- Moral principles and values that govern actions and decisions of individuals.
- Guidelines on how to act rightly when faced with moral dilemmas.
Rationalization – if behavior is ethical and legal.
Four reasons ethical business:
- Increased pressure on businesspeople to make decisions in a society
characterized by diverse value systems.
- Growing tendency for business decisions to be judged publicly
- Public’s expectations of ethical business behavior have increased.
- Business conduct may have declined (most disturbing)
Factors that affect ethical marketing behavior:
- societal culture and norms
- business culture and industry practices
- corporate culture and expectations
Societal Culture and Norms
-provides a foundation for understanding moral behavior in business activities
Culture serves as a socializing force that dictates what is morally right.
This means that moral standards are relative to particular societies. These
standards often reflect the laws and regulations that affect social and
economical behavior, which can create ethical dilemmas.
Societal values affect ethical and legal relationships (copyright owner and
people downloading illegal)
Business culture and industry practices
compromise the effective rule of the game, the boundaries between competitive
and unethical behavior, and the codes of conduct in business dealings
affects both in the exchange relationship between sellers and buyers and in the
competitive behavior among sellers
Ethics of Exchange (central to marketing concept)
buyers and sellers should be better off after a transaction.
Caveat emptor – let the buyer beware
Consumer Bill of Rights
codified the ethics of exchange between buyers and sellers
rights to: safety, be informed, choose and be heard.
o Right to safety differs in industries
o Right to be informed
Complete and accurate information to consumers
Solicitation of personal information
o Right to choose
Supermarkets demand “slotting allowances” from manufacturers
This would limit the number of new products available to
consumers & interfere with their right to choose.
o Right to be heard
Consumers should have access to public-policy makers regarding
Illustrated in limitations put on telemarketing practices.
Ethics of Competition
Two kinds of unethical behavior are:
Economic espionage (illegal and unethical)
o Clandestine collection of trade secrets or proprietary information about a
o Include theft, fraud, misrepresentation, and search of competitor’s trash.
o Most prevalent in high-tech industries.
o Common in B2B and government marketing than in consumer marketing
(Laws: The Economic Espionage Act and Foreign Corrupt Practices Act)
Corporate culture and expectations
set of values, ideas and attitudes that is learned and shared among the members
Codes of Ethics
formal statement of ethical principles and rules of conduct
lack of specificity - major reason for the violation of ethics codes.
Ethical Behavior of Top Management
second reason for violation of ethics code: perceived behavior of top
whistle-blowers : employees who report illegal/unethical behavior of employers
Your Personal Moral Philosophy and Ethical Behavior
ethical choices are based on the personal moral philosophy of the decision
Moral philosophy is learned through process of socialization and formal learning,
also influenced by societal, business and corporate culture.
Two impact on marketing:
o moral idealism
personal moral philosophy that considers certain individual rights
or duties as universal, regardless of the outcome
exist in Consumer Bill of Rights
Applies to ethical duties – to do no harm
personal moral philosophy that focuses on the “greatest good for
the greatest number” by assessing the costs and benefits of the
consequences of ethical behavior
if benefit > cost ethical, vise versa
- organizations are part of a larger society and accountable to that society for their
- three concepts:
o profit responsibility
to maximize profits for their owners
focuses on obligations an organization has to those who can affect
achievement of its objectives
include consumers, employees, distributors and suppliers
obligations that organizations have to the:
preservation of ecological environment
emphasis placed of triple-bottom line – recognition of the need
for the organizations to improve the state of people, planet, and
profit simultaneously if they are to achieve sustainable, long-term
Growth marketing – marketing efforts to produce, promote and
reclaim environmentally sensitive products. “Pollution Prevention
Pays” program solicits employee suggestions on how to reduce
pollution and recycle materials.
Cause marketing – occurs when the charitable contributions of a
firm are tied directly to the consumer revenues produced through
the promotion of one of its products. Incorporates all three
components of social responsibility by addressing public concerns
and satisfying customer needs & enhance sales and profits.
Social audit – a systematic assessment of firm’s objectives
strategies, and performance in terms of social responsibility.
a. recognition of firm’s expectations and rationale for engaging
in social responsibility
b. identification of social responsibility causes or programs
consistent with the company’s mission
c. determination of organizational objectives and priorities for
programs and activities it will undertake
d. specification of the type and amount of resources necessary
to achieve social responsibility
e. evaluation of social responsibility programs undertakes and
assessment of future involvement
Corporate attention to social audits will increase as companies
seek to achieve sustainable development and improve the quality
of life in a global economy.
Sustainable development – conducting business in a way that
protects the natural environment while making economic
Companies that evidence societal responsibility have been
o Benefit from favorable word of mouth among consumers
o Outperform less responsible companies (financial
Consumer Ethics and Social Responsibility
- filing warranty after the warranty period, misredeeming coupons, etc.
- cost to marketers in lost sales and prevention expenses is huge
- unethical behavior influenced by:
o a belief that a consumer can get away with the act and it is worth doing
o the rationalization that the act is justified/driven by forces outside the
individual – “everybody does it”