MKTG327 - Ethics and Social Responsibility: Key Concepts and Topics
Determinants of a Civil Society
Social control: any means used to maintain behavioral norms or standards of proper and acceptable behavior; helps regulate conflict to address disagreements while maintaining order and stability.
Modes of social control relevant to marketing:
Ethics: moral principles or values that govern conduct; provide principles of right action.
Laws: ethical rules and guidelines codified into law; not a perfect mechanism for ensuring good corporate and employee behavior; may represent the lowest common denominator of socially acceptable behavior.
Formal and informal groups: codes of conduct influence individual and organizational behavior.
Additional modes important to marketing:
Self-regulation: voluntary acceptance of standards by non-governmental entities; industries may adopt codes (e.g., advertising standards) to prevent false or misleading claims even when not prohibited by law.
Media: informs the public, shapes perceptions of what is acceptable, and holds businesses accountable.
Active civil society: an informed, engaged society shapes both individual and corporate ethics and encourages socially responsible behavior.
Ethical Behavior
Ethics vs Law: ethics are standards of right and wrong; laws are enforceable by courts but do not cover all moral behavior; some actions may be ethical but not legal, and vice versa.
Ethics include personal moral principles and unwritten rules guiding everyday interactions.
Line-cutting example: no statute makes line cutting a crime, but it offends notions of fairness and justice; ethical judgments hinge on fairness beyond legal rules.
Ethical dilemmas arise when interests of different groups conflict (owners seeking higher returns vs workers/customers/community seeking fair treatment, product quality, and social responsibility).
Reconciliation in business: managers must pursue reasonable profits for shareholders while upholding honesty and environmental/social concerns; balancing financial performance with ethical responsibility is central to contemporary business ethics.
Boundaries: legal boundaries are often clear, but ethical boundaries are less obvious and depend on ethical theories guiding decision-making.
Ethical theories (underlying principles for right/wrong): different theories emphasize different values (outcomes, duties, or fairness) and can lead to different judgments in the same situation.
Major ethical theories:
Deontological theory: duty-based; uphold one’s duty regardless of outcomes (e.g., truth-telling as a duty).
Utilitarian ethical theory: consequences matter; choose actions yielding the greatest good for the greatest number (e.g., environmentally friendly practices if overall society benefits).
Casuist (casualist) ethical theory: compare current dilemmas with past cases and their outcomes; use precedent to assess severity and guide solutions.
Moral relativism (time and place ethics): ethical truths depend on situation and culture; what’s acceptable in one culture may be unethical in another.
Sixth and final ethical theory: virtue ethics; focuses on character traits (honesty, courage, fairness, generosity); ethical business practice reflects the character of decision-makers and the organization.
Practical takeaway: virtue ethics emphasizes character and long-term moral development; ethics is not only about complying with laws or predicting outcomes but also about the organization’s values and the decision-maker’s character.
Ethical Behavior in Business
Morals: rules people develop from cultural values and norms; foundation for ethical behavior; culture strongly shapes what is considered right or wrong.
Morals can reflect laws and regulations but do not automatically equal ethics; actions may align with morals yet raise ethical concerns (e.g., unethical marketing despite meeting quotas or legal requirements).
Examples:
A salesperson exceeding a quota with dishonest tactics may be materially successful but not ethical.
A doctor advertising large discounts on open-heart surgery treats medical care as a product; raises ethical concerns despite potential benefits.
Key factors shaping ethical decision making in business:
Extent of ethical problems within the organization: fewer problems can lead to stronger disapproval of questionable practices; many problems may desensitize employees.
Top management’s actions on ethics: leaders who promote ethical behavior encourage employees to follow suit.
Potential magnitude of consequences: greater harm increases likelihood of identifying an action as unethical.
Social consensus: if most managers view an action as harmful, it is more likely to be seen as unethical.
Probability of a harmful outcome: higher probability leads to stronger ethical judgments.
Length of time between decision and consequences: shorter horizons make unethicality easier to recognize.
Number of people affected: more people harmed strengthens ethical concerns.
Tools to support ethical behavior:
Code of ethics: guidelines to help marketing managers and employees decide; provides internal control and reduces confusion; fosters discussion about what is right and wrong.
Ethics training: helps employees translate ethics into daily practice.
Ethics in international contexts:
Cultural differences influence ethical beliefs and business practices.
U.S. companies must follow the Federal Corrupt Practices Act (FCPA): prohibits illegal payments to foreign public officials to obtain business advantages; ethics in global business combines cultural differences with legal requirements.
Corporate Social Responsibility (CSR)
Definition: a firm’s voluntary sense of responsibility toward the economy, society, and the environment; beyond what is legally required; programs and policies that support communities, protect the environment, and promote fairness.
Three dimensions of CSR:
Economic responsibility: contributions to the economic well-being of society; providing jobs, paying wages, contributing to growth; often considered the highest priority.
Social responsibility: internal (better working environment) and external (relationship with society) responsibilities; includes maintaining ethical business practices.
Environmental responsibility: practices that benefit the environment (reducing waste, conserving resources, investing in renewable energy).
Arguments for and against CSR:
Negative perspective (neoclassical economics): primary duty is to maximize profits; CSR distracts from core mission and can create inefficiency and reduce productivity.
Positive perspective: firms have an obligation to society since they benefit from capitalism; ignoring social problems creates social costs that hurt consumers and companies.
Eclectic perspective: combines profit goals with responsibilities; CSR can bring long-run benefits and need not conflict with profitability; currently the dominant view.
Eclectic view emphasis: profitability and CSR are not mutually exclusive; CSR can support long-run enterprise success.
Ethical Marketing Communications
Definition: delivering messages to consumers honestly, transparently, and respectfully.
Green marketing: development and promotion of products designed to minimize environmental impact or improve environmental conditions.
Practices include green advertising, reduced packaging waste, seal-of-approval programs certifying eco-friendly products, green point-of-purchase initiatives.
Key idea: communicate commitment to protecting the environment while meeting customer needs responsibly.
General principles for green marketing claims:
Specific claims: avoid vague statements; examples of acceptable specifics: recycled materials; packaging with less plastic than before.
Substantive claims: avoid exaggeration; example: a car with lower emissions rather than claiming zero emissions if manufacturing or energy use still produces emissions.
Supportable claims: backed by competent, reliable evidence; claims like "kills 99% of bacteria" require lab tests or studies.
Cost-related marketing: for-profit and nonprofit partnerships where the company promotes social good while aiming to increase sales.
Examples: The Body Shop’s Time to Care campaign (donated personal cleaning products to shelters); Blizzard Entertainment’s Pink Mercy skin in Overwatch raising funds for breast cancer research.
Marketing practices most susceptible to ethical challenges:
Targeting vulnerable groups: e.g., marketing to children with food and drink (Oreo Hulk example) or targeting low-resource neighborhoods with alcohol/tobacco ads; raises fairness concerns.
Advertising ethics in general:
Untruthful or deceptive claims: promising things not supported by facts.
Manipulation: creating wrong behavioral norms.
Offensive advertising: cultural offense across different markets.
Stereotypes: reinforcing racism or discrimination.
Fear-based advertising: exploiting insecurity to drive purchases (example: controversial ad from Hornbach showing racial/gender stereotypes).
Public relations ethics: dual role of promoting positives while handling negatives; ethical issue centers on confessing problems vs covering up.
Example: Volkswagen diesel emissions scandal; initial misrepresentation followed by apology and transparency.
Packaging ethics:
Label information can mislead (overstating good ingredients or understating harms).
Deceptive packaging graphics can mislead consumers (store-brand packaging resembling popular brands).
Safety: unsafe packaging (child-resistant packaging) for products like medicine.
Sales promotions ethics:
Slotting allowances: paying retailers to display products; potential bribery concerns.
Consumer promotions: promising rewards but failing to deliver; damages trust.
Online and social media ethics:
Privacy invasion: collecting personal data and disclosing it without permission.
Falsified testimonials or paid bloggers: misleading endorsements.
Ethical decision-making in marketing: practical implications for daily practice include ensuring truth in advertising, avoiding manipulation, respecting cultural differences, and maintaining transparent relationships with customers, retailers, and the public.