Marketing Ethics and Social Responsibility 20 Principles of Marketing.
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Transcript of Marketing Ethics and Social Responsibility 20 Principles of Marketing.
Marketing Ethicsand
Social Responsibility
2020
Principles of Marketing
Learning Objectives
After studying this chapter, you should be able to:
1. Identify the major social criticisms of marketing
2. Define consumerism and environmentalism and explain how they affect marketing strategies
3. Describe the principles of socially responsible marketing
4. Explain the role of ethics in marketing20-2
Chapter Outline
1. Social Criticisms of Marketing2. Citizen and Public Actions to
Regulate Marketing3. Business Actions Toward Socially
Responsible Marketing
20-3
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
• High cost of distribution• High advertising and promotion costs• Excessive markups• Deceptive practices
20-4
Social Criticisms of Marketing
Complaint: Intermediaries mark up prices beyond their value due to inefficiencies and unnecessary or duplicative services
Response: Markups reflect the cost
of the services that consumers expect
• Convenience• Larger stores and
assortments• More service• Return privileges 20-5
Marketing’s Impact on Individual ConsumersHigh Cost of Distribution
Social Criticisms of Marketing
Complaint: Prices are inflated to
absorb advertising and sales promotion costs, and packaging only adds to the psychological, not functional, value of the product
Response: Advertising does add to
product cost but also to product value by informing potential customers of the availability and merits of the product
20-6
Marketing’s Impact on Individual ConsumersHigh Advertising and Promotion costs
Social Criticisms of Marketing
Complaint: Companies mark up
products excessively
Response: Most businesses try to
deal fairly with consumers because they want to build relationships and repeat business
20-7
Marketing’s Impact on Individual ConsumersExcessive Markups
Social Criticisms of Marketing
Marketing’s Impact on Individual ConsumersDeceptive Practices
Complaint: Companies use deceptive practices that lead customers to believe they will get more value than they actually do. These practices fall into three categories:
• Deceptive pricing• Deceptive promotion• Deceptive packaging
20-8
Social Criticisms of Marketing
Marketing’s Impact on Individual ConsumersDeceptive Practices
Deceptive pricing includes practices such as falsely advertising “factory” or “wholesale” prices or a large price reduction from a phony high retail list price
Deceptive promotion includes practices such as misrepresenting the product’s features or performance or luring the customer to the store for a bargain that is out of stock
Deceptive packaging includes exaggerating packaging contents through subtle design, using misleading labeling or describing size in misleading terms
20-9
Social Criticisms of Marketing
Marketing’s Impact on Individual ConsumersDeceptive Practices
Legislation to protect consumer from deceptive practices• Wheeler-Lea Act—gives the Federal Trade Commission
(FTC) power to regulate “unfair or deceptive acts or practices”
Is it deception or alluring or puffery that is just an exaggeration for effect?
• Products that are harmful• Products that provide little benefit• Products that are not made well
20-10
Social Criticisms of Marketing
Complaint: Salespeople use high-
pressure selling that persuades people to buy goods they had no intention of buying
Response: Most selling involves
building long-term relationships and valued customers. High pressure or deceptive selling can damage these relationships.
20-11
Marketing’s Impact on Individual ConsumersDeceptive Practices
High-Pressure Selling
Social Criticisms of Marketing
Complaint: Products have poor
quality, provide little benefit, and can be harmful
Response: Today’s marketers know that
customer-driven quality results in customer value and satisfaction that creates profitable customer relationships. There is no value in marketing shoddy, harmful, or unsafe products.
20-12
Marketing’s Impact on Individual ConsumersDeceptive Practices
Shoddy, Harmful, or Unsafe Products
Social Criticisms of Marketing
Complaint: Producers follow a program
of planned obsolescence, causing their products to become obsolete before they actually need replacement. Producers also continually change consumers’ concepts of acceptable styles to encourage more and earlier buying.
Response: Planned obsolescence is
really the result of competitive market forces leading to ever-improving goods and services. Marketers know that customers like style changes and want the latest innovations even if older models still work.
20-13
Marketing’s Impact on Individual ConsumersDeceptive Practices
Planned Obsolescence
Social Criticisms of Marketing
Complaint: American marketers
serve disadvantaged customers poorly. Some retail companies “redline” poor neighborhoods and avoid placing stores there.
Response: Some marketers
profitably target these customers, and the FTC has taken action against marketers that do advertise false values, wrongfully deny service, or charge disadvantaged customers too much.
20-14
Marketing’s Impact on Individual ConsumersDeceptive Practices
Poor Service to Disadvantaged Consumers
Social Criticisms of Marketing
Complaint: The marketing system
urges too much interest in material possessions. People are judged by what they own rather than who they are, creating false wants that benefit industry more than they benefit consumers.
Response: People do have strong
defenses against advertising an other marketing tools. Marketers are most effective when they appeal to existing wants rather than creating new ones. The high failure rate of new products shows that companies cannot control demand.
20-15
Marketing’s Impact on Society as a WholeFalse Wants and Too Much Materialism
Social Criticisms of Marketing
Complaint: Businesses oversell private
goods at the expense of public goods and require more public goods to support them
Response: There needs to be a
balance between private and public goods
• Producers should bear full social costs of their operations
• Consumers should pay the social costs of their purchases
20-16
Marketing’s Impact on Society as a WholeToo Few Social Goods
Social Criticisms of Marketing
Complaint: Marketing and
advertising creates cultural pollution
Response: Marketing and advertising are
planned to reach only a target audience, and advertising makes radio and television free to users and helps to keep the cost of newspapers and magazines down. Today’s consumers have alternatives to avoid marketing and advertising from technology.
20-17
Marketing’s Impact on Society as a WholeCultural Pollution
Social Criticisms of Marketing
Complaint: Businesses wield too
much political power over mass media, limiting media to report independently and objectively
Response: American industries do
promote their own interests, and regulators are seeking to balance the interests of big businesses against the public
• Microsoft• Tobacco
20-18
Marketing’s Impact on Society as a WholeToo Much Political Power
Social Criticisms of Marketing
Marketing’s Impact on Other Businesses
• Acquisition of competitors• Marketing practices• Unfair competitive marketing practices
20-19
Social Criticisms of Marketing
Marketing’s Impact on Other Businesses
Acquisition of competitors can sometimes be good for society when the acquiring company gains economies of scale that lead to lower prices
Marketing practices can also bar new competitors from entering an industry and can create use patents, heavy promotional spending to drive out existing competitors
Unfair competitive marketing practices such as setting prices below cost, threatening to cut off business with suppliers, or discouraging the buying of a competitor’s product can hurt or destroy other firms
20-20
Citizen and Public Actions to Regulate Marketing
Consumerism is the organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers
Environmentalism is an organized movement of concerned citizens, businesses, and government agencies to protect and improve people’s living environment
20-21
Citizen and Public Actions to Regulate Marketing
ConsumerismTraditional sellers’ rights include:• The right to introduce any product in any size and
style, provided it is not hazardous to personal health or safety, or if it is, to include proper warning and controls
• The right to charge any price for the product, provided no discrimination exists among similar kinds or buyers
• The right to spend any amount to promote the product, provided it is not defined as unfair competition
• The right to use any product message, provided it is not misleading or dishonest in content or execution
• The right to use any buying incentive programs, provided they are not unfair or misleading
20-22
Citizen and Public Actions to Regulate Marketing
Environmentalism
People and organizations should operate with more care for the environment
The marketing system’s goal should not be to maximize consumption, consumer choice, or satisfaction, but rather to maximize life quality. Environmental costs should be included in both producer and consumer decision making. 20-23
Citizen and Public Actions to Regulate Marketing
EnvironmentalismEnvironmental Sustainability
• Pollution prevention• Product stewardship• Design for environment (DFE)• New environmental technologies• Sustainability vision
20-24
Citizen and Public Actions to Regulate Marketing
EnvironmentalismEnvironmental Sustainability
Pollution prevention involves not just cleaning up waste but also eliminating or minimizing waste before it is created
Product stewardship involves minimizing the pollution from production and all environmental impact throughout the full product life cycle
Design for environment (DFE) involves thinking ahead to design products that are easier to recover, reuse, or recycle
20-25
Citizen and Public Actions to Regulate Marketing
EnvironmentalismEnvironmental Sustainability
New environmental technologies involve looking ahead and planning new technologies for competitive advantage
Sustainability vision is a guide to the future that shows the company that the company’s products, process, and policies must evolve and what is needed to get there
20-26
Business Actions Toward Socially Responsible Marketing
Enlightened Marketing
Enlightened marketing refers to a company’s marketing effort supporting the best long-run performance of the marketing system and consists of five principles:
• Consumer-oriented marketing• Customer-value marketing• Innovative marketing• Sense-of-mission marketing• Societal marketing
20-27
Business Actions Toward Socially Responsible Marketing
Enlightened Marketing
Consumer-oriented marketing means that a company should view and organize its marketing activities from the consumer’s perspective
Customer-value marketing means that the company should put most of its resources into customer-value-building marketing investments—long-term customer loyalty and relationships—by continually improving the value consumers receive from the firm’s market offerings
Innovative marketing requires the company to continually seek real product and marketing improvements
20-28
Business Actions Toward Socially Responsible Marketing
Enlightened Marketing
Sense-of-mission marketing means the company should define its mission in broad social terms rather than narrow product terms
Societal marketing means the company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, and society’s long-run interests
• Views societal problems as opportunities• Designs pleasing and beneficial products
20-29
Business Actions Toward Socially Responsible Marketing
Enlightened Marketing
Deficient products have neither immediate appeal nor long-term benefits
• Bad-tasting and ineffective medicine
Pleasing products have high immediate satisfaction but may hurt consumers in the long run
• Cigarettes and junk food
20-30
Business Actions Toward Socially Responsible Marketing
Enlightened Marketing
Salutary products have low appeal but may benefit consumers in the long run
• Seat belts and air bags
Desirable products give both immediate satisfaction and high long-term benefits
• Tasty and nutritious breakfast food
20-31
Business Actions Toward Socially Responsible Marketing
Marketing Ethics
Corporate marketing ethics are broad guidelines that everyone in the organization must follow that cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards
20-32
Business Actions Toward Socially Responsible Marketing
Marketing EthicsPhilosophies
Issues are decided by the free market and legal system
Responsibility is not on the system but in the hands of the individual company and managers
20-33
The End