Chapter 20 by H8pUtAp

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									                           20



Principles of Marketing


     Marketing Ethics
           and
   Social Responsibility
Learning Objectives

After studying this chapter, you should be able
   to:
1. Identify the major social criticisms of
   marketing
2. Define consumerism and environmentalism
   and explain how they affect marketing
   strategies
3. Describe the principles of socially
   responsible marketing
4. Explain the role of ethics in marketing
                                          20-2
Chapter Outline


1.   Social Criticisms of Marketing
2.   Citizen and Public Actions to Regulate
     Marketing
3.   Business Actions Toward Socially
     Responsible Marketing



                                      20-3
Social Criticisms of Marketing

    Marketing’s Impact on Individual Consumers

•   High cost of distribution
•   High advertising and promotion costs
•   Excessive markups
•   Deceptive practices



                                           20-4
   Social Criticisms of Marketing
     Marketing’s Impact on Individual Consumers
                  High Cost of Distribution
Complaint:                    Response:
   Intermediaries mark        Markups reflect the cost of
   up prices beyond their       the services that
   value due to                 consumers expect
   inefficiencies and            • Convenience
   unnecessary or
                                 • Larger stores and
   duplicative services
                                   assortments
                                 • More service

                                 • Return privileges
                                                       20-5
 Social Criticisms of Marketing
 Marketing’s Impact on Individual Consumers
        High Advertising and Promotion costs

Complaint:                    Response:
Prices are inflated to        Advertising does add to
    absorb advertising and      product cost but also to
    sales promotion costs,      product value by
    and packaging only          informing potential
    adds to the                 customers of the
    psychological, not          availability and merits
    functional, value of        of the product
    the product
                                                20-6
 Social Criticisms of Marketing

    Marketing’s Impact on Individual Consumers
                   Excessive Markups

Complaint:                 Response:
Companies mark up          Most businesses try to
   products excessively      deal fairly with
                             consumers because
                             they want to build
                             relationships and repeat
                             business

                                               20-7
Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers
                Deceptive Practices

Complaint: Companies use deceptive practices
   that lead customers to believe they will get
   more value than they actually do. These
   practices fall into three categories:
•  Deceptive pricing
•  Deceptive promotion
•  Deceptive packaging
                                                  20-8
Social Criticisms of Marketing
   Marketing’s Impact on Individual Consumers
                      Deceptive Practices

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 includes practices such as misrepresenting
   the product’s features or performance or luring the customer
   to the store for a bargain that is out of stock

Deceptive packaging includes exaggerating packaging contents
   through subtle design, using misleading labeling or describing
   size in misleading terms
                                                          20-9
Social Criticisms of Marketing
    Marketing’s Impact on Individual Consumers
                        Deceptive Practices

Legislation to protect consumer from deceptive practices
•    Wheeler-Lea Act—gives the Federal Trade Commission (FTC)
     power to regulate “unfair or deceptive acts or practices”

Is it deception or alluring or puffery that is just an exaggeration for
      effect?
•     Products that are harmful
•     Products that provide little benefit
•     Products that are not made well

                                                             20-10
Social Criticisms of Marketing
Marketing’s Impact on Individual Consumers
             Deceptive Practices
             High-Pressure Selling

 Complaint:                Response:
 Salespeople use high-     Most selling involves
     pressure selling that   building long-term
     persuades people to     relationships and valued
     buy goods they had no   customers. High
     intention of buying     pressure or deceptive
                             selling can damage
                             these relationships.

                                              20-11
  Social Criticisms of Marketing
  Marketing’s Impact on Individual Consumers
                   Deceptive Practices
           Shoddy, Harmful, or Unsafe Products


Complaint:                     Response:
                               Today’s marketers know that
Products have poor               customer-driven quality
    quality, provide little      results in customer value
    benefit, and can be          and satisfaction that creates
    harmful                      profitable customer
                                 relationships. There is no
                                 value in marketing shoddy,
                                 harmful, or unsafe products.

                                                        20-12
    Social Criticisms of Marketing
     Marketing’s Impact on Individual Consumers
                       Deceptive Practices
                      Planned Obsolescence

Complaint:                       Response:
Producers follow a program of     Planned obsolescence is really
    planned obsolescence,            the result of competitive
    causing their products to        market forces leading to
    become obsolete before           ever-improving goods and
    they actually need               services. Marketers know
    replacement. Producers           that customers like style
    also continually change          changes and want the latest
    consumers’ concepts of           innovations even if older
    acceptable styles to             models still work.
    encourage more and
    earlier buying.                                       20-13
 Social Criticisms of Marketing
 Marketing’s Impact on Individual Consumers
                  Deceptive Practices
       Poor Service to Disadvantaged Consumers
Complaint:                    Response:
American marketers serve Some marketers profitably
   disadvantaged                 target these customers,
   customers poorly.             and the FTC has taken
   Some retail companies         action against
   “redline” poor                marketers that do
   neighborhoods and             advertise false values,
   avoid placing stores          wrongfully deny service,
   there.                        or charge
                                 disadvantaged
                                 customers too much. 20-14
      Social Criticisms of Marketing
          Marketing’s Impact on Society as a Whole
                False Wants and Too Much Materialism
Complaint:                         Response:
The marketing system urges         People do have strong defenses
    too much interest in             against advertising an other
    material possessions.            marketing tools. Marketers
    People are judged by what        are most effective when they
    they own rather than who         appeal to existing wants
    they are, creating false         rather than creating new
    wants that benefit industry      ones. The high failure rate of
    more than they benefit           new products shows that
    consumers.                       companies cannot control
                                     demand.

                                                           20-15
   Social Criticisms of Marketing
        Marketing’s Impact on Society as a Whole
                       Too Few Social Goods

                               Response:
Complaint:
                               There needs to be a balance
Businesses oversell private
                                 between private and public
    goods at the expense of
                                 goods
    public goods and require
    more public goods to       • Producers should bear full
    support them                 social costs of their
                                 operations
                               • Consumers should pay the
                                 social costs of their
                                 purchases
                                                        20-16
    Social Criticisms of Marketing
      Marketing’s Impact on Society as a Whole
                    Cultural Pollution

Complaint:                   Response:
                             Marketing and advertising are
Marketing and advertising      planned to reach only a target
   creates cultural            audience, and advertising makes
   pollution                   radio and television free to users
                               and helps to keep the cost of
                               newspapers and magazines
                               down. Today’s consumers have
                               alternatives to avoid marketing
                               and advertising from technology.



                                                         20-17
   Social Criticisms of Marketing
       Marketing’s Impact on Society as a Whole
                 Too Much Political Power

Complaint:                    Response:
Businesses wield too much     American industries do
    political power over        promote their own
    mass media, limiting        interests, and regulators
    media to report             are seeking to balance
    independently and           the interests of big
    objectively                 businesses against the
                                public
                                 •   Microsoft    20-18

                                 •   Tobacco
Social Criticisms of Marketing
     Marketing’s Impact on Other Businesses

•   Acquisition of competitors
•   Marketing practices
•   Unfair competitive marketing practices




                                             20-19
Social Criticisms of Marketing
       Marketing’s Impact on Other Businesses

Acquisition of competitors can sometimes be good for society
   when the acquiring company gains economies of scale that
   lead to lower prices

Marketing practices can also bar new competitors from entering
   an industry and can create use patents, heavy promotional
   spending to drive out existing competitors

Unfair competitive marketing practices such as setting prices
    below cost, threatening to cut off business with suppliers, or
    discouraging the buying of a competitor’s product can hurt or
    destroy other firms
                                                          20-20
Citizen and Public Actions to
Regulate Marketing

Consumerism is the organized movement of
   citizens and government agencies to improve
   the rights and power of buyers in relation to
   sellers

Environmentalism is an organized movement of
   concerned citizens, businesses, and
   government agencies to protect and improve
   people’s living environment

                                               20-21
Citizen and Public Actions to
Regulate Marketing
                         Consumerism
Traditional sellers’ rights include:
•   The right to introduce any product in any size and style,
    provided it is not hazardous to personal health or safety, or if
    it is, to include proper warning and controls
•   The right to charge any price for the product, provided no
    discrimination exists among similar kinds or buyers
•   The right to spend any amount to promote the product,
    provided it is not defined as unfair competition
•   The right to use any product message, provided it is not
    misleading or dishonest in content or execution
•   The right to use any buying incentive programs, provided they
    are not unfair or misleading

                                                           20-22
Citizen and Public Actions to
Regulate Marketing

              Environmentalism

People and organizations should operate with
   more care for the environment

The marketing system’s goal should not be to
   maximize consumption, consumer choice, or
   satisfaction, but rather to maximize life
   quality. Environmental costs should be
   included in both producer and consumer
   decision making.
                                        20-23
Citizen and Public Actions to
Regulate Marketing
               Environmentalism
            Environmental Sustainability


•   Pollution prevention
•   Product stewardship
•   Design for environment (DFE)
•   New environmental technologies
•   Sustainability vision

                                           20-24
Citizen and Public Actions to
Regulate Marketing
                     Environmentalism
                 Environmental Sustainability

Pollution prevention involves not just cleaning up waste but also
    eliminating or minimizing waste before it is created

Product stewardship involves minimizing the pollution from
    production and all environmental impact throughout the full
    product life cycle

Design for environment (DFE) involves thinking ahead to
    design products that are easier to recover, reuse, or recycle

                                                           20-25
Citizen and Public Actions to
Regulate Marketing
                 Environmentalism
             Environmental Sustainability

New environmental technologies involve looking
  ahead and planning new technologies for
  competitive advantage

Sustainability vision is a guide to the future that
   shows the company that the company’s products,
   process, and policies must evolve and what is
   needed to get there
                                              20-26
Business Actions Toward
Socially Responsible Marketing
              Enlightened Marketing

Enlightened marketing refers to a company’s
    marketing effort supporting the best long-run
    performance of the marketing system and consists
    of five principles:
•   Consumer-oriented marketing
•   Customer-value marketing
•   Innovative marketing
•   Sense-of-mission marketing
•   Societal marketing
                                              20-27
Business Actions Toward
Socially Responsible Marketing
                 Enlightened Marketing
Consumer-oriented marketing means that a company should
   view and organize its marketing activities from the consumer’s
   perspective

Customer-value marketing means that the company should put
    most of its resources into customer-value-building marketing
    investments—long-term customer loyalty and relationships—
    by continually improving the value consumers receive from the
    firm’s market offerings

Innovative marketing requires the company to continually seek
    real product and marketing improvements
                                                        20-28
 Business Actions Toward
 Socially Responsible Marketing
              Enlightened Marketing

Sense-of-mission marketing means the company
   should define its mission in broad social terms
   rather than narrow product terms

Societal marketing means the company makes
   marketing decisions by considering consumers’
   wants and interests, the company’s requirements,
   and society’s long-run interests
•  Views societal problems as opportunities
•  Designs pleasing and beneficial products
                                               20-29
Business Actions Toward
Socially Responsible Marketing
               Enlightened Marketing

Deficient products have neither immediate appeal nor
    long-term benefits
•   Bad-tasting and ineffective medicine

Pleasing products have high immediate satisfaction but
    may hurt consumers in the long run
•   Cigarettes and junk food


                                               20-30
  Business Actions Toward
  Socially Responsible Marketing

               Enlightened Marketing

Salutary products have low appeal but may benefit
    consumers in the long run
•   Seat belts and air bags

Desirable products give both immediate satisfaction and
   high long-term benefits
•  Tasty and nutritious breakfast food

                                                    20-31
 Business Actions Toward
 Socially Responsible Marketing

                  Marketing Ethics

Corporate marketing ethics are broad guidelines
   that everyone in the organization must follow that
   cover distributor relations, advertising standards,
   customer service, pricing, product development,
   and general ethical standards




                                                  20-32
Business Actions Toward
Socially Responsible Marketing
                Marketing Ethics
                   Philosophies


Issues are decided by the free market and legal
   system

Responsibility is not on the system but in the
   hands of the individual company and
   managers
                                          20-33
The End

								
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