Session 10_B324_Marketing and Society Block23 (2018)_SPRING 2020 2021.ppt

Marketing and Society
(B 324)
Session 10
In Block 2 & Block 3
1
Copyrights Materials, AOU Lebanon

Acting Ethically (Block 2, section 5, p. 94)
To make a simple distinction between ethics and morals, Lawton
(1998) distinguishes between 'ethics' as a set of principles that
acts as a guide to conduct and 'morals' as how a person lives up
to the demands of what is perceived to be right and wrong
behavior.
Moral behavior (section 5.1, p.94): Rest (1994) proposed
that moral behavior consisted of four components:
1. moral sensitivity
2. moral judgment
3. moral motivation
4. moral character.
2

Acting Ethically (Continue I)
1. Moral sensitivity: Rest (1994, p. 23) defined moral
sensitivity as 'the awareness of how our actions
affect other people'.
 It concerns being sensitive to the possible impact of
different courses of action on all of those involved.
 Rest emphasized the importance of empathy and
role-taking skills.
 To act morally, we need to consider the potential
consequences of our actions on other people and
appreciate their perspectives. Of course the extent to
which we may be able to predict all the consequences
of actions is a moot point.
3

Acting Ethically (Continue II)
2. Moral judgment: Moral judgment involves
deciding which action is morally right or
wrong, having considered the range of
possible actions and their likely effects on
people. We have already examined many
frameworks for moral reasoning that have been
developed to guide moral judgment. At the
same time, moral judgment will reflect
experience and 'practical wisdom'.
4

Acting Ethically (Continue III)
3. Moral motivation: Moral motivation
concerns the relative importance given to
competing values.
 Moral action may be compromised if a
person is insufficiently motivated to give
moral values priority over other values.
 Rest gave the examples of self-actualization
and protecting one's organization as values
that are sometimes given greater weight than
moral values.
5

Acting Ethically (Continue IV)
4. Moral character: Rest (1994, p. 24) lists moral character as
involving: 'ego strength, perseverance, backbone, toughness,
strength of conviction and courage'.
 Of course, such characteristics are not necessarily ethical; we
might want to add the caveat that they take on an ethical
dimension in the pursuit of ethical ends such as the 'public good'.
 Maclagan (1991) suggests that moral development requires
interpersonal skills and self-knowledge, and emphasizes the
importance of the following interpersonal skills: assertiveness,
the ability to control one's emotional reactions and tolerance of
others' views.
 As ethical dilemmas may involve conflicts of interests or values
between stakeholders, the ability to negotiate sensitively with
other people is essential. Maclagan also highlights the need for
self-knowledge.
6

Moral character (continued) – The implications of “Moral Character” in
terms of three response categories to ethical issues in advertising:
Three different stances that tend to be adopted by advertising practitioners when faced
with ethical issues in advertising (Drumwright & Murphy 2004):
 Moral myopia - exhibited by advertising practitioners who had
difficulty perceiving ethical issues. These practitioners saw
responsibility for monitoring ethical issues as being external to
themselves. In Rest's terms, they may be seen as lacking moral
sensitivity.
 Moral muteness - shown by advertising practitioners who
recognized ethical issues but ignored or avoided confronting them.
These practitioners appeared uneasy but dissociated themselves
from the ethical conflicts that threatened them. They appeared to
have moral sensitivity and moral judgment, but lacked moral
motivation and moral character.
 Moral imagination - demonstrated by a minority of advertising
practitioners who recognized and engaged with ethical issues in
advertising. These individuals acknowledged and confronted ethical
issues openly. This minority of practitioners displayed moral
sensitivity, moral judgment, moral motivation and moral character.
7

Ethical decision making models (Block 2, section 5.3, p. 100)
•A number of models of ethical decision making in marketing
have been developed. Ferrell and Gresham (1985) proposed a
contingency framework that describes a process of ethical
decision making in marketing (see Figure 5.2). It includes
contingency factors that distinguish between contexts in
which decision making takes place.
•An individual's decision-making process is conceived as
being influenced by the interaction between individual
factors (including knowledge, values, attitudes and
intentions) and organizational factors (including significant
others and opportunity factors).
•The model assumes that individuals may, consciously or
unconsciously, draw on various ethical frameworks, which
inform their knowledge, values, attitudes and intentions,
although these are not explicitly represented in the figure.
8

Ethical decision making models (continued)
9

Ethical decision making models (continued)
Hunt and. Vitell's general theory of marketing ethics: Hunt & Vitell (1986; 1993)
posited a process through which an individual passes once he or she has detected a
situation that involves an ethical problem. The model was originally published in 1986
and a revised version was published in 1993. The revised model is shown in Figure 5.3
(Note: Students must refer to Block II page 101).
• The boxes on the far left influence the perception of an ethical problem. The next step
is the set of perceived possible options; perceptions of these may differ between
individuals. The options are then subjected to two types of evaluation: deontological
(the rightness or wrongness of the option) and teleological (consideration of the
consequences and stakeholders).
• Deontological evaluation entails evaluating each option against the individual’s set of
norms (in other words personal values or rules of moral behavior). These include
general beliefs (for example, honesty) and issue-specific beliefs (for example, price
discrimination) about what is right or wrong.
• Teleological evaluation involves assessing each option with regard to four
considerations: (i) the perceived consequences of each option for the different
stakeholder groups; (ii) the probability that each consequence will happen to each of
the stakeholder groups; (iii) the acceptability or unacceptability of each consequence;
and (iv) the importance of each stakeholder group. The outcome of these evaluations
is the individual’s ethical judgments, which lead to intentions and then behavior,
consistent with other general theories in consumer behavior.
10

Hunt and. Vitell's general theory of marketing ethics (continued)
•However, it is possible that intentions might not necessarily
be consistent with ethical judgments, because intentions can
also be influenced by teleological evaluation directly, perhaps
because one of the options is personally beneficial albeit not
the most ethical. This will result in feelings of guilt, owing to
the conflict between ethical judgment and intentions.
Behavior is also influenced by ‘action control’, which is the
individual’s ability to enact an intention. An individual might
be prevented from acting according to intentions by
situational constraints.
•Finally, the consequences of the actual behavior are evaluated
afterwards and fed back into ‘personal characteristics’ and
effect learning. In their later review of studies that had tested
their general theory of marketing ethics, Hunt and Vitell
(2006) concluded that studies provided strong support for
their model.
11

Jones' Issue-contingent Model (Block 2, section 5, p. 104)
Building on a number of ethical decision-making models, Jones' (1991)
issue-contingent model emphasizes the importance of the
characteristics of the ethical issue in question. Jones identified the
following six characteristics, which he called 'moral intensity'. He
argued that they influence all aspects of ethical decision making and
behavior:
1 Magnitude of consequences - the total harms or benefits experienced
by those affected by the act in question.
2 Social consensus - the level of social agreement about the good or evil
of a proposed act.
3 Probability of effect - a combination of the likelihood that the act in
question will happen and the likelihood of its causing the predicted
harms or benefits.
4 Temporal immediacy - the length of time from the present time to
the start of the consequences of the act in question (the shorter
the length of time, the greater the temporal immediacy).
12

Jones' Issue-contingent Model (continued)
5 Proximity - the degree of closeness (social, cultural,
psychological or physical) of the moral agent to
those affected by the act in question.
6 Concentration of effect - an inverse function of the
number of people affected by the act in question or
given magnitude (in other words whether the harm
is borne by a small number of people or diluted
among a larger number of people).
Jones' issue-contingent model emphasizes the
importance of the characteristics of the ethical issue
in question. Refer to page 104.
13

Block III
Learning outcomes:
The aim of this block is to explore what is meant by responsible business
marketing, to look at the rationale and theory underlying it, and to
critically examine some of the key forms in which it manifests itself.
After studying this block, you should be able to:
 describe -the concept of responsible marketing and present arguments
for and against it
 describe in some detail the concepts and practice of sustainable
marketing and fair trade marketing
 identify some aspects or features of responsible marketing practice that
apply across its different forms
 think critically about the benefits and pitfalls. of responsible marketing
and apply this to your own experience of, and attitudes towards,
responsible marketing practices.
14

Some Key Issues In Responsible Marketing
In this section we will start to look in more detail at some
of the substantive issues and challenges that responsible
marketing practice has to deal with. You have already
learned about a number of issues in marketing ethics in
Block II of B324. It is beyond the scope of this block to
look at every responsible marketing issue in detail and so
we have chosen to focus on five that we consider
particularly important: sustainability, fair trade,
consumer protection, the relationship between business
and government, and ethical consumption.
15

Some Key Issues In Responsible Marketing (Continue I)
Sustainability: Sustainable development is perhaps the most
significant and yet the most difficult problem that marketing - and
human economic activity in general - faces at the beginning of the
third millennium.
Modern production methods and marketing systems have brought
unparalleled material comforts to most people in affluent societies
and to many in the so-called emerging economies, as well as to
some in less-developed economies.
In this sense affluent consumers have never had it so good. But this
level of material wealth has come at a high price as increasingly
the earth's natural resources are seen to be under enormous stress,
the most significant example of which is perhaps global climate
change. An example - an increasing number of people travel more
frequently and for longer distances, using motorcars, aeroplanes
and other forms of motorized transport.
16

Some Key Issues In Responsible Marketing (Continue II)
What do we mean by sustainability? 'Sustainability' (and related
terms such as 'sustainable development') is a highly contested
concept and is interpreted in quite a number of different ways. Put
in somewhat simplified terms, there are two ways of defining
sustainability.
A) Narrowly speaking, sustainability can be defined in terms of
ecological system maintenance, in the sense of ensuring that our
actions do not impact upon the Earth or the biosphere in such a way
that its long-term viability is threatened. B) More broadly,
sustainability can be seen in terms of balancing economic,
ecological and social goals and consequences (see Elkington,
1998).
Most current definitions of sustainability tend to rely on the widely
cited definition of sustainable development from the Brundtland
Commission (WCED, 1987). This stresses the necessity of meeting
the needs of current generations without compromising the ability
of future generations to meet their needs.
17

Some Key Issues In Responsible Marketing (Continue III)
The goals of sustainability: Let us now consider
in a little more detail what sustainability entails.
As mentioned above, most commentators on
sustainability see it as a three-partite concept
embracing environmental, economic and social
goals which need to be brought into some kind
of harmony. The relationship between the main
goals of sustainability can be depicted as in
Figure 3.1
18

19

Figure 3.1 (continued)
•Figure 3.1 lays out diagrammatically the three goals which
it calls eco-efficiency, eco-justice and socio-efficiency.
These goals are sometimes measured in a way that in
accounting terms is called the triple bottom line, since it
involves providing measurable information on three
separate sets of criteria- economic factors, social policies
and environmental practices - not merely on traditional
accounting data.
•In investment terms, the Dow Jones Sustainability Index
and the FTSE 4 Good Europe 50 allow shareholders to
evaluate how effective individual corporations are in
monetary and sustainability terms as, in addition to the
normal financial measures, corporations are measured by
the triple bottom line.
20

Sustainable marketing: an oxymoron?
 For the purposes of this course, sustainability is perhaps
best thought of in terms of a process directed towards
minimizing the damage done by economic and social
activity to the capacity of the planet to sustain economic
and social activity over the long term. Sustainable
marketing practices are those which encourage the use of
resources in such a way as to maximize social welfare and
minimize the wasteful use of such resources on products
of little or no intrinsic value. According to the marketing
concept as presented in many widely used marketing
textbooks, 'achieving organizational goals depends on
determining the needs and wants of target markets and
delivering the desired satisfactions' (Kotler et al., 2001, p.
15).
21

Fair Trade
Another important challenge for responsible
marketing relates to the fairness with which
benefits from trade and marketing are distributed
between producers, intermediaries and consumers.
The key problem identified in the fair trade
movement is that small producers (such as of foods
or crafts) often do not appear to be receiving a 'fair'
price for their goods, while intermediaries (such as
exporting firms and retailers) are seen to make very
good profits and consumers have the luxury of
paying only moderate prices for these goods.
22

Fair Trade (Continued)
The problem is thought to be particularly significant in
areas of international trade. For example, it is argued
that small coffee or cocoa farmers in so-called Third
World countries commonly receive very little money for
their produce - not always enough to lift them above the
poverty line - while European coffee importers earn
good profits and European consumers pay very
affordable prices.
The fair trade movement attempts to rectify this
situation by paying fair prices to producers, cutting out
large profits to intermediaries, and charging slightly
higher prices to Western consumers.
23

Consumer Protection
• One of the most established concerns for marketing ethics and
responsible marketing practice is that of consumer protection. , the 'free
market' view would hold that consumers enter into purchasing
agreements of their own free will and can be trusted to workout for
themselves if a product is safe, fit for purpose or meets their needs, and
make a purchasing decision accordingly.
• The argument is that if consumers want more product safety (or other
benefits) they choose products which provide this safety and pay any
extra cost that is associated with it.
• The problem with this argument was also touched on in Reading 3: that
consumers are at a power and information disadvantage vis-à-vis large
manufacturing firms and retailers. They often lack the means to assess
reliably whether a product or service is fit for its purpose or safe.
Extensive consumer protection legislation has therefore been
introduced in many countries, which puts the onus on companies to
provide safe, reliable and suitable products and gives consumers some
form of redress if they are persuaded to buy products which do not meet
minimum standards.
24

Business's Relationship With Government
Responsible marketing practice is, to a large extent,
concerned with fair treatment for stakeholders, be they
consumers (e.g. in terms of consumer protection),
producers (e.g, in paying fair prices to small producers),
or the wider community and the environment (in terms of
striving for sustainable marketing practices). One of the
main stakeholders of most businesses is government and
its agencies. In the relationship between business and
government, the idea that a stakeholder relationship is
one where responsibility and dependence go both ways is
particularly clear.
25

Business's Relationship With Government (continue I)
Because of this, the relationship between government and
business is often complex and contradictory. Governments
have to strive for a societal compromise between people's
self-interest and social interest, and corporations are caught
in a dual position of both challenging government
intervention and being dependent on that very government
action. For example, some corporations contribute
significantly to the funding of government parties. This can
lead to a conflict of interests when government is expected to
also protect the interests of its electorate by regulating
business activity. Corporations are dependent on the
government to ensure the protection of their interests through
favorable legislation, but must also constantly lobby
government to increase the sphere of their autonomy
(Campion, 2006).
26

The role of government regulation in responsible
marketing
Clearly an enlightened CSR policy is important for a company
in emphasizing its straight-dealing and morally upright
attitude to its customers and wider society. However, in
capitalist economies the imperatives of sales and profit and
the demands of shareholders and financiers frequently have
greater power than those of the wider society and morality,
even if strong arguments can be made that the costs of many
CSR strategies can be justified on the grounds that they will
lead to an enhanced reputation which will in turn strengthen
competitive advantage. This is less the case for producers of
nonbranded goods and business-to-business marketers; and
not all CSR costs can be justified in strictly profit terms.
Government regulation and legislation therefore often step in
to ensure minimum standards of 'good' behavior by
companies.
27

How Companies Can Influence Government
There are also a number of ways in which companies can
influence government to enact legislation protecting their
interests. One of these is lobbying, whereby firms
commonly employ lobbying companies or corporate
communications consultants to further their cause, or
representatives of business are appointed to government
posts and vice versa. Such influencing tactics are not always
compatible with good social responsibility. For example,
mutual appointments of (ex-)politicians to business posts
and of business people to government posts can clearly lead
to opportunities for exerting undue influence and may' well
lead to potential conflicts of interest. Party/financing by
companies in order to influence agendas is also often seen
as ethically problematic.
28

Ethical Consumption
The history of ethical consumption can probably be traced
back to the start of the South African apartheid boycott in
1959. As globalization makes the whole world effectively a
single market, there is pressure on governments to de-
regulate, so a counter-force is needed to protect buyers
against too rampant a strain of capitalism. Terms are of
course used very loosely here and 'green' and 'ethical' are
used to cover an equally wide range of issues: animal
welfare (including free range and organic production),
restriction of the use of genetically modified products,
dolphin and whale protection, vegetarianism and veganism,
and prohibition of testing of cosmetics and, more
controversially, of pharmaceuticals, on animals.
29

Ethical Consumption ( Continue I)
•Screening of suppliers for environmental policies,
the use of timber from managed forests only,
avoidance of PVC and chlorine, the elimination of
ozone-depleting hydrocarbons in refrigerators,
recycling, fair trade, and campaigns against sweat
shop practices have also all been included as part of
'green' or 'ethical' consumption. Research has shown
that ethical subjects can, in consumers‘ eyes, be
grouped into four areas: (1) treatment of employees;
(2) environmental factors; (3) community support;
and (4) product qualities (MORI, 2000).
30

Sustainability And Green Marketing (Block III Page 30)
The growth of green marketing is claimed to be the result of a combination of
factors, notably:
1 Firms see environmental marketing as an opportunity to differentiate
themselves in the market. Ottman (1993) states that in a study of 16
countries more than 50 per cent of consumers in each country, other than
Singapore, indicated a concern about the environment, even in the early
1990s. There is much evidence to suggest that consumers are becoming
more environmentally aware and as a result some firms see opportunities
for achieving competitive advantage through green marketing.
2 Firms recognize their obligations to be more environmentally
responsible. Some firms like Coca-Cola and Walt Disney employ green
policies without highlighting them. Many more highlight so-called green
policies without thinking of them as much more than 'good' marketing
strategies.
3 Government bodies are forcing firms to become more environmentally
responsible. Many countries have stringent environmental regulations,
forcing firms to adopt more environmentally friendly policies and practices.
.
31

Sustainability And Green Marketing (Continue I)
4 Competitors' environmental activities pressurize firms to
improve their environmental marketing activities. There is also
an element of 'follow my neighbor' in corporate green policies. If
your competitors are going green in their marketing, you had
better do so too.
5 Cost factors concerned with material usage or waste disposal
lead firms to modify their activities. When attempting to minimize
waste, firms are forced to re-evaluate their production processes.
This often leads to change in a green direction that also reduces
costs. New industries can even develop selling methods of reducing
or even eliminating waste.
• Green or environmental marketing is perhaps the area of
responsible marketing which has been practiced most and about
which most has been written. The literature on green marketing
can tell us quite a lot, not just about green marketing itself, but by
implication about responsible marketing in general.
32

What Is Green Marketing?
• Green marketing has been proposed as a solution, at least a
partial one, to the environmental issues connected with
conventional marketing. Much of the early theory on green
marketing as well as its practice is really more or less an
extension of conventional marketing theory and practice.
• This idea of green marketing is based on the concept of
ecological modernization, which suggests that it is possible to
achieve an environmentally sustainable economy within the
current market system.
• Green marketers are expected to react flexibly to these
consumer demands, changing products and processes to
achieve the same consumer benefits with less environmental
damage.
33

Development Of Green Marketing
•The notion of green marketing, described above as.
essentially an extension of conventional marketing,
has undergone some changes and developments since
green marketing first became popular in the closing
decades of the twentieth century. This development
has mostly affected green marketing theory - that is,
thinking about the way in which marketing could be
made more environmentally friendly - but there have
also been some changes in the practice of green
marketing.
34

A Systemic View Of Marketing
Sustainability
According to Bill Kilbourne, one of the more outspoken
critics of 'conventional' green marketing, the environmental
crisis is caused not by specific behaviors, such as the
production or consumption of particular, non-green
.products, but by a materialist 'dominant social paradigm'
which is reflected in our entire .production and consumption
system. Kilbourne argues that contemporary green
marketing fails to move beyond that paradigm and is
therefore unable to provide a solution to the crisis
(Kilbourne, 1998). On the practical side, green marketing
has been found to be more rhetoric than substance (Peattie,
1999) and some companies have also found that the profits
they expected from green marketing 'have not materialized.
35

The Future Of Sustainable Marketing
•What, then, is the future of marketing in sustainability
terms? Kilbourne, in Reading 9, argues that
sustainability can only be achieved if the dominant
social paradigm is challenged and overcome. What he
seems to argue is that the way in which the capitalist
system works is the main problem and sustainability is
unlikely to be achieved within that system (although he
doesn't actually quite phrase it like that). We will
conclude this section with excerpts from two articles
which consider the possibilities of achieving sustainable
marketing within the capitalist system.
36

Fair Trade And Marketing
In this section you will study another aspect of responsible
marketing that has gained in currency over recent years -
fair trade marketing. Sustainable development and fair trade
are not so very different in their aims. The triple goals of
sustainability, as outlined in Section 3.1, include ecological,
social and economic goals. Likewise, the fair trade
movement pays attention to the ecological and economic
sustain ability of producers' businesses, as well as to the
social dimension. However, the green marketing movement
and most of the literature concerned with the 'sustainability'
of marketing focuses on the ecological dimension, whereas
fair trade appears to be mostly focused on the social
dimension.
37

What Is Fair Trade Marketing?
Fair trade marketing is principally concerned with
making sure that small producers are paid sufficient
money for their products to cover their costs and give
them enough to live on.
Fair trade is a multi-strand movement in which the parts
are all pointing in the same direction, namely to improve
the lot of small, (initially) powerless primary producers
by ensuring that they get a better price for their produce,
usually one that is over the market price. There are
alternative trade organizations and those involved in fair
trade labeling; there are programs to encourage organic
production and ethical sourcing initiatives carried out by
major Western retailers.
38

The Argument For Fair Trade
Some economists argue that fair trade prices given to
commodity producers, such as small coffee farmers,
distort the market. They argue that the main reason
for low coffee prices is that there is too great a
supply, and that paying above world market prices,
i.e. paying what is considered a 'fair' price by the fair
trade movement, will only encourage the
development of a greater glut in the market and
further depress market prices. However, this
reasoning assumes rough equivalence in power
between the producer and the buyer which frequently
does not exist.
39

The Argument For Fair Trade (Continue I)
The validity of the argument that products
manufactured under such labor conditions are sold at
a 'fair' market price can be questioned as such
workers often do not operate in what one would
consider free market conditions. Since they are
commonly paid below-subsistence wages, on which
nevertheless their families rely for what little they
have, they cannot' really be said to be participating
'freely' in the market.
40

Fair Trade Organizations And Networks
FLO has become the standard bearer of the movement and is
trying to harmonize standards for fair trade. These standards
increasingly include environmental factors, thus bringing the
green and fair trade movements closer together. At present,
fair trade producers are concentrated in a limited number of
product areas arid most of them tend to be in some form of
marketing co-operative.
Fair trade marketing tends to be mainly about finding
customers who will pay the required premium price for the
products that the producer can supply. As such it can be only
a niche market as only a small minority of consumers is
prepared to pay a premium in order to support small, mostly
Third World producers. In order to gain a more thorough
overview of the fair trade movement, we will now turn to
Reading 12.
41

The Effectiveness Of Fair Trade
 The FLO labeling scheme aims to give objective
certification for fair trade practices on which consumers
can rely. Suppliers who meet certain fair trade criteria are
allowed to label their products as fair trade and thus attract
customers who are sympathetic to their aims.
 The fact that fair-trade-labeled products are now sold
through mainstream retailers and not just niche outlets
means that fair trade may reach a wider range not only of
consumers but also producers, which would seem to
increase its effectiveness. The size of the overall fair trade
market, even taking into account some mainstreaming,
should not be over-estimated: of 6 million tones of coffee
beans produced annually, only 20,000 tones go into fair
trade products.
42

Mainstreaming Fair Trade Marketing
Fair trade marketing is perhaps the responsible
marketing practice that has most clearly
developed in a niche, with specialist providers of
fair trade products operating from specialist shops.
It is therefore a good example for studying how
responsible marketing practices can be made more
mainstream and how this may affect the way they
work.
43

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