Week 11. Marketing ethics (student) (1 slide per page) PDF

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Principles of Marketing Week 11: Marketing ethics

Andrew (Andy) Zur! [email protected]

Assessment Research component (5%) Complete 4x 30min studies

Due: Throughout the semester via SONA system (look for the “marketing study” studies)

Discussion paper (10%) 1,000 words

Due: Wednesday, 3 April at 11:59pm (Week 5)

Assessment (cont.) Marketing report (25%) 2,000 words

Due: Wednesday, 15 May at 4:00pm (Week 10)

End of semester exam (60%) Hurdle requirement

Between Tuesday, 11 June to Friday, 28 June

Lecture structure The market-oriented firm & Value creation (Week 1)

Product life cycle & product development (Week 5)

Distribution & Services marketing (Week 9)

Relationship marketing & Customer Loyalty (Week 2)

Consumer behaviour

(Week 3)

Segmentation, targeting, positioning, & branding (Week 4)

Marketing communications

Marketing communications & Pricing

(Week 6)

(Week 7)

Services marketing

Marketing ethics

Research debriefing

(Week 10)

(Week 11)

(Week 12)

Pricing & distribution

(Week 8)

We look at the impact of ethics on individuals & businesses Today

What will we achieve in this session? •

Understand the ethical tension that exists for all businesses!

•

Consider the rationale for corporate social responsibility (CSR), including evidence for the business case!

•

Broaden our perspective of organisational stakeholders

“Ethics is knowing the difference between what you have a right to do and what is right to do.”

–Potter Stewart

What is ethics? •

Ethics refers to the concept of what is right and wrong, moral, and immoral. Ethical behaviour is generally considered what is in line with the accepted moral code, and what is proper

What is ethics? •

Ethics are considered the moral standards by which people standards by which people judge behaviour. Ethics are often summed up in what is considered the Golden Rule:!

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“Do unto others as you would have them do unto you.”

What is ethics? •

While this makes sense as a general rule of thumb, it is not entirely useful when looking to define business ethics!

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In business, there are many different stakeholders you have to answer to!

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Determining what to do when an ethical dilemma arises among these different interests can be extremely tricky and as such business ethics as a field is complex and multi-faceted

Stakeholders •

Primary stakeholders: those who have a formal, official, or contractual relationship with/stake in the organisation!

•

Secondary stakeholders: other societal groups who are affected by the activities of the firm

Stakeholders Primary

Secondary

Shareholders & investors

Government (local, state, & federal)

Managers

Other regulators

Employees

Social pressure/lobby groups

Customers

Media & Journalists

Suppliers & other partners

Academic & Researchers Natural environment Future Generations Local community

Stakeholder expectations Primary

What do they want?

Shareholders & investors

ROI, corporate governance, conscience protection

Managers

Benefits, safety, stimulation, equal opportunities Employees

Customers

Value, quality, honest advertising, transparency

Suppliers & other partners

Sustained relationships, payment of bills, technology transfer, reputation protection

Stakeholder expectations Secondary

What do they want?

Government (local, state, & federal) Law abidance, tax contribution, local economic impact

Other regulators Social pressure/lobby groups Media & Journalists

Media releases, public relations

Academic & Researchers

Natural environment

Sustainable materials, water/air emissions, energy efficiency, waste management

Future generations Local community

Charity, community investment, sponsorship

Classifying stakeholders •

Stakeholder power: ability to bring about desired outcomes (despite resistance)!

•

Stakeholder legitimacy: actions of an entity are desirable, proper, or appropriate!

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Stakeholder urgency: issues are time sensitive and of great importance

Stakeholder salience

What is business ethics? •

A system of moral principles applied in commercial world. In other words, business ethics refer to the moral rules and regulations governing the business world!

•

They are the moral values that guide the way corporations or other business makes decisions

Key questions •

Why do we have ethics and morality?!

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If morality is hard wired, why do we differ on what we consider ethical behaviour?!

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When we do generally agree that something is unethical, why is it so hard to act ethically?!

•

Is being “good” the same thing as being “not bad”?

Why do we have ethics and morality? •

In-built moral emotions!

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Shame, moral outrage, disgust, contempt, vengeance !

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Compassion, forgiveness, gratitude

Why do we have ethics and morality? •

•

Group benefits!

•

Kin survival!

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Cooperation and reciprocity!

Empathy!

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We are empathetic to those who are in the same group!

•

Not related to liking

Why do we differ on what we see as ethical? •

Different cultures perceive the same behaviour differently and more/less ethical!

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Bribery/gifts!

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Child labour!

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Rights of women!

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Giving to charity!

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Homosexuality

Why do we differ?

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Apply different ethics in moral reasoning!

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Have different intuitions

Ethical theories

Corporate social responsibility

Corporate Social Responsibility (CSR)— a company’s discretionary actions, policies, and programs that appear to advance societal wellbeing in ways that extend beyond its immediate financial interests and the requirements of the law

Motivations behind CSR •

Value-driven CSR: CSR is presented as being part of the company’s culture, or as an expression of its core values!

•

Performance-driven CSR: CSR is introduced as a part of the firm’s economic mission, as an instrument to improve its financial performance and competitive posture!

•

Stakeholder-driven CSR: CSR is presented as a response to the pressure and scrutiny of one of more stakeholder groups

Motivations behind CSR (cont.) •

Business reasons:!

• •

Opportunities/rewards (e.g. $$$)!

Moral/ethical reasons:!

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Corporations cause social problems or have social impacts!

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With power comes responsibility!

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Because government cannot fix all social problems!

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Corporations rely on resources from a broader set of stakeholder than just shareholders

Motivations behind CSR (cont.) •

Legal reasons:!

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Risks/penalties!

•

Australian Consumer Law!

•

Age Discrimination Act 2004!

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Disability Discrimination Act 1992

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Racial Discrimination Act 1975!

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Sex Discrimination Act 1984!

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Environmental Protection Act 1970 (VIC)

Why invest in CSR? •

Financial motive: belief that CSR contributes to the (long term) financial performance of the company (extrinsic)!

•

Moral motive: one feels obliged to do something because it is right, not because it is enjoyable (intrinsic)!

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Altruistic motive: Executives may contribute to CSR because they enjoy helping others or want to contribute to the common good from a genuine concern of the well-being of others (intrinsic)

The business impact of CSR •

Instrumental CSR (‘enlightened self-interest’)!

•

Employees may be more attracted/committed!

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Forestall legalisation (‘license to operate’)!

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Risk management!

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Reputation/brand enhancement or differentiation!

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Extra and/or more satisfied customers vs. boycotts or other consumer actions

Changing consumer behaviour has a lot to do with it

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Consumers will only pay a small premium for ethically produced goods! un t

e

The size of the effect depends on consumer expectations

But the Challenge of Changing Actual Consumer Behaviour Remains

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While 30% of consumers stated that they would purchase ethically, only 3% actually do

Corporate social responsibility •

Macro-CSR: involving broader economic, institutional, political, and societal contexts !

•

Micro-CSR: outcomes of individual beliefs and perceptions of CSR practices (i.e., individual responses to CSR) and understanding the underlying mechanisms (i.e., the psychological mechanisms that mediate CSRindividual outcome relationships)

(Macro) Corporate social responsibility

(Micro) Corporate social responsibility Employees

Customers

Milton Friedman

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“The social responsibility of business is to increase its profits.”

Example: Daraprim

Utilitarianism •

Consideration: social consequences!

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If I consider all of the possible consequences of my actions, for everyone who is affected, will we be better or worse off overall? How likely are these The happiness of the greatest consequences and how number of people in the society is significant are they?

considered the greatest good

Example: The trolley problem

Egoism •

Consideration: one's own interests!

•

Is this really in my, or my organisation’s, best long-term interests? Would it be acceptable and expected for me to think only of the consequences to myself in this situation?

Example: Volkswagen

Feminist ethics/Ethics of care •

Consideration: care for others and relationships!

•

How do I (or would) the other affected parties feel in this situation? Can I avoid doing harm to others? Which situation is most likely to preserve healthy and harmonious relationships among those involved?

Example: Barbie

Example: Nestlé infant milk formula

Postmodern ethics •

Consideration: moral impulse and emotions!

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Am I just simply going along with the usual practice here, or slavishly following the organisation's code, without questioning whether it really feels right to me? How can I get closer to those likely to be affected by my decision? What do my emotions or gut feelings tell me once I'm out of the office?

Example: Banking sector

Example: Whistleblowers

Why is it so hard to act ethically?

Recap •

The ‘right’ course of action for businesses will often imply significant short-term costs (which shareholders don’t like)!

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But there are good normative reasons and some evidence for the instrumental case for ethical behaviour!

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Exactly what CSR means for businesses is not always certain, however, taking a broadened view of organisational stakeholders is a good starting point

Exam preparation!...