1 Find three articles pertaining to unethical business/marketing practices. Write a summary of the ethical issues presented in each article in your own words. Use the terminology from the textbook, specically chapter 16. Analyze the ethical situation in each article by referring to specic sections of the AMA Statement of Ethics. Explain how you as the marketing/business manager, would have avoided the ethical dilemmas in each article. For one of the articles: Write a paragraph describing a personal experience (business or consumer) with a similar ethical situation described in the article. How were you involved in this situation? What decisions were made? What was the resolution to the ethical issue? Marketing: An Introduction 11e Armstrong | Kotler Sustainable Marketing Social Responsibility and Ethics Chapter 16 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Rest Stop: Previewing the Concepts Define sustainable marketing and discuss its importance Identify the major social criticisms of marketing Define consumerism and environmentalism and explain how they affect marketing strategies Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 2 Rest Stop: Previewing the Concepts Describe the principles of sustainable marketing Explain the role of ethics in marketing Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 3 First Stop: Sustainability at Unilever Under its Sustainable Living Plan, Unilever has set out to create a better future every day for people around the world Sustainability efforts span the entire value chain Works with final consumers to improve the social and environmental impact of its products in use Fuels innovation, resulting in new eco-friendly products and new customer benefits Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 4 Sustainable Marketing Socially and environmentally responsible marketing that: Meets the present needs of consumers and businesses Preserves or enhances the ability of future generations to meet their needs Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 5 Figure 16.1 - Sustainable Marketing Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 6 Sustainable Marketing McDonald's \"Plan to Win\" addresses issues related to: Food-supply sustainability Sustainable packaging Reuse and recycling Responsible store designs \"Plan to Win\" strategy has both created sustainable value for customers and positioned the company for a profitable future Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 7 Social Criticisms of Marketing Marketing's impact on individual consumers has been criticized in terms of: High prices Deceptive practices High-pressure selling Shoddy, harmful or unsafe products Planned obsolescence Poor service to disadvantaged consumers Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 8 High Prices Three factors are cited as leading to high prices: High costs of distribution High advertising and promotion costs Excessive markups Heavily promoted brands cost much more than private labels, virtually identical nonbranded, or store-branded products Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 9 Deceptive Practices Deceptive pricing - Falsely advertising factory or wholesale prices or large reductions from a phony high retail list price Deceptive promotion - Misrepresenting a product's features or performance, or luring consumers to store for out-of-stock item Deceptive packaging - Exaggerating package contents, using misleading labeling, etc. Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 10 Deceptive Practices Deceptive practices have led to legislation and other protective consumer actions FTC governs deceptive practices Use of puffery is legal, but may harm consumers in subtle ways Deceptive practices are not sustainable as they harm a firm's business in the long-run Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 11 High-Pressure Selling Tactics Salespeople are often accused of using highpressure selling tactics: In persuading people to buy goods they had no intention of buying Because prizes are often given to top sellers Marketers have little to gain from highpressure tactics Such actions damage relationships with the firm's customers Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 12 Shoddy or Unsafe Products Products are not made well or services are not performed well Products are unsafe due to manufacturer indifference, increased product complexity, and poor quality control Products deliver little benefit or are even harmful Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 13 Planned Obsolescence Causing products to become obsolete before they actually need to be replaced Using materials and components that will break, wear, rust, or rot sooner than they should Holding back functional features, and introducing them later to make older models obsolete Perceived obsolescence - continually changing consumer concepts of acceptable styles to encourage more and earlier buying Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 14 Poor Service to Disadvantaged Consumers They are forced to shop in small stores where they pay more for inferior goods National chain retailers practice redlining and refuse to open businesses in poor neighborhoods Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 15 Underserved Consumers Lack of supermarkets in low income areas, have left many disadvantaged consumers with little or no access to healthy, affordable fresh foods Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 16 Marketing's Impact on Society as a Whole Marketing's impact on society as a whole has been criticized in terms of: Creating false wants and encouraging materialism Overselling private goods at the expense of public (social) goods Creating cultural pollution, stemming from constant exposure to marketing messages Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 17 Fuel for Thought Marketing messages are prevalent throughout the United States, and critics contend that this causes \"cultural pollution Do you agree? Why or why not? Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 18 Marketing's Impact on Other Businesses Critics charge that a firm's marketing practices can harm other companies and reduce competition through: Acquisitions of competitors Marketing practices that create barriers to entry Unfair competitive marketing practices Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 19 Marketing's Impact on Other Businesses Wal-mart was accused of predatory pricing practices by local pharmacists Wal-Mart countered charges by noting that their tremendous buying power allows them to sell at this price and still make a profit Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 20 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 21 Traditional Seller's Rights Introduce any product in any size and style, provided it is not hazardous to safety; or, if it is, to include proper warnings and controls Charge any price for the product, provided no discrimination exists among similar kinds of buyers Spend any amount to promote the product, provided it is not defined as unfair competition Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 22 Traditional Seller's Rights Use any product message, provided it is not misleading or dishonest in content or execution Use any buying incentive schemes, provided they are not unfair or misleading Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 23 23 Traditional Buyers' Rights To not buy a product that is offered for sale To expect the product to be safe To expect the product to perform as claimed Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 24 Proposed Consumer Rights Consumer advocates call for additional rights: To be protected against questionable products and marketing practices To influence products and marketing practices in ways that will improve quality of life To consume now in a way that will preserve the world for future generations of consumers To be informed about important aspects of the product Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 25 Consumers' Right to Information Product labels contain information about ingredients, nutrition facts, recycling, country of origin Jones Soda even puts customer submitted photos on its labels Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 26 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 27 Environmentalism Those who subscribe to environmentalism believe that marketing system's goal should be to maximize quality of life Life quality includes the quantity and quality of consumer goods and services and quality of the environment Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 28 Environmentalism Is concerned with damage to the ecosystem caused by global warming, resource depletion, toxic and solid wastes, litter, etc. Over the past several decades, such concerns have resulted in federal and state laws and regulations In recent years, however, firms have accepted more responsibility and many have adopted a policy of environmental sustainability Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 29 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 30 Figure 16.2 - The Environmental Sustainability Portfolio Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 31 Sustainability EffortsPollution Prevention Subaru of Indiana claims that it now sends less trash to the landfill each year than the average American family Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 32 New Clean Technology Many companies are adopting design for environment (DFE) and cradle-to-cradle practices Design products that are easier to recover, reuse, recycle, or safely return to nature after usage Coke is researching and testing new bottles made from aluminum, corn, or bioplastics Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 33 Marketing at Work Sustainability means: Driving out hidden costs Conserving natural resources Providing sustainable and affordable products so customers can save money and live better Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 34 Figure 16.3 - Marketing Decision Areas That May be Called into Question Under the Law Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 35 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 36 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 37 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 38 Sense-of-Mission Marketing A principle of sustainable marketing that holds that a company should define its mission in broad social terms rather than narrow product terms Sense-of-mission marketing has made Pedigree the world's number one dog food brand Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 39 Marketing at Work Ben & Jerry's, The Body Shop, Burt's Bees, Stonyfield Farms, Patagonia, Timberland, and TOMS Shoes pioneered the concept of values-led Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Method's mission is to inspire a happy, healthy home revolution 16 - 40 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 41 Figure 16.4 - Societal Classification of Products Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 42 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 43 Desirable Products PepsiCo has hired a team of scientists to help it develop a larger portfolio of healthy product options, such as the Trop50 brand Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 44 Business Actions Toward Sustainable Marketing Firms need to develop corporate marketing ethics policies to serve as broad guidelines that everyone in the organization must follow Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 45 Business Actions Toward Sustainable Marketing Ethics policies should cover: Distributor relations Advertising standards Customer service Pricing Product development General ethical standards Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 46 Business Actions Toward Sustainable Marketing In solving issues on ethics and social responsibility, companies and marketing managers can rely on principles of: The free market and legal system Letting responsibility fall to individual companies and managers to develop a social conscience International marketers face the challenge of varying business practices and standards across countries Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 47 Rest Stop: Previewing the Concepts Define sustainable marketing and discuss its importance Identify the major social criticisms of marketing Define consumerism and environmentalism and explain how they affect marketing strategies Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 48 Rest Stop: Previewing the Concepts Describe the principles of sustainable marketing Explain the role of ethics in marketing Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 49 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 16 - 50