Marketing and Ethical Behavior

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Ethics and Marketing
Part 2 of 2 Ch 4 Social Responsibility and
Marketing Ethics
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Ethics and Marketing, Discussion Objectives

• To overview ethics as an environmental influence
  on marketing in our society
• To identify ethical issues in the marketing mix
  and exchange relationships
• To understand the interaction of marketing ethics
  and social responsibility

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Business Ethics, A Frame of Reference

• Business people are motivated by greed.
• A moral suspicion of businessmen
  exists that dates back into the middle ages when
  the profit motive was pitted against the myth of
  noblesse oblige
• The profit motive is misunderstood. Profits are
  a reward for economic efficiency.

• In theory, The Marketing Concept advocates a
  customer orientation, integrated operations and
  L-R profits. (GE, 1953)

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Business Ethics,A Consumer Perception Update

• 76 of adults feel a lack of business ethics is
  contributing to the perceived decline of the U.S.
  moral standards. (Time Mag.7/94)
• Of all occupations, selling and advertising rate
  the lowest for honesty ethical standards.
  (Gallup Poll).
• Americans do not trust their leaders
• 1/2 trust doctors journalists
• 1/3 trust elected officials
• 1/5 trust business executives (Am.
  Demographic1/94)

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Business Ethics and the Ethics of Business

• Spring 1987 J. Shad (former SEC Chrmn.) donated
  30 million to Harvard to provide a finishing
  course in business ethics (WSJ 5/18/87)

. . . Is there economic compatibility between a
customer and a society focus ?
Are we living in an age of moral
collapse?

• One response
• Society is applying higher stds of ethics to
  businesses!
• Preoccupation social/moral issues distracts from
  economic leadership. (author unknown)

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Ethical Beliefs Shape All Behavior
Social Cultural Values
Ethics
Personnel
Political Legal Forces
Product
Accounting
Consumer Needs Wants
Price
Finance
Science Technology
Distr..
Promotion
Production
Monopoly Pure Competition
Economics
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Is a Lack of Ethics,a basic human condition?

• 1990s
• Loyalty - US Marine, Russian Embassy
  -
  Whistle Blowers??
• Sex Scandals - Jim Baker (Evangelist)
• - W. Clinton (Arkansas)
• - Jesse Jackson
  (Rev. ?)
• Influence - Political Campaign
  Selling Financing (China)

Answer Yes
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Examples of Medical Ethics

• Improper Coding and Cost Reporting
• Double billing
• False insurance claims
• Fabricated visits
• Quality of Treatment
• Code of Silence
• Over prescribing drugs
• Test Tube Fraud
• Nursing Home Visits _at_ 2230

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Examples of Ethics in Education

• HS Teacher says IUP professors need to clean up
  their act (1996)
• Decline in academic standards
• Casualness in testing grading inflation
• Class attendance and participation
• Giving Extra points for committee/org. work
• Ghost writers
• Special treatment (atheletes/Honors)
• Code of conduct Code of Silence

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Ethical Issues the Marketing Mix
Product Issues
Pricing Issues
Customers
Distribution Issues
Promotion Issues
Employee Theft
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Why study Business Ethics?

• To increase public confidence in business to
  facilitate the markets exchange system
  (Trust)
• To develop healthy competition to foster the
  exchange process (Integrity)
• To develop economic freedoms which produce
  economic efficiency resulting in economic
  social gains

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Marketing Ethics Socially Responsible Behavior
What would you do?

• As the manager of a toy store at holiday
  time, would you break a promise to a previous
  customer and sell a toy in scarce supply to a
  woman who claimed her child was very ill?
• Males 28 yes (Rules of right/wrong)
• Females 56 yes (emotional/feelings)

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What would you do?
TRADE SHOW -- As a sales person at a trade
show, you have the opportunity to pick up an
important document invariably left behind by a
competitor. - Males 63 yes, take it
-
females 57 yes, take it
GIFT Giving -- The purchasing agent of an
important account wants an expensive gift To
provide it would violate company policy, while
not providing it would lose the account.

- Males 54 yes, do it

- females 12 yes, do it
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Photo Processors Face A Tough DilemmaWhen to
call the Police?

• Situation Processing Questionable photos
  
• Baby and marijuana leaves
• Young male teenager and duct tape
• Nude girls ages 3 and 8
• Issues False Accusation/Legal Liability/
  Privacy/Child abuse

What would you do?
Ethical Decision Store policies that force you
to choose between your company and your moral
and, even legal, duty to society.
WSJ,1 June 2001,pg.A1
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Ethics In Business

• Corporate Culture
• how well an individuals or an organizations
  marketing activities exhibit ethical values
• Does good ethics good business?

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The Relationship of Organizational Values to
Employee Satisfaction
Source Ethics Resource Center, The Ethics
Resource Centers 2000 National Business Ethics
Survey How Employees Perceive Ethics at Work
(Washington, D.C. Ethics Resource Center, 2000),
p. 85. Reprinted with permission.
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• An individuals beliefs about right and wrong
  actions
• Moral values (standards) guide behavior and they
  change with time and society
• Norms
• what ought to be done
• norms in Western society generally are based
  on Judeo-Christian ethical ideology
• Are there universal rules?

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Two Moral Philosophies thatcondition guide
ones beliefs values

• Two types of moral philosophy
• Utilitarianism (teleological)
• Maximize the good for all
  
• focus on the consequences
• Ethical formalism (deontological)
• Golden rule
  
• focus on the inherent good/bad
• Ethical Dilemma
• occurs when two values are in conflict

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Golden Rule of Ethics

• Do unto others as you would have them do unto
  you.
• Different people understand this rule in
  different ways
• The other person may be different from you and
  does not want to be treated as you want to be
  treated!

• Marketing News. Ethics can be gauged by three
  key rules. Written by Dillard B. Tinsley. Sept.
  1,2003.

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Four Major Influences on Ethical Behavior
Religious Morality
What would you do?
Organizational Top-Middle-lower
Legal
Individual (you)
Situation
Parents, Family, Relatives, Friends etcetera
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Moral Philosophy the Situation

• What motivates voters more, economic (pocketbook)
  issues or . . . morals and values?

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Ethical Influences on Decision Making Processes
Your Personal Values
Opportunity
Money
Integrity
Ethical Marketing Decisions
Privacy
Legal Rights Obligations (Trust-Honesty-Respect)

Deception
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Incorporating Social Responsibility and Ethics
into Strategic Planning
EthicsIndividual and group decisions
Social Responsibility The total effect of
marketing decisions on society
Overall Strategic Marketing Planning
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Sources of Pressure to Compromise Ethics
Standards at Work
Sets tone
Source Ethics Resource Center, The Ethics
Resource Centers 2000 National Business Ethics
Survey How Employees Perceive Ethics at Work
(Washington, D.C. Ethics Resource Center, 2000),
p. 38. Reprinted with permission.
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Corporate Efforts to Improve Ethical Conduct

• Potential Tools

• Codes of Conduct
• Create Ethics Officers (High Rank)
• Implement Legal Compliance Programs
• Training (Ethics,honesty, respect for people)
• Support with Time over time
• Principle The more a person is exposed to
  unethical behavior, the more likely they will
  exhibit unethical behavior.

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Ethics in Business . . . .
Are execs quick to write off ethics?

• Situation An incentive to cheat (falsify audit)
• - Code of Conduct (Useless)
• - Personal Values (Fade)
• - Training (No effect)
• Result many executives are quick to write
• off ethics, ( no bottom line effects ?)
• (JBE, Feb. 1996)

25 of execs say ethical standards impede
success a majority feel young execs compromise
their ethics to achieve wealth power
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Why Ethics is also B-School Business

• Corporate Scandals
• Enron
• WorldCom
• Question Whose responsible?
• Answer To clean up ethics in corporations, you
  have to start at the beginning of a career.
  Business school, that is.

Business Week,27Jan03
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Lack of Personal Ethics Results in Political
Action Legislative Ethics

• Legislative ethics are societys laws that govern
  marketplace behavior
• Examples
• Federal Trade Commission (Ad substantiation)
• Congress amended a 1930 Trade Law in 1998 to
  ban the importation of products made with child
  labor (due to Teamster Union objections)

Corporate ethics are derived from federal, state,
local regulatory agency compliance laws.
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Corporate Bribery...

• 1994 - Foreign Companies used bribes to edge US
  competitors on 45 billion of business deals (US
  Commerce Dept.)
• Major Competitors France 1 , Germany 2,
  Britain, Japan
• Result Foreign Corrupt Practices Act-1994
• Updated 1998 Economic Espionage Act

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When the Government Replaces God,a Higher Law
emerges (WSJ, 30Dec 1995)

• Farmers , who once looked to God to solve their
  problems, now look to the government for
  subsidies.
• The Bible supports the Western concept of a
  Higher law. (ex. WW2, 2000 terrorists)
• It is the acknowledgment of an individuals right
  to appeal directly to God over the claims of the
  secular rulers.

Separation of church state,
Thomas Jefferson
Separation does mean elimination
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Ethical Judgments of College Students

• Ethical Judgments and Religion
• Intrinsic religious people evaluated the ethical
  scenarios as more unethical than did those with
  lower levels of intrinsic religious commitment.

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Quantifying Americas Decline

• America is subsiding into decay through default
  and can be defeated...from within by weariness,
  boredom, cynicism, greed, and in the end
  helplessness before its greatest problems.
• The West has been undergoing an erosion and
  obscuring of high moral and ethical ideals. The
  spiritual axis of life has grown dim.
• Alexander Solzhewitsyen (1993)

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Quantifying Americas Decline

• Living well versus Living Nobly
• Percent of abortions illegitimate births
• Teenage suicide rates
• Violent crime rate
• Ethnic based hate
• Economic Corruption
• Low Work ethic vs. immigrants
• Honesty, integrity -- ethical norms
• Religion Morality in decline

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Media Young People are targets of Violence
5760
Visual emotional deception Guns kill, people kill
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Teenage drug, alcohol users and Religious
practices
Result Those who attended religious services
regularly are less likely to use drugs and alcohol
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Applied Research
The Dynamics of Guanxi andEthics for Chinese
Executives

• Guanxi is perceived as an ethical means to
  efficiently conduct business in China based on
  Confucian cultural values

• Its a special type of relationship which
  contains trust, favor, dependence, and adaptation
  and often leads to insider-based decision making
  in the business world.

R. Chan, L. Cheng, and Ricky Szeto, Jrl of
Business Ethics,12/2002
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Another View

• Westerners often view Guanxi as related to
  unethical behavior
• Lead to corruption
• Privileged treatment
• Under-table dealing

Analysis uncovered 5 types of Ethical Views
1. Emphasize personal benefits rather than laws.
2. Explore Legal loopholes for profits.
3.Resist official governance and regulations.

• 4. Emphasize profits rather than friendship.
• Give favor do business within a Guanxi network.

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• Study Results

1. Unethical Profit Seekers (UPS) tend to be
younger than . . . Anti-governance,
Guanxi-Cultivators (AGGC). 2. UPS and AGGCs
generally work for privately-owned companies,
3. Apathetic Executives (AE) were found
to work for state-owned companies.