BA 370 Principles of Marketing Week 1: Ch. 4 - Ethical and Social Responsibility for Sustainable Marketing Professor: Kristine Ehrich, Ph.D. Objectives for today • Explain the difference between legal and ethical behavior in marketing. • Identify factors that influence ethical and unethical marketing decisions. • Describe the different concepts of social responsibility. • Recognize unethical and socially irresponsible consumer behavior. ©Kristine R. Ehrich, PhD 1 Ethical Responsibility • Why Ethics? • Do No Harm • Foster Trust in the Marketing System • Embrace Ethical Values Consumer Bill of Rights -1962 Ethical Issues in Marketing ©Kristine R. Ehrich, PhD 2 Ethical Dilemmas • What are your thoughts on selling something that can be gotten for free? • What do you think about marketing products that are legal but have addictive properties associated with them? • As a marketer, would you approve of marketing genetically modified food products? Why or why not? • A marketing manager is offered inside information on competitor’s marketing plan by a disgruntled employee who is looking for a new job Going Beyond • Business must do more than what is legally required • Friedman’s take – What did Milton Friedman say? • Should companies be reactive or proactive? • Role of top management ©Kristine R. Ehrich, PhD 3 Ethical? Legal? Ethics deal with personal moral principles and values Laws are society’s values and standards that are enforceable in courts Ethical Dimension of Social Responsibility • Responsibility to fulfill ethical obligations to various stakeholders – Which stakeholders are the most important? • • • • • ©Kristine R. Ehrich, PhD Consumers Employees Suppliers Shareholders Community 4 Corporate Responsibility • Shareholder or Society • Corporations owe certain ethical, financial and social obligations to the community in which they operate. • “companies, like individuals, should strive to be good citizens by contributing to the community to a greater extent than is legally required.” – E. Merrick Dodd 1932 Sustainability: Moving from “why” to “how” • “Over the past 10 years, a lot has changed, and in some ways not enough has changed,” “…the conversation used to be about ‘why is [sustainability] really important?’ and … now we’ve moved on to the ‘how’.” • Companies now know why they should move towards sustainability, but rarely know what to do to get there ©Kristine R. Ehrich, PhD 5 Sustainability Strategy • Starting out with a grand vision – 100% renewable energy, or zero waste to landfill - can quickly lead to being adrift without a plan of action • Plucking the often-harvested low-hanging fruit – energy and water efficiency, in-office recycling, reducing landfill waste – but having no grand strategy for how to get to the higher branches can also result in disappointment • Tie compensation to sustainability – a way for leadership to send a message that the environment matters to us as a company Long Term Plans • Sustainability strategy must extend to leaders below the top spot • Critical to sustaining the organization for the long term and maintaining shareholder value • Sustainability is by default a long term issue and requires long term plans • Social and environmental issues come up in nearly every role and every department, and every employee can do something, whether it’s starting a recycling program or drawing up a corporate sustainability policy ©Kristine R. Ehrich, PhD 6 Social Responsibility Impact on Society’s Well-Being § Global brands are expected to address social problems regarding what they sell and how they conduct business § They are also expected to conduct themselves to a higher standard than local competitors Global Brands = Global Citizens § Global brands must give back and participate in making the world a better place – not just sell products and produce ads § Their social responsibility efforts must show that these companies have utilized their resources to truly benefit society A long term perspective sees the value of the social responsibility efforts – they build goodwill and solidify a brand’s global position, and put the brand in the future consideration sets of potential customers. Nike’s Experience Initially, Blindsided by the Protests Against Their Production Standards & Facilities § They were not operating any differently than anyone else § Their production facilities were not in violation of any local laws or policies However, that is not the point § Nike is a global company, producing & marketing products in many countries around the world § As a global producer, the standards in Indonesia are now compared to the standards in the U.S., not just in Indonesia If the standards of your facilities in foreign countries are not equal to the standards of a facility you would construct next to your headquarters, you have failed. Fix it, or get out. ©Kristine R. Ehrich, PhD 7 Corporate Social Responsibility Green Marketing • Green Marketing – marketing efforts that promote the environmentally conscious production process of a product and the product itself. • Walmart encourages its suppliers to use environmentally friendly packaging • 3M encourages employees to submit suggestions on how to reduce pollution • Not to be confused with “greenwashing” – making an unsubstantiated or misleading claim about environmental benefits of product/service ©Kristine R. Ehrich, PhD 8 Understanding Competitive Advantage • Patagonia has built its reputation on being environmentally friendly • Click here for an ad featuring Yvon Chouinard, the owner of Patagonia • Is being “green” a competitive advantage for Patagonia? • Mission Statement: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis Why would being environmentally friendly be of value to Patagonia? What is happening in the green market? ©Kristine R. Ehrich, PhD 9 Dove: Campaign for Real Beauty Creatied a campaign around positive social impact rather than around promoting a product ©Kristine R. Ehrich, PhD 10 ...
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