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Chapter 18

BU352 Chapter Notes - Chapter 18: Living Wage, Water Scarcity, U.S. Consumer Product Safety Commission

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Chapter 18: Ethics and Socially Responsible Marketing
The Scope of Marketing Ethics
-Business Ethics: Branch of ethical study that examines ethical rules and principles within a
commercial context, the various moral or ethical problems that might arise in a business
setting, and any special duties or obligations that apply to persons engaged in commerce
-Marketing Ethics: Ethical problems that are specific to the domain of marketing
-Anyone involved in marketing activities must recognize the ethical implications of their actions:
Societal issues: sale of products or services that may damage environment
Global issues: use of sweatshops and child labour
Individual consumer issues: deceptive advertising and marketing dangerous products
Ethical Issues Associated with Marketing Decisions
Creating an Ethical Climate in the Workplace
-Ethical Climate: Set of values within a marketing firm, or in the marketing division of any firm,
that guides decision-making and behaviour
-Everyone within the firm must share the same understanding of these values and how they
translate into the business activities of the firm, and they must share consistent language to
discuss them
-Understand values  Develop set of explicit rules and implicit understandings that govern all
the firm’s transactions
-Employees throughout firm must be dedicated to ethical climate b/c roots of ethical climate
are often the competing values of individuals
-Set rules  System of controls that rewards appropriate behaviour – behaviour consistent with
firm’s values – and punishes inappropriate behaviour
-Canadian Marketing Association (CMA) developed the generally accepted code in marketing –
flows from general norms of conduct to specific values to which marketers should aspire
Each subarea of marketing (marketing research, advertising, pricing, etc.) has its own
code of ethics that deals with specific issues that arise when conducting business in
those areas
The Influence of Personal Ethics
Why People Act Unethically
-Every individual is product of their culture, upbringing, genes, and other influences – they also
continue to grow emotionally in their understanding of what is/isn’t’ ethical behaviour
-People must choose between conflicting outcomes
-Chief marketing officers have observed employees participating in high pressure, misleading,
or deceptive sales tactics (45%), misrepresenting company earnings, sales, and revenues (35%),
withholding or destroying info hurting company sales or image (32%), and conducting false or
misleading advertising (31%)
-Managers faced with dilemma between doing what’s beneficial for them and firm in short run,
or doing what’s right and beneficial for firm in long-run
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-Avoid ethical consequences: LT goals of firm must be aligned with ST goals of each individual
within firm
-To align personal and corporate goals, firms need to have strong ethical climate, explicit rules
for governing firm’s transactions (code of ethics), and system for rewarding/punishing
Corporate Social Responsibility
-Corporate Social Responsibility (CSR): Voluntary actions taken by a company to address the
ethical, social, and environmental impacts of its business operations and the concerns of its
E.g. establishing corporate charitable foundations, supporting and associating with
existing non-profit groups, supporting minority activities, and following responsible
marketing, sales, and production practices
-Employees within company must maintain high ethical standards and recognize how individual
decisions lead to collective actions of firm
-Firms should implement programs that are socially responsible and employees should act in
ethically responsible manner
Can be both ethical and socially responsible, ethical but no involved with larger
community, questionable firm practices but donates a lot to community, or neither
ethical nor socially responsible
-Consumers are more willing to buy g/s from companies that are socially responsible and give
back to community
-Companies earn both tangible and intangible benefits for acting in socially desirable manner
b/c it makes good business sense to take actions that benefit society
Include socially responsible programs when planning and defining their strategic
-Being socially responsible doesn’t mean all members of firm will act unethically, but it means
that firm will commit time and resources to projects in community that may not directly relate
to generating profit
Consumerism, Ethics, and Socially Responsible Practices
-Companies not paying enough attention to ethical conduct and CSR = targeted by consumer
and advocacy groups = generate negative PR and may boycott products
Consumer Reports and Lemon Aid are dedicated to inform and protect consumers from
harmful products and poor business practices by marketers
-Consumerism and environmental awareness driving CSR
Consumerism: Social movement aimed at protecting consumers from business practices
that infringe upon their rights
-Many companies have CSR programs that enable consumers to safely dispose of products they
buy in order to minimize harmful effects on environment (e.g. recycling, reusable shopping
bags, returning products)
-Consumers want to purchase g/s from companies that act in socially responsible ways –
companies understand and actively promote their efforts
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