PRINCIPLES OF MARKETING

ODD SEMESTER (2010/2011)

SUMMARY OF CHAPTER 20

Marketing Ethics and Social Responsibility

Compiled By

Fara Laynds Lamborghini : 0910233039

INTERNATIONAL ACCOUNTING DEPARTMENT

ECONOMIC FACULTY
BRAWIJAYA UNIVERSITY
MALANG
2011

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 Marketing Ethics and Social Responsibility

Fara Laynds Lamborghini: 090233039

International Accounting Department Economic Faculty
Brawijaya University

ETHICS IN MARKETING
Ethics are a collection of principles of right conduct that shape the
decisions people or organizations make. Practicing ethics in marketing means
deliberately applying standards of fairness, or moral rights and wrongs, to
marketing decision making, behavior, and practice in the organization.
In a market economy, a business may be expected to act in what it believes
to be its own best interest. The purpose of marketing is to create a competitive
advantage. An organization achieves an advantage when it does a better job than
its competitors at satisfying the product and service requirements of its target
markets. Those organizations that develop a competitive advantage are able to
satisfy the needs of both customers and the organization. As our economic system
has become more successful at providing for needs and wants, there has been
greater focus on organizations' adhering to ethical values rather than simply
providing products. This focus has come about for two reasons. First, when an
organization behaves ethically, customers develop more positive attitudes about
the firm, its products, and its services. When marketing practices depart from
standards that society considers acceptable, the market process becomes less
efficient—sometimes it is even interrupted. Not employing ethical marketing
practices may lead to dissatisfied customers, bad publicity, a lack of trust, lost
business, or, sometimes, legal action. Thus, most organizations are very sensitive
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to the needs and opinions of their customers and look for ways to protect their
long-term interests.
Second, ethical abuses frequently lead to pressure (social or government)
for institutions to assume greater responsibility for their actions. Since abuses do
occur, some people believe that questionable business practices abound. As a
result, consumer interest groups, professional associations, and self-regulatory
groups exert considerable influence on marketing. Calls for social responsibility
have also subjected marketing practices to a wide range of federal and state
regulations designed to either protect consumer rights or to stimulate trade. The
Federal Trade Commission (FTC) and other federal and state government agencies
are charged both with enforcing the laws and creating policies to limit unfair
marketing practices. Because regulation cannot be developed to cover every
possible abuse, organizations and industry groups often develop codes of ethical
conduct or rules for behavior to serve as a guide in decision making. The American
Marketing Association, for example, has developed a code of ethics. Self-
regulation not only helps a firm avoid extensive government intervention; it also
permits it to better respond to changes in market conditions. An organization's
long-term success and profitability depends on this ability to respond.
Marketing ethics is the area of applied ethics which deals with the moral principles
behind the operation and regulation of marketing. Some areas of marketing ethics
(ethics of advertising and promotion) overlap with media ethics. Possible
frameworks:
 Value-oriented framework, analyzing ethical problems on the basis of the
values which they infringe (e.g. honesty, autonomy, privacy, transparency).
An example of such an approach is the AMA Statement of Ethics.
 Stakeholder-oriented framework, analyzing ethical problems on the basis of
which they affect (e.g. consumers, competitors, society as a whole).
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 Process-oriented framework, analyzing ethical problems in terms of the
categories used by marketing specialists (e.g. research, price, promotion,
placement).

None of these frameworks allows, by itself, a convenient and complete

categorization of the great variety of issues in marketing ethics.
Contrary to popular impressions, not all marketing is adversarial, and not all
marketing is stacked in favour of the marketer. In marketing, the relationship
between producer/consumer or buyer/seller can be adversarial or cooperative. For
an example of cooperative marketing, see relationship marketing. If the marketing
situation is adversarial, another dimension of difference emerges, describing the
power balance between producer/consumer or buyer/seller. Power may be
concentrated with the producer (caveat emptor), but factors such as over-supply or
legislation can shift the power towards the consumer (caveat vendor). Identifying
where the power in the relationship lies and whether the power balance is relevant
at all are important to understanding the background to an ethical dilemma in
marketing ethics. What is marketing? 1. The act or process of buying and selling in
a market. 2. The commercial functions involved in transferring goods from
producer to consumer.
A popularize anti-marketing stance commonly discussed on the blogosphere and
popular literature is that any kind of marketing is inherently evil. The position is
based on the argument that marketing necessarily commits at least one of three
wrongs:
 Damaging personal autonomy. The victim of marketing in this case is the
intended buyer whose right to self-determination is infringed.
 Causing harm to competitors. Excessively fierce competition and unethical
marketing tactics are especially associated with saturated markets.
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 Manipulating social values. The victim in this case is society as a whole, or
the environment as well. The argument is that marketing promotes
consumerism and waste.
 Marketing has a major impact on our self-images, our ability to relate to one
another, and it ruins any knowledge and action that might help to change
that climate.
 Marketing/Advertising creates artificiality and influences sexual attitudes.
 Overall, people are spending tons of money and are usually more depressed.

SOCIAL RESPONSIBILITY IN MARKETING

Most marketing organizations do not intentionally work in isolation from the rest
of society. Instead they find that greater opportunity exists if the organization is
visibly accessible and involved with the public. As we’ve seen, because marketing
often operates as the “public face” of an organization, when issues arise between
the public and the organization marketing is often at the center. In recent years the
number and variety of issues raised by the public has increased. One reason for the
increase is the growing perception that marketing organizations are not just sellers
of product but also have an inherent responsibility to be more socially responsible,
including being more responsible for its actions and more responsive in addressing
social concerns. Being socially responsible means an organization shows concern
for the people and environment in which it transacts business. It also means that
these values are communicated and enforced by everyone in the organization and,
in some cases, with business partners, such as those who sell products to the
company (e.g., supplier of raw material for product production) and those who help
the company distribute and sell to other customers (e.g., retail stores). In addition
to insuring these values exist within the organization and its business partners,

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social responsibility may also manifest itself in the support of social causes that
help society. For instance, marketers may sponsor charity events or produce cause-
related advertising. Marketers who are pursuing a socially responsible agenda
should bear in mind that such efforts do not automatically translate into increased
revenue or even an improved public image. However, organizations that
consistently exhibit socially responsible tendencies may eventually gain a strong
reputation that could pay dividends in the form of increased customer loyalty.
There’s no doubt that ethics and corporate social responsibility have an increasing
impact on business. But it’s not enough to produce a corporate responsibility (CR)
report each year and hope that committing to sustainable initiatives won’t
adversely affect profit. The role of the marketer these days could be seen in terms
of connecting with stakeholders not only in terms of value, but in terms of values.
In a world where intangible assets and corporate reputation are centre stage, the
marketing team needs to focus on ethical issues more than ever before.