Chapter 4
Ethics
- Moral principles and values that govern actions and decisions of individuals.
- Guidelines on how to ac...
 Complete and accurate information to consumers
 Solicitation of personal information
o Right to choose
 Supermarkets d...
 Applies to ethical duties – to do no harm
o utilitarianism
 personal moral philosophy that focuses on the “greatest goo...




d. specification of the type and amount of resources necessary
to achieve social responsibility
e. evaluation of soc...
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Chapter 4

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Chapter 4

  1. 1. Chapter 4 Ethics - 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
  2. 2.  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 complaints.  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 company’s competitors. o Include theft, fraud, misrepresentation, and search of competitor’s trash. o Most prevalent in high-tech industries. Bribery 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 management 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 maker. 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
  3. 3.  Applies to ethical duties – to do no harm o utilitarianism  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 Social responsibility - organizations are part of a larger society and accountable to that society for their actions - three concepts: o profit responsibility  to maximize profits for their owners o stakeholderresponsibility  focuses on obligations an organization has to those who can affect achievement of its objectives  include consumers, employees, distributors and suppliers o societalresponsibility  obligations that organizations have to the: preservation of ecological environment general public  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  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. 5 Steps: 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
  4. 4.   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 progress. Companies that evidence societal responsibility have been rewarded: o Benefit from favorable word of mouth among consumers o Outperform less responsible companies (financial performance) 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”

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