ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx

ETH–1
Marketing Ethics
� Prepared and written by Dr. Linda Ferrell,
University of Wyoming
Marketing ethics addresses principles and standards that define
acceptable conductin the marketplace. Marketing usually occurs
in the context of an organization,
and unethical activities usually develop from the pressure to
meet performance objec-
tives. Some obvious ethical issues in marketing involve clear-
cut attempts to deceive
or take advantage of a situation. For example, two former senior
executives with Ogilvy
& Mather Advertising were sentenced to more than a year in
prison for conspiring to
overbill the government for an ad campaign warning children
about the dangers of
drugs. The executives were also required to perform 400 hours
of community service,
pay a fine, and draft a proposed code of ethics for the
advertising industry.1 The
requirement to draft a code of ethics implies that the court
viewed the executives’
wrongdoing as a lapse of ethical leadership in the advertising
industry. Obviously, mis-
representing billing on accounts is a serious ethical issue which
can evolve into mis-
conduct with severe repercussions. The overbilling in this case
was to benefit the

advertising agency’s bottom line.
The Ethics Resource Center (www.erc.org) reported in its most
recent National
Business Ethics Survey that “one in two employees witnessed at
least one specific type
of misconduct.”2 At least 52 percent of employees observed at
least one type of mis-
conduct in the past year, while the percentage of employees
willing to report the
misconduct dropped by 10 percentage points between 2003 and
2005.3 This may
explain the increase in corporate whistle-blowing reports to the
Securities and Exchange
Commission. Even with a regulatory requirement that public
companies have an anony-
mous and confidential means of reporting misconduct under
Sarbanes Oxley and the
Federal Sentencing Guidelines for Organizations, companies are
likely to learn about
the ethical misconduct in marketing at the same time as the
public. This overview of
marketing ethics is designed to help you understand and
navigate organizational eth-
ical decisions. �
Why Marketing Ethics Is Important
There are many reasons to understand and develop the most
effective approaches to
manage marketing ethics. All organizations face significant
threats from ethical mis-
conduct and illegal behavior from employees and managers on a
daily basis. Well-
meaning marketers often devise schemes that appear legal but

are so ethically flawed
that they result in scandals and legal entanglements. For
example, in one case, a sales-
person pretended to be in shipping rather than sales to hopefully
develop customer
trust. The Colorado Consumer Protection Act was found to be
violated in this case.
There is a need to identify potential risks and uncover the
existence of activities or
events that relate to misconduct. Overbilling clients, deceptive
sales methods, fraud,
antitrust, and price fixing are all marketing ethics risks. There
must be a plan and
infrastructure to determine what is happening and to deal with it
as soon as possible
rather than covering up, ignoring, and assuming that no one will
ever learn of the eth-
ical and legal lapses. There is a need to discover, disclose,
expose, and resolve issues
as they occur. All firms have marketing misconduct, and
discovering and dealing with
these events is the only effective way to be successful in
today’s complex regulatory
system. Ethical issues are usually resolved through the legal
system. But the negative
publicity associated with an event hurts the reputation of a
company more than the
legal penalties. Ethical issues are resolved through plaintiff-
friendly civil litigation
that can destroy reputations and draw intense scrutiny to a
company.
Although accounting fraud has been in the spotlight lately,
many unethical activ-
ities relate to marketing activities. These unethical acts often
begin as a marketing

effort that only in retrospect is revealed to be unethical. And
clearly, not each and
every one becomes a crisis. When Blockbuster introduced its
“The End of Late Fees”
policy and promotion, a lawsuit brought by the New Jersey
Attorney General’s office
over possible deceptive pricing did not seem to dampen
Blockbuster’s reputation and
stakeholder confidence. The attorney general’s office was
concerned that some con-
sumers did not understand that they would have to pay the cost
of the videocassette
or DVD if they failed to return it to Blockbuster within a stated
period of time.4
Coca-Cola, following the allegations of product contamination
in Belgium, was
forced to lay off a number of high-level executives as a result of
the troubles, and the
CEO resigned. The troubles for the soft-drink giant did not end
there.5 The company
was also accused of racial discrimination in a lawsuit brought
against the company by
2,000 current and former African-American employees. The
company settled the suit
by paying $193 million. To add insult to injury, the company
came under additional
scrutiny with accusations that Dasani “bottled water” was
nothing more than tap
water. Then it emerged that what the company described as its
“highly sophisticated
purification process,” based on NASA spacecraft technology,
was in fact reverse
osmosis used in many modest water purification units.6
In 2002, Coca-Cola once again ran into troubles when Matthew

Whitley, a mid-
level accounting executive, filed a whistle-blowing suit against
the company alleging
retaliation for revealing fraud in a market study performed on
behalf of Burger King.
When Coca-Cola’s fountain drink business with Burger King
did not meet sales expec-
tations, it was suggested that Burger King launch Frozen Coke
as a kid’s snack. Coke
arranged to test market the product, and a follow-up
investigation determined that
Coca-Cola exaggerated the test data to deceive Burger King.7
Subsequently, a number
of top-level executives were fired; Coke paid $21 million to
Burger King to settle its
disputes with the fast-food giant, $540,000 was paid to the
whistle-blower, and a
$9 million pre-tax write off had to be taken. Although Coca-
Cola disputes or denies
ETH–2 Marketing Ethics
the allegations made both in 1999 and 2002, the net result
means that shares of Coca-
Cola trade in 2006 at the same level they did nearly 10 years
ago. To overcome its many
ethical and marketing mistakes, Coca-Cola launched over 1,000
new products in 2005
to deal with falling sales, as PepsiCo’s sales growth has
exceeded Coke’s over the past
five years.8
Businesses that effectively manage ethics can systemically
absorb, react, and

appropriately adjust to most breakdowns in conduct or
decisions. In the case of Coca-
Cola, the recovery from its many ethical mistakes will take a
long time. In Block-
buster’s case, the company modified its promotion from the
“End of Late Fees” to
“Life after Late Fees” to clarify its return policies for
consumers.9 People make poor
choices all the time. The key is whether the organization has
adequately planned to
mitigate the potential results of poor choices through
leadership, effective ethics pro-
grams, prompt response, disciplinary actions, appropriate
disclosure, communica-
tion to the workforce, and public crisis management
communication so that they do
not escalate into catastrophes.
Understanding Ethical Decision Making10
You may think that ethical decisions are an individual matter
and that you are only
responsible for your own actions. Values-driven ethical
leadership and compliance-
driven ethics training, monitoring, and reporting systems are
necessary for an ethical
corporate culture. As a manager, you will be responsible for
your ethical decisions as
well as those you supervise. According to David Gabler,
president of a business ethics
consulting firm, “It is not enough to merely ask whether
controls are in place or if
everyone has attended a class or signed a code. The
organization has to understand
what the drivers of behavior are, and how those align with
integrity goals.”11 Thus, it is

vital to understand how people make business ethics decisions
in an organization.
Figure 1 illustrates a model of ethical decision making in an
organizational environ-
ment. Although it is impossible to describe precisely how or
why an individual or a
work group may reach a particular decision, we can generalize
about typical behavior
patterns within organizations. It is important to understand that
this framework does
not explain how to make a decision, but rather describes how
decisions are made. In
other words, this framework facilitates understanding the
factors that influence deci-
sion making within an organizational culture. For a marketing
manager to make a
specific ethical decision requires a knowledge of the subject
matter, an assessment of
risk, and the experience to understand the consequences of the
decision affecting all
stakeholders. While personal character and values are
important, decisions made in
an organizational context involve the ability to navigate
directives and pressure from
the work group.
Stakeholders
The first step in Figure 1 is recognizing stakeholder interests
and concerns. Stake-
holders, obviously, are individuals, groups, and even
communities that can directly or
indirectly affect a firm’s activities. Although most corporations
have emphasized
shareholders as the most important stakeholder group, the
failure to consider all sig-
nificant stakeholders can lead to ethical lapses. Some executives

believe that if their
companies adopt a market-orientation and focus only on
customers and sharehold-
ers, everything else will be adequate. Unfortunately, failure to
recognize the needs and
potential impact of employees, suppliers, regulators, special-
interest groups, com-
munities, and the media can lead to unfortunate consequences.
Wal-Mart faces many
Marketing Ethics ETH–3
ethical accusations today from stakeholders such as employees,
suppliers, and local
communities, while consumers appear satisfied with low prices.
Thus, organizations need to identify and prioritize stakeholders
and their respec-
tive concerns about organizational activities and gather
information to respond to
significant individuals, groups, and communities. These groups
apply their own val-
ues and standards to their perception of many diverse issues.
They supply resources—
e.g., capital, labor, expertise, infrastructure, sales, etc.—that
are more or less critical to
a firm’s long-term survival, and their ability to withdraw—or
threaten to withdraw—
these resources gives them power.12
One approach is to deal proactively with stakeholders’ concerns
and ethical
issues and stimulate a sense of bonding with the firm. When a
company listens to

their concerns and tries to resolve issues, the result is tangible
benefits that can trans-
late into customer loyalty, employee commitment, supplier
partnerships, and
improved corporate reputation. This requires going beyond
basic regulatory require-
ments and making a difference by genuinely listening to
stakeholders and addressing
their concerns. Such a stakeholder orientation secures continued
support and stake-
holder identification that promotes the success of the firm.
The purpose of understanding stakeholder concerns and risks is
to pinpoint
issues that could trigger the ethical decision-making process. If
ethical issues are per-
ceived as being related to the importance of stakeholders’
interaction with the firm, a
sound framework will exist for assessing the importance or
relevance of a perceived
issue—the intensity of the issue13—and the next step in Figure
1. The intensity of a
particular issue is likely to vary over time and among
individuals and is influenced by
the organization’s culture, the specific characteristics of the
situation, and any per-
sonal pressures weighing on the decision. Different people
perceive issues with vary-
ing intensity due to their own personal moral development and
philosophies and
because of the influence of organizational culture and
coworkers.14
Figure 1.

Framework for Understanding Organizational Ethical Decision
Making
SOURCE: O. C. Ferrell, 2005 ©
Individual Factors:
moral philosophies and
values
Organizational Factors:
culture, values, norms,
opportunity
Ethical
issue
intensity
Stakeholder
interests and
concerns
Ethical
decision
Evaluation of
ethical outcomes
Individual Perspectives
Understanding individuals’ moral philosophies and reasoning
processes is one
approach that is often cited for recognizing and resolving

ethical issues. However, the
role of individuals and their values is one of the most difficult
challenges in under-
standing organizational ethical decision making. Although most
of us would like to
place the primary responsibility for decisions on individuals,
years of research suggest
that organizational factors have greater dominance in
determining ethical decisions
at work.15 Nonetheless, individual factors are clearly important
in evaluating and
resolving ethical issues, and familiarity with theoretical
frameworks from the field of
moral philosophy is helpful in understanding ethical decision
making in business.16
Two significant factors in business ethics are an individual’s
personal moral philoso-
phy and stage of personal moral development. Through
socialization, individuals
develop their own ethical principles or rules to decide what is
right or wrong, and with
knowledge and experience, they advance in their level of moral
development. This
socialization occurs from family, friends, formal education,
religion, and other philo-
sophical frameworks that an individual may embrace.
Although individuals must make ethical choices, they often do
so in committees,
group meetings, and through discussion with colleagues. Ethical
decisions in the
workplace are guided by the organization’s culture and the
influence of coworkers,
superiors, and subordinates. A significant element of
organizational culture is a firm’s

ethical climate—its character or conscience. Whereas a firm’s
overall culture estab-
lishes ideals that guide a wide range of behaviors for members
of the organization, its
ethical climate focuses specifically on issues of right and
wrong. Codes of conduct
and ethics policies, top management’s actions on ethical issues,
the values and moral
development and philosophies of coworkers, and the
opportunity for misconduct all
contribute to an organization’s ethical climate. In fact, the
ethical climate actually
determines whether certain dilemmas are perceived as having a
level of ethical inten-
sity that requires a decision.
Organizational Culture
Together, organizational culture and the influence of coworkers
may create condi-
tions that limit or permit misconduct. Organizational culture
relates to how things
are done both formally and informally on a daily basis. If these
conditions act to
provide rewards for unethical conduct—such as financial gain,
recognition, promo-
tion, or simply the good feeling from a job well done—the
opportunity for further
unethical conduct may exist. For example, a company policy
that does not provide
for punishment of employees who violate a rule (e.g., not to
accept large gifts from
clients) effectively provides an opportunity for that behavior to
continue because it
allows individuals to break the rule without fear of
consequences. Thus, organiza-
tional policies, processes, and other factors may contribute to

the opportunity to act
unethically.
Opportunity
Opportunities to engage in misconduct often relate to
employees’ immediate job con-
text—where they work, with whom they work, and the nature of
the work. The specific
work situation includes the motivational “carrots and sticks”
that managers can use to
influence employee behavior. Pay raises, bonuses, and public
recognition are carrots,
or positive reinforcement, whereas reprimands, pay penalties,
demotions, and even
firings act as sticks, the negative reinforcement. For example, a
salesperson that is
publicly recognized and given a large bonus for making a
valuable sale that he
obtained through unethical tactics will probably be motivated to
use unethical sales
tactics in the future, even if such behavior goes against his
personal value system. In
fact, quite often, top-performing salespersons are disciplined
less for unethical prac-
tices than their poor-performing counterparts.
Organizational Ethics Doesn’t Equal Personal Ethics
According to ethics consultant David Gebler, “most unethical
behavior is not done for
personal gain—it’s done to meet performance goals.”17
Unfortunately, failure to

understand this basic fact is a major barrier to educating
marketing managers as to
how to avoid an ethical disaster. Many managers believe that
the moral values learned
within the family and through religion and education are the
major drivers of ethical
decision making in business. Indeed, some companies and many
business schools
focus on personal character or moral philosophy development in
their training pro-
grams to prevent unethical business decisions. Although a
personal moral compass is
certainly important, it is not sufficient to prevent ethical
misconduct in the complex
world of business. The rewards for meeting performance goals
and the corporate cul-
ture, especially for coworkers and managers, have been found to
be the most impor-
tant drivers of ethical decision making.18 Although there are
many factors that
influence the final decisions of individuals—including the
workplace, family, religion,
legal system, community, and profession—the level of these
“spheres of influence”
varies depending on how important the decision maker
perceives the issue to be.19
In evaluating the key influences of ethical decision making, it is
important to
remember that ethical decisions are often made in groups or
committees, and group-
think combined with peer pressure often becomes more
important than the influence
of the individual. Usually, a strong leader evolves who assures
others that a particular
action is legal and acceptable, and if the other individuals do

not feel good about the
decision, they should remember that it is just a “business
decision” that is necessary
“to stay competitive.” For example, Betty Vinson, an accountant
at WorldCom,
objected when her superiors asked her to make improper
accounting entries in order
to conceal the telecom’s deteriorating financial condition. She
gave in only after being
told that it was the only way to save the beleaguered company.
She, along with several
other WorldCom managers, eventually pled guilty to conspiracy
and fraud charges
related to WorldCom’s bankruptcy after the accounting
improprieties came to light.
She was sentenced to five months in prison and five months
house arrest.20 Marketers
have the same risks as accountants to report sales in advance or
book sales before
they occur to inflate quarterly sales numbers.
This situation is made more dynamic because individuals are
culturally diverse,
have different values, and have different personal attributes,
such as personality, age,
and gender, which may influence how they will react in an
organizational decision-
making situation. In fact, academic studies have shown that in
any workplace, at least
10 percent of employees will take advantage of situations if the
opportunity exists and
the risk of being caught is low. About 40 percent of workers
will go along with the work
group on most matters; these employees are most concerned
about the social impli-
cations of their actions and want to fit into the organization.

Another 40 percent of a
company’s employees will always try to follow company rules
and policies, including
codes of ethics, ethics training, and other communications about
appropriate con-
duct. The final 10 percent of employees try to maintain formal
ethical standards that
focus on rights, duties, and rules.21 For a corporation like Wal-
Mart, with 1.6 million
employees, this suggests that 160,000 employees are likely to
engage in misconduct if
given the opportunity. Maybe this explains why Wal-Mart is
reported in the mass
media for so much misconduct.
The Role of an Ethical Corporate Culture
It is important not to merely emphasize legal ramifications of
decisions at the expense
of developing an ethical corporate culture. Training, educating,
and motivating
employees to act in ways consistent with both legal
requirements and ethical expec-
tations is at the core of planning to prevent and manage
misconduct. Companies
themselves do much to establish the values, the culture, and the
expectations for con-
duct that employees hold about daily life within the firm. This
is achieved explicitly
through codes of conduct and statements of values/ethics
documented in organiza-
tional communication that addresses risks associated with

marketing activities. This
is also accomplished implicitly through dress codes, anecdotes
about company
heroes and villains, treatment of customer complaints, treatment
of employee com-
plaints, how meetings are conducted, and in which behaviors
and accomplishments
get rewarded and recognized compared with which behaviors
are criticized, ignored,
or punished. In fact, ethical leadership and ethical culture of the
organization are con-
siderations in assessing misconduct by regulatory agencies. If a
company is showing
due diligence in trying to prevent wrongdoing, it will be treated
more leniently.
Marketing managers cannot motivate employees or coordinate
implement mar-
keting strategies without effective communication about values,
standards, and
expectations. Communication is important in marketing for
ethical standards and
activities across the functional areas of the business. No
marketing strategy can be
implemented without complete understanding of its objectives
and employee coop-
eration to make it work. While most marketing managers and
employees don’t have
“ethics” in their job title, everyone is ultimately accountable.
Ethical Leadership in Marketing
To move from just being an ethical person in everyday life
experiences to being an
ethical leader in implementing marketing activities requires
synchronizing the devel-
opment of both character and competence. Leaders must be

competent in under-
standing organizational ethics and the requirements to
implement programs.
Leadership requires an understanding of the firm’s vision and
values, as well as the
challenges of responsibility and risk in achieving organizational
objectives. The West
Point model would suggest that character and competence must
be developed simul-
taneously. Character alone will result in failure, and
competence without character
will result in misconduct and eventually failure. Lapses in
ethical leadership do occur
even in people who possess strong ethical character, especially
if they view the orga-
nization’s ethical culture as being outside of the realm of
decision making that exists
in the home, family, and community. This phenomenon has been
observed in count-
less cases of so-called good community citizens engaging in
ethical misconduct that
sometimes leads to corporate ethical disasters. An ethical
individual can be a cautious
and conforming participant in a corporate culture that tolerates
unethical conduct.
In the long run, if a company’s leader fails to satisfy
stakeholders, he or she will
not retain a leadership position. In today’s earnings-driven
world, even marketing
managers often think only of the bottom line and quarterly
expectations. The 2005
Ethics Resource Center National Business Ethics Survey
(NBES) found that 81 percent

of employees trust the promises of top management. This means
that almost 20 per-
cent of all employees are skeptical. In addition, the study found
that 42 percent of
companies have a weak ethical culture. You could end up
working in an organization
where unethical conduct and complacency is expected.
Ethical leaders are competent managers who take a holistic view
of the firm’s
ethical culture. Ethical leaders can see a holistic view of their
organization and there-
fore view ethics as a strategic component of decision making,
much like marketing,
information systems, production, and so on. You don’t want key
employee or issue
information trapped in a “silo” structure not coordinating
information between
human resource management, legal, auditing, and ethics.
Marketing is a functional
part of an organization, and ethical decision making must be
coordinated with the
other functional areas. Without the ability to coordinate across
functional areas, key
oversight and understanding will be lost.
The goal is to recognize that while you cannot remove the risk
of ethical mis-
conduct, great leaders are prepared. As Jeff Immelt, CEO of
General Electric, stated in
his 2002 letter to his shareholders, “One concern that keeps me
up at night is that
among the 300,000-plus GE employees worldwide, there are a

handful who choose to
ignore our code of ethics. I would be naïve to assume a few bad
apples don’t exist in our
midst.” Perhaps this is why when GE received a letter of inquiry
concerning miscon-
duct in 2005 from the SEC, the communication had little impact
on the overall stock
value of the company.
In addition, employees need guidance on where to go for
assistance from man-
agers or other designated personnel in resolving ethical
problems. To communicate
ethical values and implement an effective ethics program, there
must be interaction
including monitoring, reporting, and answering concerns and
questions about issues
and events.
Reputation Is a Marketing Asset22
Its reputation is one of an organization’s greatest intangible
assets. The value of a pos-
itive reputation is difficult to quantify, but it is an important
intangible asset that all
marketers understand. A single negative incident can influence
perceptions of a cor-
poration’s image and reputation instantly and for years
afterward, affecting sales and
customer relationships. Thus, protecting a firm’s reputation is a
critical priority. When
United Parcel Service lost a cardboard box containing computer
tapes with personal
information about 3.9 million Citigroup customers, both
companies’ reputations
were tarnished. This incident involved the names, social

security numbers, account
numbers, and payment history of all of Citigroup’s U.S.
customers. This blunder cre-
ated a major embarrassment for a company that had built its
recent reputation
around an image of identity-theft protection.23 Marriott’s
timeshare unit is investigat-
ing the disappearance of backup computer tapes containing
information on over
200,000 employees and customers. Marketers have to take
responsibility in protecting
customer, as well as employee, private information or they risk
reputation crisis.24
Reputation is not a trait or state in the possession of a company,
but rather it
exists in the collective minds of the various stakeholders. It is
tied to perceptions of
the corporate image, brand, and (mental) associations in the
minds of key stake-
holders. Although reputation is certainly an asset, it is one that
lies in the perceptions
of those to whom the organization is accountable and depends
upon in order to be
successful and effective. Such stakeholders include employees,
customers, vendors,
suppliers, neighbors, investors, regulators, and labor unions.
The news media, to the
extent that it views itself as a public “watchdog” of the greater
society, is both a con-
stituent to whom organizations are accountable as well as an

adversary. The
“watchdog” role suggests that the media will have its own
agenda and “message” to
pursue that may not inherently align with the agenda and
message that is in the best
interest of your company if trying to create and sustain a
positive reputation for your
company. Nonetheless, the news media plays a major role in
shaping the perceptions
of key stakeholders.
There are other factors that influence the perceptions of
corporate reputation.
These perceptions are formed and influenced based on an
individual’s experiences
with a company or members of its workforce, subjective
judgments of corporate
actions (or inactions), assessments of responsibility and
culpability for negatively
perceived events, scrutiny of communication messages received,
along with the
influence of media scrutiny of an organization’s performance
and ethics.
Positive reputations develop slowly and incrementally. It takes
a series of rich
positive experiences and symbolic actions to carefully craft a
positive reputation. One
such example is Hershey Foods. Milton Hershey established a
corporate culture based
on integrity and values that endures more than 100 years later.
On the other hand,
damage to a positive reputation can occur very quickly, and in
some cases, the posi-
tive image cannot be immediately or fully restored. We have
seen this happen with

Enron and Worldcom, and to a lesser extent Coca-Cola and Wal-
Mart.
There are many potential threats to reputation. Reputation can
be damaged by
poor sales performance or ethical misconduct. Poor sales
performance is easier to
recover from than ethical misconduct. Obviously, stakeholders
who are most directly
affected by negative events will have a corresponding shift in
their perceptions of a
firm’s reputation. On the other hand, even those indirectly
connected to negative
events can shift their reputation attributions. In many cases,
those indirectly con-
nected to the negative events may be more influenced by the
news media or general
public opinion than are those who are directly connected to your
organization.
A scandal can reduce shareholder value and lower stock price as
investor percep-
tions and decisions begin to take their toll. Reputation is also a
factor in the con-
sumers’ perceptions of product attributes and corporate image
features that lead to
consumer willingness to purchase goods and services at
profitable prices. Some scan-
dals may lead to boycotts and aggressive campaigns to dampen
sales and earnings.
Nike experienced such a backlash from its use of offshore
subcontractors to manu-
facture its shoes and clothing. When Nike claimed no
responsibility for the subcon-
tractors’ poor working conditions and extremely low wages,
some consumers

demanded greater accountability and responsibility by engaging
in boycotts, letter-
writing campaigns, public-service announcements, etc. Nike
ultimately responded to
the growing negative publicity by changing its practices.
Reputation is also inherently intertwined with brand values.
This value is tied to
general perceptions of the brand manufacturer’s character and
reputation. Coca Cola,
Harley-Davidson, and Microsoft, for example, are valuable
global brands worth bil-
lions of dollars but have all found their ethics called into
question. On April 14, 2004,
Harley-Davidson shares closed at an all-time high of $59.50,
only to have them plunge
to a 14-month low a year later. By July 2005, the motorcycle
maker had received a let-
ter of inquiry from the SEC based upon allegations of “channel
stuffing,” something
that has become a common allegation against many brand
leaders. Channel stuffing
is the practice of shipping inventory to resellers at an excessive
rate, usually before the
end of a quarter. It is common for accountants to work with
marketers to achieve this
deception.
A positive reputation is one of the most important attributes of
any company.
Brands such as Coca-Cola, Ford’s Explorer, and Merck’s Vioxx,
and hundreds of others
have all been damaged by negative publicity associated with
questionable conduct.

The conduct, when called into question, may indirectly affect a
company’s overall net
worth, if brand assets are included in stakeholder judgments,
and perceptions, as we
have seen with many of the pharmaceutical product companies.
As mentioned earlier, Wal-Mart, the largest corporation in the
world with its 1.6
million employees and sales approaching $300 billion, is feeling
the pressure. The
company has been involved in numerous conflicts involving
gender-discrimination
litigation, wage and pay disputes, union-busting allegations, as
well as the resignation
of a top officer over financial improprieties. The company made
a multi-million-
dollar settlement with immigration authorities over the
employment of illegal work-
ers, but it continues to face dozens of lawsuits attempting to
delay construction of
super-centers because of community concerns about the firm’s
impact on the envi-
ronment, small businesses, and quality of life.25 When all the
ethical issues are com-
bined, they add up to a small-sized corporate ethical disaster.
Wal-Mart has focused
primarily on investors and customers with its ultra-low prices,
and rarely on the inter-
ests of other stakeholders such as employees, suppliers,
communities, and society.
The claims range from firing whistle-blowers to discriminating
against women (and
most recently African American truck drivers) to violating child

labor laws, locking
workers into stores overnight, mooching off the taxpayers,
disregarding local zoning
laws, mistreating immigrant janitors, abusing young
Bangladeshi women, paying
poverty-level wages in the United States, and destroying small-
town America. No
company is immune—no matter how large—to the damage
caused to one’s reputa-
tion as a result of ethical misconduct, as Wal-Mart now
acknowledges the impact the
stakeholders’ efforts have had on the company. Wal-Mart CEO
Lee Scott recently
called the backlash “one of the most organized, most
sophisticated, most expensive
corporate campaigns ever launched against a single
company.”26
Conclusions
One lesson that every marketing student should understand is
that most companies
will engage in some form of misconduct. As Warren Buffet has
stated, “we just hope
it’s small and that we find it quickly.” Because marketers
engage in behaviors impact-
ing many varied stakeholders, their potential to do harm and
opportunity to have a
very positive impact is great. We have recapped some of the
areas marketers may have
had some difficulties managing: deceptive selling, advertising,
product claims, etc.
However, we need to reflect upon the areas where marketers can
do great good. In
identifying needs in the marketplace, marketing managers have
the opportunity to
address ways to improve our daily lives. Investments in new

drugs, cars with
improved safety and fuel efficiency, smaller and more efficient
technologies all have
the potential to improve our quality of life. Companies such as
Avon and Yoplait rec-
ognize the need to support social causes of interest to their
customers and provide
financial support for breast cancer research. Home Depot
supports Habitat for
Humanity and was one of the first companies, along with Wal-
Mart, to enter New
Orleans with supplies after Hurricane Katrina. Through
developing products, pricing
them competitively, making us aware of them, and making them
readily available,
marketers have a significant impact on our lives.
Most marketers have concern for stakeholders and want to build
long-term rela-
tionships with customers. Most organizations recognize and
manage the ethical risks
associated with marketing and all other business activities.
According to the Open
Compliance Ethics Group, firms with a strong ethics program
for at least 10 years have
had no major reputation damage related to ethics over the last 5
years.27
I S S U E S F O R D I S C U S S I O N A N D R E V I E W
1. Why is marketing an area that deals with many

ehical issues?
2. How can companies prepare their marketing
employees (sales, advertising, research) to deal with
marketing ethics issues?
3. What is the most important organizational factor
influencing organizational decision making?
4. What is the difference between personal ethics
(learned at home, family, friends) and organizational
ethics?
5. Why are companies today so concerned about
ethical misconduct within the organization?
6. What is the importance of maintaining a positive
reputation as it relates to branding and other
marketing elements?
7. How can companies improve their image in the
marketplace through ethical behavior?
R E F E R E N C E S
1. “Ex Ad Agency Execs Sentenced for Fraud,” Associated
Press
Newswire, August 11, 2005.
2. Ethics Resource Center, “National Business Ethics Survey:
How
Employees View Ethics in Their Organizations 1994–2005,” p.
16.
3. Ibid, p. 17.
4. Caroline E. Mayer (2005), “Blockbuster Sued over Return

Policy,”
The Washington Post, February 19, www.washingtonpost.com/
wp-dyn/articles/A36767-2005Feb18.html.
5. Jonathan Lowe and Pam Cohen Kalafut (2002), Invisible
Advantage:
How Intangibles Are Driving Business Performance,
Massachusetts:
Perseus Publishing, p. 8.
6. Felicity Lawrence (2004), “Things Get Worse for Coke,” The
Guardian
(London), March 20, http://www,guardian.co.uk/business/story/
0_3604.1174127.00.html.
7. Chad Terhune (2003), “How Coke Beefed up Results of a
Market
Test,” Wall Street Journal, August 20, p. A1.
8. Mary Jane Credeur (2005), “Coke Poured Out Over 1,000
New
Products in 2005,” USA Today, December 15, p. B5.
9. Daniel McGinn (2005) “Rewinding a Video Giant,”
Newsweek, June
27, www.msnbc.msn.com/id/8259044/site/newsweek/.
10. This section was adapted from O. C. Ferrell, “Nature, Scope
and
History of Marketing Ethics,” in Marketing and Public Policy,
Marketing and Society, William Wilkie, Greg Gundlach, and
Lauren
Block, eds. (Mason, OH: Thomson South-Western,
forthcoming).

11. James C. Hyatt (2005), “Birth of the Ethics Industry,”
Business Ethics,
Summer, p. 26.
12. Isabelle Maignon, O. C. Ferrell, and Linda Ferrell (2005),
“A
Stakeholder Model for Implementing Social Responsibility in
Marketing,” European Journal of Marketing, Vol. 9/10, pp. 956–
977.
13. T. M. Jones (1991), “Ethical Decision Making by
Individuals in
Organizations: An Issue-Contingent Model,” Academy of
Management Review, 16, pp. 366–395.
14. D. P. Robin, R. E. Reidenbach, and P. J. Forrest (1996),
“The Perceived
Importance of an Ethical Issue as an Influence on the Ethical
Decision-Making of Ad Managers,” Journal of Business
Research, 35,
pp. 17–29.
15. O. C. Ferrell (2005), “A Framework for Understanding
Organizational
Ethics,” in Business Ethics: New Challenges for Business
Schools and
Corporate Leaders, R. A. Peterson and O. C. Ferrell, eds.
(Armonk,
New York: M.E. Sharpe), pp. 3–17.
16. Patrick E. Murphy, Gene R. Laczniak, N. E. Bowie, and T.
A. Klein
(2005), Ethical Marketing, (Upper Saddle River, N.J.: Pearson
Prentice-Hall).
17. Marjorie Kelly (2005), “The Ethics Revolution,” Business

Ethics,
Summer, p. 6.
18. O. C. Ferrell and Larry G. Gresham (1985), “A Contingency
Framework for Understanding Ethical Decision Making in
Marketing,” Journal of Marketing, 49 (Summer), pp. 87–96.
19. Roselie McDevitt and Joan Van Hise (2002), “Influences in
Ethical
Dilemmas of Increasing Intensity,” Journal of Business Ethics,
40
(October), pp. 261–274.
20. “Ex-WorldCom Comptroller Gets Prison Time”; “Ex-
WorldCom CFO
Gets Five Years,” CNN/Money, August 11, 2005,
www.money.cnn.com;
Susan Pullman, “Ordered to Commit Fraud, A Staffer Balked,
Then
Caved,” The Wall Street Journal, June 23, 2003.
21. Data from O. C. Ferrell, as reported in O. C. Ferrell, John
Fraedrich,
and Linda Ferrell (2005) Business Ethics: Ethical Decision
Making
and Cases, 6th ed. (Boston: Houghton Mifflin), pp. 144–145.
22. Adapted from Lynn Brewer, Robert Chandler, and O.C.
Ferrell,
Managing Risks for Corporate Integrity: How to Survive an
Ethical
Misconduct Disaster, working manuscript, forthcoming 2006.
23. Mitchell Pacelle (2005), “UPS Loses Citigroup Customer
Data,” The
Wall Street Journal, June 7, p. A3.

24. John Seward (2005), “Marriott’s Timeshare Unit Says
Customer
Data Disappeared,” Dow Jones Newswire, December 27,
http://money.cnn.com/services/tickerheadlines/for5/
200512271552DOWJONESDJONLINE000300_FORTUNE5.htm
,
accessed December 30.
25. Andy Serwer (2005), “Wal-Mart: Bruised in Bentonville,”
Fortune,
April 8, pp. 84–89.
26. Liz Featherstone, “Wal-Mart’s P.R. War,” August 2, 2005,
http://
www.salon.com/news/feature/2005/08/02/walmart/print.html.
27. Open Compliance Ethics Group, Benchmark Study
Summary,
www.oceg.org.
Alharshan 1
Alharshan 6
Nasser Alharshan
English 101
May 9, 2016
It Changed Everything
Owsley Stanley was an American chemist and an American
audio engineer. He as an important figure in the hippie
movement during the sixties and also played a critical role in
the counterculture protests. Owsley was the soundman for the
Grateful Dead. He frequently recorded numerous live tapes
behind his mixing board. He was the first private individual to

create massive quantities of LSD. In his account between 1965
and 1967, he produced almost five hundred grams of LSD that
amounted to around ten million doses in this period. Russell and
Cohn. Both highlighted that Owsley during this time had
emerged as the leading manufacturer of high-quality LSD. He
had maintained a close relationship with the music scene during
the 1960s.He had associations with customers and friends such
as Janis Joplin and Jim Morrison, and he was highly generous at
numerous infamous psychedelic events and parties such as the
Acid Test organized by Ken Kasey in San Francisco. During
these parties, LSD was distributed to all individuals that
attended the party as the drug was mixed with lemonades as the
band of Owsley, known as The Grateful Dead played as the
recognized background band. Comment by Anna Dickau: could
have a bit more of a lead-in to this; a funnel intro (where you
start talking broadly about a subject and narrow it down) seems
like it would be appropriate for your paper Comment by
Anna Dickau: the intro provides some good information, but
what is your paper going to prove? remember, you need to be
answering a research question. it seems like you might be
setting up to talk about the effects that lsd had on the hippie
movements of the 60s and 70s, but clarify this point in a thesis
statement that contains what you’re going to prove and your
evidence/how you’re going to prove it
LSD was the hallmark drug era that was championed with much
messianic fervor especially during the era of countercultural
activism. In 1964, the Height –Ashbury district in the Bay Area
of San Francisco became the nerve center for all young
individuals that opposed the mainstream ideals and the
prevailing American culture. MacFarlane, (2007) elicited that
these people known by an informal term as hippies wanted to be
more than just people just moving along like everyone else
through life without a purpose or identity of themselves. The
driving force behind this culture was psychedelic rock music
and also acid rock. The establishment of the hippy culture was
connected to the increase of the utilization for cannabis and the

most pronounced drug used, LSD. LSD and other forms of drugs
were essentially a channel of rebellion and a way to oppose the
trending social norms, with music such as acid rock, the
primary carrier of this important message (Misiroglu, 2015).
Comment by Anna Dickau: it might be interesting to start
off with some descriptions of the immediate effects of lsd (with
citations, of course) Comment by Anna Dickau: no comma
Comment by Anna Dickau: good, but provide some
analysis after this citation. why were drugs used as a way to
rebel against the establishment?
As the time progressed, LSD became highly available at a time
when only twenty-five thousand Americans had tried the drug at
least one time. For years later, this number increased up to four
million. The countercultural era ultimately failed as drugs
eventually ceased on becoming a reservoir of illumination but
just inducers of disturbances. Huxley was clearly prophetic
concerning the mood influences that the altering drugs have
than relevant mind altering drugs. Comment by Anna Dickau:
do you mean “four” years later? if not, specify the number of
years later that the number rose Comment by Anna Dickau:
who is this? Comment by Anna Dickau: if this is from a
source of yours, this would be a great place for a quote
Acid rock is a rock music genre that is mainly influenced or
inspired by the psychedelic culture with attempts of replicating
and promotion of mind-changing experiences of various
psychedelic drugs, most commonly LSD. It primarily utilizes
new recording techniques and influences and sometimes draws
inspiration from other genres such as drones of Indian music.
During this time, several types of psychedelics also gained
popularity. Not only did LSD spawn a culture of psychedelic
influenced youth, but it also gave birth to a particular music
genre Acid rock. The primary objective of this music was the
enhancement of experiences of psychedelic drugs such as LSD
both in lyrics and in sound (Stanley, 2013). Comment by
Anna Dickau: your first mention of this is earlier. think about
the organization here; is there a way that you could move this

description up to when you first introduce this topic, or move
the other paragraph down? Comment by Anna Dickau:
citation? Comment by Anna Dickau: no comma, no year, need
page # Comment by Anna Dickau: how did acid rock
accomplish its goal, musically?
This genre peaked between 1967 and 1969 with the Woodstock
Festival and the Summer of Love and became a global musical
movement and associated with famous counterculture before it
began declining as attitudes changed. Also, the loss of some
outstanding individuals, and back to basics protests, led several
surviving performers to move into new musical areas. As the
sixties progressed, widespread tensions between different
societies emerged concerning various issues and continuously
flowed along numerous generations lines that concerned them,
and sexuality, the rights of women, experimentation with
psychoactive drugs, traditional structures of authority and also
varying interpretations of the American Dream Comment by
Anna Dickau: what attitudes? how did they change? also, a
citation is needed here Comment by Anna Dickau: be more
specific about all of these things Comment by Anna Dickau:
which societies? do you maybe mean subcultures? (societies is a
pretty broad term, usually used for like “european societies” or
“american society” — really big groups of people) Comment by
Anna Dickau: clarify this sentence. also, i’m not sure how this
relates to psychedelic drugs
As this era unfolded, numerous cultural forms and a significant
dynamic subculture developed which celebrated modern
incarnations of bohemianism, experimentation and also the
emergence of the hippiand movement and various alternative
lifestyles. This process of embracing creativity is highly notable
in works of the British Invasion, bands such as the Beatles and
also several film developers whose works were highly restricted
due to censorship policies. Also, the Beatles that were the
leading trendsetters and other significant authors, creative
artists and thinkers across numerous disciplines, assisted in the
definition of the counterculture movement. Comment by

Anna Dickau: clarify here. again, what does this have to do with
lsd? Comment by Anna Dickau: citation?
Swanson, (2012) stated that there are very few albums that
could epitomize and define a moment in time they originate
from. The seventh album of the Beatles, Sgt Pepper can be
categorized as a true masterpiece. This collection merged pop
and rock and made something beautiful and overlooked the
importance of the single bowed down to the musical statement
of the record. The single largest influence on this album was
LSD. The very fact that the band no longer did live concerts;
they made their recording studio their full-time home. .This
album became the prominent soundtrack to that eventful year. It
had long been stated that a person can hear the album playing
out of numerous households and vehicles the entire summer of
that time. This album also marked the first record of the Beatles
that had an identical release both in the United States and the
United Kingdom (Julien, 2016).
Comment by Anna Dickau: no comma Comment by
Anna Dickau: write out entire name of album and italicize titles
of albums Comment by Anna Dickau: according to whom?
Comment by Anna Dickau: this sentence is very unclear
Comment by Anna Dickau: citation? Comment by
Anna Dickau: format Comment by Anna Dickau: citation?
also, how was this year eventful? Comment by Anna Dickau:
transition? also, i’m not sure about the organization here. it
seems like this would be very useful much earlier in the paper
Effective doses of LSD are usually small on the order of
millionths in a gram. However, the unique perceptual changes
that LSD brings may place the individual using it at a huge risk
of indirect bodily injury or harm. In several cases of moderate
to mild intake, the great effects of this drug mostly involve the
psyche and the brain rather than the entire body. Some doctors
have stated that frequent users of LSD commonly experience
psychotic episodes with severely modified perceptions for
numerous years even once they stop taking the drug. Some
doctors report that LSD has various effects. Olive, (2008)

asserted that one common long-term effect of LSD was the use
of recurring flashbacks. This condition of having several LSD
feedbacks is formally known as Hallucinogen persisting
perception disorder. The various psychotic disturbances
connected with HPPD may last for several months or in severe
cases years. Also, a person may not quickly reverse the
different effects of HPPD simply by quitting the drug.
Comment by Anna Dickau: unnecessary Comment by
Anna Dickau: how does all this relate to music?
LSD typically produces a highly pronounced mental adverse
effect compared to the physical effects. Some physical
implications may include acute signs of stimulation of the
sympathetic nervous system of the body that may result from
excessive use of LSD. Long term LSD use may lead to a
demonstrative tolerance defect. As a result, the abusers of
KLSD may need massive doses of LSD to elicit the desired
implications. This action may be highly risky as the Large doses
of LSD of over four hundred mcg publicly reported have led to
life-altering toxicity. Comment by Anna Dickau: lowercase
l Comment by Anna Dickau: citation?
Dr. Hoffman, the initial creator of LSD, had a euphoric natural
vision, and he claimed that his experience was radiance so
beautiful that it spoke to the heart. He said that he believed that
LSD has the capacity of recapturing that divine experience,
disclosing a powerful, miraculous, unfathomable reality that
was hidden from daily sight. It is through technology that LSD
visions were acknowledged. In 2006 several early computer
developers stated that they had been users of LSD. Steve Jobs,
the presiding genius of Apple, highlighted his LSD experience
as either one or two of the most critical things he ever did in his
lifetime. It is through LSD that some important inventions from
Apple may have emerged. Comment by Anna Dickau:
citation? also, what does this have to do with music?
The same impulse from Dr. Hoffman also attracted Huxley.
Huxley saw that drugs were catalysts of social control, and he
viewed them as shortcuts to manipulation of the general mood

of a person. In his book The Doors of Perception, he justified
his assertions as he stated that drugs play a major opposite
function. Drugs mainly provide a pathway for a person to step
outside of the usual cultural boundaries and reveal numerous
alternatives that break down boundaries. Comment by Anna
Dickau: book titles are italicized
Augustus Owsley Stanley III stated that his primary goal was
not concerned about changing the world through the
manufacture of LSD. He said that he only set out in ensuring
that he was acquiring something that he knew the benefits of
what it truly was. Selvin, (2007) highlighted that these
advantages led to Owsley, developing several batches of LSD as
his friends also wanted to find out what they were taking.
However, the end of the sixties did not mean the end of the acid
rock. Even today, several rock bands are highly influenced by
the music of that time. The influences of this genre and those of
the Flower Power era can still be distinguished. However, not
much of the content revolves around LSD. Comment by
Anna Dickau: so i think it would be really beneficial to
determine what exactly your research question is, because that
will help with the conclusion as well — it’ll make it much
easier to answer the “so what?” and “who cares?” questions. i
also strongly encourage you to do a reverse outline (make an
honest outline of what this paper looks like now in order to sort
out the order of the paragraphs and the content in the
paragraphs)
Works Cited
Julien, Olivier. Sgt. Pepper and the Beatles: It Was Forty Years
Ago Today. Routledge. 2016. Print
MacFarlane, Scott. The Hippie Narrative: A Literary
Perspective on the Counterculture. McFarland. 2007.Print
Misiroglu, Gina. American Countercultures: An Encyclopedia of
Nonconformists, Alternative Lifestyles, and Radical Ideas in
U.S. History. Routledge. 2015. Print
Olive, M, Foster. LSD. Drugs Series. Infobase Publishing. 2008.

Print
Russell, Jesse & Cohn, Ronald. Owsley Stanley. Book on
Demand. 2012. Print.
Selvin, Joel. For the unrepentant patriarch of LSD, long, strange
trip winds back to Bay Area
Viewed on 08 May 2016.Retrieved (Online) from:
http://www.sfgate.com/bayarea/article/For-the-unrepentant-
patriarch-of-LSD-long-2581601.php
Comment by Anna Dickau: don’t need the URLs
Stanley, Richard. T. The Psychedelic Sixties: A Social History
of the United States, 1960-69. iUniverse. 2013. Print
Swanson, Dave. It Was 48 Years Ago Today: The Beatles’ ‘Sgt.
Pepper’ Celebrates a Big Birthday. Viewed on 08 May
2016.Retrieved (Online) from:
http://ultimateclassicrock.com/the-beatles-sgt-pepper-turns-45

ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx

Recommended

Recommended

More Related Content

Similar to ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx

Similar to ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx (16)

More from SANSKAR20

More from SANSKAR20 (20)

Recently uploaded

Recently uploaded (20)

ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx