Discussion Question Chapter 5: Ethical Values of Marketers
There are 6 ethical values that marketers are expected to uphold, and these are:
Honesty
– Be forthright in dealings and offer value and integrity.
Responsibility
– Accept the consequences of marketing practices and serve the needs of customers of all types, while being good stewards of the environment.
Fairness
– Balance buyer needs and seller interest fairly, and avoid manipulation in all forms while protecting the information of the consumers.
Respect
– Acknowledge basic human dignity of all the people involved through efforts to communicate, understand and meet needs and appreciate the contributions of others.
Transparency
– Create a spirit of openness in the practice of marketing through communication, constructive criticism, action, and disclosure.
Citizenship
– Fulfill all legal, economic, philanthropic and societal responsibilities to all stakeholders as well as give back to the community and protect the ecological environment.https://www.cleverism.com/social-responsibility-ethics-marketing/(Links to an external site.)
Think of a situation that you may have experienced, witnessed, or heard about where the unethical side of Marketing was displayed. In a 2-3 paragraph response tell about it and tell us why it was unethical.
CHAPTER 5: ETHICS AND SOCIAL RESPONSIBILITY WHY IT MATTERS: ETHICS AND SOCIAL RESPONSIBILITY Why learn about ethics and social responsibility? Generally speaking, students believe that there are two primary reasons to act ethically: 1. Acting ethically is the right thing to do from a moral perspective; 2. If you act unethically, then you might get caught and be punished. Neither of these is a bad reason to apply principles of ethics and social responsibility, but it is worth considering another reason, as well. In most cases strong ethical behavior leads to strong business results. Behaving ethically is actually good business. Let’s look at two different auto companies whose track records on ethical behavior have had very different outcomes. Tesla Motors and Social Responsibility Tesla Motors was founded in 2003 by a group of engineers who wanted to prove that electric cars could be better than gasoline-powered cars. They hoped to build cars that wouldn’t require the tradeoffs in power and comfort of electric cars in the past. The founders pledged that each new generation of cars would be increasingly affordable, helping the company work toward its mission: to accelerate the world’s transition to sustainable transport. (Note: https://www.teslamotors.com/about) In order to design and build luxury electric cars, Tesla invented a number of new technologies that it patented in order to protect its competitive advantage. In June 2014 the company announced that it was releasing access to all of its patents, making its technological advances open to competitors and inventors. In the announcement, company CEO Elon Musk said, “Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual-property land mines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.” (Note: https://www.teslamotors.com/blog/all-our-patent-are-belong-you) Tesla has a mission with an emphasis on social responsibility; it strives to develop products that have both a societal and economic benefit. Industry analysts and consumers alike see this as a distinct advantage in the marketplace. Investment analyst Seeking Alpha explains: Companies like Toyota Motor and Honda are already pushing for gas-less cars and more and more efficiency from their cars. Tesla is not single-handedly pushing this, but it is part of the overall push to improve one of the most important aspects of our country—how we envision the car. Yet, the company extends beyond this—challenging how we vision luxury, how we understand how to build a car, and what the future electric grid could look like. (Note: http://seekingalpha.com/article/2801365-tesla-social- responsibility-scorecard-shows-strengths-and-weaknesses?page=2) Volkswagen and Ethical Behavior The car company Volkswagen (which is part of the larger Volkswagen Group) does not have a formal mission statement, but its goal is “to offer attractive, safe, and environmentally sound vehicles that can compete in an increasingly tough market and set world standards in their respective class.” (Note: http://www.strategicmanagementinsight.com/mission-statements/volkswagen- mission-statement.html) In September 2015, the Environmental Protection Agency announced that Volkswagen had installed special software in its cars to manipulate emissions levels (making it appear that the cars are less polluting than they are). A week later Volkswagen disclosed that 11 million diesel vehicles contained the devices, and CEO Martin Winterkorn resigned. The price of Volkswagen stock plunged—losing 30 percent of its value overnight—and the company scrambled to understand what had happened and control the damage to its reputation. In the months following the discovery of the deceptive devices, investigators identified a team of Volkswagen employees who had hatched the plan and implemented it over a number of years. An internal evaluation identified a “culture of tolerance” for rule breaking at the company. It also came to light that Volkswagen’s emphasis on “results at any cost” had contributed to the breach in ethical standards. Industry experts believe that the company’s violation of consumers’ trust will be will be exceedingly difficult to repair and that it may take years to rebuild the Volkswagen brand. Tesla and Volkswagen both compete in the same global market but have seen very different patterns in their stock prices (years 2011–2015 shown below). Some of these differences can be attributed to important differences in their approach to ethics and social responsibility. Licensing & Attributions CC licensed content, Original · Why It Matters: Ethics and Social Responsibility. Provided by: Lumen Learning. License: CC BY: Attribution CC licensed content, Shared previously · Tesla Model S. Authored by: Al Abut. Located at: https://www.flickr.com/photos/alabut/4276454889/. License: CC BY-SA: Attribution-ShareAlike · VW Jetta TDI. Authored by: RightBrainPhotography. Located at: https://www.flickr.com/photos/rightbrainphotography/3526674386/. License: CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives INTRODUCTION TO ETHICAL MARKETING ISSUES What you’ll learn to do: describe the types of ethical and social responsibility issues that marketing must address We will begin by introducing definitions to clarify ethical terms and then turn to the issues that marketing professionals most often encounter. If you’ve taken other business courses, you’ve probably studied business ethics and have some familiarity with examples of corporate malfeasance (which is a fancy term for unethical behavior). These cases typically involve financial fraud. (Click here if you’d like to read about investor Bernie Madoff, the man responsible for the largest financial fraud in U.S. history). Financial fraud is certainly an example of unethical (and, often, illegal) behavior, but it isn’t directly related to marketing. Despite the presence of financial scandals in the news, you might be surprised to learn that the ethical issues U.S. businesses worry about the most are related to marketing. (Note: Brenner, S. N, Molander, E. A. "Is the Ethics of Business Changing" Harvard Business Review 55: 57-71 (1977).) Take a look at their “top eight” list of ethical concerns, below: 1. Gifts, gratuities, bribes (marketing and sales) 2. Price discrimination and unfair pricing (marketing and sales) 3. Dishonest advertising (marketing and sales) 4. Miscellaneous unfair competitive practices 5. Cheating customers, unfair credit practices, and overselling (marketing and sales) 6. Price collusion by competitors or price fixing (marketing and sales) 7. Dishonesty in making or keeping a contract 8. Unfairness to employees and prejudice in hiring You will notice that five of the eight ethical issues cited are governed by the marketing function, and the other three can certainly affect or involve marketing. In this section, you’ll learn more about these issues and the challenges in overcoming them. As with ethics in general, the line between ethical behavior and unethical behavior can be very fine indeed.Licensing & Attributions CC licensed content, Original · Outcome: Ethical Marketing Issues. Provided by: Lumen Learning. License: CC BY: Attribution DEFINING ETHICS Learning Objectives · Define ethics in the context of marketing Ethics is the set of moral principles or values that guides behavior. There is a general recognition that many, if not most, business decisions involve some ethical judgment. Each party in a marketing transaction brings a set of expectations regarding how the business relationship will exist and how transactions should be conducted. For example, when you as a consumer wish to purchase something from a retailer, you bring the following expectations about the transaction: (a) you want to be treated fairly by the salesperson, (b) you want to pay a reasonable price, (c) you want the product to be available as advertised and in the indicated condition, and (d) you want it to perform as promised. Unfortunately, your expectations might not be in agreement with those of the retailer. The retail salesperson may not “have time for you,” or the retailer’s notion of a “reasonable” price may be higher than yours, or the advertising for the product may be misleading. These differences in expectations can lead to ethical questions that are sometimes difficult to analyze. To create greater clarity for marketing professionals, the American Marketing Association has created a Statement of Ethics. It’s helpful to review this short document in order to understand the scope of issues that marketing professionals face. The preamble of the document defines a number of key terms and explains why ethics are of particular importance to marketers: The American Marketing Association commits itself to promoting the highest standard of professional ethical norms and values for its members (practitioners, academics, and students). Norms are established standards of conduct that are expected and maintained by society and/or professional organizations. Values represent the collective conception of what communities find desirable, important, and morally proper. Values also serve as the criteria for evaluating our own personal actions and the actions of others. As marketers, we recognize that we not only serve our organizations but also act as stewards of society in creating, facilitating, and executing the transactions that are part of the greater economy. In this role, marketers are expected to embrace the highest professional ethical norms and the ethical values implied by our responsibility toward multiple stakeholders (e.g., customers, employees, investors, peers, channel members, regulators and the host community).[Emphasis added] (Note: https://archive.ama.org/archive/AboutAMA/Pages/Statement%20of%20Ethics.aspx) The exchange process between an organization and a customer is based on a relationship of trust. The Statement of Ethics aims to protect that trust.Licensing & Attributions CC licensed content, Original · Revision and adaptation. Provided by: Lumen Learning. License: CC BY: Attribution CC licensed content, Shared previously · Chapter 5: External Considerations in Marketing, from Core Concepts of Marketing. Authored by: John Burnett. Located at: http://www.saylor.org/site/wp-content/uploads/2012/11/Core-Concepts-of-Marketing.pdf. License: CC BY: Attribution · That Way. Authored by: Justin Baeder. Located at: https://www.flickr.com/photos/justinbaeder/194066146/. License: CC BY: Attribution COMMON ETHICAL ISSUES IN MARKETING Learning Objectives · Identify common ethical issues and their impact on individuals and organizations Consider the following business situation: You’re a member of the marketing team for a B2B company that sells software to restaurants. Your product is a point-of-sale system that manages orders, menus, and staff scheduling. While it generally works well, there are sometimes glitches that cause it to drop orders, and the system goes down more often than you would like. You are marketing the system to a major restaurant chain, and they’ve asked for a list of references from current customers. The marketing and sales teams sit around a table reviewing the current customer list trying to decide which references to provide. First, the team screens out those who have complained most vocally about the glitches with the product. There is one customer who told his account manager, “These thing happen with all systems,” so the team thinks he would be a good reference. There’s also a new customer who started using the system recently and hasn’t yet experienced the system down time that other customers have. The team selects that restaurant, as well, and prepares to send the two names to the sales prospect. Question: Is that ethical? Is it fair and honest to cherry-pick the customer references, selecting only the ones that are unlikely to share negative experiences about your product? To be sure, there’s