Functional areas in Business ethics.pptx

Functional areas in Business EthicsEthics

1. Ethics in Functional Areas Module III

2. ETHICS The word ethics is derived from the Greek word “Ethikos” which means custom or character. “Our concern for good behaviour. We feel an obligation to consider not only our own personal well being but also that of others”. Albert Schweitzer

3. Marketing Marketing consist of the performance of business activities that direct the flow of goods and services from producer to consumer. A number of distinct function is coming under this broad characterization which include: Product Development Distribution Pricing Promotion Sales

4. Marketing “ Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others” Philip Kotler

5. Marketing ethics Marketing ethics addresses principles and standards that define acceptable conduct in the market place. Marketing usually occurs in the context of an organization, and unethical activities usually develop from the pressure to meet performance objectives. Some obvious ethical issues in marketing involves clear cut attempts to deceive or take advantage of a situation

6. Why we need Ethics in Marketing? We can give many reasons but will notify some: When an organization behaves ethically, customers develop more positive attitudes about the firm, its products, and its services. To create Values or trust with key stakeholders To build good image about the organization in the minds of customer, employees, shareholders and the society.

7. MARKETING ETHICS AND CONSUMER RIGHTS The law and regulations are generally designed to protect the consumer from unethical practices by businesses These law and regulations recognizes that consumers have certain basic rights in the market place Each marketer must rely on his/her own value system to determine what is and is not ethical

8. AMA has established a codes of ethics to provide guidelines for ethical conduct. It says, in part, that, “Marketers shall uphold and advance the integrity, honour and dignity of the marketing profession, by being honest in serving consumers, clients, employees, suppliers, distributors, and the public.”

9. ETHICAL VALUES Honesty : to be truthful and forthright in our dealings with customers and stakeholders. Responsibility : to accept the consequences of our marketing decisions and strategies. Fairness : to try to balance justly the needs of the buyer with the interests of the seller. Respect : to acknowledge the basic human dignity of all stakeholders.

10. Openness : to create transparency in our marketing operations. Citizenship : to fulfill the economic, legal and societal responsibilities that serve stakeholders in a strategic manner.

11. Marketing ethics includes…

12. CRITICISMS OF ETHICS IN MARKETING CRITICISM OF THE FORMER : Promotion of morally ‘bad’ values such as the excessive consumption of private rather than public goods and services comes under this. CRITICISM OF SPECIFIC PRACTICES : These are frequently based on assumptions drawn from system level critiques. The criticism are:

13. Advertisement : that gives false information, penetrating to wrong values. Personal selling : the ethics of the relationship of sales people to customer Packaging and labelling practices : irregularities of package size and shape ecological issues Pricing practices Provision of intelligible labelling information

14. Ethical Criticisms of Marketing High prices Deceptive practices High-pressure selling Shoddy, harmful, or unsafe products Planned obsolescence Poor service to disadvantaged consumers

15. High Prices Caused by: High costs of distribution High advertising and promotion costs Excessive markups (greed & profit pressures) Why do branded products cost more than generics (i.e. store brand)? The cost of advertising?

16. Deceptive Practices Deceptive Pricing Falsely advertising “factory”, “wholesale”, “clearance” or other seemingly large reductions from a high original retail (list) price. Deceptive Promotion Overstating a product’s features or performance, running fraudulent contests. “Bait-and-Switch” advertising Deceptive Packaging Exaggerating package contents through slick design, misleading quantity or quality imagery and misleading labeling

17. High-Pressure Selling Salespeople are trained to deliver smooth, canned talks to entice purchase. High-pressure selling persuades people to buy goods they neither need nor want. Driven by compensation structures (i.e. high bonus potentials). High-pressure selling ultimately destroys customer relationships and goodwill.

18. Includes Poorly made products Products that do not perform well Products that deliver little benefit Harmful products (cause bodily harm, illness, even death) How it happens Undue focus on profit, increased production complexity, poorly trained labor, and poor quality control New products without safety track records Outsourcing of production often leads to quality issues Shoddy or Unsafe Products

19. McDonald’s and Obesity A 2002 lawsuit sued McDonald’s on behalf of obese children, claiming McD’s marketed food that is high in “fat, salt, sugar, and cholesterol

20. Planned Obsolescence Refers to: Products needing replacement before they should be, because they are obsolete. (computers and software) Producers who change consumer concepts of acceptable styles. (clothing and fashion) Intentionally holding back attractive or advanced functional features, and introducing them later to make the old model obsolete. (electronics) How do consumers attempt to combat Planned Obsolescence?

21. Examples The poor are forced to shop in smaller stores where they pay more for inferior goods. The poor receive worse service (or no service) at stores. “Redlining” by national chain stores in disadvantaged neighborhoods. Poor are targeted for “rapid refunds” and other “quick-money” swaps. Poor Treatment of Disadvantaged Consumers

22. Involvement in the community Honesty, truthfulness and fairness in marketing Use of animals in product testing Agricultural practices e.g. intensive faming The degree of safety built into product design Donation to good causes The extent to which a business accepts its alleged responsibilities for mishaps, spillages and leaks The selling of addictive products e.g. tobacco Involvement in the arms trade Trading with repressive regimes Ethical issues and society - examples

23. Ethical issues arising from internal and industry practices - examples Treatment of customers - e.g. honouring the spirit as well as the letter of the law in respect to warranties and after sales service The number and proportion of women and ethnic minority people in senior positions The organisation’s loyalty to employees when it is in difficult economic conditions Employment of disabled people Working conditions and treatment of workers Bribes to secure contracts Child labour in the developing world Business practices of supply firms

24. Cultural Pollution Does constant exposure to advertisements assault our senses?

25. Consumerism Consumerism is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers

26. Buyers have the right to: not buy a product offered for sale. expect the product to be safe. expect the product to perform as claimed. 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 their “quality of life.” Buyers’ Rights

27. Sustaining the environment while producing profits for the company. The “Triple Bottom Line” Levels of environmental sustainability: Pollution prevention Product stewardship New environmental-friendly technologies Sustainability vision Environmental Sustainability

28. Environmental Sustainability The Dell recycling program helps customers recycle or donate old computer equipment.

29. SOCIALLY RESPONSIBLE ADVERTISING Most advertisements are socially responsible Some advertisements willfully misinform the public Deceptive Advertising : Advertising that give false info Corrective Advertising : company publicly correct a false impression created by past advertising

30. Ethical standards to be followed in advertisements Cannot be directed towards any religious or political end Any goods or services that are advertised should not have any defect of any form in consumer protection act 1986 Products should not be portrayed in a way that misleads the public to infer that it has a super natural quality Picture and the audible matter should not be excessively ‘loud’

31. Advertisements should not endanger the safety of children or produce any sort of perversion Any type of offensive, indecent, suggestive, vulgar, repulsive themes must be avoided

32. Nike shoes

33. ETHICAL ISSUES IN MARKETING TO CHILDREN Children are an important marketing target for certain products Because their lack of knowledge about products, the media and selling strategies usually mislead them Children are likely to be more vulnerable to psychological appeals and strong images.

34. FOUR AREAS OF PRICING THAT ARE UNETHICAL AND ILLEGAL : Deceptive Pricing : Where a salesperson tries to influence lure customers into a store. Thereafter, a salesperson tries to influence to buy a higher-priced item Unfair Pricing : When competitors are driven out by low prices the company raises price back to their former level

35. Price Discrimination : It can be unethical if similar buyers are charged different prices for the same based on their ability to pay. Price fixing: It is an agreement among firms in an industry to set up prices at certain levels.

36. Background Sweatshops and child labor overseas, with horrible working conditions. Accusation: targeting low-income families by making shoes an expensive status symbol for poor urban street kids. Nike responds by… Implementing a companywide ethical code of conduct Commissioning an independent study of Nike factories abroad Creating a huge social responsibility department Donating more than $37 million to sports programs and 3 percent of earnings to charity. NIKE – Socially Responsible?

37. Social gambling Facebook’s   deal with online gaming firm 888  has raised eyebrows, with many questioning whether a social networking site is a suitable environment for gambling. The social network will offer Las Vegas-style slot machines and other games for bets up to £500 using a credit or debit card.

38. Nestle Nestlé boycott The Nestlé boycott is a boycott launched on July 7, 1977, in the United States against the Swiss-based Nestlé corporation. It spread quickly throughout the United States, and expanded into Europe in the early 1980s. In Canada, the controversy lasted from 1978 to 1984 . It was prompted by concern about the Nestle's promotion of breast milk substitutes (infant formula), particularly in less economically developed countries (LEDCs), which campaigners claim contributes to the unnecessary suffering and even deaths of babies, largely among the poor .

39. Concept of Social Responsibility Profit Responsibility- company’s duty is to maximize profits Green Marketing Stakeholder Responsibility- company’s duty is to protect the interests of the people who gain from it Societal Responsibility - company’s duty is to preserve environment while reaping profit Careful of Profiteering- shrink supply to raise price & profit

40. Three concepts of social responsibility