Two prominent personal moral philosophies that have direct bearing on marketing practice are

Slide 3-*

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

CHAPTER

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

3

Part II: Ethical behavior and social responsibility

*

Slide 3-*

LO6

LEARNING OBJECTIVES

LO7

Identify factors that influence ethical and unethical marketing decisions.

Describe the different concepts of social responsibility.

Ethical Behavior

Social Responsibilities

*

Slide 3-*

ETHICAL MARKETING BEHAVIOR

LO6

Ethics - The moral principles and values that govern the actions and decisions of an individual or group
Ethics serve as guidelines on how to act rightly and justly when faces with moral dilemmas.

Slide 3-*

ETHICAL MARKETING BEHAVIOR

LO6

Ethical Crisis

1980s’

Corporate raiders and insider trading

https://www.cnn.com/2015/08/21/us/carl-icahn-fast-facts/index.html

https://www.worldfinance.com/strategy/the-rebranding-of-corporate-raiders

Let’s observe some major ethical crisis in last century. The following two slides are not for your exam/quizzes but for your understanding.

In 1980s, corporate raiders and insider trading

What is corporate raider? The process of buying a large stake in a corporation and then using shareholder voting rights to require the company to undertake novel measures designed to increase the share value, generally in opposition to the desires and practices of the corporation's current management. Is this believed morally right or wrong? See the example of Carl Icahn (1980s) who took on a substantial amount of debt in order to assume a majority share of TWA. But….. (see the news link)

What is insider trading? Investors used inside knowledge to take positions in companies for personal benefit, even and very often, to the eventual detriment of the entity

Slide 3-*

ETHICAL MARKETING BEHAVIOR

LO6

Ethical Crisis

Late 1990s’

Dot-com boom: create value out of nothing

2000s’

Financial crisis

In late’90s, dot-com boom is a partial result of not that ethical behavior.

Dot-com boom: creating value out of nothing. Investors were paying huge premiums for companies that were little more than vapor.

Watch the video embedded in .dot boom icon. Ask yourself why it is not so ethical behavior for investors intentionally to pay huge premium for companies that were little more than vapor?

What gets benefited or hurt? Investors on dot.com, dot.com, society….

In the 2000s came financial crisis which is also a result of ethical failures. Watch video embedded in the pic above and ask why the crisis is a result of ethical failure? By whom? Credit rating agency (who rates a debtor's ability to pay back debt), bank, insurance company, loaners etc. The crisis ruined lives, decimated communities and brought the world financial system to its knees. “Big institutions made bad bets on collateralized mortgage obligations and credit default swaps. More than 400 banks failed in four years” https://www.pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=Speeches&id=1428615292381-966

Slide 3-*

ETHICAL MARKETING BEHAVIOR

LO6

Ethics
This slide gives you a framework that shows factors that influence ethical marketing behavior and the relationships between these factors.

First of all, ask yourself what is culture? (the set of values, ideas, and attitudes that are learned and shared among the members of a group).

-Societal culture and norms (a foundation for moral principles at other levels): one function of culture is serving as a socializing force that dictates what is normally right and just. Moral standards are relative to particular societies. These standards often reflect the laws and regulations that affect social and economic behavior. There often exist ethical dilemmas.

-Business culture and industry practices: “comprise the effective rules of the game, the boundaries between competitive and unethical behavior, the codes of conduct in business dealings”. Business culture affects ethical conduct both in the exchanges relationships between sellers and buyers and in the competitive behavior among sellers. Next slide, we will talk about ethics of exchange and competition.

-Corporate culture and expectations: Corporate culture is the set of values, ideas, and attitudes that is learned and shared among the members of an organization. (“the Tarleton Way”, “We wear sneakers”). Codes of ethics (a formal statements of ethical principles and rules of conduct). The role of ethical behavior of top management and co-workers. When ethical dilemma brings personal and professional conflict, many states have laws protecting whistle-blowers.

-Personal moral philosophy and ethical behavior: ultimately, ethical choices are based on the personal moral philosophy of the decision maker. Later in the slides, we will talk about moral idealism and utilitarianism.

Slide 3-*

ETHICAL MARKETING BEHAVIOR

LO6

Ethical Conduct

Sellers- Buyers: Ethics of Exchange

Sellers- Sellers: Ethics of Competition

Caveat Emptor: let the buyer beware (before 1960s)
Consumer Bill of Rights (1962)
Economic Espionage
Bribes and Kickbacks
Ethical exchanges between sellers and buyers should result in both parties being better off after a transaction.

What is Caveat Emptor? A legal concept before 1960s, very pervasive in American business culture. E..g, . In the private purchase of a used or "pre-owned" car, Caveat Emptor places the burden on the buyer to make sure the car is worth the purchase price, so it is advisable to take the car first to a mechanic. Once the transaction is complete the buyer typically will not receive a warranty or return option from the seller.

In 1962, President John F. Kennedy outlined a Consumer Bill of Rights which represents the first legislation to put limits on this principle Caveat Emptor.

Consumer Bill of Rights (1962): It codified the ethics of exchange between buyers and sellers, including the rights to safety, be informed, to choose, to be heard.

©McGraw-Hill Education.

Ethics of Exchange
Consumer Bill of Rights (1962)
The Right
To Safety
To Choose
To Be Informed
To Be Heard
ETHICAL MARKETING BEHAVIOR

BUSINESS CULTURE AND INDUSTRY PRACTICES

LO6

https://www.youtube.com/watch?v=siMPY5FjlaY

*

Caveat Emptor places the burden on buyers to make sure that they pay a fair price for what they buy.

But this principle should have some limits. Very often, buyers have less information about the good or service they are purchasing, while the seller has more information. The situation is known as 'information asymmetry’. E.g. defects in the good or service may be hidden from the buyer, and only known to the seller.

Think of how much you know of HVAC (central air conditioning and heating system) before you are forced to replace your HVAC for the first time. E.g., what is difference between SEER 15 and 17? What warranty terms are typical? Does warranty usually cover labor or just the unit? Etc… Sellers knows much more than buyers.

So, Consumer Bill of Rights (1962) codified the ethics of exchange between seller and buyer i.e., (consumers have) the rights to safety, be informed, to choose, to be heard.

For marketers they need to do the following e.g.,:

-Making credible claims about the products/services

-Do not stretch the truth

https://www.forbes.com/sites/tykiisel/2013/02/12/caveat-emptor-3-keys-to-credibility/#4f6ad29f39ef

©McGraw-Hill Education.

*

This may help you understand why President Kennedy outlines a Consumer Bill of Rights to protect buyers and exchange process.

Can Listerine prove that their mouthwash was clinically proven to be as effective as floss in fighting tooth and gum decay?

©McGraw-Hill Education.

*

Naked Juice use phrases like “100% Fruit,” “All Natural,” “All Natural Fruit” and “Non-GMO” on their packaging. How about if their products were found out to be not all-natural? A class action could be on the way..

Slide 3-*

ETHICAL MARKETING BEHAVIOR

BUSINESS CULTURE AND INDUSTRY PRACTICES

LO6

Ethics of Competition
Economic Espionage
Bribes and Kickbacks
Now we will talk about ethics of competition which often involves two unethical behavior: economic espionage, bribes and kickbacks.

Economic espionage: e.g., wiretapping, trespassing, searching a competitor’s trash, theft, fraud etc.

Bribery is often disguised as gifts, consultant fees, and favors but is used to gain an unethical advantage over competitors. It often occurs when competition is intense.

Check out the news link.

“Amazon employees are offering internal data and other classified information through intermediaries, to independent merchants selling their products on the site to help them boost sales in return for payments”

“Brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers' email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts in exchange for payments ranging from about $80 to more than $2,000, the WSJ report said”

“The e-commerce giant is also investigating a number of cases involving employees, including some in the U.S., suspected of accepting these bribes, according to the Journal report”

https://www.aol.com/article/finance/2018/09/17/amazon-investigating-claims-of-employees-leaking-data-for-bribes/23529857/

Slide 3-*

ETHICAL MARKETING BEHAVIOR

CORPORATE CULTURE AND EXPECTATIONS

LO6

Corporate Culture
Code of Ethics
Ethical Behavior of Top Management and Co-Workers
Protecting Whistle-Blowers
Corporate culture: the set of values, ideas and attitudes that is learned and shared among the members of an organization. It is reflected by the behavior of top management, expectations for ethical behavior present in formal codes of ethics, and the dress codes, manner of work, and sayings of its employees.

Slide 3-*

ETHICAL MARKETING BEHAVIOR

LO6

“At UPS, operating as an ethical company means doing what we say we will do, in business conduct, in our impact on the environment and in how we touch the lives of people in the communities where we live and work” said Mohammad Azam, UPS chief compliance officer

Ethics is the knowing the difference between what you can do and what you should do.

Example 1:

A public speech by one of UPS top management: “In 2007, I was Vice President of Marketing for the Europe, Middle East and Africa region. Clearing business into one eastern European country had always been difficult. All of a sudden, one of our competitors was clearing packages one to two days faster than we were. Not sure how. We were following the same rules and regulations that we figured they were. We were getting a lot of pressure from customers. They didn't care how the competitor was doing it. They just cared that we weren't. And because we weren't, we were losing business.”

“We could have made short term decisions but, instead, we engaged our Public Affairs group to work with the country's government to level the playing field. It took two years to ensure all were playing by the same rules. But it was the right decision to make.”

Example 2:

“we operate in 200 countries worldwide. We just started freight forwarding to Myanmar (Burma). How can you ethically justify doing business there? It's a fair question.”

“In Burma, businesspeople have very weak ethics. For example, they engage in illegal trade, promote shoddy products and they can’t market Myanmar brands internationally”

These two examples are statements from top management of UPS. They demonstrate how UPS values their ethical way of doing business more than making profits and increasing marketing share etc.

Slide 3-*

Slide 3-*

ETHICAL MARKETING BEHAVIOR

PERSONAL MORAL PHILOSOPHY AND ETHICS

LO6

Case#1

It is a consumer credit agency. Recently, the company suffered from a huge data breach. The investigation shows that the company was aware of the system flaw

That the hackers took advantage since March of this year. The company waited a full two months before disclosing it.

*

The ethic choices are ultimately based on the personal moral philosophy of the decision maker. Ask yourself: by knowing this, is this going to change your perception of the company?

This is a case about Equifax.
If the company was aware of the system flaw that the hackers took advantage of two months earlier but waited a full two months before disclosing it (when the hack already happened), do you tend to blame Equifax?

“The Justice Department is reportedly looking into whether top Equifax executives committed insider trading when selling some $1.8 billion in shares just before the breach was disclosed”

Slide 3-*

ETHICAL MARKETING BEHAVIOR

PERSONAL MORAL PHILOSOPHY AND ETHICS

LO6

Case #2

It is a dot.com. The company just settled with FTC (Federal Trade Commission) over the claims that the app misled users to believe photos couldn’t be saved. The FTC also alleged the company lied about the amount of personal data it was collecting from users

*

This is a case about Snapchat.

Slide 3-*

ETHICAL MARKETING BEHAVIOR

PERSONAL MORAL PHILOSOPHY AND ETHICS

LO6

You have a Wall Street offer, but you are really passionate about managing people and thereby improving their lives. You know that you will only get that in a manufacturing job.
Think of the situation here.

Q: Should I take the lower salary?

You are getting your law degree and drawn to serve the legal needs of the poor or advance environmental causes, but you have big debts and that corporate law offer is pretty attractive.
*

Answering this first question. Ethical choice often gets people into ethical dilemma which can come at a real cost, even a substantial cost.

Slide 3-*

Moral Idealism
Ex: 3M’s Scotchgard
Utilitarianism
“The Greatest Good for the Greatest Number”
ETHICAL MARKETING BEHAVIOR

PERSONAL MORAL PHILOSOPHY AND ETHICS

LO6

*

Two prominent personal moral philosophies that have direct bearing on marketing practice are:

-Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. A fundamental ethical duty is to do no harm. E.g., 3M phase out products of a chemical (Scotchgard fabric protector) 3M had manufactured for nearly 40 years after finding out the substance could be harmful in large doses. Their action resulted in $200 million loss in annual sales.

-Utilitarianism: a personal moral philosophy that focuses on “ the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. If benefits > costs, the behavior is ethical.

©McGraw-Hill Education.

SOCIAL RESPONSIBILITY IN MARKETING
THREE CONCEPTS OF SOCIAL RESPONSIBILITY

Social Responsibility
Profit Responsibility: Obligation to Maximize Profits for Stockholders

Stakeholder Responsibility: Obligations to Those Who Can Affect Achievement of Objectives

Societal Responsibility: Obligations to Preserve Environment and to the General Public

https://www.unilever.com/news/news-and-features/Feature-article/2017/how-to-boost-business-growth-through-brands-with-purpose.html

*

What is social responsibility?

Organizations are part of a society and are accountable to that society for their actions.

-Profit responsibility: Maximize profit for owners or stockholders

-Stakeholder: Consumers, employees, suppliers and distributors

-Societal responsibility: 1) the preservation of the ecological environment 2) the general public

©McGraw-Hill Education.

Stakeholder Responsibility

*

©McGraw-Hill Education.

Societal Responsibility

Green Marketing
Cause Marketing: address all three concepts of social responsibility
Triple-Bottom Line:
Improve the state of people, the planet and profit
*

3M: “Pollution Prevention Pays” program – solicits employee suggestions on how to reduce pollution and recycle materials. Since 1975, the program generated 9000 3P projects. which eliminated more than 3.5 billion pounds of air, water and solid-waste pollutants from the environment.

What is cause marketing? When charitable contributions of a firm are tied directly to the customer revenues. E.g., B&N promotes literacy. TOMs donates 1$? if you buy a pair of shoes from them.

©McGraw-Hill Education.

MARKETING MATTERS
Will Consumers Switch Brands for a Cause?
Yes, if …

More than $12 Billion Raised in 2013
85% of Consumers Have Favorable Opinion of Companies that Support Their Causes
80% will Switch Brands
Cause Marketing

Forum

*

©McGraw-Hill Education.

SUSTAINABLE DEVELOPMENT:
DOING WELL BY DOING GOOD

Sustainable Development
Conduct Business to Protect the Environment While Making Economic Progress
90% of U.S. Citizens are Concerned about Working Conditions Outside the U.S.
https://www.haagendazs.us/save-the-honey-bees

*

Sustainable marketing: making economic progress + protects the natural environment

Slide 3-*

SOCIAL RESPONSIBILITY IN MARKETING

SUSTAINABLE DEVELOPMENT

LO8

Social Audit
A social audit is a way of measuring, understanding, reporting and ultimately improving an organization's social and ethical performance.
A social audit helps to narrow gaps between vision/goal and reality, between efficiency and effectiveness.

Reference: http://www.fao.org/docrep/006/ad346e/ad346e09.htm

Slide 3-*

Stop for a short review…

What is Ethics? What factors influence ethical marketing behavior? (social, business, corporate and personal)
What have been discussed about ethics of exchange? This is about the conduct between whom?
What are two common unethical behavior about ethics of competition?
Ultimately, which factor leads to an ethical choice?
Two personal moral philosophies
Difference between three social responsibilities.
What is Triple Bottom Line?
*

Slide 3-*

Social Forces

Social forces are the demographic characteristics of
the population and its values.

*

Slide 3-*

Demographics

Demographics describe a population according to selected characteristics such as age, gender, ethnicity, income, and occupation.

*

Slide 3-*

Baby Boomers

Baby boomers consist of the
generation of children born between 1946 and 1964.

*

Slide 3-*

Generation X

Generation X includes the 15 percent of the population born between 1965 and 1976. Also called baby bust.

*

Slide 3-*

Generation Y

Generation Y includes the 72 million Americans born between 1977 and 1994. Also called
echo-boom or baby boomlet.

*

Slide 3-*

Culture

Culture consists of the set of values, ideas, and attitudes that are learned and shared among
the members of a group.

*

Slide 3-*

Economy

The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household.

*

Slide 3-*

Technology

Technology consists of the inventions or innovations from applied science or engineering research.

*

Slide 3-*

Marketspace

Marketspace is an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.

*

Slide 3-*

Competition

Competition consists of the alternative firms that could provide a product to satisfy a specific market’s needs.

*

Slide 3-*

Regulation

Regulation consists of the restrictions state and federal laws place on business with regard to the conduct of its activities.

*

Slide 3-*

Consumerism

Consumerism is a grassroots movement started in the 1960s
to increase the influence, power, and rights of consumers in
dealing with institutions.

*

Slide 3-*

Ethics

Ethics are the moral principles and values that govern the actions and decisions of an individual or group.

Slide 3-*

Code of Ethics

A code of ethics is a formal statement of ethical principles
and rules of conduct.

Slide 3-*

Social Responsibility

Social responsibility is the idea that organizations are part of a larger society and are accountable to that society for their actions.

Slide 3-*

Green Marketing

Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products.

Slide 3-*

Cause Marketing

Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of
its products.

Slide 3-*

Sustainable Development

Sustainable development consists of conducting business
in a way that protects the natural environment while making economic progress.

Slide 3-*

Multicultural Marketing

Multicultural marketing consists of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races.

Slide 3-*

Consumerism

Consumerism is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.

Slide 3-*

Environmental Scanning

Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.

Slide 3-*

Marketspce

Marketspace: An information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digital offerings.

Slide 3-*

Self-Regulation

Self-regulation is an alternative to government control where an industry attempts to police itself.

Slide 3-*

Caveat Emptor

Caveat emptor is the legal concept of “let the buyer beware” that was pervasive in the American business culture before the 1960s.

Slide 3-*

Moral Idealism

Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome.

Slide 3-*

Utilitarianism

Utilitarianism is a personal moral philosophy that focuses on the “greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior.

Slide 3-*

Economic Espionage

Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors.

Slide 3-*

Green Marketing

Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products.

Slide 3-*

Cause Marketing

Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products.

Slide 3-*

Social Responsibility

Social responsibility is the idea that organizations are part of a larger society and are accountable to that society for their actions.

Slide 3-*

Sustainable Development

Sustainable development involves conducting business in a way that protects the natural environment while making economic progress.

*

*

Ethics serve as guidelines on how to act rightly and justly when faces with moral dilemmas.

Let’s observe some major ethical crisis in last century. The following two slides are not for your exam/quizzes but for your understanding.

In 1980s, corporate raiders and insider trading

What is corporate raider? The process of buying a large stake in a corporation and then using shareholder voting rights to require the company to undertake novel measures designed to increase the share value, generally in opposition to the desires and practices of the corporation's current management. Is this believed morally right or wrong? See the example of Carl Icahn (1980s) who took on a substantial amount of debt in order to assume a majority share of TWA. But….. (see the news link)

What is insider trading? Investors used inside knowledge to take positions in companies for personal benefit, even and very often, to the eventual detriment of the entity

In late’90s, dot-com boom is a partial result of not that ethical behavior.

Dot-com boom: creating value out of nothing. Investors were paying huge premiums for companies that were little more than vapor.

Watch the video embedded in .dot boom icon. Ask yourself why it is not so ethical behavior for investors intentionally to pay huge premium for companies that were little more than vapor?

What gets benefited or hurt? Investors on dot.com, dot.com, society….

In the 2000s came financial crisis which is also a result of ethical failures. Watch video embedded in the pic above and ask why the crisis is a result of ethical failure? By whom? Credit rating agency (who rates a debtor's ability to pay back debt), bank, insurance company, loaners etc. The crisis ruined lives, decimated communities and brought the world financial system to its knees. “Big institutions made bad bets on collateralized mortgage obligations and credit default swaps. More than 400 banks failed in four years” https://www.pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=Speeches&id=1428615292381-966

This slide gives you a framework that shows factors that influence ethical marketing behavior and the relationships between these factors.

First of all, ask yourself what is culture? (the set of values, ideas, and attitudes that are learned and shared among the members of a group).

-Societal culture and norms (a foundation for moral principles at other levels): one function of culture is serving as a socializing force that dictates what is normally right and just. Moral standards are relative to particular societies. These standards often reflect the laws and regulations that affect social and economic behavior. There often exist ethical dilemmas.

-Business culture and industry practices: “comprise the effective rules of the game, the boundaries between competitive and unethical behavior, the codes of conduct in business dealings”. Business culture affects ethical conduct both in the exchanges relationships between sellers and buyers and in the competitive behavior among sellers. Next slide, we will talk about ethics of exchange and competition.

-Corporate culture and expectations: Corporate culture is the set of values, ideas, and attitudes that is learned and shared among the members of an organization. (“the Tarleton Way”, “We wear sneakers”). Codes of ethics (a formal statements of ethical principles and rules of conduct). The role of ethical behavior of top management and co-workers. When ethical dilemma brings personal and professional conflict, many states have laws protecting whistle-blowers.

-Personal moral philosophy and ethical behavior: ultimately, ethical choices are based on the personal moral philosophy of the decision maker. Later in the slides, we will talk about moral idealism and utilitarianism.

Ethical exchanges between sellers and buyers should result in both parties being better off after a transaction.

What is Caveat Emptor? A legal concept before 1960s, very pervasive in American business culture. E..g, . In the private purchase of a used or "pre-owned" car, Caveat Emptor places the burden on the buyer to make sure the car is worth the purchase price, so it is advisable to take the car first to a mechanic. Once the transaction is complete the buyer typically will not receive a warranty or return option from the seller.

In 1962, President John F. Kennedy outlined a Consumer Bill of Rights which represents the first legislation to put limits on this principle Caveat Emptor.

Consumer Bill of Rights (1962): It codified the ethics of exchange between buyers and sellers, including the rights to safety, be informed, to choose, to be heard.

*

Caveat Emptor places the burden on buyers to make sure that they pay a fair price for what they buy.

But this principle should have some limits. Very often, buyers have less information about the good or service they are purchasing, while the seller has more information. The situation is known as 'information asymmetry’. E.g. defects in the good or service may be hidden from the buyer, and only known to the seller.

Think of how much you know of HVAC (central air conditioning and heating system) before you are forced to replace your HVAC for the first time. E.g., what is difference between SEER 15 and 17? What warranty terms are typical? Does warranty usually cover labor or just the unit? Etc… Sellers knows much more than buyers.

So, Consumer Bill of Rights (1962) codified the ethics of exchange between seller and buyer i.e., (consumers have) the rights to safety, be informed, to choose, to be heard.

For marketers they need to do the following e.g.,:

-Making credible claims about the products/services

-Do not stretch the truth

https://www.forbes.com/sites/tykiisel/2013/02/12/caveat-emptor-3-keys-to-credibility/#4f6ad29f39ef

*

This may help you understand why President Kennedy outlines a Consumer Bill of Rights to protect buyers and exchange process.

Can Listerine prove that their mouthwash was clinically proven to be as effective as floss in fighting tooth and gum decay?

*

Naked Juice use phrases like “100% Fruit,” “All Natural,” “All Natural Fruit” and “Non-GMO” on their packaging. How about if their products were found out to be not all-natural? A class action could be on the way..

Now we will talk about ethics of competition which often involves two unethical behavior: economic espionage, bribes and kickbacks.

Economic espionage: e.g., wiretapping, trespassing, searching a competitor’s trash, theft, fraud etc.

Bribery is often disguised as gifts, consultant fees, and favors but is used to gain an unethical advantage over competitors. It often occurs when competition is intense.

Check out the news link.

“Amazon employees are offering internal data and other classified information through intermediaries, to independent merchants selling their products on the site to help them boost sales in return for payments”

“Brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers' email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts in exchange for payments ranging from about $80 to more than $2,000, the WSJ report said”

“The e-commerce giant is also investigating a number of cases involving employees, including some in the U.S., suspected of accepting these bribes, according to the Journal report”

https://www.aol.com/article/finance/2018/09/17/amazon-investigating-claims-of-employees-leaking-data-for-bribes/23529857/

Corporate culture: the set of values, ideas and attitudes that is learned and shared among the members of an organization. It is reflected by the behavior of top management, expectations for ethical behavior present in formal codes of ethics, and the dress codes, manner of work, and sayings of its employees.

Ethics is the knowing the difference between what you can do and what you should do.

Example 1:

A public speech by one of UPS top management: “In 2007, I was Vice President of Marketing for the Europe, Middle East and Africa region. Clearing business into one eastern European country had always been difficult. All of a sudden, one of our competitors was clearing packages one to two days faster than we were. Not sure how. We were following the same rules and regulations that we figured they were. We were getting a lot of pressure from customers. They didn't care how the competitor was doing it. They just cared that we weren't. And because we weren't, we were losing business.”

“We could have made short term decisions but, instead, we engaged our Public Affairs group to work with the country's government to level the playing field. It took two years to ensure all were playing by the same rules. But it was the right decision to make.”

Example 2:

“we operate in 200 countries worldwide. We just started freight forwarding to Myanmar (Burma). How can you ethically justify doing business there? It's a fair question.”

“In Burma, businesspeople have very weak ethics. For example, they engage in illegal trade, promote shoddy products and they can’t market Myanmar brands internationally”

These two examples are statements from top management of UPS. They demonstrate how UPS values their ethical way of doing business more than making profits and increasing marketing share etc.

*

The ethic choices are ultimately based on the personal moral philosophy of the decision maker. Ask yourself: by knowing this, is this going to change your perception of the company?

This is a case about Equifax.
If the company was aware of the system flaw that the hackers took advantage of two months earlier but waited a full two months before disclosing it (when the hack already happened), do you tend to blame Equifax?

“The Justice Department is reportedly looking into whether top Equifax executives committed insider trading when selling some $1.8 billion in shares just before the breach was disclosed”

*

This is a case about Snapchat.

*

Answering this first question. Ethical choice often gets people into ethical dilemma which can come at a real cost, even a substantial cost.

*

Two prominent personal moral philosophies that have direct bearing on marketing practice are:

-Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. A fundamental ethical duty is to do no harm. E.g., 3M phase out products of a chemical (Scotchgard fabric protector) 3M had manufactured for nearly 40 years after finding out the substance could be harmful in large doses. Their action resulted in $200 million loss in annual sales.

-Utilitarianism: a personal moral philosophy that focuses on “ the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. If benefits > costs, the behavior is ethical.

*

What is social responsibility?

Organizations are part of a society and are accountable to that society for their actions.

-Profit responsibility: Maximize profit for owners or stockholders

-Stakeholder: Consumers, employees, suppliers and distributors

-Societal responsibility: 1) the preservation of the ecological environment 2) the general public

*

*

3M: “Pollution Prevention Pays” program – solicits employee suggestions on how to reduce pollution and recycle materials. Since 1975, the program generated 9000 3P projects. which eliminated more than 3.5 billion pounds of air, water and solid-waste pollutants from the environment.

What is cause marketing? When charitable contributions of a firm are tied directly to the customer revenues. E.g., B&N promotes literacy. TOMs donates 1$? if you buy a pair of shoes from them.

*

*

Sustainable marketing: making economic progress + protects the natural environment

A social audit helps to narrow gaps between vision/goal and reality, between efficiency and effectiveness.

Reference: http://www.fao.org/docrep/006/ad346e/ad346e09.htm

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