Ethics and Social

Responsibility in Marketing
MM 2
 I. Ethics
What are ethics?
Moral principles and values that govern
the actions of an individual or group.
 II. Factors Influencing Ethical
Marketing Behavior
A. Societal Culture
The set of values, ideas, and attitudes that
are learned and shared among members of a
group.

 Western culture: Judeo-Christian values

 Diverse Indian culture

 Values and standards: reflected in laws

Example – protection of property
 MARKETING NEWSNET
Internet Piracy and Campus Pirates

Slide 4-11
 II. Factors (cont.)

B. Business Culture
1. Ethics of Exchange
*Prior to 1960’s: caveat emptor
*Consumer Bill of Rights (changed business culture)
Safety
Be informed
Choose
Be heard

2. Ethics of Competition
*Economic espionage – collecting competitor trade
secrets and proprietary information.
*Economic espionage differs from competitive analysis
 II. Factors (cont.)
C. Corporate Culture
• Management tries to communicate ethical
standards through the corporate code of ethics.
• Code of Ethics- a formal written statement of
ethical principles and rules of conduct to guide
employee decision making.
• What does it address?
• Will it ensure ethical behavior within the
organization?
FIGURE 4-3 American Marketing Association
Code of Ethics

Slide 4-17
 III. Social Responsibility
 The idea that organizations are part of a
larger society and are accountable to that
society for their actions.
 Concepts of Social Responsibility
 Profitresponsibility
 Stakeholder responsibility
 Societal responsibility
 Green marketing – the marketing of products that
are presumed to be environmentally safe
 Social Responsibility
 Companies that show societal
responsibility have been rewarded.

1. Benefits from favorable word of mouth

2. Typically outperform less responsible
companies on financial performance
The Pyramid of Social Responsibility
PHILANTHROPIC
Responsibilities
Be a good Corporate Citizen.
Contribute resources to the
community; improve quality of life.

ETHICAL
Responsibilities
Be ethical.
Obligation to do what is right,
just and fair; Avoid harm.

LEGAL
Responsibilities
Obey the Law
Law is society’s codification of right and wrong;
Play by the rules

ECONOMIC
Responsibilities
Be Profitable
The foundation upon which all others rest

Source: Carroll (1991)

Level 1
ECONOMIC
Responsibilities
Be profitable
The foundation upon which all
other levels rest
 Economic Components
 It is important to perform in a manner
consistent with maximising earnings per share
 It is important to be committed to being as
profitable as possible
 It is important to maintain a strong competitive
position
 It is important to maintain a high level of
operational efficiency
 It is important that a successful firm be defined
as one that is consistently profitable.
Level 2 LEGAL

Responsibilities
Obey the Law
Law is society’s codification of right
and wrong; Play by the rules
 Legal Components
 It is important to perform in a manner consistent
with expectations of government and the law.
 It is important to comply with various national
and supra-national laws and regulations.
 It is important to be a law-abiding corporate
citizen.
 It is important that a successful firm be defines
as one that fulfils its legal obligations.
 It is important to provide goods and services
that at least meet the minimal legal
requirements.
Level 3 ETHICAL

Responsibilities
Be Ethical
Obligation to do what is right, just
and fair; Avoid harm.
 Ethical Components
 It is important to perform in a manner that is
consistent with the expectations of societal mores
and ethical norms.
 It is important to recognise and respect new or
evolving ethical/moral norms adopted by society.
 It is important to prevent ethical norms from being
compromised in order to achieve corporate goals.
 It is important that good corporate citizenship be
defined as doing what is expected morally or
ethically.
 It is important to recognise that corporate integrity
and ethical behaviour go beyond mere compliance
with laws and regulations.
Level 4 PHILANTHROPIC

Responsibilities
Be a Good Corporate Citizen
Contribute resources to the
community; improve quality of life
 Philanthropic Components
 It is important to perform in a manner consistent
with the philanthropic and charitable
expectations of society.
 It is important to assist the fine and performing
arts.
 It is important that managers and employees
participate in voluntary and charitable activities
within their local communities.
 It is important to provide assistance to public and
private educational institutions.
 It is important to assist voluntarily those projects
that enhance a community’s ‘quality of life’.
Moral Management and
Stakeholders
Three Moral Types:
Immoral Managers
Amoral Managers
Moral Managers
 Immoral Managers
Characterised by:
 managers whose decisions, actions and
behaviour suggest an active opposition to
what is deemed to be right and ethical
 These managers care only about their or
their organisation’s profitability or success
 Legal issues are there to be circumvented
 Strategy is to exploit opportunities for
personal or organisational gain at any cost
 Amoral Managers
 Amoral Managers are neither immoral nor
moral but are not sensitive to the fact that
their everyday business decisions may
have a deleterious effect on others.
 These managers may lack an ethical
perspective in their organisational lives.
 Typically their orientation is to the ‘letter
of the law’ as their ethical guide.
 Sometimes we can have a sub category -
the unintentional amoral manager
 Un-intentional Amoral Manager
 These managers are un-intentionally amoral
in their behaviour. They tend to see ethical
issues are for their private lives not their
business lives, where different rules apply.
 They tend to believe that business activity
resides outside the sphere to which moral
judgements may apply.
 Amoral managers here may not consider a
role for ethics in business.
 The Moral Manager
 In moral management, ethical norms that
adhere to a high standard of right behaviour
are employed
 Moral managers not only conform to accepted
and high levels of professional conduct, they
also lead on issues of ethical behaviour.
 The law is seen as giving a minimal guide to
ethical behaviour. The ‘spirit of the law’ in
more important than the ‘letter of the law’.
The objective is to operate well above what
the law mandates the firm to do.
 The Moral Manager
 Moral mangers want to be profitable and
ethical.
 Moral mangers will use ethical principles to
base their judgements upon - justice, rights,
the Golden Rule, utilitarianism etc.
 When ethical dilemmas arise, moral managers
and moral companies will tend to assume
leadership in their companies and industries.

Compare this model with the Reidenbach & Robin Model

 Finally
 Though the concept of social responsibility
may change from time to time, the
pyramid model gives us a framework for
understanding the evolving nature of the
firm’s economic, legal, ethical and
philanthropic performance.
 Marketing and Ethics

From Buyer Beware to Seller

Beware

See:
Smith, N.C., (1995) Marketing Strategies for
the Ethics Era, Sloan Management Review,
Summer, pp. 85-97.
 Marketing Ethics Continuum
Producer Interests Producer Interests
Favoured Less favoured

Consumer Interests Consumer Interests

Less Favoured More Favoured

Caveat Industry Ethics Consumer Caveat

Emptor Practice Codes Sovereignty Venditor

Profit General business Codes of Capability Consumer

maximisation practice (average individual satisfaction
across all firms) firms Information

Subject to Practices of Industry Choice

legal constraints specific industries codes

Practice of Professional
best firms codes
Source: N C Smith (1995)
 Some Ethical Maxims
Marketers often rely on simple maxims to evaluate their
marketing practices. While useful, they generally lack
specific guidance.

 Do unto others as you would have them do unto you.

 Would you be embarrassed in front of your family/ friends/
colleagues if the media publicised your decision ?
 Good ethics is in the long term interests of the firm.
 Would an objective panel of professional colleagues view
my actions as proper ?
 When in doubt, don’t.

Read the article in the reading list entitled ‘Ethics - a view from the
trenches’