marketing strategy

O. C. Ferrell Michael D. Hartline

Marketing Ethics
and Social
Responsibility in
Strategic Planning
C H A P T E R
3-2
Car manufacturers have gone to great lengths to promote
hybrid cars.

These cars are generally much more expensive to develop and
produce. Do corporations have a social responsibility to
develop environmentally friendly cars? Why or why not?
The Auto Industry Tries to Go Green
Beyond the Pages 3.1
3-3
The Role of Ethics and Social
Responsibility in Marketing Strategy
Grown in importance recently
Due to firms having problems in this area
Have become necessities due to:
Stakeholder demands
Changes in Federal law
Improve marketing performance and profits
Are important to development of marketing strategy
3-4
Why is marketing ethics a strategic consideration
in organizational decisions? Who is most
important in managing marketing ethics: the
individual or the firms leadership? Explain your
answer.
Discussion Question
3-5
Dimensions of
Social Responsibility
Social Responsibility
A broad concept that relates to an organizations
obligation to maximize its positive impacts on society
while minimizing its negative impacts

Marketing Ethics
Principles and standards that define acceptable marketing
conduct as determined by the public, government
regulators, private interest groups, competitors, and the
firm itself
3-6
R.J. Reynolds has been accused by critics of using its
Joe Camel cartoon character, to target children for
cigarette consumption.

How has society acted to protect children from
advertising such as this? What obligations do
companies have to protect children?
Marketing Strategy in Action
3-7
The Pyramid of
Corporate Social Responsibility
Exhibit 3.1
3-8
Social Responsibility
Includes:
Economic responsibility of making a profit
Legal responsibility of obeying laws and regulations
Ethical responsibility to uphold principals and standards
Philanthropic responsibility to increase the firms
positive impact on society
3-9
Marketing Ethics and Strategy
Requires that organizations and individuals accept
responsibility
Can lead to violations of public trust
Involves complex and detailed decisions in gray areas
Deals with experiences and decisions made at work
Comes into play anytime individuals feel manipulated or
cheated
3-10
Potential Ethical Issues in Marketing
Overall Issues
Product Issues
Pricing Issues
Distribution Issues
Promotion Issues

See Exhibit 3.2 in Text
3-11
Government Regulation of
Marketing Activities
Exhibit 3.3
3-12
The Challenges of Being
Ethical and Socially Responsible
Business decisions involve complex decisions in which
correctness may not be clear cut
e.g. Internet privacy, protecting trademarks and brand names
Ethical conflict may emerge from an inconsistency
between personal values and the values held by members
of the work group
Ethical issues can develop into legal problems
3-13
Types of Misconduct
Observed in Organizations
Exhibit 3.4
3-14
Why have we seen more evidence of widespread
ethical marketing dilemmas within firms today?
Is it necessary to gain the cooperation of
marketing managers to overstate revenue and
earnings in a corporation?
Discussion Question
3-15
Deceptive Practices in Marketing
Deceptive Communications and Promotion
Fraud or any false communication
Exaggerated claims or statements
Ambiguous statements
Product labeling issues
Selling abuses
Regulating Deceptive Marketing Practices
Typically regulated by:
The firms themselves
Industry and trade associations
3-16
Organizational Determinants of
Marketing Ethics & Social Responsibility
Ethical Decision Making
Determined by an individuals background and business
colleagues
Affected by personal values, opportunity for unethical
behavior, and exposure to others
Intricately tied to the firms culture and ethical climate
Can only be improved by planning and structure
Likely to occur when modeled by a strong leader
3-17
Ethical Climate
Part of a corporate culture that relates to an
organizations expectations about appropriate conduct
The character component of an organization
Sets the tone for ethical decisions
Determines whether or not an individual perceives an issue to
be an ethical issue
3-18
Codes of Conduct (1 of 2)
Codes of Conduct (Codes of Ethics)
Formal statement that describes what an organization expects
of its employees
Not an effective means of controlling ethical behavior unless
integrated into daily decision making
Not effective unless the code has support of top management
3-19
Codes of Conduct (2 of 2)
Codes must reflect managements desire for
compliance with values, rules, and policies
Codes should have six core values:
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
Codes will not resolve every issue encountered in daily
operations
Codes can help managers deal with ethical dilemmas
3-20
Key Considerations in Developing and
Implementing a Code of Ethical Conduct
Exhibit 3.5
3-21
Texas Instruments
Ethics Quick Test
Is the action legal?
Does it comply with our values?
If you do it, will you feel bad?
How will it look in the newspaper?
If you know its wrong, dont do it!
If youre not sure, ask.
Keep asking until you get an answer.
3-22
Market Orientation
Market Orientation
The development of an organizational culture that effectively
and efficiently promotes the necessary behaviors for the
creation of superior value for buyers and, thus, continuous
superior performance of the firm.
Strongly tied to ethics and social responsibility
Means fostering a sense of cooperation and information
exchange
3-23
Stakeholder Orientation
Stakeholder Orientation
The degree to which a firm understands and addresses
stakeholder demands
Strongly tied to ethics and social responsibility
Comprised of three activities:
1. Generation of stakeholder groups data and assessment
of firm effects on these groups
2. Distribution of this information throughout the firm
3. Responsiveness as a whole to this intelligence
3-24
Connecting Ethics & Social Responsibility
to Marketing Performance
Strong ethics causes employees to be:
Motivated to serve customers
Committed to the firm
Committed to high quality standards
Satisfied with their job
Can lead to trust among firms stakeholders
Is so important that it can have major negative impacts
on firms that dont uphold ethical standards
3-25
What is the relationship between marketing ethics
and organizational performance? What are the
elements of a strong ethical compliance program
to support responsible marketing and a successful
marketing strategy?
Discussion Question
3-26
The Connection Between
Ethics and Strategic Planning
Typically done through ethical compliance programs or
integrity initiatives
Vested in the marketing plan
Based on an understanding of:
1) Risks associated with misconduct
2) Ethical and social consequences of strategy
3) Values of organizational members and stakeholders
Manifested through actions not just words