Responsible Marketing

Learning Objectives

I. Explain how ethical issues influence marketing
planning.
II. Analyse examples of how organisations respond
to ethical issues.

© 2014 Berlin Asong. All rights reserved.

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?

ETHICS

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“Ethics are values that an individual
uses to interpret whether an action or
behaviour is acceptable or appropriate”.
Peter Stanwick & Sarah Stanwick (2013), “Understanding Business Ethics”. 2nd edition. Sage publication, p. 3


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study
morality.

It is the


of

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It is the Study of

right &
wrong

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What’s right & wrong is
sometimes not clear-cut.
For example…


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Is it right or wrong for
McDonald’s to profit from
selling high-carb meals
often linked to obesity and
heart-related diseases?


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Is it right or wrong for
companies to use bio-fuel
made from corn when 9 million
people (5 million are children)
die each year of hunger?


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Yahoo CEO Scott
Thompson stepped
down after it was
revealed he doesn’t
have a computer
science degree as
stated in his CV.
May 2012

Right or Wrong?

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It could be argued…

He lied to get a job
he “canSo what?so well”.
do


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A counter-argument could be…

He has the skills to do
his job, but no longer has
the trust or integrity of his
employees & shareholders.


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Sky News admits hacking emails
but says it was 'in the public interest'

Source: The Independent (2012). Retrieved from www.independent.co.uk/news/uk/crime/sky-news-admitshacking-emails-but-says-it-was-in-the-public-interest-7621831.html


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Hacking into someone’s email is a criminal offence.

Sky News argues its
action is morally right because
it helped solve a crime.


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Is office
romance a
good thing or
bad thing?


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Some ethicists observe that…

…what is right and
wrong is subjective and
not universally binding.


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30 minutes

What criticisms do

organisations face nowadays?
Alternatively, what criticisms do marketers face nowadays?


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Product

Process

Price

Marketing
Mix

Physical
Layout

Place

People


Promotion

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Providing customers
with defective products
or poor services.

T
oyota Recalls, 2010.


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February 2013 horsemeat
scandal in Europe.

Source: gawker.com


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Misleading nutritional labels
E.g. falsely claiming a product is
an organic or fair-trade product.


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Fanciful, expensive packaging

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Deceitful packaging


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Using excess packaging


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Obese society linked
to high carb products.

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Child obesity often linked to
high carb products and pastimes
that discourage active lifestyle.


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Product

Process

Price

Marketing
Mix

Physical
Layout

Place

People


Promotion

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Highly priced products
and services beyond the
buying reach of many.


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The poor pay for the same pricey
products and services as the rich.


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Price-fixing

Barclays fined £290m
for rigging LIBOR rate.
Source: www.guardian.co.uk/business/2012/jun/27/barclays-chief-bob-diamond-bonus-fine

3 July 2012
Source: insurance-center.org


Former Barclays CEO Bob Diamond resigned amid libor scandal
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Product

Process

Price

Marketing
Mix

Physical
Layout

Place

People


Promotion

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There are unverified claims that…

…Apple intentionally limits supplies
of the iPhones and iPad to create a
perception of high demand.


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Product

Process

Price

Marketing
Mix

Physical
Layout

Place

People


Promotion

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Skechers USA Inc. fined

$40 million

for misleading advertising claims.


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Source: adpressive.com


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Stereotype

body figure & size.


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Consumerism

Aggressive promotion glamorises materialism.


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Companies are often criticised for
creating artificial needs.

Do you actually need another pair of shoes or that expensive shoes?


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Consequences of materialism and artificial needs:

Thrown foods

Source: WRAP (2012). Retrieved from www.wrap.org.uk/content/pictures


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In the UK, family household throws

£680
of food a year.

Source: The Telegraph (2012). Retrieved from
www.telegraph.co.uk/finance/personalfinance/consumertips/householdbills/9268980/Families-waste-680-of-food-a-year.html

Source: WRAP (2012). Retrieved from www.wrap.org.uk/content/pictures


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Consequences of materialism
and artificial needs:

debts


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Cultural imperialism

by foreign brands:

eroding national and sub-cultures.


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Unauthorised used

of consumers’
private details.


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Product

Process

Price

Marketing
Mix

Physical
Layout

Place

People


Promotion

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Exploitation

of workers.


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sweatshops


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Underpaid workers

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“Excessive”

executive pay
and bonuses.


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"Rogue" Bosses

ENRON
Guilty of accounting
embellishment & fraud.

(L-R) Mr. Jeffrey K. Skilling, former President and CEO of Enron Corporation; Dr. Robert Jaedicke,
Board of Directors Chairman of Audit and Compliance Committee of Enron Corporation; and Mr.
Herbert S. Winokur, Jr., Board of Directors Chairman of the Finance Committee of Enron
Corporation, during the Oversight and Investigation Subcommittee hearing.


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"Rogue" Bosses

Worldcom

WorldCom Accounting Scandal Revealed: 3.8 billion in mislabelled expenses had been used to inflate
cash flow and hide losses in 2001 and early 2002. Shown is former Worldcom CEO Bernard Ebbers,


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"Rogue" Bosses

Bernard Madoff’s
ponzi scheme.


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Product

Process

Price

Marketing
Mix

Physical
Layout

Place

People


Promotion

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Not adhering to
manufacturing, customer care,
or quality control procedures.


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Air pollution from
industrial waste like
carbon emissions.


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Depletion
of natural
resources.


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…and many more
criticisms such as…


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Corporate Tax Evasion

Picture source: www.ecumenicalnews.com


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Picture source: metro.co.uk

20 minutes

What are the possible
effects of these criticisms
on organisations?


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Effects of "Irresponsible" Marketing on Organisations

Damaged reputation/brand.
Consumer boycott and activism.
Falling sales and profit.
Legal fines.
Loss of shareholder value.
Withdrawal of business license.
Unnecessary distractions.
Etc.

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20 minutes

How should marketing
planners and their organisations
respond to the criticisms?
See slides 17 - 58

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Learning Objective

I. Explain how ethical issues influence marketing
planning.


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A Schematic Outline of the Influence of Ethics on Marketing Planning
Ethical gathering and use of data | Focus on customer and societal needs.
The 7Ps address legal, societal and environmental concerns.
Employee care | Create, encourage, reinforce
and reward ethical behaviours.

Understand the
marketplace &
consumer needs.

Design
suitable marketing
strategy.

Implement
marketing strategy.

Measure
performance of
marketing strategy.

Value creation

Financial, environmental, societal, customer and employee
metrics are used to assess performance of marketing strategies.

Shared value; fairer value for the customer, company & society.

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1

A growing number of
companies are incorporating
social and environmental issues
into their planning processes.


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5000

Almost
organisations published corporate
responsibility reports in 2010.
Corporate Register (2011), “Corporate Responsibility Reporting Awards ‘11”, Corporate Register, pp. 4-5


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Kraft Foods supporting
Cocoa farmers in Ghana.


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74

2

Product
Planet

Process

Price

Marketing
Mix

Physical
Layout

Place

Promotion
People


Ethical and legal
concerns are being
considered when
formulating marketing
strategies (marketing
mixes). For example…
75

Retailing products that
are safe, and help customers
lead a healthier lifestyle.


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“In April 2008, we were the first
retailer to launch 1% fat milk, which
retains the same amount of calcium
and vitamin B as semi-skimmed milk
but has nearly half the fat.”

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McDonald’s launches new
packaging with QR codes, which
provide nutritional info. to help
health conscious diners make
informed eating decisions.


Picture source: http://news.mcdonalds.com/press-releases/mcdonald-slaunches-new-global-packaging-designs-nyse-mcd-975617

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SABMiller

“Making more
beer but using
less water: we've
set ourselves a
target to reduce
our average
water use per
hectolitre of beer
by 25% by 2015”.

Picture Source: cervejaavecesar.blogspot.com

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“We are active in
taking steps to discourage
irresponsible drinking”.


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3

Planners are increasingly seeing…

…ethical issues as sources for new
products, new markets, brand differentiation,
new revenue streams and cost reduction.
For example…


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Toyota’s Prius has been a success with over

3 million
units sold worldwide since it went on sales in1997.


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Kraft Foods has
cut its annual use of
fuel to 680,000 litres.
Source: Kraft annual report 2011


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Learning Objective

I. Analyse examples of how organisations respond
to ethical issues.


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Chosen Organisations


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20 minutes

What issues is
McDonald’s often
criticised of?

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Criticisms of McDonald's

Food provisions linked to obesity.
Provision of high-carb & fatty foods.
Marketing "unhealthy" meals to children.
Less attractive jobs (McJob).
Cultural imperialism.
Etc.

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20 minutes

How is McDonald’s responding

to the top-three criticisms?
See slide 6


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1


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92

2


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McDonald’s launches new
packaging with QR codes, to
help diners make informed
dieting choices.—Jan. 2013


Picture source: http://news.mcdonalds.com/press-releases/mcdonald-slaunches-new-global-packaging-designs-nyse-mcd-975617

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3


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Picture source: www.wdexpo.org

"One of McDonald’s Europe’s new
principles states that all Happy Meal
advertising that features food will include
fruit or vegetables and drinks with only
naturally occurring or no sugar".
McDonald’s (2013), “Leading by Examples”. [Online] Available from
www.aboutmcdonalds.com/mcd/sustainability/library/best_practices/nutritio
n_and_well_being/leading_by_example.html [accessed 18 October 2013]


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4


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Source: McDonald’s (2013)


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The company is criticised for
hiking energy prices at a time many
households are financially tight.


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101

20 minutes

How is British Gas responding

to the public uproar?


102

1

British Gas Managing Director Ian
Peters in media interview, explaining
the reasons of raising energy prices.


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2

The company uses
Twitter to respond to
customer grievances.


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3

British Gas is rolling out smart
energy metres to help customer
manage energy usage and bills.

Picture source: moneysupermarket.com


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The Cooperative Group is one of the
world’s most ethical companies, according
to the Ethisphere Institute’s 2013 study.


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T appreciate why the Cooperative Group
o
is one of the world’s most ethical organisation,
one has understand its business model.


107

The company strives…

“…to be the most
socially responsible
business in the UK”.
The company is delivering on its ethical goal.

108

The company is delivering on its ethical goal.


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