Marketing Ethics Flashcards
What is marketing ethics?
Refers to the basic principles and values that govern the firm’s practices of those engaged in promotion products or services to consumer. Sound marketing ethics are typically those that result in or at least do not negatively impact consumer satisfaction with the goods/services being promoted, or with the company producing them. Firms should seek to promote honesty, fairness and responsibility in all activities. E.g. looking after their employees and treating them well & fairly.
What is Corporate Social Responsibility (CSR)?
The continuing commitment and obligation of an organisation to behave ethically and make decisions and take actions that will influence, enhance and benefit the welfare and interests of society, as well as the organisation (including customers, employees, shareholders, the environment and local community). It basically means being a good corporate citizen, and encompasses the economic, legal, ethical and philanthropic expectations placed on organisations by society at any given point in time.
What are the features of CSR?
CSR is largely due to changing consumer behaviours. Consumers are now more ethically aware and conscious when making purchase decisions. They will only pay a small premium for ethically produced goods, but, they will punish an unethically made product even more harshly by buying it at a steep discount.
What are the reasons why firms engage in responsible behaviours?
- business/instrumental reasons
2. moral/normative reasons
What are the business/instrumental reasons?
Include the opportunities or rewards that arise from pursuing those behaviours, such as profitability, sales, customers, market share, and to avoid risks or penalties by behaving the interests of society, such as losses, legal and industrial disputes.
What are the features of business/instrumental reasons?
- When customers are buying products from a firm that is socially responsible, they have a more satisfying result (and won’t be subject to boycotts). Thus, firms can result in extra and/or more satisfied customers, as opposed to boycotts or other consumer actions.
- Employees may be more attracted/committed in working for the firm if their needs and expectations are met, or if the firm goes over and above these.
- Firms are able to prevent legislation and have the license to operate
Firms can enhance or differentiate their reputation/brand. Brand equity has the power to drive consumer behaviour and purchase decisions. So firms should work towards building their brand responsibly. - Risk management
What are the moral/normative reasons?
Where firms choose to go beyond simply talking about the business case. Corporations cause social problems and have social impacts. With power comes responsibility – their power should be exercised in a way that is in the interest of society. As governments fail to fix social problems, they force other entities in society to help fix them. Therefore, firms can help. Corporations rely on resources from a broader set of stakeholders than just their shareholders, and hence, must operate in the interest of these other stakeholders.
What do firms rely on to operate?
A broad set of stakeholders
What are stakeholders?
Stakeholders are groups or individuals who interact with a firm and have a vested interest in its activities, and are affected directly and indirectly by the firm’s actions.
How can firms organise stakeholders?
Firms can organise stakeholders in ways that enables them to make the best decisions for the firm and the environment in which it operates.
How can stakeholders be identified and classified in terms of?
Power, legitimacy and urgency, as well as their relative importance to the firm
What is stakeholder power?
Refers to the ability of stakeholders to bring about desired outcomes, despite resistance (the degree to which stakeholders can bring about an outcome, despite the firm not wanting it).
For example, governments have power to change the decisions of a firm through legislations, and customers have power to change the decisions of a firm through boycotting or withdrawing from purchasing their products.
What is stakeholder legitimacy?
Comes from the actions of an entity that the stakeholders themselves deem desirable, proper or appropriate behaviour. If the firm’s actions are proper and appropriate, stakeholders will support the firm’s behaviour.
What is stakeholder urgency?
Refers to the degree to which stakeholder claims or requirements call for immediate action, or the degree to which issues are time-sensitive and of great importance.
What is the dormant stakeholder?
Power, no legitimacy, no urgency. Have power to impose views on the organisation, but remains unused and in the background due to lack of legitimacy and urgency.
