UNDERSTANDING
ETHICS USING
SCENARIOS
I
n this appendix, we present nine ethical scenarios designed to assist you in
developing your skills at identifying ethical issues. There is no one right answer to the
dilemmas below, just as there will be no correct answers to many of the ethical
situations you will face throughout your career. Instead, these scenarios can help you
develop your ethical reasoning skills as well as your sensitivity toward ethical issues. As
mentioned throughout the chapter, Exhibit 4.4 provides an ethical decision-making
metric to assist you in evaluating the following and all such ethical dilemmas you may
face.
Scenario 1: R.J. Reynolds: Promotions to the
Youth Market
Tobacco giant R.J. Reynolds sent a set of coasters featuring its cigarette brands and
recipes for mixed drinks with high alcohol content to young adults, via direct mail, on
their 21st birthdays (the legal age for alcohol consumption). The alcohol brands in the
recipes included Jack Daniels, Southern Comfort, and Finlandia Vodka. The reverse side
of the coaster read, “Go ‘til Daybreak, and Make Sure You’re Sittin’.” The campaign,
called “Drinks on Us,” clearly promoted abusive and excessive drinking. This campaign
was eventually stopped because the cigarette company did not have permission to use
the alcohol brands.
The Federal Drug Administration (FDA) has been given the authority to regulate
tobacco, including banning certain products, limiting nicotine, and blocking labels such
as “low tar” and “light” that could wrongly imply certain products are less harmful.1 The
law Page 144 doesn’t let the FDA ban nicotine or tobacco entirely. A committee has been
formed to study several issues, including dissolvable tobacco products, product changes,
and standards, and report back to the FDA. Of particular interest is the increase in the
share of smokers using menthol cigarettes from 31 percent to almost 34 percent in four
years, with more pronounced increases among young smokers. It also showed that
among black smokers, 82.6 percent used menthol cigarettes, compared with 32.3
percent for Hispanic smokers and 23.8 percent for white smokers.2 A ban on cigarettes
with flavors such as clove, chocolate, or fruit took effect in 2009 because they are
believed to appeal to youth.
After graduation, you have an offer to work in either marketing or sales at R.J.
Reynolds, the tobacco company that sells many popular brands of cigarettes. The pay
and benefits are very competitive. The job market is tight, and if you don’t get a job right
away, you will have to live with your parents. Should you take the job?
Scenario 2: Car Manufacturer Gives Bribes
for Contracts
A car and truck manufacturer just found out that two of its overseas business units have
been engaging in bribery over a 10-year period of time. The company paid $56 million in
bribes to more than 20 countries to gain government contracts for their vehicles.3 The
company is now paying millions in criminal and civil charges because of its violation of
the Foreign Corrupt Practices Act (FCPA), and it admits to earning more than $50
million in profits based on its corrupt transactions. The car company recorded the bribe
payments as commissions, special discounts, or necessary payments. Should the
manufacturer discontinue its operations with the countries that were unlawfully bribed
to buy its cars? Are financial fines sufficient to repair the problem? How can companies
be sure the commissions they earn are true commissions and not a bribe?
Scenario 3: Retailers Lack Ethical Guidelines
Renata has been working at Peavy’s Bridal for nearly a year now. Her sales figures have
never been competitive with those of her coworkers, and the sales manager has called
her in for several meetings to discuss her inability to close the sale. Things look
desperate; in the last meeting, the sales manager told her that if she did not meet her
quota next month, the company would likely have to fire her.
In considering how she might improve her methods and sales, Renata turned to
Marilyn, the salesperson in the store who had the most experience. Marilyn has been
with Peavy’s for nearly 30 years, and she virtually always gets the sale. But how?
“Let me tell you something sweetie,” Marilyn tells her. “Every bride-to-be wants one
thing: to look beautiful on her wedding day so that everyone gasps when they first see
her. And hey, the husband is going to think she looks great. But let’s be honest here—not
everyone is all that beautiful. So you have to convince them that they look great in one,
and only one, dress. And that dress had better be the most expensive one they try, or
they won’t believe you anyway! And then you have to show them how much better they
look with a veil. And some shoes. And a tiara … you get the picture! I mean, they need all
that stuff anyway, so why shouldn’t we make them feel good while they’re here and let
them buy from us?”
Should she follow Marilyn’s advice and save her job?
Scenario 4: Giving Credit Where Credit Isn’t
Due
A catalog retailer that carries home and children’s items, such as children’s furniture,
clothing, and toys, was seeking a way to reach a new audience and stop the declining
sales and revenue trends it was suffering. A market research firm hired by the cataloger
identified a new but potentially risky market: lower-income single parents. The new
market seemed attractive because of the large number of single parents, but most of
these homes were severely constrained in terms of their monetary resources.
The research firm proposed that the cataloger offer a generous credit policy that would
allow consumers to purchase up to $500 worth of merchandise on credit without a
credit Page 145 check, provided they signed up for direct payment of their credit account
from a checking account. Because these were high-risk consumers, the credit accounts
would carry extremely high interest rates. The research firm believed that even with
losses, enough accounts would be paid off to make the venture extremely profitable for
the catalog retailer.
Should the cataloger pursue this new strategy?
Scenario 5: The Jeweler’s Tarnished Image
Sparkle Gem Jewelers, a family-owned and -operated costume jewelry manufacturing
business, traditionally sold its products only to wholesalers. Recently however, Sparkle
Gem was approached by the charismatic Barb Stephens, who convinced the owners to
begin selling through a network of distributors she had organized. The distributors
recruited individuals to host jewelry parties in their homes. Sparkle Gem’s owners, the
Billing family, have been thrilled with the revenue generated by these home parties and
started making plans for the expansion of the distributor network.
However, Mrs. Billing just received a letter from a jewelry party customer, who
expressed sympathy for Mrs. Billing’s loss. Confused, Mrs. Billing contacted the letter
writer, who told her that Barb Stephens had come to the jewelry party at her church and
told the story of Sparkle Gem. According to Stephens’s story, Mrs. Billing was a young
widow struggling to keep her business together after her husband had died on a
missionary trip. The writer had purchased $200 worth of jewelry at the party and told
Mrs. Billing that she hoped it helped. Mrs. Billing was stunned. She and her very-muchalive husband had just celebrated their 50th wedding anniversary.
What should Mrs. Billing do now?
Copyright Grantland Enterprises; www.grantland.net. All rights reserved. Used with permission.
Scenario 6: No Wonder It’s So Good
Enjoy Cola is a new product produced by ABC Beverage and marketed with the slogan
“Relax with Enjoy.” Unlike other colas on the market, Enjoy does not contain caffeine
and therefore is positioned as the perfect beverage to end the day or for a slow-paced
weekend and as a means to help consumers relax and unwind. The market response has
been tremendous, and sales of Enjoy have been growing rapidly, especially among
women.
ABC Beverage decided not to list on the ingredients label that Enjoy contains a small
amount of alcohol, because it is not required to do so by the government unless the
alcohol content is more than 1 percent.
Page 146
Mia Rodriguez, the marketing director for Enjoy, only recently learned that Enjoy
contains small amounts of alcohol and is troubled about ABC’s failure to disclose this
information on the ingredients list. She worries about the impact of this omission on
consumers who have alcohol sensitivities or those who shouldn’t be consuming alcohol,
such as pregnant women and recovering alcoholics.
What should Rodriguez do? What would you do in her position?
Scenario 7: Bright Baby’s Bright Idea
Bartok Manufacturing produces a line of infant toys under the Bright Baby brand label.
The Consumer Product Safety Commission (CPSC) recently issued a recall order for the
Bright Baby car seat gym, a very popular product. According to the CPSC, the gym
contains small parts that present a choking hazard. The CEO of Bartok Manufacturing,
Bill Bartok, called an executive meeting to determine the firm’s strategy in response to
the recall.
Mike Henderson, Bartok’s CFO, stated that the recall could cost as much as $1 million in
lost revenue from the Bright Baby line. Noting that there had been no deaths or injuries
from the product, just the potential for injury, Henderson proposed that the remaining
inventory of car seat gyms be sold in regions where there are no rules such as the
CPSC’s. Sue Tyler, the marketing director for Bartok, recommended that the product be
repackaged and sold under a different brand name so that the Bright Baby name would
not be associated with the product. Bartok, though a bit leery of the plan, agreed to go
along with it to avoid the monetary losses.
What would you have recommended to the CEO?
Scenario 8: Money from Mailing Lists4
Sports Nostalgia Emporium sells autographed sports memorabilia online. Recently, the
director of marketing, John Mangold, started using a mailing list he had purchased from
Marketing Metrix, a marketing research firm that sells consumer information. Mangold
relies on such purchased mailing lists to grow the company and sends printed catalogs
to thousands of people each month. The mailing lists he gets from Marketing Metrix are
much more effective than other mailing lists and generate almost twice as much
revenue.
In a recent conversation with a sales representative from Marketing Metrix, Mangold
discovered the reason its lists were so effective: Marketing Metrix tracks the online
behavior of consumers and uses that information to create targeted lists. The mailing
lists that Mangold has been using consist of consumers who visited the websites of
Sports Nostalgia Emporium’s competitors. Based on what he can discern, Mangold
believes that these consumers are not aware that someone is collecting information
about their online behavior, along with their names and addresses, and selling it to
other firms.
Should Mangold continue to use the Marketing Metrix mailing list? If so, should he tell
his new customers how he got their names and addresses? Do consumers need to give
consent before firms can collect information about their behavior?
Scenario 9: The Blogging CEO5
David Burdick is the CEO of ACME Bubblegum, a successful public company. As one of
the cofounders of the company, Burdick has enjoyed speaking and writing about the
success of ACME Bubblegum for several years. Typically, he speaks at conferences or
directly to the press, but recently he has been blogging about his firm anonymously.
Specifically, he defended a recent advertising campaign that was unpopular among
consumers and pointedly attacked one of ACME Bubblegum’s competitors. Burdick
deeply enjoys his anonymous blogging and believes that none of his readers actually
know that he works for ACME Bubblegum.
Page
147
Copyright Grantland Enterprises; www.grantland.net. All rights reserved. Used with permission.
Should Burdick be allowed to praise his company’s performance anonymously online?
Should he be allowed to attack his competitors without disclosing his relationship with
the company? How would you feel if the CEO of a company at which you shopped was
secretly writing criticisms of his or her competition? How would you feel if you knew a
writer for your favorite blog was actually closely involved in a company that the blog
community discussed?
MKTG 315
Ethical Scenarios
Scenario
Ethical Dilemma
(competing decisions)?
Is it ethical? What
would you do?
Which test of the six
ethical test did you
use?
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