ethics? 2. What are 4 possible reasons for the present state of ethical conduct in the United States?
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PP4-CC Understanding Ethical Marketing Behavior Consider the use of anothers ideas: In the US copyrights, trademarks and patents are considered intellectual property, and unauthorized use is illegal and unethical. Outside the US, sometimes due to the culture of a country, unauthorized use of copyrights, patents and trademarks is not considered unethical or illegal. Such is the case in countries like China, Mexico and Korea.

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PP4-D International comparison of the percent of U.S.

software package sales that are illegal copies
100 Percentage 80 60 40 20 0
Switzerland

Germany

Benelux

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Benelux

Taiwan

Korea

Japan

China

Iberia

Italy

PP4-2 A framework for understanding ethical behavior

Societal culture and norms

Business culture and industry practices

Personal moral philosophy and ethical behavior

Organizational culture and expectations

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PP4-Ea Consumer Bill of Rights

In 1962 President John F. Kennedy outlined the Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers.
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PP4-Eb Consumer bill of rights - continued

Safety Be informed

Right to
Choose Be heard
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PP4-DDa Two kinds of unethical behavior

1. Industrial Espionage is the clandestine collection of trade secrets or proprietary information about a companys competitors.

Industrial espionage is most prevalent in hightechnology industries, such as electronics, specialty chemicals, industrial equipment, aerospace, and pharmaceuticals, where technical know-how and trade secrets separate industry leaders from followers.
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PP4-DDb Two kinds of unethical behavior

2. The giving and receiving of bribes and kickbacks is the second form of unethical competitive behavior. Bribes and kickbacks are often disguised as gifts, consultant fees and favors. They are more common in business-to-business and government marketing than in consumer marketing.

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PP4-EE Foreign Corrupt Practices Act

This act makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country. Generally, ethical standards are more likely to be compromised in industries experiencing intense competition and in countries in earlier stages of economic development.
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PP4-3 American Marketing Association Code of Ethics Members of the American Marketing Association have joined together in subscribing to its code of ethics embracing the following topics:

1.
2. 3.

Responsibilities of the Marketer

Rights and Duties of Parties in the Marketing Exchange Process Organizational Relationships
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PP4-F Personal moral philosophies MORAL IDEALISM

Considers certain individual rights or duties universal regardless of the outcome

UTILITARIANISM
Considers the greatest good for the greatest number by assessing the costs and benefits of the consequences
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PP4-FF Concept Check

1.

What rights are included in the Consumer Bill of Rights? What ethical practice is addressed in the Foreign Corrupt Practices Act?
What is meant by moral idealism?
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2.

3.

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PP4-4 Three concepts of social responsibility

Societal responsibility Stakeholder responsibility Ecological environment Profit responsibility Owners/ Stockholders Employees

Customers

General public

Suppliers/Distributors

Public interest groups

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PP4-G Elements of a social audit

Recognition Identification
Of social expectations and rationale for engaging in social responsibility endeavors Of causes or programs consistent with the companys mission

Of objectives and priorities for programs Determination and activities to be undertaken

Specification Evaluation
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Of the type and amount of resources necessary to achieve objectives Of programs and activities and assessment of future involvement
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PP4-GGa Valdez Principles

The Valdez Principles encourage companies to: 1. eliminate pollutants, minimize hazardous wastes, and conserve nonrenewable resources; 2. market environmentally safe products and services; 3. prepare for accidents and restore damaged environments; 4. provide protection for employees who report environmental hazards;
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PP4-GGb Valdez Principles

5. appoint an environmentalist to their boards of directors, name an executive for environmental affairs, and develop an environmental audit of their global operations to be made available for public inspection.

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PP4-HH Concept Check

1.
2.

3.

What is meant by social responsibility? Marketing efforts to produce, promote, and reclaim environmentally sensitive products are called ________________ . What is a social audit?
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