MARKETING Exam I (Chp. 3)

Ethics and Social Responsibility

Six modes of Social Control = Societal Order

1. ethics

2. laws

3. formal groups

4. informal groups

5. self-regulation

6. media

An informed and engaged society can help mold individual and corporate behavior.

Ethics

Moral principles that govern a group or individual's conduct, acting as a guide for "right" action.

Laws

Codified ethical rules and guidelines that create legal requirements for business behavior.

Formal & Informal Groups

Organizations (like the American Marketing Association) and groups that establish codes of conduct.

Self Regulation

Voluntary acceptance of standards by non-governmental entities to curb, for example, deceptive advertising.

The Media

Plays a crucial role in informing the public about both positive and negative actions of companies.

Active Civil Society

Engaged citizens who influence marketing practices.

social control

any means used to maintain behavioral norms and regulate conflict

behavioral norms

standards of proper or acceptable behavior. Several modes of social control are important to marketing

Concept of Ethical Behavior

• Standards that are legal may not always be ethical

• An ethics violation offends a person’s sense of justice or fairness

• Constitutes the unwritten rules developed to guide interactions

• Many ethical questions arise from balancing a business’s need to produce profit for shareholders against its desire to operate honestly and with concern for environmental and social issues.

Ethical Theories

1. Deontological

2. Utilitarian ethical

3. Casuist ethical

4. Moral Relativism

5. Virtue

Deontological theory

people should adhere to their obligations and duties when analyzing an ethical dilemma

Utilitarian theory

founded on the ability to predict the consequences of an action

Casuist ethical theory

compares a current ethical dilemma with examples of similar ethical dilemmas and their outcomes

• apply past cases to current (downside: not always a similarity)

Moral Relativism

time-and-place ethics; the belief that ethical truths depend on the individuals and groups holding them

Virtue

a character trait valued as being good

The ethical conduct of businesspeople is shaped by what societal elements?

• family

• education

• religious institutions

3 Approaches of Ethical Decision Making

1. examine the consequences of decisions

2. relies on rules and laws to guide decision making

3. based on theory of moral development: places indiv./groups in 1/3 developmental stages of Morality

   1. Preconventional

   2. Conventional

   3. Postconventional

Business Influences on decision making?

• extent of ethical problems within the organization

• top managment’s actions on ethics

• probability of a harmful outcome

• length of time between the decision and onset of consequences

• number of people affected

• social consensus

Social Consensus (decision making influence)

a psychological phenomenon where individuals look to the behaviors and actions of others to determine their own, particularly in uncertain situations. showing that a majority of similar people already approve of or use a product.

• conformity

• “herd mentality”

• validation

• reduced uncertainty

Code of Ethics

guideline to help marketing managers and other employees make better decisions. (Cultural differences like practice of bribery or gift giving.)

• identify acceptable business practices

• be an effective internal control on behavior

• help avoid confusion when determining ethicality of decisions

• facilitate discussion between right vs. wrong

Morals

the rules people develop as a result of cultural values and norms

Foreign Corrupt Practices (FCPA)

a law that prohibits U.S. corporations from making illegal payments to public officials of foreign governments to obtain business rights or to enhance their business dealings in those countries

Corporate Social Responsibility

a business’s concern for society’s welfare

Stakeholder (ethical) Theory

social responsibility is paying attention to the interest of every affected stakeholder in every aspect of a firm’s operation

Pyramid of Corporate Social Responsibility (CSR)

a model that suggests CSR is composed of {economic, legal, ethical, and philanthropic responsibilities} and that a firm’s economic performance supports the entire structure

Arguments for Social Responsibility

Arguments against Social Responsibility

Sustainability

the idea that socially responsible companies will outperform their peers by focusing on the world’s social problems and viewing them as opportunities to build profits and help the world at the same time

• environmental

• economic

• financial

• social

Green Marketing (branch of social responsibility)

the development and marketing of products designed to minimize negative effects on the physical environment or to improve the environment.

• often bottom line of a business

Greenwashing (negative)

Adding a minimal number of green product attributes to promote a product as green

Cause-Related Marketing

the cooperative marketing efforts between a for-profit firm and a nonprofit organization.

• popular; can enhance the reputation of the corporation

• make additional profit for the company

• consumers sometimes come to believe that every company is tied to a cause = consumer cause fatigue.

(different from philanthropy, which is a specific, tax-deductible donation)

The for-profit firm hopes to generate extra sales, and the nonprofit firm, in turn, hopes to receive money, goods, and/or services.

Company Stakeholders

B Corps

for-profit companies certified by the non-profit B Lab for meeting high, verified standards of social and environmental performance, transparency, and accountability.

• To become a B Corp Certified company, a firm must pass a 200-point assessment.