Transcript Animated Blue Line

Chapter Three
Marketing Ethics, Regulations,
and Social Responsibility
Chapter Objectives
• Identify ethical issues in marketing.
• Discuss legislation and regulatory agencies
that impact marketing.
• Discuss the social responsibility of business
firms.
Ethical Issues in Marketing
Marketing Shapes Inappropriate
Cultural Values
• Companies aggressively market their products, even if
they are harmful to individuals and/or society.
• Does marketing of products shape values or does
marketing respond to current values?
This ad promises little
girls and their parents
that their girl will end up
as attractive as Britney
Spears if they drink milk.
•
•
$12 billion a year is spent on marketing
products to children ages 4 to 12.
Are children a fair target?
– They have not reached maturity.
– They don’t have adult reasoning.
– It is difficult for them to differentiate
between fact and fiction.
– They can be easily manipulated.
Source: Courtesy of Bozell Worldwide, Inc. as agent for
the National Fluid Milk Processor Promotion Board.
Is this advertisement
merely responding to
sexual attitudes in society?
•
•
•
•
•
Does sexual appeal sell products?
Is sex in advertising overdone?
Is marketing promoting inappropriate
sexual behavior?
Is marketing responding to sexual
attitudes in society?
Should sex in advertising be regulated?
If so, how? If not, why not?
Source: Courtesy of Guess and Creative Director
Paul Marciano.
Does Marketing Overemphasize
Materialism and Cause People to
Buy More Than They Can Afford
•
Does marketing create materialistic desires or
does marketing respond to materialistic desires?
•
Is materialism good or bad?
•
Do consumers overspend?
•
Does easy credit contribute to overspending?
•
Is marketing responding to desires of consumers or promoting overspending?
•
Does marketing capitalize on human weakness or does it respond to human
desires?
Marketing Uses Deceptive and
Misleading Techniques
Blockbuster sued over late fees
•
Can salespeople be trusted?
•
Is it okay to use bribes and gifts in selling to business customers? If
marketers do not use bribes at home can they do it when they take their
products internationally?
•
Bait and switch
•
Deceptive Advertising* (FTC Guidelines; False Advertising)
What are the ethical issues involved
when marketing to youth?
• Channel One Advertising
• Research results
Pros
Cons
Huge market
(over $170 billion a year)
Youth are adventurous.
Potential creation of
brand loyalty
Youth can change tastes
over night.
Marketing Increases the
Prices of Goods and Services
From www.coach.com
Yes, but ….
• Marketing creates intangible benefits.
• Marketing provides information.
• Companies cannot reduce marketing expenditures
unless competitors do.
• Marketing contributes to GDP.
Marketing Violates
Consumer Rights to
Privacy
•
Why do marketers want information
about consumers?
•
What information do marketers
want?
•
How should this information be
gathered?
•
How should this information be
used?
Ethical/Unethical Decisions
Ethically
Questionable
Issue
-Personal background
-Experience
-Social influences
-Job-related influences
Ethics: Philosophical
principles that serve as
operational guidelines for
both individuals and
organizations concerning
what is right and wrong.
Individual
Alternatives
Morals: Personal beliefs or
standards used to guide an
individual’s actions. Morals
direct people as they make
decisions.
Consequences
Decision
Marketing Regulations
Free
Trade
Open
Competition
•
•
•
•
•
•
•
•
•
•
•
Sherman Antitrust Act—1890
Federal Food and Drug Act—1906
Clayton Act—1914
Federal Trade Commission Act—1914
Robinson-Patman Act—1936
Wheeler-Lea Amendment—1938
Lanham Act—1946
Fair Packaging and Labeling Act—1966
Consumer Product Safety Act—1972
Hart-Scott-Rodino Act—1976
Children’s Television Act—1990
Federal Agencies Regulating
Marketing Practice
•
•
•
•
•
Food and Drug Administration (FDA)
Federal Communications Commission (FCC)
U.S. Postal Service (USPS)
Consumer Product Safety Commission (CPSC)
Federal Trade Commission (FTC)
Deceptive and Misleading
Communication
•
•
•
Communication is deceptive or
misleading if a substantial number of
consumers are left with false
impression or if the communication
involves misrepresentation.
The misrepresentation induces people
to make a purchase.
Note: Puffery is not considered
deceptive or misleading.
Complaint Procedure
•
•
•
•
•
Complaint filed with FTC
Investigation initially
confidential
Consent order
Administrative complaint
Cease and desist order
•
Court of Appeals
Procedures
•
•
•
Corrective advertising
Requires substantiation of
claims
Trade regulation rulings
Industry Regulations
• Better Business Bureau (BBB):
– Keeps records and summaries of complaints filed
against individual companies.
– National Advertising Division (NAD)
– National Advertising Review Board (NARB)
Social Responsibility
•
83% of Americans indicate that it is important for
companies to support the needs of society through:
– Environmentally safe products
– Controlling emissions and wastes
– Becoming involved in meeting societal needs, e.g.,
donations, community sponsoring, etc.
Cause-Related Marketing
•
•
•
•
Involves a long-term
partnership
Is integrated into the
corporation’s
marketing plan
Both parties must
benefit.
Companies need to
show a genuine effort.
Green Marketing
•
•
•
Development and promotion of
products that are environmentally safe
Demonstrates social responsibility
Keys to successful green marketing
–
–
–
Develop a strong brand name
and association with green
products
Reduce costs of producing green
products
Make green products attractive to
the public
Prius
Prius-Japan