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Chapter 4 Social Responsibility and Ethics in Marketing Objectives • Understand concept and dimensions of social responsibility • Define/describe importance of marketing ethics • Familiarize self with ways to improve ethical decisions in marketing • Understand role of social responsibility and ethics in improving marketing performance 4|3 The Nature of Social Responsibility Social responsibility – an organization’s obligation to maximize its positive impact and minimize its negative impact on society 4|4 100 Best Corporate Citizens Copyright © Houghton Mifflin Company. All rights reserved. 4|5 Dimensions Of Social Responsibility Social Responsibility Marketing/Corporate Citizenship Stakeholders Marketing Ethics Cause-Related Marketing Strategic Philanthropy 4|6 Marketing Citizenship The adoption of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders. 4|7 Pyramid Of Corporate Social Responsibility Source: From Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug. 1991. Copyright © 1991 by the Foundation for the School of Business at Indiana University. Reprinted with permission. 4|8 Marketing Ethics Principles and standards that define acceptable marketing conduct as determined by various stakeholders. BBB Code of Advertising 4|9 Cause-Related Marketing The practice of linking products to a particular social cause on an ongoing or short-term basis. 4 | 10 Strategic Philanthropy The synergistic use of organizational core competencies and resources to address key stakeholders’ interests and achieve both organizational and social benefits. IBM - Overview | Corporate Community Relations 4 | 11 Social Responsibility Issues 4 | 12 Green marketing The specific development, pricing, promotion, and distribution of products that do not harm the natural environment. 4 | 13 Europe’s Eco-Label EUROPA - Environment - Ecolabel - Latest News 4 | 14 Corporate Goals For The Natural Environment Eliminate concept of waste Reinvent concept of a product Make prices reflect the cost Make environmentalism profitable 4 | 15 Marketing Ethics Ethical Issue – An identifiable problem, situation, or opportunity requiring a choice among several actions that must be evaluated as right or wrong, ethical or unethical. 4 | 16 Sample Ethical Issues Related to the Marketing Mix 4 | 17 The Nature of Marketing Ethics • Individual Factors • Organizational Relationships • Opportunity 4 | 18 Factors in Ethical Decision-Making 4 | 19 Organizational Culture A set of values, beliefs, goals, norms, and rituals that members of an organization share. 4 | 20 Types And Incidences Of Observed Misconduct 4 | 21 Improving Ethical Conduct In Marketing • Codes of conduct • Ethics Officers • Implementing Ethical and Legal Compliance Programs 4 | 22 Top Management & Ethics • Talk about importance of ethics • Inform employees • Keep promises • Model ethical behavior 4 | 23 Reasons For Not Reporting Ethical Misconduct Source: From National Business Ethics Survey, “How Employees View Ethics in Their Organizations 1994-2005,” Ethics Resource Center 2005, p. 29. © Ethics Resource Center, Washington, DC. Reprinted with permission. 4 | 24 Codes of Conduct Formalized rules and standards that describe what the company expects of its employees 4 | 25 Ethics Officers Create/enforce code Meet with, discuss code, and advise organization members Toll-free hotlines Salaries Of Ethics Officers 4 | 26 Implementing Ethical & Legal Compliance Programs • Open communication & coaching • Ethics training • Clear channels of communication • Follow-up support • Enforce standards and impose penalties • Part of overall marketing strategy 4 | 27 Audit Of Control Mechanisms 4 | 28 Challenges Of Ethical and Socially Responsible Behavior Introduction/adaptation of new products More user-friendly Transparency/openness Management responsibility Predict long-term effects Balancing society’s demands 4 | 29 Social Responsibility and Ethics Improve Performance $ Consumers want to buy from company associated with cause $ Company’s citizenship 4 | 30