Marketing Ethics

Ethics, in the broadest sense of the word, is rising to the top of the corporate agenda. Scarcely a week goes by without a leading company coming under attack, rightly or wrongly, for alleged unethical business practices, whether it is Ford removing the black faces from a sales brochure, Shell UK dumping its redundant oil platform, Brent Spar, in the North Sea, or MeVities' use of fish oil from sand eels, an endangered species and puffins' staple diet.

However far from reality the accusations of manufacturers' unethical business practices are, companies under attack risk tarnishing their reputation. And those found guilty of wrongdoing face hefty legal penalties. The US subsidiary of Lucas (automotive components and parts manufacturer) was fined $106 million for keeping false records of gearboxes, while Daiwa Bank suffered fines of £340 million for concealing SI billion of losses.18

High-publicity scandals, which made international news, such as the case of Union Carbide's plant in Bhopal, India, which negligently released toxic fumes, killing 2,5000 people, serve to remind society of the pressing imperatives for corporations to act in an ethical manner.

Conscientious marketers face many moral dilemmas, though the best thing to do is often unclear. Imagine you are trying to win a big public contract in a developing country. The minister in charge makes unmistakable references to the disgracefully low pay of local civil officials and the benefits his own children would enjoy if they could study abroad. The cost of providing this (concealed as a 'scholarship' paid for by your company) is minute compared with the value of the contract. Your competitors, given the chance, would assuredly find the money. Do you pull out, or pay up?

Most businesspeople in such situations find that their scruples are soon swallowed. So do most governments. Germany is one of several European countries where bribes paid abroad are tax-deductible (although the tax office may want proof that the person paid is not liable for German income tax). The United States is harsher - under the Foreign Corrupt Practices Act, executives can face gaol for paying bribes. But it is hard to prove ('I was shocked, shocked to hear that our executive training scholarship had paid for the minister's children to visit Disneyland'); and many American firms get third-party consultancies to do their bribing for them. In searching for ethical standards for marketing, marketing managers draws upon postmodernist thinking and philosophies that date back well beyond marketing itself. Marketing Highlight 2.4 introduces some of this,19

Because not all managers have fine moral sensitivity, companies need to develop corporate marketing ethics policies. Such policies offer broad guidelines that everyone in the organization must follow. They cover distributor relations, advertising standards, customer service, pricing , product development and

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general ethical standards. 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. But ta/iat 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 judgements. Companies can in good conscience do whatever the system allows.

A second philosophy puts responsibility not in the system, but in the hands of individual companies and managers. This more enlightened philosophy suggests that a company should have a 'social conscience'. Each company and marketing manager must work out a philosophy of socially responsible and ethical behaviour. Under the societal marketing concept, each manager must look beyond what is legal and allowed, and develop high standards of ethics and morality based on personal integrity, corporate conscience and long-run consumer welfare. A clear and responsible philosophy will help the marketing manager deal with the many knotty questions posed by marketing and other human activities.

Many industrial and professional associations have suggested codes of ethics, and many companies are now adopting their own codes of ethies. About half" of European firms (a modest sum) compared to something like 90 per cent of America's biggest 2,000 companies have established 'ethical codes of practice' for their employees. Efforts have been made to establish a general international ethies code (see Marketing Highlight 2.5). Firms also have 'ethics education' programmes to teach managers about important ethics issues and help them find the proper responses.2"

Written codes do not, however, assure ethical behaviour. The code of the Prudential Corporation, a life insurance-to-property group, pledges to work f'or the good of its shareholders, customers and staff. It notes that 'in providing its business, the Prudential aims are ... to abide by the spirit of laws as well as their letter and to be a significant contributor to the development and well-being of the wider community in which we operate". The guidelines are well meaning but too abstract to direct action when the interests of the company diverge sharply from those of its employees, customers or the local community. There has to be the small print to tell employees what to do in specific dilemmas, such as when being offered, or asked for, a bribe. There should also be sanctions to enforce the code, so that ethical pledges are more than mere PR 'puff.

Companies are urged to provide detailed policy on issues such as conflicts of interest, bribes, gift-giving, relations with competitors, and shareholders' and other stakeholders' rights. Every function of the business should also have an ethics policy tailored for them. For example, how is the export division, which

From Plato's Republic to Supermarket Slavery

There is good reason to search a long way back for the ethics to guide marketing. As the British philosopher Alfred North Whitehead (1861-1947) commented, 'all Western philosophy is really no more than a footnote to Plato's (428-354 BC) great work The Republic.' Tf that were true, our thinking on 'marketing ethics' is little more than a smudge on that footnote.

The ancients were also practical, as Plato's student explained:

'Ethics is a rough and ready business determined by ordinary practical men of common sense, not by inbred ascetic "experts" with their heads in a remote and austere world.'

Aristotle (384-322 BC}

Thinking's the thing

A lot of thinking went on in ancient Athens, a city state of only about 400,000 people. Socrates (469399 EG) thought that the most important thing about human beings is that they ask questions. He also thought that real moral knowledge existed and was worth pursuing. He did not think morality could be tough, but said that it was more than just obeying the law. The newly democratic Athenians did not like this questioning of state morality, so they condemned him to death by poisoning.

Good I'or the slate and good for you too Plato thought that Athens' experiments with democracy were a shambles and left town. He believed in moral absolutes that were separate from the more sordid world. This letl him to idealize regimes where right and wrong was well defined. He thought militaristic and disciplined Sparta was a much better place than free-thinking Athens and that people should do what is good for the state. Lots of leaders have tried this and very nasty it is too.

Choosing the happy medium

Aristotle rejected his teachers' concern for absolute truths, suggesting that people take a middle road

Marketing Highlight 2.4

and learn how to behave from experience. People learn to become good citizens, and from that achieve contentment. Well, most people! And how about being a good citizen of a gang of hooligans?

It was a long time before western philosophy recovered from these Greeks, but the Renaissance got things going again. Machiavelli was born in another city state: Florence.

He may be clung, but at least he's our dung Machiavelli (1469-1527) was an observer rather than a philosopher. After he saw what succeeded, he recognized that politics and morality mix badly. This is a convenient view for business leaders who think there should be two Nets of moral standards: one for public life and one for private life. In political and business life it is necessary to be pragmatic and prudent - in other words, unethical - while retaining a different private ethic. As recent politicians have found, life does not always divide -so easily.

Solitary, poor, nasty, brutish and short The English Royalist Hobbes (1588-1678) is even more depressing than Machiavelli, People are awful and are prevented from degenerating into our natural brutish behaviour only by realizing that everyone behaving that way would make life unbearable. People therefore establish a 'social contract' (which parents call 'bringing up') that has to be enforced by a neutral third party (government contract). Franco-Swiss Rousseau (1712-78) had the opposite view that humanity is essentially good, but is corrupted by society to want things like smart clothes, carriages and Nike trainers.

Sum happiness

English Utilitarians Bentham (1748-1832) and Mill (1806-73) invented a form of moral calculus. Bentham thought his country's laws were in a mess because they lacked a scientific foundation, lie saw human beings as pleasure-pain machines, so he suggested that law makers should balance the sum of the pain and pleasure to achieve 'the greatest happiness of the greatest number'. This has two consequences: means justifying ends, and problems for minority groups. Mills worried about this 'tyranny of the majority'. He preferred talking about happiness rather than pleasure, tolerated individual lifestyles and thought that the 'happiness sums' varied and were for individuals as well as law makers.

Bah. happiness

Kant (1724-1804) had little time for happiness. The German idealist's ethics had categorical imperatives. Tie believed that a moral action was one done out of a sense of duty, and thought that ethics was about finding out our duties and living by them. Kant deduced a 'universality test' to find the compulsory rules. He asked people to imagine what it would be like if everybody did what they themselves wanted to do. Using this mind model, we deduce that if people sold shoddy goods habitually, life would be chaotic and, therefore, people have a duty not to sell shoddy goods.

And justice for all

Living American John Rawls (1921— ) has greatly influenced modern liberal thinking. He has a mind model based on imagining a group of people brought together with no knowledge of what place they will have in society. They have to invent a series of rules that will make their community just and fair. Then they have to live in it.

Don't know; can't know

This rationalist climb to understanding 'truths' started being undermined by Scotsman David Hume (1711-76). His 'meta-ethics' does not offer any advice, but reeogni/<es an 'is-ought gap' between what we experience (is) and the conclusion we try to draw from that (ought). Even though we know that bull bars on ears kill children (is), we can only produce a false argument that they should not be sold (ought). Developing similar insights, it follows that any moral argument between people is 'utterly futile, unsolvc-able and irrational' (A. J. Avers 1910-89).

The Age of Unreason

Postmodernists have pursed this ethical scepticism to new layers. Reason fails because of its dependence on language. What passed as reason in the past has caused so much human suffering. This level of ethical uncertainty is not new; it is close to the Sophist views that Plato argued against. Postmodernists despair at the society they see coming: a kaleidoscope of consumerist images that hypnotize citizens into accepting the morality of capitalism; where individual morality ceases to exist, where all that remains is supermarket slavery and where the only choice is by consumers between products - marketing.

Meanwhile Alisdair Maclntyre looks back to the Aristotelian idea that we should concentrate less on the individual and more on people and what is good for the society.

SouKflES: J. Ackrill, An.stotfe and the Philosophers (Oxford, 1981); G. Kerner, Three Philosophical Moralists (Oxford, 1990); A. Maclntyre, A Short History (/Ethics (Routledgu, 1987); D. Robinson ami C. Garratt, Kthitisfar Beginners (Icon. 1996); B. Russell,/I History nfWestern Philosophy (Oxford, 1945); P. Singer, Irautical Kthics (Oxford, 1993).

deals with vSaudi Arabia, or many South American countries, where bribes and kickbacks are routine business practice, to actV Some companies may set tougher standards than others. The question arises as to whether a company must lower its ethical standards to compete effectively in countries with lower standards. Some western firms have made a commitment to a common set of shared standards worldwide. For example, the ethical code of Levi Strauss, a jeans manufacturer, forbids bribes, whether or not prevalent or legal in the foreign country involved.

Across Europe, national cultures naturally impose different standards of behaviour on individuals and organizations. In the European Union, each market sector in each country is still characterized by a mixture of accepted commercial practices, codes of practice and formalized legislation. What is considered an acceptable practice in one country may be illegal in another (see Marketing

Highlight 2.6). The EU may eventually move towards a pan-Europe an business ethics policy anil codes of conduct, but that day is still some way off.21

Ethics and social responsibility require a total corporate commitment. They must be components of the overall corporate culture. Ethics programmes or seminars for employees help to imbue corporate ethics and codes of conduct among staff, while ethical audits may be used to monitor and evaluate business conduct and to use the lessons to guide both policy and behaviour:

In the final analysis, 'ethical behaviour' must he an integral part of the organization, a way of life that is deeply ingrained in the collective corporate body ... In any business enterprise, ethical behaviour must be a tradition, a way of conducting one's affairs that is passed from generation to generation of employees at all levels of the organization. It is the responsibility of management, starting at the very top, to both set the example by personal conduct and create an environment that not only encourages and rewards ethical behaviour, but which also makes anything less totally unacceptable.22

The future holds many challenges and opportunities for marketing managers as they move into the twenty-first century. Technological advances in solar energy, home computers, interactive television, modern medicine and new forms of transportation, recreation and communication provide abundant marketing opportunities. However, forces in the socioeconomie, cultural and natural environments increase the limits within which marketing oan be carried out. Companies that are able to create new values and to practise societally responsible marketing will have a world to conquer.

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