Transcript S41, 42 Sustainable Development

Sustainable Marketing
Social Responsibility and
Ethics
Session-41,42
First Stop
Patagonia’s Sustainability Mission: Do No Harm
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Background
Business Approach: To
produce the highest-quality
products while doing the least
possible harm to the
environment. Environmental
Review Process examines all
of the methods and materials
used in making clothing.
Socially Responsible:
Donates time, services, and
1% of sales to grassroots
environmental groups.
Challenge: Eco-savvy buyers
are asking hard questions
about product origins.
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Patagonia’s Response
Created Footprint Chronicles:
Documents and shares with
customers information about the
environmental effects of every
link in the firm’s supply chain.
Both positive and negative
information is provided.
Results: Manufacturing, not
transportation, takes the most
energy and often creates bad
by-products. PFOA used in rain
shell jacket was found to be
toxic, requiring a product
change. CEO believes benefits
outweigh the costs, and that firm
is setting a new competitive bar.
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Sustainable Marketing
• Sustainable marketing:
 Socially
and environmentally
responsible marketing that meets the
present needs of consumers and
businesses while also preserving or
enhancing the ability of future
generations to meet their needs.
• E.g., McDonald’s “Play to Win” strategy.
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Social Criticisms of Marketing
• Marketing’s impact on individual
consumers has been criticized in terms of:
 High
prices.
 Deceptive practices.
 High-pressure selling.
 Shoddy, harmful, or unsafe products.
 Planned obsolescence.
 Poor service to disadvantaged consumers.
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Social Criticisms of Marketing
• Three factors are cited as leading to
high prices:
 High
costs of distribution.
 High advertising and promotion costs.
 Excessive markups.
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Social Criticisms of Marketing
• Marketers are often accused of deceptive
practices such as:
 Deceptive
Pricing: Falsely advertising
“factory” or “wholesale” prices or large
reductions from phony high retail list prices.
 Deceptive Promotion: Misrepresenting a
product’s features or performance, or luring
consumers to store for out-of-stock item.
 Deceptive Packaging: Exaggerating
package contents through subtle design,
using misleading labeling, etc.
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Social Criticisms of Marketing
• Deceptive practices have led to
legislation and other protective
consumer actions.
 FTC
governs deceptive practices.
 Use of puffery is legal, but may harm
consumers in subtle ways.
 Deceptive practices are not sustainable
as they harm a firm’s business in the
long-run.
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Social Criticisms of Marketing
• Salespeople are often accused of using
high-pressure selling tactics:
 In
persuading people to buy goods they had
no intention of buying.
 Because prizes are often given to top sellers.
• Marketers have little to gain from highpressure tactics.
 Such
actions damage relationships with the
firm’s customers.
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Social Criticisms of Marketing
• Shoddy or unsafe product criticisms
include complaints that:
 Products
are not made well or services are
not performed well.
 Products deliver little benefit or are even
harmful.
 Products are unsafe due to manufacturer
indifference, increased product complexity,
and poor quality control.
• Manufacturers provide desirable, quality
goods.
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Social Criticisms of Marketing
• Planned obsolescence refers to:
 Products
needing replacement before they
should because they are obsolete.
• Criticisms include:
 Use
of materials and components that will
break, wear, rust, or rot before they should.
 Continually changing consumer concepts of
acceptable styles.
 Intentionally holding back attractive functional
features, then introducing them later to make
older models obsolete.
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Social Criticisms of Marketing
• Marketers are also accused of serving
disadvantaged consumers poorly as:
 The
poor are forced to shop in smaller stores
where they pay more for inferior goods.
 National chain stores, insurers, and health
care providers practice “redlining” and refuse
to open businesses in poor neighborhoods.
 Banks and mortgage firms have targeted and
exploited the disadvantaged for subprime
loans via “reverse redlining” practices.
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Marketing’s Impact on
Society as a Whole
• Marketing’s impact on society as a whole
has been criticized in terms of:
 Creating
false wants and encouraging too
much materialism.
• This criticism overstates the power of business and
ignores consumers’ ability to defend themselves
against advertising.
 Overselling
private goods at the expense of
public (social) goods.
 Creating cultural pollution, stemming from
constant exposure to marketing messages.
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Marketing’s Impact on
Other Businesses
• Critics charge that a firm’s marketing
practices can harm other companies and
reduce competition via:
 Acquisitions
of competitors.
• Shrinking number of competitors.
 Marketing
practices that create barriers to
entry.
• Patents, heavy promotional spending can limit
competition.
 Unfair
competitive marketing practices.
• Predatory pricing and other practices.
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Consumer Actions to Promote
Sustainable Marketing
• Two major movements include:
 Consumerism
 Environmentalism
Consumerism:
 An
organized movement of citizens and
government agencies to improve the rights
and power of buyers in relation to sellers.
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Consumer Actions to Promote
Sustainable Marketing
• Traditional seller’s rights include the right to:
Introduce any product in any size and style,
provided it is not hazardous to personal health or
safety; or, if it is, to include proper warnings and
controls.
2. Charge any price for the product, provided no
discrimination exists among similar kinds of
buyers.
3. Spend any amount to promote the product,
provided it is not defined as unfair competition.
4. Use any product message, provided it is not
misleading or dishonest in content or execution.
5. Use any buying incentive schemes, provided they
are not unfair or misleading.
1.
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Consumer Actions to Promote
Sustainable Marketing
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Traditional buyers’ rights include the right to:
1.
2.
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3.
Not buy a product that is offered for sale.
Expect the product to be safe.
Expect the product to perform as claimed.
Consumer advocates call for more rights to:
4.
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7.
Be well informed about important aspects of the
product.
Be protected against questionable products and
marketing practices.
Influence products and marketing practices in
ways that will improve “quality of life.”
Consume now in a way that will preserve the
world for future generations of consumers.
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Consumer Actions to Promote
Sustainable Marketing
• Environmentalism:
An
organized movement of concerned
citizens and government agencies to
protect and improve people’s living
environment.
• Those who subscribe to
environmentalism believe that a
marketing system’s goal should be to
maximize quality of life.
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Consumer Actions to Promote
Sustainable Marketing
• Environmentalism:
 First
wave in the 1960s–1970s was
driven by environmental groups and
concerned consumers.
 Second wave in the 1970s and 1980s
was driven by government and resulted
in environmental laws.
 Third wave is occurring now. Firms are
accepting more responsibility and many
have adopted a policy of environmental
sustainability.
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Consumer Actions to Promote
Sustainable Marketing
• Environmental sustainability:
A
management approach that involves
developing strategies that both sustain the
environment and produce profits for the
company.
• Environmental sustainability portfolio:
 Pollution
prevention.
 Product stewardship.
 New clean technologies.
 Sustainability vision.
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Consumer Actions to Promote
Sustainable Marketing
• Public actions to regulate marketing
involve applications of law. Marketing
management decisions face legal issues
regarding:
 Selling
decisions.
 Advertising decisions.
 Channel decisions.
 Product decisions.
 Packaging decisions.
 Pricing decisions.
 Competitive relations decisions.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall
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Business Actions Toward
Sustainable Marketing
• Consumer-oriented marketing:
 The
philosophy of sustainable marketing
that holds that the company should view
and organize its marketing activities
from the consumer’s point of view.
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Business Actions Toward
Sustainable Marketing
• Customer-value marketing:
A
principle of sustainable marketing that
holds that a company should put most of
its resources into customer-valuebuilding marketing investments.
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Business Actions Toward
Sustainable Marketing
• Innovative marketing:
A
principle of sustainable marketing that
requires that a company seek real
product and marketing improvements.
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Business Actions Toward
Sustainable Marketing
• Sense-of-mission marketing:
A
principle of sustainable marketing that
holds that a company should define its
mission in broad social terms rather
than narrow product terms.
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Business Actions Toward
Sustainable Marketing
• Societal marketing:
A
principle of sustainable marketing that holds
that a company makes marketing decisions
by considering consumers’ wants and
interests, the company’s requirements,
consumers’ long-run interests, and society’s
long-run interests.
• Seeks to introduce desirable products, rather than
those that are deficient, salutary, or simply
pleasing.
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Business Actions Toward
Sustainable Marketing
• Firms need to develop corporate
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marketing ethics policies to serve as
broad guidelines that everyone in the
organization must follow.
Ethics policies should cover:
 Distributor
relations.
 Advertising standards.
 Customer service.
 Pricing.
 Product development.
 General ethical standards.
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Business Actions Toward
Sustainable Marketing
• What principle should guide firms and
marketing managers on issues of ethics
and social responsibility?
 Free
market and legal system is one option.
 Letting responsibility fall to individual
companies and managers to develop a “social
conscience” is a second option.
• International marketers face special
challenges.
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