Business Actions Towards Socially Responsible Marketing: Chapter 9

Business Actions Towards Socially Responsible Marketing
Business Actions Towards Socially Responsible Marketing

At first, many companies opposed consumerism and environmentalism.

They thought the criticisms were either unfair or unimportant.

But by now, most companies have grown to accept the new consumer rights, at least in principle.

They might oppose certain pieces of legislation as inappropriate ways to solve certain consumer problems, but they recognize the consumer's right to information and protection.

Many of these companies have responded positively to consumerism and environmentalism in order to serve consumer needs better. Responsible sellers would attract buyers, either forcing less responsible marketers out of business or forcing them to give up their unsavory practices.


Enlightened Marketing

The philosophy of enlightened marketing holds that a company's marketing should support the best long-run performance of the marketing system.

Enlightened marketing consists of five principles: consumer-oriented marketing, innovative marketing, value marketing, sense-of-mission marketing, and societal marketing.

Enlightened marketers also ensure that their marketing approach reflects corporate ethics.

• Consumer- Oriented Marketing

Con sinner-oriented marketing means that the company views and organizes its marketing activities from the consumer's point of view. It should work hard to sense, serve and satisfy the needs of a defined group of customers.

Consider the following example. Richardson Sheffield, a British cutlery maker, fought off tough competition in a stagnant cutlery market in the UK in the 1980s, largely by making the customer happy.

Its chairman, Mr. Bryon Upton, claims that the most important ingredient in Richardson's recipe for success is the great stress the company puts on customer satisfaction and relationships.

This is seen in its speed in responding to customer inquiries and requests (letters are answered the same day, telexes the same hour, and samples are provided within two days) through its customer-led product development programs.

When a request for a kitchen knife that does not need to be sharpened' came from America's biggest retailer, Sears Roebuck, instead of saying, as did many competitors approached by Sears, 'We don't make it; nobody makes it; therefore it can't be made', Richardson pondered about the problem.

It finally created both the knife and the machinery needed to automate the grinding of the specially serrated edge.

 similar attention to customers' wishes has resulted in a broad product line, from a range of 30 top-of-the-line chefs blades to knives given away as petrol-station promotions.IS enlightened marketing A marketing philosophy holding velvet a company's marketing should support the best long-run performance of the marketing .system,- its five principles are co ns user-oriented marketing, innovative marketing, value marketing, sense-omission marketing, and societal marketing. u on sum er-1 in ented marketing A principle of enlightened marketing which holds that a company should view and organize its marketing activities from the consumers' point of view.

• Innovative Marketing

The principle of innovative marketing requires that the company continuously seek real product and marketing improvements.

The company that overlooks new and better ways to do things will eventually lose customers to another company that has found a better way.

Ola Ivarsson is the environmental director at Scandic Hotels and his drive to transform the chain into an EEO-friendly business has started to revolutionize Europe's leisure industry. Under Ivarsson's direction, Scandic Hotels has made design improvements that have drastically reduced the company's environmental impact.

Annual consumption of plastic has been reduced by 90 tonnes, metal usage has been cut by 25 tonnes, the discharge of harmful chemicals has fallen by 25 tonnes and the quantity of unsorted waste produced by the chain has been reduced by 50 percent.

At the same time, Ivarsson's program has boosted the chain's popularity, which has helped lift Scandic out of the difficulties it experienced in the early 1990s.

The centerpiece of this design revolution is the 'recyclable room' that Ivarsson created with the help of his team of in-house architects. They managed to make the room a remarkable 97 percent recyclable, and since then Scandic has built 2,700 more worldwide. Ivarsson explains, 'We identified our customers' most repetitive activities and found ways of making these less damaging to the environment.' Ivarsson found

Social Criticisms of Marketing: Deceptive Practices: Chapter 6


• Value Marketing

According to the principle of value marketing, the company should put most of its resources into value-building marketing investments. Many things marketers do - one-shot sales promotions, minor packaging changes, advertising puffery - may raise sales in the short run. but add less -value than would actual improvements in the product's quality, features, or convenience.

Enlightened marketing calls for building long-run consumer loyalty, by continually improving the value that consumers receive from the firm's marketing offer. The computer company Dell, which pioneered mail-order selling of personal computers in the late 1980s, is a good example of an innovative marketer.

The company recognized that PC buyers were becoming more knowledgeable about computers and the software they wanted, and were confident about making a purchase decision without the need for salespeople's advice and interference.

They wanted fast delivery and reliable after-sales service and maintenance support. They did not require an intermediary.

Dell bypassed traditional distribution channels used by the competition and, in selling direct to customers, created a unique selling point (USP) based on its innovative distribution arrangements. The approach was so successful that many competitors followed suit.

Today, Dell continues to maintain a direct relationship with consumers that enables the company to listen better, learn faster and become more agile in responding to their changing and differing needs.17

 • Sense-of Mission Marketing

Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms. When a company defines a social mission, employees feel better about their work and have a clearer sense of direction.

For example, defined in narrow product terms, the Co-operative Bank's mission might be to sell banking services, but the company has taken a firm decision to promote a broader mission - to be an ethical bank, refraining from doing business with those companies that engage in so-called unsavory business practices, from companies that are involved in the fur trade to tobacco product manufacturers.

• Societal Marketing

Following the principle of societal marketing, an enlightened company makes marketing decisions by considering consumers' wants and long-run interests, the company's requirements, and society's long-run interests.

The company is aware that neglecting consumer and societal long-term interests is a disservice to consumers and society.

A crucial problem is this. In many cases, customer needs, customer wants and customer long-run interests are the same things, and customers are the best judges of what is good for them.

However, customers do not invariably make decisions that are good for them. People want to eat fatty food, which is bad for their health; some people want to smoke cigarettes knowing that smoking can kill them and damage the environment for others; many enjoy drinking alcohol despite its ill effects.

To control some of the potential evils of marketing there has to be access to the media for the counterargument — the counter-argument against smoking, against fatty foods, against alcohol.

There is also a need for regulation-self if not statutory—to cheek unsavory demand.

A second problem is that what consumers want is sometimes at odds with societal welfare. If marketing's job Is to fulfill customers' wants, unsavory desires leave marketers with a dilemma.

Consumers want the convenience and prestige of hardwood window frames, doors, and furniture, but society would also like to keep the Amazon rain forest; consumers want the comfort of air-conditioning, yet we need the ozone layer; consumers worldwide should be using lead-free petrol, yet not all bother.

Marketing has to be more alert to the inconsistencies between consumer wants and society's welfare.

Where there is insufficient drive from within the consumer movement and consumers' own sense of responsibility, marketers would do better to control or regulate their own behavior in providing goods or services that are undesirable for society at large. If not, legislation is likely to do that for them.

A socially oriented marketer should design products that are not only pleasing but also beneficial. The difference is shown in Figure 2.2. Products can be classified according to their degree of immediate consumer satisfaction and long-run consumer benefit.

Desirable products give both high immediate satisfaction and high long-run benefits.

A desirable product with immediate satisfaction and long-run benefit would be tasty and nutritious breakfast food.

Pleasing products give high immediate satisfaction but may hurt consumers in the long run.

Examples are indulgence goods like confectionery, alcohol, and cigarettes.

Salutary products have low appeal, but benefit consumers in the long run. Seat belts and airbags in cars are salutary products.

Finally, deficient products, such as bad-tasting and ineffective medicines, have neither immediate appeal nor long-run benefits.

The challenge posed by pleasing products is that they sell very well, but may end up hurting the consumer.

The product opportunity, therefore, is to add long-run benefits without reducing the product's pleasing qualities.

For example, the British drug and household product manufacturer Reckitt & Coleman developed a phosphate-free laundry detergent that was relatively more effective than existing 'green' detergents. The challenge posed by salutary products is to add some pleasing qualities so that they will become more desirable in the consumers' minds.

For example, synthetic fats and fat substitutes, such as NutraSweet's Simplest and P & G's Olese, promise to improve the appeal of low-calorie and low-fat foods.

Social Criticisms of Marketing: High-Pressure Selling: Chapter 7


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 city 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 jail 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 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 judgments. 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 behavior.

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 ethics.

About half" of European firms (a modest sum) compared to something like 90 percent 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 ethics code.

Firms also have 'ethics education' programs to teach managers about important ethical issues and help them find the proper responses.2 " Written codes do not, however, assure ethical behavior.

The code of the Prudential Corporation, a life insurance-to-property group, pledges to work for 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 a 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.

Marketing's Impact on Other Businesses: Chapter 8

Companies are urged to provide detailed policies 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 to them.

For example, how is the export division, which deals with Saudi Arabia, or many South American countries, where bribes and kickbacks are routine business practices, to act 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 behavior 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

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