Chapter 16Marketing Ethics and Social Responsibility

Previewing the Concepts: Chapter Objectives

1. Identify the major social criticisms of marketing.2. Define consumerism and environmentalism, and explain how they affect

marketing strategies.3. Describe the principles of socially responsible marketing.4. Explain the role of ethics in marketing.

JUST THE BASICS

Chapter Overview

There have been many criticisms of marketing as it impacts individual consumers, other businesses, and society as a whole. This chapter discusses them in detail and provides some responses to critics.

Surveys usually show that consumers hold mixed or even slightly unfavorable attitudes toward marketing practices. Consumers, consumer advocates, government agencies, and other critics have accused marketing of harming consumers through high prices, deceptive practices, high-pressure selling, shoddy or unsafe products, planned obsolescence, and poor service to disadvantaged consumers. Companies respond in many ways, noting that the practices that cause so-called high prices—advertising, using intermediaries, decorative packaging, and the like—are necessary and well liked by consumers. Companies also note that those who use deceptive practices and high-pressure selling, or produce shoddy products, will not remain in business long.

Critics also charge that the American marketing system has added to several “evils” in society at large. Advertising has been a special target; it is charged that it urges too much interest in material possessions. However, our wants and values are influenced not only by marketers, but also by family, peer groups, religion, ethnic background, and education. If Americans are materialistic, these values arose out of basic socialization processes that go much deeper than business and mass media could produce alone.

Consumerism is an organized movement of citizens and government agencies to improve the rights and powers of buyers in relation to sellers. Consumers not only have the right but also the responsibility to protect themselves instead of leaving this function to someone else.

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

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Environmentalists are not against marketing and consumption; they simply want people and organizations to operate with more care for the environment. Companies have responded. At the most basic level, a company can practice pollution prevention, which means eliminating or minimizing waste before it is created. At the next level, companies can practice product stewardship, which is minimizing not just pollution from production but all environmental impacts through the full product life cycle. At the third level, environmental sustainability, companies look to the future and plan for new environ-mental technologies. Finally, companies can develop a sustainability vision, which serves as a guide to the future.

The philosophy of enlightened marketing holds that a company’s marketing should support the best long-run performance of the marketing system. It consists of five principles: consumer-oriented marketing, innovative marketing, value marketing, sense-of-mission marketing, and societal marketing.

Companies also need to develop corporate marketing ethics policies, which are broad guidelines that everyone in the organization must follow. These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards. For the sake of all of the company’s stakeholders—customers, suppliers, employees, shareholders, and the public—it is important to make a commitment to a common set of shared standards worldwide. Ethics and social responsibility require a total corporate commitment. They must be a component of the overall corporate culture.

Chapter Outline

1. Introductiona. Nike has been a lightning rod for social responsibility criticisms. Critics

have accused Nike of putting profits ahead of the interests of consumers and the broader public, both at home and abroad.

b. Despite its success at selling shoes, Nike has been accused of everything from running sweatshops, using child labor, and exploiting low-income consumers to degrading the environment.

c. Nike outsources production to contractors in low-wage countries. It has created a Code of Conduct, which demands socially responsible labor practices by its contractors. Nike has actually been improving the working conditions in low-wage countries.

d. Nike has also received criticism at home. It has been accused of inappropriately targeting its most expensive shoes to low-income families, making the shoes an expensive status symbol for poor urban kids.

e. A closer look shows that Nike works hard at being a socially responsible global citizen. Nike and the Nike Foundation contributed more than $29 million in cash and products last year to programs that encourage youth to participate in sports and that address challenges of globalization.

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f. Nike also donates money for education, community development, and small-business loans in the countries in which it operates.

g. Responsible marketers discover what consumers want and respond with marketing offers that give satisfaction and value to buyers and profit to the producer. The marketing concept is a philosophy of customer satisfaction and mutual gain.

h. Some companies use questionable marketing practices, and some marketing actions that seem innocent in themselves strongly affect the larger society.

2. Social Criticisms of Marketinga. Social critics claim that certain marketing practices hurt individual

consumers, society as a whole, and other business firms.

Use Chapter Objective 1 here.

Marketing’s Impact on Individual Consumersb. Surveys usually show that consumers hold mixed or even slightly

unfavorable attitudes toward marketing practices.c. Many critics charge that the American marketing system causes prices to

be higher than they would be under more “sensible” systems.1. A long-standing charge is that greedy intermediaries mark up

prices beyond the value of their services. There are too many intermediaries, they are inefficient, or they provide unnecessary or duplicate services.i. Companies respond that intermediaries do work that would

otherwise have to be done by manufacturers or consumers. Markups reflect services that consumers themselves want—more convenience, larger stores and assortments, longer store hours, return privileges, and others.

2. Modern marketing is also accused of pushing up prices to finance heavy advertising and sales promotion. Much of the packaging and promotion adds only psychological value to the product rather than functional value.i. Marketers respond that consumers can usually buy func-

tional versions of products at lower prices. However, they are willing to pay more for products that also provide psychological benefits.

ii. Heavy advertising and promotion may be necessary for a firm to match competitors’ efforts—the business would lose “share of mind” if it did not match competitive spending.

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Let’s Discuss ThisIf you did not have advertising, where would you gather information about products you wanted to buy?

3. Critics also charge that some companies mark up goods exces-sively.i. Marketers respond that most businesses try to deal fairly

with consumers because they want repeat business.ii. Marketers also respond that consumers often don’t under-

stand the reasons for high markups.

Use Discussing the Issues 1 here.

d. Marketers are sometimes accused of deceptive practices that lead consumers to believe they will get more value than they actually do. However, marketers argue that most companies avoid deceptive practices because such practices harm their businesses in the long run. Deceptive practices fall into three groups.1. Deceptive pricing includes practices such as falsely advertising

“factory” or “wholesale” prices or a large reduction from a phony high retail list price.

2. Deceptive promotion includes practices such as overstating the product’s features or performance, luring the customer to the store for a bargain that is out of stock, or running rigged contests.

3. Deceptive packaging includes exaggerating package contents through subtle design, not filling the package to the top, using misleading labeling, or describing size in misleading terms.

e. Salespeople are sometimes accused of high-pressure selling that persuades people to buy goods they had no thought of buying.1. Marketers know that buyers often can be talked into buying

unwanted or unneeded things.2. In most cases, however, marketers have little to gain from high-

pressure selling. Such tactics may work in one-time selling situations for short-term gain. However, most selling involves building long-term relationships with valued customers.

Applying the ConceptHave you ever bought a used car? Describe the sales techniques used to get you to buy a car. Did it feel like you were being overly pressured? How did you feel about the transaction?

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f. Another criticism is that products lack the quality they should have. Many products are not made well and services are not performed well. Many products deliver little benefit, or they might even be harmful.1. Product safety has been a problem for several reasons, including

company indifference, increased product complexity, and poor quality control.

2. Most manufacturers want to produce quality goods. The way a company deals with product quality and safety problems can damage or help its reputation.

Use Marketing at Work 16-1 here.

g. Critics have also charged that some producers follow a program of planned obsolescence, causing their products to become obsolete before they actually should need replacement.1. Marketers respond that consumers like style changes; they get tired

of old goods and want a new look in fashion or a new design in cars.

2. Companies do not design products to break down early, because they do not want to lose customers to other brands. Instead, they seek improvement to ensure that products will consistently meet or exceed customer expectations.

h. The American marketing system has been accused of serving dis-advantaged consumers poorly. Critics claim that the urban poor often have to shop in smaller stores that carry inferior goods and charge higher prices.1. Better marketing systems must be built to service disadvantaged

consumers. Disadvantaged consumers clearly need consumer pro-tection.

2. The FTC has taken action against merchants who advertise false values, sell old merchandise as new, or charge too much for credit.

Use Linking the Concepts here.

Marketing’s Impact on Society as a Wholei. The American marketing system has been accused of adding to several

“evils” in American society at large. Advertising has been a special target.j. Critics have charged that the market system urges too much interest in

material possessions.1. The critics do not view this interest in material things as a natural

state of mind but rather as a matter of false wants created by marketing.

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2. On a deeper level, our wants and values are influenced not only by marketers but also by family, peer groups, religion, ethnic back-ground, and education.

k. Business has been accused of overselling private goods at the expense of public goods.1. As an example, an increase in automobile ownership (private

good) requires more highways, traffic control, parking spaces, and police services (public goods).

2. A way must be found to restore a balance between private and public goods.i. One option is to make producers bear the full social costs

of their operations.ii. A second option is to make consumers pay the social costs.

l. Critics charge the marketing system with creating cultural pollution.1. Our senses are constantly being assaulted by advertising.2. Marketers answer that they hope their ads reach the primary target

audience. Also, ads make much of television and radio free to users and keep down the costs of magazines and newspapers. Finally, today’s consumers have alternatives.

Let’s Discuss ThisHow do you feel about billboards along the highways? Do you feel differently about them along a country road? Can marketers truly target their markets if they advertise on billboards?

m. Another criticism is that business wields too much political power.1. Advertisers are accused of holding too much power over the mass

media, limiting their freedom to report independently and objec-tively.

2. American industries do promote and protect their own interests. They have a right to representation in Congress and the mass media, although their influence can become too great.

Marketing’s Impact on Other Businessesn. Critics also charge that a company’s marketing practices can harm other

companies and reduce competition. 1. Critics claim that firms are harmed and competition is reduced

when companies expand by acquiring competitors rather than by developing their own new products.

2. Critics have also charged that marketing practices bar new com-panies from entering an industry.

3. Finally, some firms have in fact used unfair competitive marketing practices with the intention of hurting or destroying other firms.

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4. Various laws work to prevent such predatory competition. It is difficult, however, to prove that the intent or action was really predatory.

3. Citizen and Public Actions to Regulate Marketinga. Grassroots movements have arisen from time to time to keep businesses in

line.

Use Chapter Objective 2 here.

Consumerismb. American business firms have been the target of organized consumer

movements on three occasions.1. The first consumer movement took place in the early 1900s. It was

fueled by rising prices, Upton Sinclair’s writings on conditions in the meat industry, and scandals in the drug industry.

2. The second consumer movement, in the mid-1930s, was sparked by an upturn in consumer prices during the Great Depression and another drug scandal.

3. The third movement began in the 1960s. Consumers had become better educated, products had become more complex and potentially more hazardous, and people were unhappy with American institutions.

c. Consumerism is an organized movement of citizens and government agencies to improve the rights and powers of buyers in relation to sellers.

Use Key Term Consumerism here.

1. Traditional sellers’ rights include:i. The right to introduce any product in any size and style,

provided it is not hazardous to personal health or safety; or, if it is, to include proper warnings and controls.

ii. The right to charge any price for the product, provided no discrimination exists among similar kinds of buyers.

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

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

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

2. Traditional buyers’ rights include:i. The right not to buy a product that is offered for sale.

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ii. The right to expect the product to be safe.iii. The right to expect the product to perform as claimed.

3. Consumer advocates call for the following additional consumer rights:i. The right to be well informed about important aspects of

the product.ii. The right to be protected against questionable products and

marketing practices.iii. The right to influence products and marketing practices in

ways that will improve the “quality of life.”d. Consumers have not only the right but also the responsibility to protect

themselves instead of leaving this function to someone else.

Environmentalisme. Environmentalism is an organized movement of concerned citizens,

businesses, and government agencies to protect and improve people’s living environments.

Use Key Term Environmentalism here.

f. Environmentalists are not against marketing and consumption; they simply want people and organizations to operate with more care for the environ-ment.

g. The first wave of modern environmentalism in the United States was driven by environmental groups and concerned consumers in the 1960s and 1970s.1. They were concerned about the damage to the ecosystem caused

by strip-mining, forest depletion, acid rain, loss of the atmos-phere’s ozone layer, toxic wastes, and litter.

h. The second environmentalism wave was driven by government, which passed laws and regulations during the 1970s and 1980s governing industrial practices that have an impact on the environment.

i. Those two movements are now merging into a third and strong wave in which companies are accepting responsibility for doing no harm to the environment.1. More and more companies are adopting policies of environmental

sustainability—developing strategies that both sustain the environ-ment and produce profits for the company.

Use Key Term Environmental Sustainability here.Use Marketing at Work 16-2 here.Use Application Questions 1 here.

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j. Figure 16-1 shows a grid that companies can use to gauge their progress toward environmental sustainability.

Use Figure 16-1 here.Use Application Questions 2 here.

1. At the most basic level, a company can practice pollution pre-vention.

2. At the next level, companies can practice product stewardship—minimizing not just pollution from production but all environ-mental impacts through the full product life cycle.i. Many companies are adopting design for environment

(DFE) practices, which involve thinking ahead in the design stage to create products that are easier to recover, reuse, or recycle.

3. At the third level of environmental sustainability, companies look to the future and plan for new environmental technologies.i. Many organizations that have made good headway in

pollution prevention and product stewardship are still limited by existing technologies.

Use Under the Hood/Focus on Technology here.

4. Finally, companies can develop a sustainability vision, which serves as a guide to the future. It shows how the company’s products and services, processes, and policies must evolve and what new technologies must be developed to get there.

k. Environmentalism creates some special challenges for global marketers.1. As international trade barriers come down and global markets

expand, environmental issues are having an ever-greater impact on international trade.

2. Environmental policies still vary widely from country to country, and uniform worldwide standards are not expected for many years.

Let’s Discuss ThisWhat might be holding back worldwide environmental standards? Do you think they will ever be developed?

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Public Actions to Regulate Marketingl. Figure 16-2 illustrates the major legal issues facing marketing manage-

ment.

Use Figure 16-2 here.

4. Business Actions Toward Socially Responsible Marketinga. Most companies have grown to embrace the new consumer rights, at least

in principle. They might oppose certain pieces of legislation as inappropriate ways to solve specific consumer problems, but they recognize the consumer’s right to information and protection.

Use Chapter Objective 3 here.Use Discussing the Issues 2 here.

Enlightened Marketingb. The philosophy of enlightened marketing holds that a company’s

marketing should support the best long-run performance of the marketing system. It consists of five principles.1. Consumer-oriented marketing means that the company should

view and organize its marketing activities from the consumer’s point of view. It should work hard to sense, serve, and satisfy the needs of a defined group of customers.

2. The principle of innovative marketing requires that the company continuously seeks real product and marketing improvements. The company that overlooks new and better ways to do things will eventually lose customers to another company that has found a better way.

3. According to the principle of value marketing, the company should put most of its resources into value-building marketing invest-ments.

4. Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms. When a company defines a social mission, employees feel better about their work and have a clearer sense of direction.

5. Following the principle of societal marketing, an enlightened company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, and society’s long-run interests.

c. Figure 16-3 shows how products can be classified according to their degree of immediate consumer satisfaction and long-run consumer benefit.

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1. Deficient products, such as bad-tasting and ineffective medicine, have neither immediate appeal nor long-run benefits.

2. Pleasing products give high immediate satisfaction but may hurt consumers in the long run.

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

4. Desirable products give both high immediate satisfaction and high long-run benefits.

d. Companies should try to turn all of their products into desirable products.

Use Key Terms Enlightened Marketing, Consumer-Oriented Marketing, Innovative Marketing, Value Marketing, Sense-of-Mission Marketing, Societal Marketing, Deficient

Products, Pleasing Products, Salutary Products, and Desirable Products here.Use Figure 16-3 here.

Use Linking the Concepts here.Use Discussing the Issues 3 and 4 here.

Use Focus on Ethics here.

Marketing Ethicse. Companies need to develop corporate marketing ethics policies—broad

guidelines that everyone in the organization must follow.1. These policies should cover distributor relations, advertising stan-

dards, customer service, pricing, product development, and general ethical standards.

f. Table 16-1 lists some difficult ethical situations marketers could face dur-ing their careers.

Use Table 16-1 here.Use Chapter Objective 4 here.

Use Discussing the Issues 5 here.

g. But what principles should guide companies and marketing managers on issues of ethics and social responsibility?1. One philosophy is that such issues are decided by the free market

and legal system. Under this principle, companies and their managers are not responsible for making moral judgments. Companies can in good conscience do whatever the market and legal systems allow.

2. A second philosophy puts responsibility not on the system but in the hands of individual companies and managers. This more enlightened philosophy suggests that a company should have a “social conscience.”

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h. Under the societal marketing concept, each manager must look beyond what’s legal and allowed and develop standards on personal integrity, corporate conscience, and long-run consumer welfare.

i. As with environmentalism, the issue of ethics provides a special challenge for international marketers. 1. Business standards and practices vary a great deal from one

country to the next.2. For the sake of all the company’s stakeholders—customers,

suppliers, employees, shareholders, and the public—it is important to make a commitment to a common set of shared standards worldwide.

j. Many industrial and professional associations have suggested codes of ethics, and many companies are now adopting their own codes.1. Table 16-2 shows the code of ethics for the American Marketing

Association.

Use Table 16-2 here.Use Discussing the Issues 6 here.

k. Ethics and social responsibility require a total corporate commitment. They must be a component of the overall corporate culture.

Travel Log

Discussing the Issues1. Of the criticisms of marketing discussed in the text, which criticism concerns you

most? Which criticism concerns you the least? Which criticism do you think is most valid?

Student responses will vary.

2. Does a company’s socially responsible behavior influence your buying decisions? Do irresponsible or unethical actions influence your decisions?

Student responses will vary.

3. What is the difference between consumerism and environmentalism? How are they alike? Give an example of a cause that would be championed by each movement.

Consumerism is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. Environmentalism is an organized movement of concerned citizens, businesses, and government agencies to protect and improve people’s living environment. Whereas consumerists consider whether the marketing system is efficiently serving consumer wants, environmentalists are concerned with marketing’s effects on the environment and with the costs of serving consumer needs and wants. Those championing consumerism might lobby for better labeling laws.

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Environmentalists want environmental costs included in both producer and consumer decision making.

4. Can an organization be focused on both consumerism and environmentalism at the same time?

Student responses will vary. The two focuses are not mutually exclusive. In fact, the goals can be very compatible. With more information, consumers may choose products that protect the environment they care about.

5. Distinguish between the five principles of enlightened marketing: consumer-oriented marketing, innovative marketing, value marketing, sense-of-mission marketing, and societal marketing.

The philosophy of enlightened marketing holds that a company’s marketing should support the best long-run performance of the marketing system. Consumer-oriented marketing means that the company should view and organize its marketing activities from the consumer’s point of view. The principle of innovative marketing requires that the company continuously seek real product and marketing improvements. According to the principle of customer-value marketing, the company should put most of its resources into customer value-building marketing investments. Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms. Following the principle of societal marketing, an enlightened company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, and society’s long-run interests.

6. Classify three of the products you regularly buy using the Figure 16-3. How does analyzing the products this way impact your future buying decisions?

Student responses will vary.

Application Questions1. Study Figure 16-1. Select two companies, one you regard as very environmentally

active and one you believe is not. After researching the companies, rate each company in the areas of pollution prevention, product stewardship, new environmental technology, and sustainability vision. Are you surprised by any of your findings?

Student responses will vary.

2. Write a corporate marketing ethics policy for a company selling mortgage services online. How would such a policy influence ethical decision making among employees in this company?

Student responses will vary. Corporate marketing ethics policies are broad guidelines that everyone in the organization must follow. These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards. The finest guidelines cannot resolve all the difficult ethical situations the marketer faces. However, guidelines can help inform employee decisions.

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3. In small groups, consider the four issues regarding marketing’s impact on society as a whole. Debate each issue and after each debate take a poll of where your group stands on the issue.

Student responses will vary.

Under the Hood

Technology surges forward at an ever-quickening pace. As computers work faster, cars get better gas mileage, and televisions offer more vivid colors, consumers constantly upgrade products to reap the benefits. But critics argue that continual improvement often stems from planned obsolescence rather than from meaningful technological breakthroughs, causing products to become obsolete before they actually should need replacement. Marketers respond that much of so-called planned obsolescence is the working of the competitive and technological forces in a free society—forces that lead to ever-improving goods and services.

According to Gary Coleman, a manager with Deloitte & Touche, managing product innovation and new features is a must for any successful marketer hoping to stay ahead of the competition. He argues that, “the so-so companies will wait the extra year while they perfect their product and will put all the quality in and all the bells and whistles on. The great innovating companies will go to market with 80 percent of the design features and a facelift or upgrade strategy. It’s not planned obsolescence. It’s planning according to a profit cycle rather than a product cycle and it gives you speed to market. They get five to seven years out of the product instead of one big hit and rapid fall off.”*

1. Do you agree with Gary Coleman’s assertion that managing the release of innovations and features is a necessary part of successful marketing?

Student responses will vary.

2. Is Coleman’s approach ethical?Student responses will vary.

3. As a consumer, does the issue of planned obsolesence concern you? Student responses will vary.

*See Ian Porter, “Agility and Innovation the Winners,” Manufacturing Reporter, August 16, 2005.

Focus on Ethics

We’ve all heard about the community outreach efforts of retailers like Ben & Jerry’s and The Body Shop. But, unlike the social activists of the past, today’s values-led businesses are founded by well-trained business managers and company builders with a passion for a cause. The result is socially minded businesses with the know-how needed to target and connect with customers. For example, to make money and follow its values at the same

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time, WorldWise Inc. offers garden, home, and pet products made from recycled or organic materials. WorldWise’s strategy for getting up and running, built around the concept of environmentally responsible products, illustrates double-bottom-line thinking. Company CEO Aaron Lamstein comments, “You can’t be successful if you can’t do both. Our whole concept was that our products had to work as well as or better than others, look as good or finer, cost the same or less, and be better for the environment.”

1. Visit the WorldWise Web site (www.worldwise.com) and learn about the company and its products. Would you be interested in these products? Are you confident in their quality and the value they offer?

Student responses will vary.

2. What impact does the company’s double-bottom-line approach (values and profits) have on your interest in its products?

Student responses will vary.

3. Do you believe a company can be truly successful when focusing on a double bottom line?

Student responses will vary.

GREAT IDEAS

Barriers to Effective Learning

1. Most of the concepts in this chapter will be new. Some students cast an uncritical eye on the opinions of activist groups and think that not a single company can be trusted to “do the right thing.” The task in this chapter is to present both sides, both good and bad, so that students can see that although problems do exist, there are solutions, and industry does tend to work toward reining in those who would create problems for consumers, society as a whole, or other businesses.

2. The complaint of prices being higher than they would be without marketing is a good way to get students thinking about how the costs do add up at every stage of the process. It is important for them to understand where the complaint originates, and going through each of the areas—distribution and intermediaries, advertising and promotion, and the markups that come from every level—will drive home why items that might cost only pennies to manufacture will cost dollars by the time they hit the retail shelves. This will also help students understand why effective budgeting is necessary and why it is important to clearly understand your target market so that you can reach them efficiently.

3. Unless the university is in an urban environment, most students will be surprised that many large retailers stay away from disadvantaged neighborhoods, and that banks and insurance companies might discriminate against customers living in these areas. Even at urban universities this could be cause for surprise, because

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most urban schools are not located in the truly disadvantaged areas. A discussion on the pros and cons of, say, a Wal-Mart or a major grocery retailer locating in an inner-city neighborhood can aid in the comprehension of the risks and rewards for the company, as well as for the consumers.

4. The United States is certainly a materialistic society, but is that because of marketing? This is an unanswerable question, but it makes for a lively debate in class. You can either have two students volunteer to represent each side of the question, or break the class up into teams to debate among themselves.

5. Another lively debate is that of public versus private goods. Should society bear the cost of health care for those who smoke, eat too much, or drink to excess? And are these problems caused by marketing, or is marketing reacting to what people are asking for? Again, there is really no “right” answer, only beliefs. But attempting to answer these questions is a good way to get students to exercise their critical thinking skills.

6. Consumerism and environmentalism are two important concepts for the students to be aware of. It is unlikely that either of these movements will go away any time soon, and because the Internet has made so much information available to so many, these issues will likely only become more in the forefront of consumers’ minds. Product recalls have become commonplace, but it is worthwhile discussing in class any recalls the students have been affected by. Comparing the number of recalls today to the number in the 1960s and 1970s will also help. As for environmentalism, one thing that is useful is to ask how many students have traveled to cities in other countries where the pollution controls are not as stringent as in the United States. Also, discuss how your own university recycles, particularly if computers are given to the students every two years, as many business schools are now doing. What happens to those that are turned in by students? Go further with this topic, and discuss companies such as IKEA (see Classroom Exercise) that work hard toward achieving environmentally sustainable practices.

7. The concepts of enlightened marketing should not be difficult to understand, however, you should go through them carefully. Consumer-oriented marketing should certainly not be new, but the term will be. Sense-of-mission marketing might be a new notion, but describing companies such as Ben & Jerry’s, Newman’s Own, and even the old “Bell System,” which had a mission of “universal service” that truly motivated its thousands of employees, should help the students see how having a broad social mission would make employees feel better about their work.

8. Use Table 16-1 to guide the discussion of marketing ethics. This section would also be best handled as a debate or discussion, rather than as a lecture. Forcing students to make choices in delicate situations is the best way to illustrate how decisions are made on a daily basis. Also, a discussion of how ethics failed in corporations such as Enron and Tyco will also be of use.

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Student Projects

1. Research articles on ADP, a division of Tyco, and their former billing practices. Did the managers involved make ethical decisions? Did the corporate culture encourage the kinds of decisions they made, or were they made in spite of the culture?

2. Find five examples of products or a marketer’s practices that you believe are environmentally sensitive. How can you tell that this is a policy that is being stressed?

3. Bring an example of a firm that you do not think is being socially responsible to class. How did you determine this? What were the firm’s negative actions? What could they do to remove the negative perceptual image?

4. Describe an ethical situation that you have faced since you have been an adult. This situation could be personal, school-related, or job-related. Be honest in describing how you resolved this situation. What did you learn? Would you do anything differently if you were to face the situation again?

5. Research the business news and find a situation where a company acquired a competitor. Did the acquisition harm consumers in any way?

6. Find at least three examples of socially responsible marketing and bring the examples to class. Demonstrate what you think makes the firms involved qualify as being socially responsible.

7. Bring an example of a firm that you do not think is being socially responsible to class. How did you determine this? What were the firm’s negative actions? What could the firm do to remove the negative social image?

8. Write a pro or con paper about social responsibility. Be sure to examine the issues of cost and profit. Examine the issues of social responsibility versus shareholder responsibility.

9. Find three examples of deceptive practices and describe them.10. Find five examples of products or marketer practices that you perceive to be

environmentally-sensitive. How can you tell that this is a policy that is being stressed?

11. Interview five fellow students (not from your class) on their feelings about the environment. Do they buy environmentally-oriented products? Do they recycle? Are they interested in environmental organizations? Have them give examples of positive and negative actions that they take daily with respect to the environment. Are they afraid of any environmental issues? If so, which ones and why?

12. Find an example of a company that you perceive is practicing enlightened marketing. Describe why you feel the company qualifies. Is its practice publicized? Should it be?

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Interactive Assignments

Small Group Assignments

1. Form students into groups of three to five. Each group should read the opening vignette to the chapter on Nike. Each group should then answer the following questions:

a. What is Nike’s impact on consumers? Do most consumers need the high tech Nike builds into its shoes, thus increasing costs and prices? Explain your answer.

b. Is Nike creating materialism, or is it responding to it? Defend your answer.c. Comment on Nike’s response to the “sweat shop” issues. What are your

feelings about their comment that they are playing by the rules of the individual country? Should Nike try to change those rules if they are in conflict with typical U.S. practices?

Each group should share its findings with the class.

Individual Assignments

1. Read the opening vignette to the chapter. Think about the answers to the following questions:

a. What is Nike’s impact on consumers? Do most consumers need the high tech Nike builds into its shoes, thus increasing costs and prices? Explain your answer.

b. Is Nike creating materialism, or is it responding to it? Defend your answer.c. Comment on Nike’s response to the “sweat shop” issues. What are your

feelings about their comment that they are playing by the rules of the individual country? Should Nike try to change those rules if they are in conflict with typical U.S. practices?

Share your findings with the class.

Think-Pair-Share

1. Consider the following questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond the questions from the instructor.

a. What are the primary criticisms of marketing? Which of the criticisms are fair? Unfair?

b. What is a deceptive practice?c. What are deceptive practices that can take place in marketing?d. What is planned obsolescence? Is it good or bad? Explain your answer.e. Does marketing have a responsibility to serve all customers? Or only

profitable ones? Who decides this?

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f. What “evils” has advertising been accused of? Are these fair or unfair? Comment.

g. What is consumerism? What are the various “rights” under this concept?h. What is environmentalism?i. What is environmental sustainability? List and describe the four parts of

Figure 16-1.j. What is green marketing? Does it work?k. According to Figure 16-2, what are all the marketing decision areas that

may be called in question under the law?l. List and describe the various forms of enlightened marketing. Which do

you prefer? Why?m. List and describe the forms of products shown in Figure 16-3. Which of

these are desirable, and which are not?n. How do firms meet their social responsibility function?

Outside Example

People for the Ethical Treatment of Animals, known as PETA, claims animals have rights, and humans have no right to eat them, use them to produce clothing (leather goods and furs, for example), or for testing purposes. They are against practices they say are cruel and barbaric, including everything from corporate animal farming to breeding dogs and cats to supply our nation’s pet supply.

The organization targets high profile companies and their practices, recently targeting Perdue Farms and KFC for cruelty to chickens. Their activists have been known to break into test labs and release the animals there. Others have released dogs that were with their owners at dog shows.

Some have decried PETA as the lunatic fringe, while others praise their efforts to force us all to treat animals humanely.

1. Should PETA be able to release animals they truly believe are suffering? Defend your answer.

2. If you were Perdue Farms, and PETA released videos taken undercover at one of your processing facilities, how would you react? How much influence would this have on your marketing practices?

3. If you worked for a fur manufacturer, how would you counteract PETA’s campaign to get people to stop wearing fur?

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Classroom Exercise/Homework Assignment

IKEA operates 154 stores in 22 countries. It offers furnishings for the home that as many people as possible can afford. They claim their business is run in partnership with their customers—their part is to find the suppliers and raw materials that will produce fashionable yet durable furniture. And then customers do their part by picking it up and assembling it themselves. But IKEA goes well beyond offering nice furnishings at low prices. They firmly believe in social and environmental responsibility—they believe that this will translate into not only greater profits, but a better world. Visit the company’s Web site at www.ikea-usa.com and click the “about” link to find information about their corporate responsibility.

1. What is “the IKEA Way,” and how does it translate into good corporate citizenship?

The IKEA Way is a document that codifies its purchasing standards. It covers issues such as social and working conditions, child labor, the environment, and forestry. The code sets only minimum standards; suppliers are supposed to go well beyond the code in ensuring safety and respect for their employees, and in the use of environmentally safe processes. IKEA also works with nongovern-mental organizations, such as UNICEF, to aid in environmental and child labor issues.

2. IKEA says it “takes all aspects of a product’s life into consideration. Through choice of raw material through production and distribution to end of use” (see the section “IKEA and the Environment”). Using Figure 16-1, determine IKEA’s progress toward environmental sustainability.

IKEA is at least at product stewardship. They are attempting to not only minimize pollution from production, but are working toward design for environment (DFE).

3. How has this social responsibility affected IKEA’s financials?IKEA’s revenues have grown steadily since its inception. Worldwide, 286 million people visited their 154 stores in their last fiscal year. It is difficult to tell if this is because of their social responsibility, but customers are certainly responding to their marketing efforts.

Classroom Management Strategies

Although there are several Key Terms in this section that should be defined for the students, this is that rare chapter that could be more easily learned in a discussion format than a lecture. Drawing out student opinions on the topics in this chapter will make the material come alive.

1. You can spend a full 30 minutes on the first section. Discussing actual situations that could cause critics to make these charges would be helpful. For instance, as mentioned in the text, many people rail against the high prices that pharma-

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ceutical companies charge, when each pill typically costs only a few cents to manufacture. Discussing all the “backroom” work that goes into developing new drugs, as well as the costs of their push-and-pull marketing strategies, brings the full picture into focus. If Christmas is near, a good discussion can also ensue about the onslaught of advertising, both on television and in newspapers. Debate whether this is the cause of materialism, or a reaction to it. An interesting debate can also be held regarding cigarettes and alcohol—is it ethical to market these products when we know they can be harmful? Have students take sides to fully discuss the pros and cons.

2. The section on citizen and public actions should take 15 minutes. A brief history of both consumerism and environmentalism is generally helpful. If you have an activist university, and Earth Day is near, perhaps you could organize a group to participate through increasing your own recycling and studying the history of the environmental movement in the United States. Also, research the companies in Marketing at Work 16-2 as well as IKEA (found in the Classroom Exercise) to see what actions they are currently taking to improve the environment.

3. Finally, take 15 minutes to discuss business actions, enlightened marketing, and marketing ethics. Use Marketing at Work 16-3 to discuss what happens when a company focuses too much on being socially responsible and how it could hurt the bottom line. Then stress the positive results from companies such as Honest Tea and WorldWise, also discussed. Have the students search for other companies that practice enlightened marketing.

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