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Chapter 03 MKT120 Ethics
The document discusses marketing ethics and corporate social responsibility. It provides learning objectives about why marketers have to consider ethics, what constitutes a socially responsible firm, how to make ethical decisions, and how to integrate ethics into marketing strategy. It then presents several scenarios to illustrate ethical issues marketers may face and discusses frameworks for ethical decision-making.
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Chapter 03 MKT120 Ethics
- 1. © McGraw-Hill Companies,Inc., McGraw-Hill/Irwin
- 2. MARKETING ETHICS LEARNING OBJECTIVES Why do marketers have to worry about ethics? What does it take for a firm to be considered socially responsible? How should a firm make ethically responsible decision? How can ethics and social responsibility be integrated into a firm’s marketing strategy? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-2
- 3. Mattel – ProductSafety Crisis Lead paint from subcontracted manufacturer in China © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-3
- 4. Firm Goals © McGraw-HillCompanies, Inc., McGraw-Hill/Irwin 3-4
- 5. The Scope ofMarketing Ethics Business Ethics Business Ethics Marketing Ethics Marketing Ethics Miller Commercial © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-5
- 6. Attitudes About theEthical Standards of Various Professions Why do you feel marketers (advertising practitioners) rank so low on this scale? What can marketers do to improve their ranking? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-6
- 7. Citibank Addresses IdentityTheft Why is this a good customer issue to address? Why are these ads effective? Citibank Commercial © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-7
- 8. Creating an EthicalClimate in the Workplace Values – Establish – Share – Understand Rules – Management commitment – Employee dedication Controls – Reward – Punishment © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-8
- 9. American Marketing Association Code of Ethics AMA Website © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-9
- 10. The Influence ofPersonal Ethics © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-10
- 11. Why People ActUnethically Are all the individuals Are all the individuals What makes people take What makes people take who engage in who engage in actions that create so actions that create so questionable behavior questionable behavior much harm? much harm? just plain immoral or just plain immoral or unethical? unethical? Decisions often have conflicting outcomes, where both Decisions often have conflicting outcomes, where both options have positive and negative consequences options have positive and negative consequences © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-11
- 12. Competing Outcomes © McGraw-HillCompanies, Inc., McGraw-Hill/Irwin 3-12
- 13. The Link BetweenEthics and Corporate Social Responsibility Build-A-Bear Workshop © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-13
- 14. A Framework forEthical Decision Making © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-14
- 15. Step One: IdentifyIssues Using results to Using results to mislead or even mislead or even harm the public harm the public Marketing research firm Hiding the real Hiding the real Data collection Data collection issues purpose of the purpose of the methods methods study study © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-15
- 16. Step Two: GatherInformation and Identify Stakeholders © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-16
- 17. Stakeholder Analysis Matrixfor a Marketing Research Firm © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-17
- 18. Step Three: BrainstormAlternatives Halt the market research project? Make responses anonymous? Instituting training on the AMA Code of Ethics for all researchers © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-18
- 19. Step Four: Choosea Course of Action Weigh the alternatives Weigh the alternatives Take a course of action Take a course of action © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-19
- 20. Ethical Decision-Making Evaluation Questionnaire © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-20
- 21. Check Yourself 1. According to the American marketing Association Code of Ethics, what are the six ethical values 2. Identify the four stages in the ethical decision making framework © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-21
- 22. Integrating Ethics IntoMarketing Strategy © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-22
- 23. Planning Phase The mission or vision statement sets the overall ethical tone for planning. Firms often go beyond the mission or vision statement by including a values statement. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-23
- 24. Newman’s Own Donating over $200 million since 1982 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-24
- 25. Implementation Stage Aqua Teen Hunger Force − LED display was mistaken as a bomb Secret Sparkle Body Spray − Sold through retailer that targets 7-14 year olds although packaging claimed to keep out of reach of children © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-25
- 26. Implementation Phase Should the firm be relocating production to another country? Should the firm be targeting this market with this product? Should the firm be selling its product in this market in this manner? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-26
- 27. Control Phase 1. 1. Check successful Check successful implementation implementation 2. 2. React to change React to change © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-27
- 28. The Six Testsof Ethical Action © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-28
- 29. Check Yourself 1. Should a marketing manager insist on assessing the ethics of a situation she or he is facing? 2. Identify one ethical issue you might face in each of the three phases of a marketing plan © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-29
- 30. Understanding Ethics Using Scenarios Scenario 1: R.J. Reynolds: Promotions to Youth Scenario 2: Victoria’s Dirty Secret Scenario 3: Pregnant Teen TV Star Scenario 4: Who Is on the Line? Scenario 5: West Virginia T-Shirts Scenario 6: Giving Credit Where Credit Isn’t Due Scenario 7: The Jeweler’s Tarnished Image Scenario 8: No Wonder It’s So Good Scenario 9: Bright Baby’s Bright Idea Scenario 10: Money from Mailing Lists Scenario 11: The Blogging CEO © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-30
- 31. Scenario 1: R.J.Reynolds What are the ethical issues − Mailings to young adults − Candy flavored cigarettes Is it wrong? Why or why not? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-31
- 32. Scenario 2: Victoria’sDirty Secret What was Victoria’s Secret doing? Was it wrong? Unethical How could they fix this? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-32
- 33. Scenario 3: PregnantTeen TV Star Should the show be cancelled? Should the pregnancy be written into the script? How should Nickelodeon handle this? Is there any way this could be helpful? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-33
- 34. Scenario 4: WhoIs on the Line? What are the ethical issues in this scenario? Why would a firm use this service? How do you think consumers will respond to firms who use this service? Would you advise purchasing this service? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-34
- 35. Scenario 5: WestVirginia T-Shirts What are the ethical issues in this scenario? If you were the retailer how would you have responded? Does a history of previous inappropriate business practices impact your opinion of the retailer? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-35
- 36. Scenario 6: GivingCredit Where Credit Isn’t Due Is this an inappropriate target market? Could you argue that the firm provides a valuable service to this market? Would you advise the cataloger to pursue this Back to list of scenarios new strategy? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-36
- 37. Scenario 7: TheJeweler’s Tarnished Image Is the manufacturer responsible for the acts of independent sales people? How do you feel the Billing’s should respond? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-37
- 38. Scenario 8: NoWonder It’s So Good Relax with Is the legal non disclosure of the Enjoy Cola alcohol content and ethical issue? Should the firm be required to disclose the alcohol content? What would you do if Back to list of scenarios you were Mia? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-38
- 39. Scenario 9: BrightBaby’s Bright Idea Is the potential for injury enough to merit removal of the product from the market? Do you feel it is ethical to move the product to a less regulated market? What would you have advised the CEO? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-39
- 40. Scenario 10: Moneyfrom Mailing Lists Should Mangold continue to use the Marketing Metrix mailing list? Should he tell his new customers how he got their names? Do customers need to give consent before companies collect information on their online behavior? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-40
- 41. Scenario 11: TheBlogging CEO Should Burdick be allowed to praise his company anonymously? Should he be allowed to attack his competitors? How would you feel if you knew a blogger had personal interests in the topic? Back to list of scenarios © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-41
- 42. Glossary Corporate social responsibilitydescribes the voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 3-42
Editor's Notes
- #3 These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides.
- #4 In August 2007 several toy manufacturer’s found lead paint in their toys. Mattel recalled 20 million products in 1 month. Ask students - was Mattel at fault for this? Many will think it’s Mattel’s responsibility to micromanage production other students will believe Mattel is not able to follow all their products through all their production stages.
- #5 Profit is important to the success of the firm. But how the firm makes that profit can have a dramatic impact on the firm’s future.
- #6 This YouTube video is a Miller ad for responsible drinking (always check YouTube links before class) . Ask students how it compares to other ads they see for drinking. They might note that they use a lighter fear appeal. Ask them if they think Miller is doing their job to promote responsible drinking. Group activity : Ask students to brainstorm the ethical issues unique to marketing. They should start with the marketing mix by proceeding through each of the 4Ps. Each group should write one issue for each element on the board, then discuss what they have produced as a class.
- #7 Marketing is a very visible part of business. Often practices that are the result of other business functions will be attributed to marketing. Marketers need to stress the good things that they do and the value that the add to society. Also, by policing practitioners and sanctioning those who violate the various codes of ethics, etc. marketers can demonstrate that they are serious about ethical standards.
- #8 These ads on YouTube (always check YouTube links before class) are part of a campaign Citibank ran for identity theft. They are interesting ads as they show the victim with the voice of the thief talking about the products the thief plans to buy. They are effective because they speak directly to a consumer’s fear of credit card theft and the contrast between the character in the ad and their voice attracts attention.
- #9 A strong ethical climate requires a commitment from the top down within the firm. Everyone within the firm must agree to a system of controls that rewards appropriate behavior and punishes inappropriate behavior. Ask students about the ethical climate on their campus. Pick a topic such as honor code violations or pledging procedures of sororities and fraternities. Then ask them to evaluate the topic based on values, rules, and controls.
- #10 Each sub-area within marketing, such as marketing research, advertising, pricing, and so forth, has its own code of ethics that deals with the specific issues that arise when conducting business in those areas. Group activity: Have the students develop a Code of Ethics for their college or university. Ask students : What ethical behaviors should you include? Why are those chosen behaviors important?
- #11 In many cases, ethics is in the eye of the beholder. Ask students : Think about a time you believed an ethical violation had occurred but a friend of family member did not think it was an ethical issue. What happened?
- #12 Ask students : Why might a salesperson lie to a young couple about the condition of a new home? This will bring out issues such as self-interest for the welfare of the salesperson and his/her family. Remind students there are no definitive answers to these questions. Ethics is a difficult topic, and many people struggle to find answers to questions such as these.
- #13 Ask students : Which option would you choose? How do you think various people make such choices?
- #14 This web link is for the Build-A-Bear Workshop. The page is for their community involvement. Students are probably familiar with the product. Ask students if they were aware that this company was so active in the community. Have students determine which of these corporate giving plans appears to be the most effective? Ask students : Can a firm be socially responsible and not ethical, or ethical and not socially responsible? A firm can give money to charity (socially responsible), but be unethical (engage in deceptive advertising). Ask students : Can you think of a firm that may be either ethical or socially responsible, but not both. Group activity : Students should create a list of firms reputed to be socially responsible. In what ways do these firms demonstrate their commitment? Do the students consider these factors when purchasing goods?
- #15 This concept is broken down in the next slides
- #16 In a marketing research firm, ethical issues might include: data collection methods—not informing respondents that they are being observed hiding the true purpose of a study from respondents—telling them they are an independent research company, but actually doing research for a particular politician. using results to mislead or even harm the public—results of a pharmaceutical study. Ask students – why would a company do this?
- #17 Ask students : What are the ramifications of publishing misleading research findings for a new pharmaceutical product. Answer: there could be real harm to users. Then ask : Why might this happen? Answer: The pharmaceutical industry wants the product to come to market to meet sales goals. They might be paying the researchers to do the project.
- #18 Ask students : How are stakeholders interrelated? How do the responsibilities of one overlap the other? The stakeholders are interrelated because an ethical violation may impact others. Falsifying results for a new pharmaceutical study will, for instance, impact the researchers, the pharmaceutical company, the legal system, the physicians, and most importantly the patients.
- #19 The alternative solutions depend on the type of ethical issue and how the stakeholders are affected.
- #20 Alternatives are then evaluated and a course of action is chosen. The chosen course represents the best solution for the stakeholders using ethical best practices.
- #21 Group activity: Pose an ethical issue and have the class vote on how they would score each question.
- #22 Honesty, responsibility, fairness, respect, openness, citizenship Stages in framework: Stages 1: Identify Issues Stages 2: Gather Information and Identify Stakeholders Stages 3: Brainstorm Alternatives Stages 4: Choose a Course of Action
- #23 Remind students that as marketers, they must ask questions specific to each stage and examine those questions carefully before moving on to the next stage .
- #24 By incorporating ethics into the firm’s mission statement, the firm sets a standard for its subsequent ethical decision making. The mission statement signals the firm’s strategic priorities.
- #25 The adding value 3.1 box features Newman’s Own Organics. This is a good opportunity to discuss the firm.
- #26 Turner Broadcasting wanted to market to its core audience— teenagers who would know exactly what the lighted character represented—but it failed to consider the ramifications of blinking lights and LED displays near public transportation venues in a city that had been touched deeply by the events of 9/11. This promotion to young girls was inappropriate according to P&G’s own labeling and was terminated when the Children’s Advertising Review Unit of the Better Business Bureau stepped in and requested that P&G stop promoting the product to children.
- #27 Group activity: For each question related to the implementation phase, see if students can think of examples for each of the questions. Many students will use examples such as tobacco, alcohol or other controversial product companies. Point out that other products also encounter the same issues, even if the products themselves seem less controversial.
- #28 Any plan requires constant evaluation and revision, and this truism applies particularly to the evaluation of ethical issues.
- #29 Group activity: Divide students into groups, each of which takes one of these tests and then develops an example for the rest of the class.
- #30 Yes Answers will vary
- #31 Click on each scenario to bring up the picture and questions.
- #32 An alcohol company cannot promote excessive drinking but a tobacco company has no such regulation.
- #33 This is very grey since the company was trying to honestly raise revenues. Students might have additional issues with this company as they promote body images that are hard for many women to maintain.
- #34 This type of issue can be very emotional for students. Be sure to instruct students to keep their comments on this topic professional. Entertainment companies who decide to stand by their stars when this type of situation happens, may find themselves stuck between strong emotions on both sides.
- #35 Some states ban such software and require businesses to display a real phone number. But the practice continues. Ask students : Why would firms want to participate in it?
- #36 The retailer clearly believes that its target market is not offended and has little regard for non-customers who might be. In the long term, this type of indifference may prove problematic, but in the short term, the firm’s attitude might even increase its sales.
- #37 Lower-income consumers often are denied credit, and when they get credit then pay it off, they build their credit. Rent-to-own and check cashing firms use this argument to justify their exorbitant fees and interest rates. Opponents argue that encouraging non–credit-worthy consumers to take credit cards harms them by making them responsible for debts they likely cannot pay off.
- #38 When the owners learn about the deception, should they immediately stop using the distributors? Why or why not?
- #39 Many people believe that legal actions de facto must be ethical, but are they really? If the chance of harm is very low, should the firm disclose the presence of the alcohol to avoid any potential issues?
- #40 Avoiding a large loss often creates the potential for ethically questionable actions. Would the scenario change if some infants had died from this product?
- #41 Sports Nostalgia Emporium must weigh the short-term gain of increased sales versus the long-term negative impact of customers who may be upset once they discover that their online behavior is being tracked.
- #42 Burdick must weigh the short-term impact of his anonymous blogging against the long-term negative impact of customers who may be upset once they discover his relationship with ACME Bubblegum.