Chapter 20

Marketing and Society: Social Responsibility and Marketing

Ethics

Chapter Objectives

Objective 1: Identify the major social criticisms of marketing

Objective 2: Define consumerism and environmentalism and explain how they affect marketing strategies

Objective 3: Describe the principles of socially responsible marketing

Objective 4: Explain the role of ethics in marketing

Marketing’s Impact on Individual Consumers

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

High Prices Critics point to three factors contributing to high prices: high costs of

distribution, high advertising and promotion costs, and excessive markups

High Costs of Distribution: critics charge that there are too many intermediaries, that intermediaries are inefficient and poorly run, or that they provide unnecessary or duplicate services

High Advertising and Promotion Costs: marketing is accused of pushing up prices to finance heavy advertising and sales promotion Critics charge that packaging and promotion adds only psychological

value rather than functional value.

Excessive Markups: critics also charge that some companies mark up goods excessively, selling an item that costs five cents to make at $2

Deceptive Practices

Deceptive Pricing: falsely advertising “factory” or “wholesale” prices or a large price reduction from a phony high retail list price

Deceptive Promotion: 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

Deceptive Packaging: exaggerating package contents through subtle design, not filling the package to the top, using misleading labeling, or describing size in misleading terms

Other Critiques

High Pressure Selling

Persuades people to buy goods they had no thought of buying

Talking customers into buying unwanted or unneeded things

Shoddy or Unsafe Products

Products lack the quality they should have or deliver little benefit or are implicitly or explicitly unsafe

Other Critiques

Planned Obsolescence

The marketer causes the products to become obsolete before they actually need replacement

Holding back attractive functional features, then introducing them later to make older models obsolete

Poor Service to Disadvantaged Consumers:

Critics claim that the urban poor often have to shop in smaller stores that carry inferior goods and charge higher prices

Marketing’s Impact on Society as a Whole

False Wants and Too Much Materialism

The marketing system urges too much interest in material possessions—people are judged by what they own rather than by who they are

Too Few Social Goods

Marketers have been accused of overselling private goods at the expense of public goods—may result in social costs

Marketing’s Impact on Society as a Whole

Cultural Pollution:

Our senses are being constantly assaulted by advertising—these interruptions continually pollute people’s minds with messages of materialism, sex, power, or status

Too Much Political Power:

Oil, Tobacco, Auto, and Pharmaceuticals senators support an industry’s interests against the public interest—advertisers are accused of holding too much power over the mass media, limiting their freedom to report independently and objectively

Marketing’s Impact on Other Businesses Three problems are involved:

acquisitions of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices

The large number of acquisitions and rapid pace of industry consolidation over the past several decades have caused concern that vigorous young competitors will be absorbed and that competition will be reduced

Large companies can use patents and heavy promotion spending, and can tie up suppliers or dealers to keep out or drive out competitors

Companies may set their prices below costs, threaten to cut off business with suppliers, or discourage the buying of a competitor’s product

Consumerism

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

Buyers’ Rights The right not to buy a product that is offered for sale The right to expect the product to be safe The right to expect the product to perform as claimed The right to be well informed about important aspects of the

product The right to be protected against questionable products or

marketing practices The right to influence products and marketing practices in ways

that will improve the quality of life

Environmentalism

Environmentalism: an organized movement of concerned citizens, businesses, and government agencies to protect and improve people’s living environment

Environmentalists are not against marketing and consumption; they simply want people and organizations to operate with more care for the environment

Environmental Sustainability: developing strategies that both sustain the environment and produce profits for the company

Environmental Sustainability

Pollution Prevention: eliminating or minimizing waste before it is created—developing ecologically safer products, recyclable and biodegradable packaging, better pollution controls, and more energy-efficient operations

Product Stewardship: minimizing not just pollution from production but all environmental impacts throughout the full product life cycle

New Environmental Technologies: a need to develop new technologies that will promote environmental sustainability

Sustainability Vision: a guide to the future showing how the company’s products and services, processes, and policies must evolve and what new technologies must be developed to get there

Enlightened Marketing

Enlightened Marketing: a company’s marketing should support the best long-run performance of the marketing system—consists of five principles

Consumer Oriented Marketing: 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 consumers

Innovative Marketing: requires that the company continuously seek out real product and marketing improvements

Enlightened Marketing

Value Marketing: the company should put most of its resources into value-building marketing investments—calls for building long-run consumer loyalty by continually improving the value consumers receive from the firm’s marketing offer

Sense of Mission Marketing: the company should define its mission in broad social terms rather than narrow market terms

Societal Marketing: an enlightened company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, and society’s long-run interests

Beneficial Products

A societally oriented marketer wants to design products that are not only pleasing but also beneficial

Deficient Products: have neither immediate appeal nor long-run benefits such as bad-tasting and ineffective medicine

Pleasing Products: give high immediate satisfaction but may hurt consumers in the long run such as cigarettes

Salutory Products: have low appeal but may benefit consumers in the long run such as seat-belts and air bags

Desirable Products: give both high immediate satisfaction and high long-run benefits such as a tasty and nutritious breakfast food

Marketing Ethics

Companies need to develop corporate marketing ethics policies to ensure a fine moral sensitivity with its managers

The policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards

Question

You work for a cigarette company and up to now have not been convinced that cigarettes cause cancer. However, recent public policy debates how leave no doubt in your mind about the link between smoking and cancer. What would you do?

Question

Your R&D department has changed one of your products slightly. It is not really “new and improved,” but you know that putting this statement on the package and in advertising will increase sales. What would you do?

Question

You have been asked to add a stripped-down model to your line that could be advertised to pull customers into the store. The product won’t be very good, but salespeople will be able to switch buyers up to higher-priced units. You are asked to give the green light for this stripped-down version. What would you do?

Question

You are thinking of hiring a product manager who just left a competitor’s company. She would be more than happy to tell you all the competitor’s plans for the coming year. What would you do?

Question

One of your top dealers in an important territory recently has had family troubles, and his sales have slipped. It looks like it will take him a while to straighten out his family trouble. Meanwhile you are losing many sales. Legally, you can terminate the dealer’s franchise and replace him. What would you do?

Question

You have a chance to win a big account that will mean a lot to you and your company. The purchasing agent hints that a “gift” would influence the decision. Your assistant recommends sending a fine color television set to the buyer’s home. What would you do?

Question

You have heard that a competitor has a new product feature that will make a big difference in sales. The competitor will demonstrate the feature in a private dealer meeting at the annual trade show. You can easily send a snooper to this meeting to learn about the new feature. What would you do?

Question

You have to choose between three ad campaigns outlined by your agency. The first (a) is a soft-sell, honest information campaign. The second (b) uses sex-loaded emotional appeals and exaggerates the product’s benefits. The third (c) involves a noisy, irritating commercial that is sure to gain audience attention. Pretests show that the campaigns are effective in the following order: c, b, and a. What would you do?

Question

You are interviewing a capable female applicant for a job as salesperson. She is better qualified than the men just interviewed. Nevertheless, you know that some of your important customers prefer dealing with men, and you will lose some sales if you hire her. What would you do?

Political Environment

Consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society

Legislation affecting businesses worldwide has increased

Laws protect companies, consumers and the interests of society

Increased emphasis on socially responsible actions

Legislation Affecting Marketing

Sherman Antitrust Act (1890)Federal Food and Drug Act (1906)Clayton Act (1914)Federal Trade Commission Act (1914)Robinson-Patman Act (1936)Wheeler-Lea Act (1938)

Legislation Affecting Marketing (Con’t)

Lanham Trademark Act (1946)National Traffic and Safety Act (1958)Fair Packaging and Labeling Act (1966)Child Protection Act (1966)Federal Cigarette Labeling and Advertising Act (1967)

Legislation Affecting Marketing (Con’t)

National Enviromental Policy Act (1969)Consumer Product Safety Act (1972)Magnusson-Moss Warranty Act (1975)Children’s Television Act (1990)

Legislation Affecting Marketing (Con’t)

Nutrition Labeling and Education Act (1990)Telephone Consumer Protection Act (1991)American’s with Disabilities Act (1991)Children’s Online Privacy Protection Act (2000)

Legislation Affecting Marketing (Con’t)

Do-Not-Call Implementation Act (2003)