This document discusses the importance of ethics and social responsibility in marketing strategy. It notes that marketing ethics has become a strategic consideration due to demands from stakeholders and changes in law. Social responsibility relates to maximizing positive impacts on society while minimizing negative ones. The document outlines various dimensions of social responsibility and marketing ethics. It also discusses challenges companies may face in behaving ethically and socially responsible such as complex decisions and conflicts between personal and organizational values.

1. marketing strategy
O. C. Ferrell Michael D. Hartline
Marketing Ethics
and Social
Responsibility in
Strategic Planning
C H A P T E R

2. 3-2
• Car manufacturers have gone to great lengths
to promote hybrid cars.
• These cars are generally much more expensive
to develop and produce. Do corporations have
a social responsibility to develop
environmentally friendly cars? Why or why
not?
The Auto Industry Tries to Go Green
Beyond the Pages 3.1

3. 3-3
The Role of Ethics and Social
Responsibility in Marketing Strategy
• Grown in importance recently
– Due to firms having problems in this area
• Have become necessities due to:
– Stakeholder demands
– Changes in Federal law
• Improve marketing performance and profits
• Are important to development of marketing
strategy

4. 3-4
• Why is marketing ethics a strategic
consideration in organizational decisions?
Who is most important in managing
marketing ethics: the individual or the
firm’s leadership? Explain your answer.
Discussion Question

5. 3-5
Dimensions of
Social Responsibility
• Social Responsibility
– A broad concept that relates to an organization’s
obligation to maximize its positive impacts on
society while minimizing its negative impacts
• Marketing Ethics
– Principles and standards that define acceptable
marketing conduct as determined by the public,
government regulators, private interest groups,
competitors, and the firm itself

6. 3-6
• R.J. Reynolds has been accused by critics of
using its “Joe Camel” cartoon character, to
target children for cigarette consumption.
• How has society acted to protect children from
advertising such as this? What obligations do
companies have to protect children
Marketing Strategy in Action (1 of 2)

7. 3-7
• Coca-Cola :
– Suggested Burger King to invest & promote frozen
Coke as a kid’s snack
– Inflated sales & misled investors by shipping extra
beverage concentrate to bottlers
– Attempt to steal and sell trade secrets to PepsiCo
• Nike claimed no responsibility for the
subcontractors poor working conditions &
extremely low wages
Marketing Strategy in Action (2 of 2)

8. 3-8
The Pyramid of
Corporate Social Responsibility
Exhibit 3.1

9. 3-9
Social Responsibility
• Includes:
– Economic responsibility of making a profit
– Legal responsibility of obeying laws and
regulations
– Ethical responsibility to uphold principals and
standards
– Philanthropic responsibility to increase the
firm’s positive impact on society
• Wall-Mart during Hurricane Katrina

10. 3-10
Marketing Ethics and Strategy
• Requires that organizations and individuals
accept responsibility
• Can lead to violations of public trust
• Involves complex and detailed decisions in gray
areas
• Deals with experiences and decisions made at
work
• Comes into play anytime individuals feel
manipulated or cheated

11. 3-11
Potential Ethical Issues in Marketing
• Overall Issues
• Product Issues
• Pricing Issues
• Distribution Issues
• Promotion Issues
See Exhibit 3.2 in Text

12. 3-12
Government Regulation of
Marketing Activities
Exhibit 3.3

13. 3-13
The Challenges of Being
Ethical and Socially Responsible
• Business decisions involve complex decisions in
which correctness may not be clear cut
– e.g. Internet privacy, protecting trademarks and brand
names
• Ethical conflict may emerge from an
inconsistency between personal values and the
values held by members of the work group
• Ethical issues can develop into legal problems

14. Types of Misconduct
Observed in Organizations (1 of 3)
3-14Exhibit 3.4
• Abusive or intimidating behavior toward
employees
• Lying to employees, customers, vendors or the
public
• A situation that places employee interests over
organizational interests
• Violation of safety regulation
• Misreporting of actual time worked

15. Types of Misconduct
Observed in Organizations (2 of 3)
3-15Exhibit 3.4
• Email & internet abuse
• Discrimination on the basis of race, color,
gender, age or similar category
• Stealing or theft
• Sexual harassment
• Provision of goods or services that fail to meet
specifications
• Misuse of confidential information

16. 3-16
Types of Misconduct
Observed in Organizations (3 of 3)
Exhibit 3.4
• Alteration of documents
• Falsification or misrepresentation of financial
records or reports
• Improper use of competitors’ inside
information
• Price fixing
• Giving or accepting bribes, kickbacks or
inappropriate gifts

17. 3-17
• Why have we seen more evidence of widespread
ethical marketing dilemmas within firms today?
Is it necessary to gain the cooperation of
marketing managers to overstate revenue and
earnings in a corporation?
Discussion Question

18. 3-18
Deceptive Practices in Marketing
• Deceptive Communications and Promotion
– Fraud or any false communication
– Exaggerated claims or statements
– Ambiguous statements
– Product labeling issues
– Selling abuses
• Regulating Deceptive Marketing Practices
– Typically regulated by:
• The firms themselves
• Industry and trade associations

19. 3-19
Organizational Determinants of
Marketing Ethics & Social Responsibility
• Ethical Decision Making
– Determined by an individual’s background and
business colleagues
– Affected by personal values, opportunity for unethical
behavior, and exposure to others
– Intricately tied to the firm’s culture and ethical
climate
– Can only be improved by planning and structure
– Likely to occur when modeled by a strong leader

20. 3-20
Ethical Climate
• Part of a corporate culture that relates to an
organization’s expectations about appropriate
conduct
– The character component of an organization
– Sets the tone for ethical decisions
– Determines whether or not an individual perceives an
issue to be an ethical issue

21. 3-21
Codes of Conduct (1 of 2)
• Codes of Conduct (Codes of Ethics)
– Formal statement that describes what an organization
expects of its employees
– Not an effective means of controlling ethical behavior
unless integrated into daily decision making
– Not effective unless the code has support of top
management

22. 3-22
Codes of Conduct (2 of 2)
• Codes must reflect management’s desire for
compliance with values, rules, and policies
• Codes should have six core values:
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
• Codes will not resolve every issue encountered in daily
operations
• Codes can help managers deal with ethical dilemmas

23. 3-23
Key Considerations in Developing and
Implementing a Code of Ethical Conduct
Exhibit 3.5

24. 3-24
Texas Instruments’
“Ethics Quick Test”
• Is the action legal?
• Does it comply with our values?
• If you do it, will you feel bad?
• How will it look in the newspaper?
• If you know it’s wrong, don’t do it!
• If you’re not sure, ask.
• Keep asking until you get an answer.

25. 3-25
Market Orientation
• Market Orientation
– The development of an organizational culture
that effectively and efficiently promotes the
necessary behaviors for the creation of superior
value for buyers and, thus, continuous superior
performance of the firm.
– Strongly tied to ethics and social responsibility
– Means fostering a sense of cooperation and
information exchange

26. 3-26
Stakeholder Orientation
• Stakeholder Orientation
– The degree to which a firm understands and addresses
stakeholder demands
– Strongly tied to ethics and social responsibility
– Comprised of three activities:
1. Generation of stakeholder groups data and
assessment of firm effects on these groups
2. Distribution of this information throughout the
firm
3. Responsiveness as a whole to this intelligence

27. 3-27
Connecting Ethics & Social Responsibility
to Marketing Performance
• Strong ethics causes employees to be:
– Motivated to serve customers
– Committed to the firm
– Committed to high quality standards
– Satisfied with their job
• Can lead to trust among firm’s stakeholders
• Is so important that it can have major negative
impacts on firms that don’t uphold ethical
standards

28. 3-28
• What is the relationship between marketing ethics
and organizational performance? What are the
elements of a strong ethical compliance program
to support responsible marketing and a successful
marketing strategy?
Discussion Question

29. 3-29
The Connection Between
Ethics and Strategic Planning
• Typically done through ethical compliance
programs or integrity initiatives
• Vested in the marketing plan
• Based on an understanding of:
– 1) Risks associated with misconduct
– 2) Ethical and social consequences of strategy
– 3) Values of organizational members and stakeholders
• Manifested through actions … not just words