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Chapter 3

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COMM 231
John C Carlson

COMM231 Chapter 3 Sustainable Marketing Social Responsibility and Ethics Sustainable Marketing - Sustainable marketing: Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs 1. Marketing concept: recognizes that organizations thrive from:  Determining current needs and wants of target group customers  Fulfilling those needs and wants more effectively/efficiently than competitors  Focus on meeting company’s short-term sales, growth, profit needs by satisfying customers immediate needs -> HOWEVER not always good 2. Social marketing concept: considers the future welfare of consumers 3. Strategic planning concept: considers future company needs 4. Sustainable marketing concept: considers both strategic + social MCs; calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company  e.g. before and after for Mcdonalds -> now = McDonald’s Plan to Win strategy -> addresses environmental + healthier foods issues Social Criticisms of Marketing Marketing’s Impact on Individual Consumers High Prices - critics charge: that the marketing system causes prices to be higher than they would be under more “sensible” systems - critics point to three factors: 1. High Costs of Distribution  Longstanding charge = greedy channel intermediaries mark up prices beyond the value of their services • Too many intermediaries • Intermediaries are inefficient • They provide unnecessary or duplicate services  Therefore, distribution costs too much -> consumers pay for these excessive costs in the form of higher prices Resellers answer to High Costs of Distribution Charge  Resellers argue that they do work that would otherwise have to be done by manufacturers or consumers: • More convenience, larger stores and assortments, more service, longer store hours, return privileges, etc. • Low price stores also pressure their competitors to operate efficiently and keep their prices down 2. High Advertising and Promotion Costs  Modern marketing also charged with pushing up prices to finance heavy advertising and sales promotion  Differentiated products include promotion and packaging costs that can amount to 40% or more of the manufacturer’s price to the retailer • Critics charge that much of the packaging and promotion adds only psychological value to the product rather than functional value Marketers response to high advertising and promotion costs charge  Advertising adds value by informing potential buyers of the availability and merits of a brand  Branding also gives buyers assurance of consistent quality  Consumers don't have to but want and are willing to pay more for products that provide psychological benefits [wealthy, attractive, special]  STILL, companies are now more cost conscious about promotion since there is a shift towards buying store brands/generics amongst increasingly frugal consumers 3. Excessive Markups  Critic’s charge: some companies mark up goods excessively • E.g. pricing tactics of funeral homes preying on the confused emotions of bereaved relatives Marketers response  Most businesses try to deal fairly as goal is to build customer relationships and repeat business – most consumer abuses are unintentional • Shady marketers should be reported to Better Business Bureaus or provincial ConsumerAffairs office  And marketer add that consumers often don’t understand the reasons for high markups 4. Deceptive Practices  Three groups: pricing, promotion, and packaging • Deceptive pricing: includes practices such as falsely advertising “factory” or “wholesale” prices or a large price reduction from a phony high retail list price • Deceptive promotion: practices such as misrepresenting the product’s features or performance or luring the customers to the store for a bargain that is out of stock • Deceptive packaging: exaggerating package contents through subtle design, using misleading labeling, or describing size in misleading terms  The competition bureau acts as a watchdog to prevent such practices  Deceptive practices have led to legislation and other consumer protection actions, but such regulations don’t solve all problems • Toughest problem is defining what is “deceptive” • Advertisers might claim ‘puffery’[innocent exaggeration for effect]  Different views on ‘puffery’ • Pro: necessary as nobody will buy pure functionality • Con: claim that puffery and alluring imagery can harm consumers in subtle ways 5. High-Pressure Selling  Salespeople sometimes accused of high-pressure selling that persuades people to buy goods they had no thought of buying  HOWEVER, in most cases -> marketers have little to gain from HPS • May work in one-time selling situation for short-term gain • But in long-term gain where goal = build customer relationship, HPS can damage this 6. Shoddy, Harmful, or Unsafe Products  Complaint 1: products not made well and services not performed well  Complaint 2: products deliver little benefit or might even be harmful • E.g. LeslieAlexander and her “all-natural” product Sleepees  Product safety is a major concern! • Problem is due to: o Company indifference o Increased product complexity o Poor quality control RESPONSE  Most manufacturers want to product quality goods -> increase reputation  Selling poor-quality/unsafe products -> risk damaging conflicts with consumer groups + regulators (e.g. Consumers Union)AND can cause product liability suits + large awards for damage 7. Planned Obsolescence  Charge: some companies cause their products to become obsolete before they actually should need replacement • “make the cost of repairs close to the item’s replacement price and entice us to buy a new”  Two charges: • 1) companies that continually change consumer concepts of acceptable styles to encourage more and earlier buying [e.g. clothes] • 2) companies that introduce planned streams of new products that make older models obsolete [consumer electronics] RESPONSE  Marketers respond that consumers like style changes or want the latest high-tech innovations  Most companies don’t design products to break down earlier, but do so to ensure products will consistently meet or exceed customer expectations (and fight competition) 8. Poor Services to Disadvantaged Consumers  Charge: marketing system accused of serving disadvantaged consumers poorly • E.g. critics accuse major chain retailers of “redlining” • E.g. banks and mortgage lenders on the other hand have practiced “reverse-redlining” -> targeting and exploiting people in poor urban areas  Better marketing systems must be built to service disadvantaged consumers • Many marketers do profitably target such consumers legitimately • In cases which marketers don’t fill in the void-> the gov’t likely will Marketing’s Impact on Society as a Whole False Wants and Too Much Materialism - Critics have charged that the marketing system urges too much interest in material possessions [not sustainable] - And people are often judged by what they own rather than who they are - Critics view this interest in materialism as false wants created by marketing that benefit the industry more than they benefit the consumer • STORY OF STUFF PROJECT: Marketing is there to promote consumption -> overconsumption is inevitable  Goal is to transform systems of production and consumption to serve ecological sustainability and social well-being Marketer’s response • Say that criticisms overstate the power of business to create needs  People have strong defenses  Marketers most effective when appealing to existing needs  Etc. • On a deeper level, our wants/values influenced also by family, peer groups, religion, cultural background, and education  Thus marketers not to blame for love of materialism • Consumption patterns also subject to larger forces [e.g. economy] Too Few Social Goods - Business has been accused of overselling private goods at the expense of public goods • As private goods increase -> require more public services  E.g. increase in automobile ownership (private good) requires more highways, traffic control, parking spaces (public goods) • Thus overselling private goods -> “social costs” [e.g. traffic congestion, air pollution] - Thus important to restore balance between private and public goods • Option 1: make producers bear the full social costs of their operation • Option 2: make consumers pay the social costs Cultural Pollution - This idea that the bombardment of marketing and advertising is continually polluting our minds with messages of materialism, sex, power, or status Marketer’s response - 1) their ads are designed to reach primarily the target audience - 2) ads make much of television and radio free to users and keep down the costs of magazines and newspapers - 3) today’s consumers have alternatives [e.g. fast forward TV commercials on recorded programs, change channels at commercial breaks, or purchase cable/satellite channels] Marketing’s Impact on Other Business - CC: • Acompany’s marketing practices can harm other companies and reduce competition • Three problems:  1) Acquisition of competitors • Concerns that young competitors will be absorbed and competition reduced • In almost every major industry, the number of major competitors is shrinking  Benefits of acquisition: • The acquiring company may gain economies of scale that lead to lower costs and lower prices + improve acquired company efficiency + competitiveness  2) Marketing practices bar new companies from entering an industry • Some barriers = economic advantage • Other barriers can be challenged by existing and new laws  3) unfair competitive marketing practice • E.g. set prices below costs, threaten to cut off business with suppliers, or discourage the buying of a competitor’s products • Various laws work to prevent this but often difficult to prove the intent/action was predatory ConsumerActions to Promote Sustainable Marketing Consumerism - North American business firms have been the target of organized consumer movements on three occasions st 1 Consumer Movement • Early 1990s • Fueled by rising prices in the meat industry + scandals in the drug industry
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