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CHAPTER ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING Copyright © 2007 by The Mc. Graw-Hill CHAPTER ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -1

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1. Explain the differences between AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1. Explain the differences between legal and ethical behavior in marketing. 2. Identify factors that influence ethical and unethical marketing decisions. 3. Describe the different concepts of social responsibility. 4. Recognize unethical and socially irresponsible consumer behavior. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -2

THERE IS MORE BREWING AT ANHEUSER-BUSCH THAN BEER Copyright © 2007 by The Mc. THERE IS MORE BREWING AT ANHEUSER-BUSCH THAN BEER Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -3

NATURE AND SIGNIFICANCE OF MARKETING ETHICS • Ethics • Ethical/Legal Framework in Marketing § NATURE AND SIGNIFICANCE OF MARKETING ETHICS • Ethics • Ethical/Legal Framework in Marketing § Laws • Current Perceptions of Ethical Behavior Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -4

Concept Check 1. What are ethics? A: Ethics are the moral principles and values Concept Check 1. What are ethics? A: Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -5

Concept Check 2. What are three possible reasons for the present state of ethical Concept Check 2. What are three possible reasons for the present state of ethical conduct in the United States? A: (1) Pressure on businesspeople to make decisions in a society with diverse value systems. (2) Business decisions being judged publicly by groups with different values and interests. (3) Ethical business conduct may have declined. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -6

UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Societal Culture and Norms § Culture Copyright © 2007 UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Societal Culture and Norms § Culture Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -7

FIGURE 4 -1 A framework for understanding ethical behavior Copyright © 2007 by The FIGURE 4 -1 A framework for understanding ethical behavior Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -8

UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Business Culture and Industry Practices § Business Cultures § UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Business Culture and Industry Practices § Business Cultures § Ethics of Exchange • Caveat Emptor • Consumer Bill of Rights • U. S. Consumer Product Safety Commission • Federal Trade Commission (FTC) Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -9

Federal Trade Commission Is your online privacy protected? Copyright © 2007 by The Mc. Federal Trade Commission Is your online privacy protected? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -10

UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Business Culture and Industry Practices § Ethics of Competition UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Business Culture and Industry Practices § Ethics of Competition • Economic Espionage • Bribes • Kickbacks Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -11

UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Corporate Culture and Expectations § Corporate Culture § Code UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Corporate Culture and Expectations § Corporate Culture § Code of Ethics § Ethical Behavior of Top Management and Co-workers • Whistle-blowers Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -12

UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Personal Moral Philosophy and Ethical Behavior § Moral Idealism UNDERSTANDING ETHICAL MARKETING BEHAVIOR • Personal Moral Philosophy and Ethical Behavior § Moral Idealism § Utilitarianism Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -13

FIGURE 4 -A Personal moral philosophies Copyright © 2007 by The Mc. Graw-Hill Companies, FIGURE 4 -A Personal moral philosophies Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -14

3 M Scotchgard Which moral philosophy did 3 M use and why? Copyright © 3 M Scotchgard Which moral philosophy did 3 M use and why? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -15

Concept Check 1. What rights are included in the Consumer Bill of Rights? A: Concept Check 1. What rights are included in the Consumer Bill of Rights? A: The rights to safety, to be informed, to choose, and to be heard. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -16

Concept Check 2. What is meant by moral idealism? A: Moral idealism is a Concept Check 2. What is meant by moral idealism? A: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -17

UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING • Concepts of Social Responsibility § Profit Responsibility • UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING • Concepts of Social Responsibility § Profit Responsibility • Profiteering § Stakeholder Responsibility § Societal Responsibility • Green Marketing • Cause Marketing Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -18

FIGURE 4 -2 Three concepts of social responsibility Copyright © 2007 by The Mc. FIGURE 4 -2 Three concepts of social responsibility Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -19

Avon Why do companies engage in cause marketing? Copyright © 2007 by The Mc. Avon Why do companies engage in cause marketing? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -20

UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING • The Social Audit: Doing Well by Doing Good UNDERSTANDING SOCIAL RESPONSIBILITY IN MARKETING • The Social Audit: Doing Well by Doing Good § Social Audit § Sustainable Development • Turning the Table: Consumer Ethics and Social Responsibility Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -21

Ronald Mc. Donald House How do companies ‘do well by doing good’? Copyright © Ronald Mc. Donald House How do companies ‘do well by doing good’? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -22

Reebok Why is sustainable development important? Copyright © 2007 by The Mc. Graw-Hill Companies, Reebok Why is sustainable development important? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -23

Concept Check 1. What is meant by social responsibility? A: Social responsibility means that Concept Check 1. What is meant by social responsibility? A: Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -24

Concept Check 2. Marketing efforts to produce, promote, and reclaim environmentally sensitive products green Concept Check 2. Marketing efforts to produce, promote, and reclaim environmentally sensitive products green marketing are called _______. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -25

Concept Check 3. What is a social audit? A: A social audit is a Concept Check 3. What is a social audit? A: A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in the domain of social responsibility. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -26

GOING ONLINE DOING WELL BY DOING GOOD Copyright © 2007 by The Mc. Graw-Hill GOING ONLINE DOING WELL BY DOING GOOD Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -27

Going Online 1. Visit the BSR website. Can you update at least one example Going Online 1. Visit the BSR website. Can you update at least one example in the text related to your chosen topic? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -28

VIDEO CASE 4 STARBUCKS CORPORATION: SERVING MORE THAN COFFEE Copyright © 2007 by The VIDEO CASE 4 STARBUCKS CORPORATION: SERVING MORE THAN COFFEE Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -29

VIDEO CASE 4 Starbucks Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All VIDEO CASE 4 Starbucks Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -30

VIDEO CASE 4 Starbucks FIGURE 1 Starbucks Mission Statement and Guiding Principles Copyright © VIDEO CASE 4 Starbucks FIGURE 1 Starbucks Mission Statement and Guiding Principles Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -31

VIDEO CASE 4 Starbucks 1. How does Starbucks’ approach to social responsibility relate to VIDEO CASE 4 Starbucks 1. How does Starbucks’ approach to social responsibility relate to the three concepts of social responsibility described in the text? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -32

VIDEO CASE 4 Starbucks 2. What role does sustainable development play in Starbucks’ approach VIDEO CASE 4 Starbucks 2. What role does sustainable development play in Starbucks’ approach to social responsibility? Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -33

SUPPLEMENTAL LECTURE NOTE 4 -1 THE FIVE MOST COMMON KINDS OF ECONOMIC ESPIONAGE Copyright SUPPLEMENTAL LECTURE NOTE 4 -1 THE FIVE MOST COMMON KINDS OF ECONOMIC ESPIONAGE Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -34

IN-CLASS ACTIVITY 4 -1 THE ETHICS OF COMPETITIVE INTELLIGENCE Copyright © 2007 by The IN-CLASS ACTIVITY 4 -1 THE ETHICS OF COMPETITIVE INTELLIGENCE Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -35

Fuld & Company Brochure Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All Fuld & Company Brochure Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -36

Ethics are the moral principles and values that govern the actions and decisions of Ethics are the moral principles and values that govern the actions and decisions of an individual or group. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -37

Laws are society’s values and standards that are enforceable in the courts. Copyright © Laws are society’s values and standards that are enforceable in the courts. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -38

Consumer Bill of Rights (1962) The Consumer Bill of Rights (1962) is a law Consumer Bill of Rights (1962) The Consumer Bill of Rights (1962) is a law that codified the ethics of exchange between buyers and sellers, including the rights (1) to safety, (2) to be informed, (3) to choose, and (4) to be heard. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -39

Code of Ethics A code of ethics is a formal statement of ethical principles Code of Ethics A code of ethics is a formal statement of ethical principles and rules of conduct. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -40

Whistle-blowers are employees who report unethical or illegal actions of their employers. Copyright © Whistle-blowers are employees who report unethical or illegal actions of their employers. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -41

Moral Idealism Moral idealism is a personal moral philosophy that considers certain individual rights Moral Idealism Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -42

Utilitarianism is a personal moral philosophy that focuses on “the greatest good for the 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. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -43

Social Responsibility Social responsibility means that organizations are a part of a larger society Social Responsibility Social responsibility means that organizations are a part of a larger society and are accountable to that society for their actions. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -44

Green Marketing Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally Green Marketing Green marketing consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -45

Cause Marketing Cause marketing occurs when the charitable contributions of a firm are tied 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. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -46

Social Audit A social audit is a systematic assessment of a firm’s objectives, strategies, Social Audit A social audit is a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility. Copyright © 2007 by The Mc. Graw-Hill Companies, Inc. All rights reserved. Slide 4 -47