Ethics and Social Responsibility: Principles of Marketing

Ethics and Social
Responsibility
Principles of Marketing
Ethics
Ethics is the set of moral

principles or values that
guides behavior
If a company acts
unethically, it risks
damaging its reputation
and its customers’ trust—
worse, it can face
lawsuits and criminal
prosecution
Norms and Values
• Norms are established standards of conduct that are

expected and maintained by society and/or
professional organizations
• Values represent the collective conception of what
communities find desirable, important, and morally
proper
Common Ethical Issues in Marketing
Most
Difficult Percent of Marketing Professionals Responding
Issue
Gifts from outside vendors, payment of questionable
Bribery 15%
commissions, “money under the table”
Unfairly placing company interests over family obligations,
Fairness taking credit for the work of others, inducing customers to use 14%
services not needed, manipulation of others
Lying to customers to obtain orders, misrepresenting services
Honesty 12%
and capabilities
Differential pricing, charging higher prices than firms with
Price 12%
similar products while claiming superiority
Product safety, product and brand infringement, exaggerated
Product 11%
performance claims, products that do not benefit consumers
Personnel Firing, hiring, employee evaluation 10%
Confidentiali Temptations to use or obtain classified, secret, or competitive
5%
ty information
Crossing the line between exaggeration and misrepresentation,
Advertising 4%
misleading customers
Manipulation
Falsifying figures or misusing statistics or information, distortion 4%
of Data
Brand Management
What does the product and brand imagery of the post

on the right add (if anything) to the sincerity of the
gratitude compared to the simple text version?
Corporate Social Responsibility
Corporate social responsibility is the ethical behavior of a
company toward society
It means acting responsibly toward the stakeholders—
not just the shareholders—who have a legitimate
interest in the business
Product Liability:
Marketing
Defects
Marketing defects
result from flaws in the
way a product is
marketed
Examples
include improper
labeling, poor or
incomplete instructions
, or inadequate safety
warnings
Privacy
• Do-Not-Call Implementation Act of 2003

• The Controlling the Assault of Non-Solicited
Pornography and Marketing (CAN-SPAM) Act
Keep Customer Information Secure
• Start with security: only collect customer data when

necessary; be transparent; and treat the data with
extreme care
• Control and restrict access to sensitive data
• Make sure your service providers implement
reasonable security measures: write security into
contracts and verify compliance
• Establish procedures to keep your security current and
address vulnerabilities that may arise; heed credible
security warnings
• Secure paper, physical media, and devices—not all
data are stored digitally
Fair Information Practice Principles.
The Federal Trade Commission recommends that

companies follow these guidelines:
• Notice: Consumers should be given notice before any
personal information is collected from them.
• Choice: Consumers can control how their data is
used.
• Opt in or opt out models
• Access: The consumer’s ability to view the data
collected and also to verify and contest its accuracy.
• Security: Information collectors should ensure that
the data they collect is accurate and secure.
Fraud
The Federal Trade Commission has determined that a

representation, omission, or practice is deceptive if it is
likely to:
• Mislead consumers and
• Affect consumers’ behavior or decisions about the
product or service.
When it comes to marketing fraud, the two key words
are deliberate deception
Trust
The goal of marketing is not to deceive the customer; it

is, in fact, to build trust
Deception in
Product
• Is the product designed
and manufactured as the
customer would expect,
given the other elements
of the marketing mix?
• Is the customer warned
about the product’s
limitations or uses that
are not recommended?
Deception in Price
• Is the total price of the
product fairly presented to
the customer?
• Is the price charged for the
product the same as the
price posted or advertised?
• Has something been
marketed as “free” and, if
so, does it meet FTC
guidelines for the definition
of free?
• Does the company disclose
information about finance
charges?
Deception in
Promotion
• Can claims made to
consumers be
substantiated?
• Are disclaimers clear and
conspicuous?
• For products marketed to
children, is extra care
taken to accurately
represent the product?
Deception in Place
• Does the distribution

channel deliver the
product at the price and
quality promised?
• Do other companies in
the distribution channel
(wholesalers, retailers)
perform as promised and
deliver on expectations
set for product, price,
and promotions?
Challenges of B2B Ethics:
• Personal sales are relationship based, requiring the

seller to tailor the process according to the buyer’s
personality and approach
• B2B sales are often large and complex
• Pricing is negotiated between the buyer and seller,
rather than being set and uniform across all customers
• Communication about the product and pricing takes
place mainly through informal or formal verbal
presentations and discussions
Company Policies
Company policies generally define:

• The total purchase authority of a single individual or
department
• The threshold at which a purchase decision must go out
for competitive bid
• The circumstances under which the company’s status as
a customer can be disclosed
• A dollar threshold for gifts from vendors
It is wise for B2B Marketers to understand these rules to

avoid putting people in awkward positions.
Business Gifts
Business gifts are usually seen as an advertising, sales-

promotion, and marketing-communication medium. Such
gifting is usually practiced for the following reasons:
1.In appreciation for past client relationships, placing a
new order, referrals to other clients, etc
2.In the hopes of creating a positive first impression
that might help to establish an initial business
relationship
3.As a quid pro quo—returning a favor or expecting a
favor in return for something
Standards for Business Conduct
• Define the threshold for behavior: Companies require

their employees to follow the law
• Create expectations for behavior: The policies identify
common issues that employees may encounter—such
as accepting gifts from suppliers—and explain how
they should be handled
• Set policy: establish company protocols for handling
confidential information, including customer data, etc.
• Give guidance on making judgment calls
• Describe reporting and enforcement procedures
Judgement Calls
• Is it legal? If it’s not legal,
don’t do it.
• Is it ethical? If it feels
wrong, it probably is
wrong.
• How would it look in the
newspaper? If you
wouldn’t feel comfortable
if your friends and family
knew about your actions,
you probably shouldn’t do
it.
Executives Shape
Company Culture and Policy
They set objectives, policies, and make personnel
decisions.
Social
Responsibility in
Marketing
Strategy
• Social responsibility may
be a corporate-level
strategy with specific
objectives.
• Social responsibility may
be part of the marketing
mix based on the
situation analysis
Sustainable Products
A sustainable product is constantly environmental-

friendly during its entire life
From the moment the raw materials are extracted to the
moment the final product is disposed of, there must be
no permanent damage to the environment
Ethics for Marketing Employees
• Demonstrate respect for uour target customer

• Prepare the sales team to sell effectively and ethically
• Demonstrate high personal standards in business
relationships
• Provide fair value to the target customer
• Play nicely in the competitive environment
• Be truthful
Ethics Makes (Dollars and) Cents
The world’s most ethical companies outperform their

peers in the stock market.
Practice Question
You are creating a marketing plan for a pharmaceutical

company
Which of these is an appropriate gift for doctors?
1. A golf vacation
2. A free continuing education seminar
3. A coffee mug
Quick Review
• What types of ethical and social responsibility issues

does marketing need to address?
• What laws regulate marketing?
• How do ethical dilemmas in business-to-business
marketing differ from those in consumer marketing?
• What measures do companies take to encourage
ethical behavior?
• How can demonstrating corporate social responsibility
impact marketing?

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Ethics and Social

Ethics is the set of moral

• Norms are established standards of conduct that are

What does the product and brand imagery of the post

• Do-Not-Call Implementation Act of 2003

• Start with security: only collect customer data when

The Federal Trade Commission recommends that

The Federal Trade Commission has determined that a

The goal of marketing is not to deceive the customer; it

• Does the distribution

• Personal sales are relationship based, requiring the

Company policies generally define:

It is wise for B2B Marketers to understand these rules to

Business gifts are usually seen as an advertising, sales-

• Define the threshold for behavior: Companies require

A sustainable product is constantly environmental-

• Demonstrate respect for uour target customer

The world’s most ethical companies outperform their

You are creating a marketing plan for a pharmaceutical

• What types of ethical and social responsibility issues

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