Marketing Ethics
Good ethics is a cornerstone of sustainable marketing. In the long run, unethical marketing harms customers and society as a whole. Further, it eventually damages a company's reputation and effectiveness, jeopardizing the company's very survival. Thus, the sustainable marketing goals of long-term consumer and business welfare can be achieved only through ethical marketing conduct.
Conscientious marketers face many moral dilemmas. The best thing to do is often unclear. Because not all managers have fine moral sensitivity, companies need to develop corporate marketing ethics policies—broad guidelines that everyone in the organization must follow. These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards.
The finest guidelines cannot resolve all the difficult ethical situations the marketer faces. • Table 20.1 lists some difficult ethical issues marketers could face during their careers. If marketers choose immediate sales-producing actions in all these cases, their marketing behavior might well be described as immoral or even amoral. If they refuse to go along with any of the actions, they might be ineffective as marketing managers and unhappy because of the constant moral tension. Managers need a set of principles that will help them figure out the moral importance of each situation and decide how far they can go in good conscience.
• table | 20.1 Some Morally Difficult Situations in Marketing
1. You work for a cigarette company. Public policy debates over the past many years leave no doubt in your mind that cigarette smoking and cancer are closely linked. Although your company currently runs an "If you don't smoke, don't start" promotion campaign, you believe that other company promotions might encourage young (although legal age) nonsmokers to pick up the habit. What would you do?
2. Your R&D department has changed one of your products slightly. It is not really "new and improved," but you know that putting this statement on the package and in advertising will increase sales. What would you do?
3. You have been asked to add a stripped-down model to your line that could be advertised to pull customers into the store. The product won't be very good, but salespeople will be able to switch buyers up to higher-priced units. You are asked to give the green light for the stripped-down version. What would you do?
4. You are thinking of hiring a product manager who has just left a competitor's company. She would be more than happy to tell you all the competitor's plans for the coming year. What would you do?
5. One of your top dealers in an important territory recently has had family troubles, and his sales have slipped. It looks like it will take him a while to straighten out his family trouble. Meanwhile you are losing many sales. Legally, on performance grounds, you can terminate the dealer's franchise and replace him. What would you do?
6. You have a chance to win a big account that will mean a lot to you and your company. The purchasing agent hints that a "gift" would influence the decision. Your assistant recommends sending a big-screen HDTV television to the buyer's home. What would you do?
7. You have heard that a competitor has a new product feature that will make a big difference in sales. The competitor will demonstrate the feature in a private dealer meeting at the annual trade show. You can easily send a snooper to this meeting to learn about the new feature. What would you do?
8. You have to choose between three ad campaigns outlined by your agency. The first (a) is a soft-sell, honest, straight-information campaign. The second (b) uses sex-loaded emotional appeals and exaggerates the product's benefits. The third (c) involves a noisy, somewhat irritating commercial that is sure to gain audience attention. Pretests show that the campaigns are effective in the following order: c, b, and a. What would you do?
9. You are interviewing a capable female applicant for a job as salesperson. She is better qualified than the men just interviewed. Nevertheless, you know that in your industry some important customers prefer dealing with men, and you will lose some sales if you hire her. What would you do?
But what principle should guide companies and marketing managers on issues of ethics and social responsibility? One philosophy is that such issues are decided by the free market and legal system. Under this principle, companies and their managers are not responsible for making moral judgments. Companies can in good conscience do whatever the market and legal systems allow.
A second philosophy puts responsibility not on the system but in the hands of individual companies and managers. This more enlightened philosophy suggests that a company should have a "social conscience." Companies and managers should apply high standards of ethics and morality when making corporate decisions, regardless of "what the system allows." History provides an endless list of examples of company actions that were legal but highly irresponsible.
Each company and marketing manager must work out a philosophy of socially responsible and ethical behavior. Under the societal marketing concept, each manager must look beyond what is legal and allowed and develop standards based on personal integrity, corporate conscience, and long-run consumer welfare. A clear and responsible philosophy will help the company deal with knotty issues such as the one faced by 3M:
In late 1997, a powerful new research technique for scanning blood kept turning up the same odd result: Tiny amounts of a chemical 3M had made for nearly 40 years were showing up in blood drawn from people living all across the country. If the results held up, it meant that virtually all Americans may be carrying some minuscule amount of the chemical, called perfluorooctane sulfonate (PFOS), in their systems. Even though at the time they had yet to come up with a definitive answer as to what harm the chemical might cause, the company reached a drastic decision. In mid-2000, although under no mandate to act, 3M voluntarily phased out products containing PFOS and related chemicals, including its popular Scotchgard fabric protector. This was no easy decision. Since there was as yet no replacement chemical, it meant a potential loss of $500 million in annual sales. 3M's voluntary actions drew praise from regulators. "3M deserves great credit for identifying the problem and coming forward," says an Environmental Protection Agency administrator. "It took guts," comments another government scientist. "The fact is that most companies ... go into anger, denial, and the rest of that stuff. [We're used to seeing] decades-long arguments about whether a chemical is really toxic." For 3M, however, it wasn't all that difficult a decision—it was simply the right thing to do. The company has since introduced reformulated Scotchgard products that it claims work even better than the original formula—and sell just as well.31
As with environmentalism, the issue of ethics presents special challenges for international marketers. Business standards and practices vary a great deal from one country to the next. For example, whereas bribes and kickbacks are illegal for U.S. firms, they are standard business practice in many South American countries. One recent study found that companies from some nations were much more likely to use bribes when seeking contracts in emerging-market nations. The most flagrant bribe-paying firms were from India, Russia, and China. Other countries where corruption is common include Iraq, Myanmar, and Haiti. The least corrupt were companies from Iceland, Finland, New Zealand, and Denmark.32
The question arises as to whether a company must lower its ethical standards to compete effectively in countries with lower standards. The answer: No. Companies should make a commitment to a common set of shared standards worldwide. For example, John Hancock Mutual Life Insurance Company operates successfully in Southeast Asia, an area that by Western standards has widespread questionable business and government practices. Despite warnings from locals that Hancock would have to bend its rules to succeed, the company set out strict guidelines. "We told our people that we had the same ethical standards, same procedures, and same policies in these countries that we have in the United States, and we do," says Hancock Chairman Stephen Brown. "We just felt that things like payoffs were wrong—and if we had to do business that way, we'd rather not do business." Hancock employees feel good about the consistent levels of ethics. "There may be countries where you have to do that kind of thing," says Brown. "We haven't found that country yet, and if we do, we won't do business there."33
Many industrial and professional assodations have suggested codes of ethics, and many companies are now adopting their own codes. For example, the American Marketing Association, an international association of marketing managers and scholars, developed the code of ethics shown in • Table 20.2. Companies are also developing programs to teach managers about important ethics issues and help them find the proper responses. They hold ethics workshops and seminars and set up ethics committees. Furthermore, most major U.S. companies have appointed high-level ethics officers to champion ethics issues and to help resolve ethics problems and concerns facing employees.
• table | 20.2 American Marketing Association Code of Ethics
Was this article helpful?
