Chapter 20
Marketing and Society:
Social Responsibility
and Ethics
PRINCIPLES OF MARKETING
Eighth Edition
Philip Kotler and Gary Armstrong
Social Criticisms of Marketing
High
Prices
Shoddy or
Unsafe
Products
Poor
Service
Deceptive
Practices
Planned
Obsolescence
High
Pressure
Selling
Marketing’s Impact on Individual Consumers
Marketing’s Impact on Society
Too Few Social
Goods
False Wants and Too
Much Materialism
Too Much
Political Power
Cultural
Pollution
The Marketing Function is Accused by Society of Creating:
Marketing’s Impact on Other Businesses
Acquisitions
of
Competitors
Marketing
Practices
that
Create Barriers
to Entry
Unfair
Competitive
Marketing
Practices
Critics Charge that a Company’s Marketing Practices Can Harm Other Companies and Reduce Competition Through:
Consumerism
The Right to Be Safe
The Right to Be Informed
The Right to Be Heard
The Right to Choose
Basic Consumer Rights
Environmentalism
Environmentalism
Practice
Product
Stewardship
Practice
Pollution
Prevention
Have a
Sustainability
Vision
Adopt Designs
for the
Environment
Plan for New Environmental
Technologies
Enlightened Marketing
Consumer-Oriented Marketing
Innovative Marketing
Value Marketing
Sense-of-Mission Marketing
Societal Marketing
Societal Classification of Products
Salutary
Products
Deficient
Products
Desirable
Products
Pleasing
Products
Long-Run Consumer Benefit
Low
High
Immediate Satisfaction
High
Low
Marketing Ethics
Customer
Service
Pricing
Distributor
Relations
General
Code
Product
Development
Advertising
Standards
Corporate
Marketing
Ethics
Policies
Principles For Public
Policy Toward Marketing
Key
Principles
for a
Public Policy
Toward
Marketing
Economic
Efficiency
Meeting Basic
Needs
Innovation
Curbing Potential
Harm
Consumer
Education
Consumer
Protection
Consumer and
Producer Freedom
Social Criticisms of Marketing
This CTR relates to the material on pp. 606-611.
High Costs of Distribution. The distribution system performs marketing functions consumers want. Costs are actually lower than they would be if the same services were performed by either the producer or the retailer. Consumers who don’t want such services have alternatives available in membership warehouses.
High Advertising and Promotion Costs. Branding and differentiation provide psychological assurances of quality and reliability that consumers are willing to pay for. Again, no-brand choices are available as ready substitutes. Further, marketing communication remains the primary source of product information for most consumers.
Excessive Markups. Large markups may cover the costs of development for other products or support loss leaders in the companies product line. Abuses do exist, but a systemic analysis of the company’s practices should be conducted before “conviction.”
Discussion Note: You may point out that most of the examples of high costs come from uncompetitive industries that do not much use the marketing concept, such as the medical and legal professions.
Deceptive Practices. Pricing, promotion, and packaging are areas where deception may occur. Laws prohibit such practices but this remains an area where unethical behavior occurs -- though not it is not in the majority.
High Pressure. The bottom line is that in addition to being illegal in many cases, these practices tend to drive customers to seek other suppliers and eventually self-terminate.
Unsafe Products. Truly unsafe products receive publicity out of proportion to their numbers. Still, producers and sellers have a legal, ethical, and moral obligation not to endanger consumers. Most companies take this responsibility very seriously.
Planned Obsolescence. To the extent that consumers like change, and style, not functional features, are subjective, most products are not guilty of planned obsolescence. Those that are eventually lose out to more competitive offers by innovative companies.
Poor Service to Disadvantaged Customers. Again, while this problem area is not often as simple as it seems, it is true that better marketing systems must be built to service low-income areas.
Marketing's Impact on the Consumer
High Prices. Marketing is blamed for high prices due to:
Marketing’s Impact on Society
This CTR relates to the discussion on pp. 611-613.
False Wants and Too Much Materialism. Critics charge that the marketing system urges too much interest in material possessions. Such charges apparently down play the role of other influences on consumers, including family values and social interaction.
Too Few Social Goods. Many private goods, such as desert golf courses, have social costs, such as irrigation drawn from publicly-owned rivers. The marketing system needs to restore more of a balance between private and public goods.
Cultural Pollution. Some critics charge that commercial practices are a form of cultural pollution. This attack overlooks much of the self-selection by consumers to use marketing communication and the choice not to use it.
Too Much Political Power. Many critics are concerned that the economic and political power of marketing forces curbs independent and objective reporting by the mass media and buys “special interest” favoritism from government. In terms of media independence, it should be remembered that these private enterprises always answer to some for-profit agenda. Regarding political power -- the right of company’s to lobby and petition government is guaranteed. Laws against undue influence more often than not counter-balance practices that threaten the social well being.
Marketing's Impact on Society as a Whole
Marketing activities, and advertising in particular, have been accused of adding several “evils” to American society, including:
Marketing's Impact on Other Businesses
Again, much of this criticism attacks straw man positions. Poor business decisions in mergers, acquisitions, and entering new markets are not due to marketing efforts. Moreover, most blatantly exploitative ventures require better laws.
Marketing’s Impact on Other Businesses
This CTR relates to the discussion on p. 614.
Consumerism
This CTR relates to the material on pp. 614-616.
Consumerism
Consumerism is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. President Kennedy's Consumer's "Bill of Rights" included the following provisions:
Right to Be Safe. This refers to consumer's expectation that the product and its proper use should not endanger the user.
Right to Be Informed. This means that the consumer should have access to relevant and reasonable product information. Companies should not hide information about products but nor should consumers assume that they have no responsibilities for their own behavior.
Right to Be Heard. This means that consumers should have the means to tell companies of their satisfaction or complaints and reasonably expect that producer will respond to their wants.
Right to Choose. This means both that consumers should not be coerced into buying and that a competitive marketplace will provide them with some selection among products.
Producer’s Rights. Producer’s too have rights in the American system of government and its fundamental belief that free enterprise, however, imperfect, provides the best system for creating the greatest good for the greatest number.
Consumer Responsibility. Lost all too often in the attacks on marketing is the fundamental premise that a free people must take it upon themselves to be better consumers -- to seek out information on products and to make wise decisions in the marketplace. When producers mislead, they should be curbed. When consumers abdicate their responsibilities, they should face up to the consequences.
Enlightened Marketing
This CTR relates to the material on pp. 621-624.
Enlightened Marketing
The Enlightened Marketing Concept holds that a company's marketing should support the best long-run performance of the marketing system. Enlightened marketing and marketing ethics ( work together to create socially responsible marketing practices. Enlightened marketing consists of five key principles:
Consumer-Oriented Marketing. This means the company should view and organize its marketing activities from the consumer's point of view.
Innovative Marketing. This requires that a company seek real product and marketing improvements. Overlooking improvements or settling on "bells and whistles" eventually leads to a loss of competitive advantage.
Value Marketing. Value marketing holds that a company should put most of its resources into value-building marketing investments. This principle would re-prioritize marketing decisions from using incentives to affect reapportionment of demand to long-term incentives to create brand loyalty by constant improvement in the value consumers receive from the firm's offer.
Sense-of-Mission Marketing. This means that a company defines its mission in broad social terms rather than narrow product terms. Product use by the target consumer should help advance those social goals to the benefit and profit of consumer, company, and society alike.
Societal Marketing. Societal marketing holds that a company should make marketing decisions by considering consumer's wants, the company's requirements, and society's long-run interests. This topic is covered in greater detail on the following CTR.
Societal Classification of Marketing
This CTR corresponds to Figure 20-3 on p. 623 and relates to the discussion on p. 622-624.
Societal Marketing
Societal Marketing holds that a company should make marketing decisions by considering consumer's wants, the company's requirements, and society's long-run interests. From this perspective, four types of products can be identified:
Desirable Products. Desirable products give both immediate satisfaction and long term benefits.
Pleasing Products. Pleasing products satisfy in the short term but may harm consumers.
Salutary Products. Salutary products are good for consumers but have low present appeal.
Deficient Products. Deficient products provide neither short term satisfaction nor long term benefits.
Marketing Ethics
This CTR relates to the material on pp. 624-628.
Instructor’s Note: This material provides additional extra-textual information on Marketing Ethics for in-class discussion.
Marketing Ethics
Distributor Relations. A comprehensive implementation of marketing ethics should include policies and guidelines for defining the company's relationship with distributors. Ethical standards help build trust and confidence in the channel and can be an asset in tough economic times.
Advertising Standards. When considered in light of increasing activism among consumer groups to regulate advertising, marketers have a unique opportunity to proactively address the needs for strong advertising ethical standards. While protecting free speech, marketers could adopt a statement on ethics in advertising that promotes accurate information exchange, encourages creative and innovative message generation. Advertising ethics could go further by denouncing exploitation of women as objects in ads, minorities as stereotypically inferior to whites, and violence as problem-solving or socially acceptable. Without legal regulation, marketers could publicly promise to cease using advertisers who fail to meet the standards. With marketers in the vanguard of ethics improvement of advertising, companies could rightfully claim to be protecting and furthering societal interests.
Customer Service . How to respond to customers and how to treat them while responding says a lot about a company. Customer ethics might be posted or mailed to customers to encourage all employees to live up to a standard known to the customer before the sale.
General Code of Ethics. A clear statement on corporate marketing policies can provide broad guidelines that everyone in the organization must follow.
Pricing. Ethics can influence strategic decisions on such pricing decisions as market penetration versus market skimming.
Product Development. This area may be influenced by ethical codes seeking more desirable products or changes is salutary product concepts to make them more desirable.
Principles for Public Policy Toward Marketing
This CTR relates to the material on pp. 628-629.
Toward a Public Policy for Marketing
The Principle of Consumer and Producer Freedom. When consumer and producer freedom drive the marketplace, needs are met more efficiently and profitably than under any other system. Consumer and producer freedom has lead to the highest standard of living in history.
The Principle of Curbing Potential Harm. Political intervention is warranted if and when a transaction or potential transaction creates harm to either party or any third party.
The Principle of Meeting Basic Needs. The marketing system should serve disadvantaged consumers as well as affluent ones. The marketing system should work to solve problems created when large groups lack purchasing power.
The Principle of Economic Efficiency. This principle is essentially “enlightened self-interest.” Producers are motivated to cut costs and raise quality to meet the needs of value-seeking consumers.
The Principle of Innovation. Authentic innovation is the most reliable source of long-term profits and business success. The marketing system encourages innovation by constantly monitoring consumer expectations and needs.
The Principle of Consumer Education and Information. An effective marketing system invests heavily in consumer education and information to increase long-run consumer satisfaction and welfare.
The Principle of Consumer Protection. Modern products are so complex that consumers need help in understanding them. Companies have a vested interest in protecting their customers.
