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MGCR 352 (26)
Chapter 4

Principles of Marketing_Chapter 4.docx

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Department
Management Core
Course
MGCR 352
Professor
Sameer Mathur
Semester
Winter

Description
Chapter 4: Social Responsibility and Ethics - Sustainable Marketing  Sustainable marketing: marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs   Marketing concept: current needs of consumers and current needs of business o Current needs and wants of target-group customers o Focus on short-term sales, growth and profits o Ex: McDonald’s early decisions to market tasty unhealthy food  Societal marketing concept: future needs of customers with current needs of business  Strategic marketing concept: current customer needs with future business needs  Sustainable marketing concept: o Ex: McDonald’s diversifying into salads, deli sandwiches, and other healthier options. Using a healthier cooking oil; sponsors sports teams; supports environmental initiatives  profits and sales have increased steadily, is now positioned for sustainably profitable future Social Criticisms of Marketing Marketing’s Impact on Individual Consumers High Prices  Critics think marketing causes prices to be higher than under sensible systems  High costs of distribution: o Think that channel intermediaries mark up prices beyond value of services, or that there are too many intermediaries  distribution costs too much, and consumers pay for excessive costs o Reality: intermediaries make life simpler. o Markups reflect services that consumers want. Competition is so intense that margins are actually really low  High advertising and promotion costs: o Marketing accused of pushing up prices to pay for heavy advertising/promotion costs o Ex: branded pain reliever costs 100X more than generic brand o Critics: packaging and promotion adds only to psychological value of brand and not functional value o Reality: branding gives customers assurance of consistent quality  consumers want/pay more for products that provide psychological benefits  Excessive markups: o Marketers actually want to deal fairly with consumers, so that they can build long-lasting relationships o If they’re being unfair, they’re reported to the Competition Bureau, Canadian Marketing Association, etc. o Consumers don’t understand the immense costs of running a business. Higher costs include R&D  GlaxoSmithKline: “today’s medicines finance tomorrow’s miracles” Deceptive Practices  Deceptive pricing: falsely advertising factory or wholesale prices from phony high retail list price  Deceptive promotion: misrepresentation of product features or performance o Ex: Lululemon removed their Vitasea t-shirts that falsely claimed to release minerals and amino acids  Deceptive packaging: exaggerating package contents through subtle design, misleading labeling, or describing size in misleading terms  Ex: Competition Bureau charged gas stations who formed a cartel in Victoriaville, Quebec in 2009  Ex: The Brick was charged with misleading advertising for its mail-in rebates  Ex: Edmonton-based Energy Wellness charged because of false claims of their products used to treat/prevent cancer  Competition Bureau released guidelines for companies to prevent from “green-washing”  Definition of “deceptive” differs for everyone. o “Puffery”: innocent exaggeration for effect.  Ex: Skittles rainbow, anything that’s computer graphics-y that is obviously exaggerated  Rationale: “no one will buy pure functionality” o Harmful for consumers  Ex: MasterCard’s “priceless” commercials, Visa “enjoy life’s opportunities”  Causes people to overuse their credit cards  $1.3 trillion household debt in Canada  People with overdue credit card balances = 17.5-24% of Canadian population High-Pressure Selling  May work in one-time selling situations for short-term gain, but most selling involves long-term relationships with valued customers  Ex: P&G’s account manager doesn’t pressure Walmart’s buyer Shoddy, Harmful or Unsafe Products  Profit-orientation causes poor product quality or harmful products  Ex: Leslie Alexander (folk singer) took prescription sleeping pills called Sleepees that created an allergic reaction, started a lawsuit  Ex: Maple Leaf Foods’ prepared meat products had deadly listeriosis in it  extensive PR and advertising campaign built purchase intent from 64% to 90%  Consumers’ Union: not-for-profit testing and information organization that reports on various hazards in tested products  helps consumers make better decisions  Most manufacturers want to produce quality goods because PR and liability suits cost money and cost customer relationships. Harmful to business in long-term Planned Obsolescence  Products become obsolete and need replacement (purposely)  Marketers continuously changing consumer concepts of acceptable styles  encourages more and earlier buying o Ex: clothing fashions  Planned streams of new products to make older models obsolete o Mostly in electronics and computer industries o (Picture with trash can full of old electronics): everyone has a bunch of old, still usable technology  Marketers respond that consumers like style changes, and want the latest and best  Companies don’t want to lose customers to other brands, so they seek constant improvement  “Planned obsolescence” = competitive and technological forces in a free society Poor Service to Disadvantaged Consumers  “Redlining”: major retail chains accused of avoiding locating their stores around disadvantaged neighborhoods. Urban poor are forced to shop in smaller stores that charge higher prices o Ex: insurance, consumer lending, banking, and health care industries don’t locate in these neighborhoods  (Picture of foreclosed house in the US): American mortgage companies accused of taking advantage of working poor by offering subprime mortgages (adjustable rate, rates usually increase) rather than fixed-rate mortgages  can no longer afford mortgage payments  foreclosed houses  Government intervention usually necessary Marketing’s Impact on Society as a Whole False Wants and Too Much Materialism  Peak in 1980s and 1990s, where “greed is good” and “shop till you drop” were commonplace. Especially prevalent in North America  Critics include Adbusters Media Foundation (magazine that criticizes physical and cultural environments based in Vancouver)  Post-WWII: exponential increase in consumption of absolutely everything o People work harder to earn the necessary money  inflation-adjusted individual income has tripled o Purchases increase ouput in industry  industry uses services of advertisers to stimulate more desire for industrial output  “Buy Nothing Day”: started in 1992 that asks consumers to stop shopping for 24 hours, asks them to think about issues like where products come from, why they’re purchased, what they do with them after purchase  Argument: demand is created by consumers; marketers don’t create needs o Ex: new products often fail  Needs influenced by family, peer groups, religion, cultural background and education  Values of materialism rose out of basic socialization  deeper than business/mass media Too Few Social Goods  Accused of overselling private goods at expense of public goods o Ex: more cars on the road (private goods) requires more highways, traffic control, parking spaces, and police services (public goods) o Social costs: traffic, pollution, gas shortage  Solution: producers bear full social costs of their operations o Or consumers pay for social costs o Ex: City of London charges “congestion tolls” to reduce traffic. Charge 8 pounds per day per car to drive in an eight-square mile area downtown  reduced traffic by 21%, increased cycling and increased public transportation use Cultural Pollution  Constantly being advertised to (commercials, ads obscure magazines, billboards ruin scenery, spam fills our inboxes)  Pollute people’s minds with messages of materialism, sex, power or status  Argument: ads primarily reach target audience. The “pollution” is mostly mis-targeted advertisement o Ex: people who buy magazines targeted to their interests (Vogue) rarely complain about ads because advertisements are relevant  Ads make TV and radio free for users  Sometimes commercials are searched for by consumers (they like them)
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