ethics part ii 2014 by dr cc tan ([email protected])

Second Part of Business Ethics – A Concise Version: Strategy, Theory of Ethics, HRM, Marketing III, CSR1, CSR2, CSR3, CSP

DR. C.C. TANSCHOOL OF MANAGEMENTMAE FAH LUANG UNIVERSITY2014

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UtilitarianismDeontology

Deontology Utilitarianism

Or

Making decisions based on ethical consequences

Utilitarianism begins with the conviction that we should decide what to do by considering the consequences of our actions. Better overall consequences – those that promote

human well-being: happiness, health, dignity, integrity, freedom, and respect of all the people affected.

The emphasis on producing the greatest good for the greatest number makes utilitarianism a social philosophy that provides strong support for democratic institutions and policies.

Long-term competitiveness and sustainability 3P (Profit-People:Social-Planet:Environmental)

Results: Shared Values. Avoid bad or harmful consequences Theme – The end justifies the means.

But the ends do not always justify the (ethical) means

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Making decisions based on ethical consequences Example: Healthy Society

Healthy Society

Sustainable expanding demand for business Successful

companies need a healthy society

Creating jobs, wealth, innovation, and establishes competitiveness for the companies, the regions and the nation

creates

Improve standards of living and social conditions Tax contribution so government can better develop

infrastructures to maintain and create healthy society

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Making decisions based on ethical principles

Utilitarianism must be supplemented with the recognition that some decisions should be matters of principles, not consequences. In other words, the ends do not always justify the means.

Principle-based, de-ontological. Ethical principles can simply be taught of as types of rules, and this approach

tells us that there are some rules we ought to follow, even if doing so prevents good consequences from happening or even if it results in some bad consequences.

Examples: Law, duty to pay our taxes, to respect the dignity of individual human being (“Kantian categorical imperative”), object to child labor.

Deontological Behaviors: Short-term reactive and defense Long-term proactive moral obligations. Long-term commitment to social responsibility

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Fundamental Ethical Principles of CSR:Consumer’s Magna Carta:

The right to be heard The right to be informed The right to choose Safety



Making decisions based on ethical principlesSources of Rules: Law (Legal Rules) Other rules are derived from various institutions in which we

participate or from various social roles that we fill i.e. professional rules.

Organizational rules and roles-based rules: As an employee, one takes on a certain role that creates duties. Every business will have a set of rules that employees are expected to follow e.g. stated in a code of conduct, employee handbooks.

Safety: The concept of safety, in a

definitional sense, means “free from harm or risk” or “secure from threat of danger, harm, or loss.”

i.e. Financial services do not cause damage or financial harm.

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The right to be heard The right to be informed The right to choose Safety Truthfully

advertised A product that will

meet reasonable expectations

Fair values

A product (or service) with full disclosure of its specification

No deception, Accurate InformationStrategies and Action Plans:





Consumerism movement as catalyst: is a social movement seeking to augment the rights and powers of buyers in relation to sellers. Ralph Nader is still the acknowledged father of the consumer movement.

Produce quality products

Advertising Social

media

Design Produce Instruction Misuse

Safety:Design rightly, produce rightly, instruct correctly to prevent misuse.

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Quality Dimensions: At least eight critical dimensions of product or service quality must be understood if business is to respond

strategically to this factor. These include: (1) Performance – refers to a product’s primary operating characteristics. For an automobile, this would include such

items as handling, steering, and comfort. (2) Features – The bells and whistles (Fig. extra, fancy add-ons or gadgets) of products that supplement the

basic functioning. (3) Reliability – Refers the probability of a product malfunctioning or failing. (4) Conformance – is the extent to which the product or service meets established standards. (5) Durability – a measure of product life. (6) Serviceability – refers to the speed, courtesy, competence, and ease of repair. (7) Aesthetics – a subjective factor that refers to how the product looks, feels, tastes, and so on. (8) Perceived quality – a subjective inference that the consumer makes on the basis of a variety of tangible and

intangible product characteristics.




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Consumer Stakeholders:Product and Service Issues

Quality-Ethics: An important question is whether quality is a social or an ethical issue or just a competitive factor that business needs

to emphasize to be successful in the marketplace. For many consumers, quality is seen to be something more than just a business issue. Three ethical theories based on the concept of duty that informs our understanding of the ethical dimensions of quality

include: (1) Contractual Theory (2) Due Care Theory (3) Social Costs View

Contract Theory Due Care Theory Social Costs View

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Consumer Stakeholders:Product and Service Issues

Quality-Ethics: The contractual theory focuses on the contractual agreement between the firm and the customer. Firms have a

responsibility to comply with the terms of the sale, inform the customer about the nature of the product, avoid misrepresentation of any kind, and not coerce the customer in any way.

The due care theory focuses on the relative vulnerability of the customer, who has less information and expertise than the firm, and the ethical responsibility that places on the firm. Customers must depend on the firm providing the product or service to live up to the claims about it and to exercise due care to avoid customer injury.

The third view, social costs, extends beyond contract theory and due care theory to suggest that, if a product causes harm, the firm should pay the costs of any injury, even if the firm had met the terms of the contract, exercised all due care, and taken all reasonable precautions. This perspective serves as the underpinning for strict liability and its extension into absolute liability.

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The US Federal Trade Commission (FTC): One of the US federal government’s major instruments for ensuring that

business lives up to its responsibilities in the relevant areas: (1) to maintain free and fair competition in the economy and (2) to protect

consumers from unfair or misleading practices. The FTC may issue cease-and-desist orders against companies it believes

engage in unlawful practices. If the FTC decides an ad is false or misleading, it may order the advertiser to

withdraw the ad or run “corrective” advertising to inform the public that the former ads were deceptive. Advertisers also may be fined for violating an FTC order.



Law enforcement role

Making decisions based on ethical consequences

FDA resides within the Health and Human Services Department and engages in three broad categories of activity: Analysis Surveillance Correction


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TQM Model – in explaining the 3 roles of FDA

Analyze the possible causes of the safety and quality issues

Employ all you learn about the causes, the variables that affect quality and safety issues, to develop and establish ISO 9001 Total Quality Management (TQM) system.

Once you have a Total Quality Management system in place, you can use that to monitor, audit according to the system policy and guidelines i.e. ISO 9001.

When found problems during surveillance, audits or monitoring, perform Corrective Actions and/or Preventive Actions.

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Safety and Ethics: Food and Drug Administration - Today, the FDA supervises many different laws and amendments that have been

passed, and regulates $1 trillion worth of products a year. It ensures the safety of all food except meat, poultry, and some egg products; ensures the safety and effectiveness of all drugs, biological products (including blood, vaccines, and tissues for transplantation), medical devices, and animal drugs and feed, and makes sure that cosmetics and medical and consumer products that emit radiation do no harm.

The FDA was reasserting itself as an agency planning to take swift action against violators.



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Companies selling the products and services to consumers

Law Enforcement and Consumer Protection agencies Consumerism

Doctrine of Strict Liability – In its most general form, the doctrine of strict liability holds that anyone in the value chain of a product is liable for harm caused to the user if the product as sold was unreasonably dangerous because of its defective condition. This applies to anyone involved in the design, manufacture, or sale of a defective product.

Another extension of strict liability is known as market share liability. This concept evolved from delayed manifestation cases – situations in which delayed reactions to products appear years later after consumption of, or exposure to, the product.

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Principles, Rules: Compliance-based culture: rule-

following responsibility Personal integrity of its workforce

Goals, Values: Value-based is one that reinforces a particular set of

values rather than a particular set of rules. Certainly these firms may have conduct of conduct, but

those codes are predicated on a statement of values.

Audit focus Holistic business focus

Transaction based Process based and business model driven

Financial account focus Customer focus

Compliance objective Risk identification, Opportunities explored and exploited, Improvement

Policies and Procedures focus Innovation, attending to anxieties and desires and solutions of consumers

Suggested cost center Accountability for total performance and Sustainability

Methodology: focus on policies, transaction Methodology: focus on goals, strategies, values of i.e. greenness andand compliance sustainability, and risk management processes

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following responsibility Personal integrity of its

workforce Doing things right, being

authentic

Goals, Values: Value-based culture is one that reinforces

a particular set of values rather than a particular set of rules.

Certainly these firms may have conduct of conduct, but those codes are predicated on a statement of values.

Doing right things Mission, Vision and Values

Social responsibility (deontology and utilitarianism) is a set of behaviors: behaviors are exhibited by individuals in the organization.

Thus both deontology and utilitarianism ethical behaviors essentially form the ethical culture.

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authentic

Goals, Values: Value-based culture is one that reinforces a particular

set of values rather than a particular set of rules. Certainly these firms may have conduct of conduct, but

those codes are predicated on a statement of values. Doing right things Mission, Vision and Values

Social responsibility (deontology and utilitarianism) is a set of behaviors: behaviors are exhibited by individuals in the organization.

Thus both deontology and utilitarianism ethical behaviors essentially form the ethical culture.

An improvement of socially responsibility behavior requires ACTION i.e. in the form of behavior change, by everyone in the organization.

CSR1Corporate Social Responsibility

CSR2Corporate Social Responsiveness

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CSR1 (Responsibility)

CSR2 (Responsiveness)

CSR3(Rectitude, Culture

and Brand Character)

CSP(Performance)

Role

Action

Habit

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authentic




Doing right things Mission, Vision and Values

Aim: Strict compliance and audit programs (e.g. ISO 9001, 14000, 22000) are often springboards for implementing more comprehensive programs addressing ethical values and to world-class companies.

Actions (Transformation): The goals of more evolved and inclusive ethics program may entail a broader and more expansive

application to the firm, including maintain brand and reputation, recruiting and retaining desirable employees, helping to unify a firm’s global operations, creating a better working environment for employees, and doing the right thing in addition to doing things right.

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InputsTransformation

(Transformative Actions, CSR2)

Outputs

Principles ISO 26000 Guidelines CSR1 Awareness Culture of socially

responsible behavior

Improved social responsibility performance (CSP)

Feedback – Continuous improvement

Social responsibility performance improvement is a process, an ideal, not an ideal state. The minute one improvement is made, another is possible. We need tools to deploy in that journey, tools that work at all levels of progress, on all aspects, on all processes.

Thus, social responsibility as a continuous improvement target.

CSR3 (Corporate Social Rectitude, Integrity, Brand Image, Brand Character)

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InputsTransformation (Transformative

Actions, CSR2)Outputs

Principles ISO 26000

Guidelines CSR1 Awareness Culture of

socially responsible behavior


Impact to society



Examples of Transformation: Creating a Customer-Oriented Company:

1. Top-down culture and commitment are essential

2. Identify internal champions and uphold them.

3. Commit resources to the task.4. Hire the right people.5. Empower employees.6. Make customer service training a priority.

Product Quality and Safety

Service Quality and Safety

Customer Satisfaction

Continued Purchases by Consumers

Firm Profitability

Firm Reputation

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ISO 26000: New edition to ISO

ISO 26000, Guidance on Social Responsibility, is an effort begun through actions initiated as early as 2001 by the International Organizational for Standardization (ISO)

This guideline is intended to be a globally consistent, practical guide for any organization wanting to enhance its social responsibility performance (CSP).

It is important to note that it is being published as a guideline, not a standard of certification requirements. There is no expectation that third-party certification to ISO 26000 will take place. As a guideline it is intended to do just that – provide guidance.

There are 7 key principles of ISO 26000: Accountability Transparency Ethical behavior Respect for stakeholder interests Respect for international norms of behavior Respect for human rights

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ISO 26000: New edition to ISO

ISO 26000, Guidance on Social Responsibility, is an effort begun through actions initiated as early as 2001 by the International Organizational for Standardization (ISO)

This guideline is intended to be a globally consistent, practical guide for any organization wanting to enhance its social responsibility performance (CSP).

It is important to note that it is being published as a guideline, not a standard of certification requirements. There is no expectation that third-party certification to ISO 26000 will take place. As a guideline it is intended to do just that – provide guidance.

There are 7 key principles of ISO 26000: Accountability Transparency Ethical behavior Respect for stakeholder interests Respect for international norms of behavior Respect for human rights (i.e. Consumer’s Magna Carta)

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Accountability: accountable not only for its decisions and actions related to social and environmental issues, but also for the impact of those issues in society as a whole.

Transparency: Make information available to the organization’s communities about its practices and the practices of its key partners and stakeholders.

Ethical Behavior: Ethical behavior includes acting with integrity, honesty, fairness, and concern for all stakeholders and the environment. Thus ethical behavior is a commitment of acting in the best interest of all stakeholders.

Respect for stakeholder interests – Consideration for the various stakeholders of a firm opens the firm up to thinking about how its organizational actions impact not only internal stakeholders (suppliers, employees, stakeholders, etc.), but also external stakeholders (consumers, government, NGOs, community, etc.).

Respect for the Rule of Law – It is a principle of respect for those procedures that have been designated as appropriate by the ruling organization.

Respect for human rights – The definition of human right is recognized through the United Nations International Bill of Human Rights. It includes the admonition of discrimination, torture, kidnapping, slavery, the abuse of children, and the abuse of migrant workers and those of disabilities. Ensuring that persons involved in the execution of business activities are treated with respect to their full human rights is considered to be universal.

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Principles ISO 26000

Guidelines CSR1 Awareness Culture of

socially responsible behavior


Impact to society



7 Core Subjects of ISO 26000: Organizational governance Human rights Labor practices The environment Fair operating practices Consumer issues Community involvement and development

4 Greenness Strategies

Product Quality and Safety

Service Quality and Safety

Customer Satisfaction

Continued Purchases by Consumers

Firm Profitability

Firm Reputation

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CSR1: A reflection of shared moral and ethical principles (in the mindshare of customers and stakeholders – brand identity)

Co-creating shared value, ethical innovation products

Principles ISO 26000 Guidelines Awareness Culture of socially

responsible behavior

Improved social responsibility performance (CSP): CSP is a form of enlightened self-interest that balances all stakeholders’ claims and enhances a company’s long-term values

Impact to society Brand character


CSR2: A vehicle for integrating individuals into the communities in which they work (communitization)

Brand integrity through proven actions of engagement (i.e. Marketing Mix)


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Kotler et al. (2010)’s book explores the changes that are cultivating a more enlightened sort of marketing whose powers are being enlisted to help solve urgent problems. The trend has shifted to “values-driven, networked world in which collaboration is easy and ubiquitous”.

If “Marketing 1.0” was a product-focused enterprise born of the Industrial Revolution, and “Marketing 2.0” was a customer-focused effort leveraging insights gained from information technology, then Kotler says marketing’s latest incarnation must do even more. It must engage people in ways that provide “solutions to their anxieties to make the globalized world a better place.” Practitioners must, as never before, understand and respond to the values that drive customer choice. – Me, We, World.,

Kotler, P., Kartajaya, H. and Setiawan, I. (2010). Marketing 3.0: From Products to Customers to the Human Spirits , USA: Wiley.

Reconceiving customer needs, products and markets

Redefining productivity in the value chain

Enabling local cluster development

Increasing level of shared value – scale

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We are seeing that: CSR1,2,3 and CSP essentially form the background and strong roots of the Marketing 3.0 concept that

embraces the 3C principles (co-creation, communitization, and character of spiritual essence) and 3E actions (explore co-created solutions, engage the communities and customers, and execute with CSR1-3,CSP actions to develop strong spiritually rooted brand character, that also enables the consumers to live a better healthier enabled life. – not discussed in Kotler et al. (2010) or elsewhere.

Thus, marketing is about defining your unique identity and strengthening it with authentic integrity to build strong image and character, through co-creating with the consumers and the communities that has transformative values to improve well-beings, intellectuality and happiness, healthiness.

Now we will see how these CSR-CSP and Marketing 3.0 business ethical principles can be applied on social entrepreneurship i.e. Doi Tung project.

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Production CSRResource

Products and Services

Paradigm Shift

Ethics driven Strategies,

Innovation and Transformation (CSR2,CSR3)

Resources and CSR 1 Principle CSP (Corporate Social Performance)

Combines commercial success and social progress

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InputsResources

Transformation (Transformative Actions, CSR2) Outputs


Build innovating commercial activities and social arrangements: mutually reinforcing changes.

Create external advisory boards Governance systems Innovation for social impacts Learning attitude Nature of innovation Leadership development of the communities Improve production techniques, knowledge transfer, improve crop

production Me-We-World responsiveness actions Rolling up relevant technologies Build management capacity Access communities of all level to funding, health-care, credit, and saving Work with relevant stakeholder groups e.g., trade union, cooperative. Mobilize ideal capacities, resources and social arrangements required for

long-term sustainable, social transformation Education, grassroots mobilization

Enacting social entrepreneurship spirits: Principles of

ethics The communities

and societies Need to mobilize

resources

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InputsResources



Me

World

We

Leadership development

Grassroots mobilization and build local capability/capacity to solve problems

Then, extend the social entrepreneurship outcomes to other groups or other parts of the world (replicate to other countries)

Promote social entrepreneurship model (knowledge dissemination)

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InputsResources



Me We

Social Bricoleurs – usually focus on discovering and addressing small-scale local social needs.

Social constructionists – typically exploit opportunities and market failures by filling gaps to underserved clients in order to introduce reforms and innovations to the broader social system

World: Social engineers – recognize

systemic problems within existing social structures and address them by introducing

revolutionary change.

Source:Zahra, S., Gedajlovic, E., Neubaum, D.O. and Shulman, J.M. (2009). A typology of social entrepreneurs: motives, search processes and ethical challenges, journal of business venturing, 24, pp. 519-532.

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InputsResources



Me

We

Community Participation

Transparency (also ISO 26000 Principle)

Due Care

Leadership / Stewardship (to where: sustainable well-being etc.)

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Inputs and Resources: Local communities

as key resources

Transformation (Transformative Actions, CSR2),Governance and control mechanism in place

Outputs:Public good and society


Vision and Mission, Motives and Ambitions

Continuous Improvement Allocating social wealth To establish efficiency of the allocation process

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InputsResources



Now Future

Social Entrepreneurship

Scaling up approaches Innovation CSR1,2,3, CSP Marketing III

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InputsResources



Outputs/Utility: Create social wealth, total wealth, public

good, common good Reduce and solve social problems Transform lives, to promote social change

and reform Catalyze sustainable social transformation To address inequity Promote genuine democratic participation

for all people Improve the general welfare of rural farm

families Promote community development Develop self-sustaining income-generating

capability and visibility Enriching community Reduce social costs

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Economy

Technology

Market

Socio-C

ulture

Political-Legal

Market Analysis:

Emerging trends enable:

The age of participation

The age of global-localized culture

More creative and in need of spiritual cultivation

Co-Creation Explore, to co-create a brand

meaning of transformative value in the mind-share of consumers, a brand identity itself.

Communitization Engage consumers to connect to

one another in communities, through market-share tactic, to establish brand integrity (trust of the communities)

Character building Take actions (execute) through

CRM and services, brand’s spiritual meaning promotion, to establish brand image.

Marketing Trends:

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Brand integrity

Brand identity Brand

imag

e

Brand

DifferentiationPositioning

3i

The 3i Model

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Kotler proposes a triangle of Positioning (Strategy, Explore, Mind Share), Differentiation (Tactics, Engage, Market Share), and Branding (Value, Execute, Heart Share) as the core of Marketing.

Mind-Share Market-Share

Heart-Share

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Summary:

We are making an effort to develop towards a theory of deontology, transformative and utilitarianism business ethical approach for social entrepreneurship to develop business and communities simultaneously and seamlessly.

A good theory, according to Weick (1995), explains, predicts, and delights. This work represents an effort to stimulate research on social entrepreneurship by using existing bodies of knowledge in marketing and business ethics.

Weick, K. (1995), Definition of Theory, pp. 565-567. in Nigel Nicholson (Ed.), Blackwell Dictionary of Organizational Behavior, Oxford: Blackwell.

Social entrepreneurship = a process involving the innovative use and combination of resources to pursue opportunities to catalyze social changes and address social needs.

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Brand stories with strong integrity pose no reason to worry.

Marketing should be redefined to its root as a triangle of Positioning, Differentiation, and Brand. A brand should be clearly positioned in the consumer’s mind to give it a clear Brand Identity. To give Brand Integrity to your Positioning, it must be supported by strong Differentiation. Positioning supported by strong Differentiation will in turn lead to strong Brand Image.

Brand Identity is about positioning your brand in the minds of the consumers. The positioning should be unique for your brand to be heard and noticed in the cluttered marketplace. It should also be relevant to the rational needs and wants of the consumers.

Brand Image is about acquiring the consumer’s mind share. Your brand values should appeal to consumer’s emotional needs and wants beyond product functionalities and features.

Brand Integrity is about fulfilling what is claimed through the positioning and brand value through solid Differentiation. It is about being credible to your promise and establishing the trust of the consumers to your brand. The target of Brand Integrity is the Spirit of the consumers.

It is the main message of this triangle: Marketing shall not be regarded as telling lies for selling purposes. Instead it should be regarded as keeping the promise to your customers.

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Brand: Brand Meaning (Identity) and Image, and its Integrity

IKEA Make stylish furniture affordableVirgin Bring excitement to boring industriesThe Walt Disney Create magical world for familiesSouthwest Airlines Make flying possible for many peopleThe Body Shop Embed social activism in businessMicrosoft Realize ubiquitous computingApple Transform how people enjoy technologyAmazon.com Provide the biggest selection of knowledge delivered convenientlyeBay Create user-governed market spaceGoogle Make the world’s information organized and accessible

Original Brand Mission

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Three Characteristics of a good Brand

Mission

Co-creation

communitization Character building

Need a story that moves people

Consumer empowerment

Business as usual

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Three characteristics of a good mission: Business as usual – Creating (Brand character building – uniquely transformative) Story that moves people – Spreading (transformative story and reality to help consumers to connect

to one another in communities) Consumer empowerment – Realizing (co-creation, co-creating values, also to help consumers to

connect to one another in communities)

Brand missions are authentic and reflect what Peter Drucker argued: Business should start from a good mission. Financial results come second. Amazon.com earned its first profit in 2001, after 7 years of online existence. Twitter has not even finalized its business model and is still not sure how to monetize its services.

A good mission is always about change, transformation, and making a difference. Thus, marketing 3 (to be discussed later) is about changing the way consumers do things in their lives. When a brand brings transformation, consumers will unconsciously accept the brand as part of their daily lives. As the experience economy matures, it is time for the transformation economy to emerge. We believe that the transformation economy – where a company’s offering is a consumer’s life-transforming experience – is already on its way.

Experience Economy Transformation Economy

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A brand possesses great characters when it becomes the symbol of a movement that addresses the problems in the society and transforms people’s lives – (business as usual)

Example: The Body Shop is the symbol of social activism Disney a symbol of family ideal Wikipedia the symbol of collaboration eBay the symbol of user governance.

Consumer empowerment – Giving consumers a sense of empowerment is crucial in the pursuit of a brand mission. Mission belongs to the consumers, and it is the company’s responsibility to fulfill the mission. It is not only about getting buy-in but making an impact. Although the individual consumer is weak, their collective power will always be bigger than the power of any firm. The value of consumer’s collective power is rooted in the value of a network. The network may develop with 1-to-1 relationship, 1-to-many relationship, or many-to-many relationship.

Example: At Amazon.com it is common for readers to write Reviews of books and recommend them to others. It is also

common at eBay when people rate buyers and sellers and leave comments that determine their reputations – all these are the consumer empowerment platforms. Consumer empowerment is the platform for consumer conversation. Many-to-many conversation is what makes a consumer network so powerful. A brand story has no meaning when consumers are not talking about it. In Marketing 3.0, conversation is the new advertising.

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In short, to market the company’s product mission to consumers, companies need to offer a mission of transformation, build compelling stories around it, and involve consumers in accomplishing it.

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Principles, Rules: Compliance-based

culture: rule-following responsibility

Personal integrity of its workforce

Doing things right




Doing right things

Culture (compliance cum value based) – can cultivate values, expectations, beliefs and patterns of behavior that best and most effectively support ethical decisions making.

Thus it becomes the primary responsibility of corporate leadership to steward this effort. In thought, word and deed, a company’s leader must clearly and unambiguously both advocate

and model ethical behavior. Ethical business leaders not only talk about ethics and act ethically on a personal level, but they

also allocate corporate resources to support and promote ethical behavior. There is a long-standing credo of management: “Budgeting is all about values.” More common versions are “Put your money where your mouth is” and “walk the talk.”

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A good leader is simply anyone who does well what leaders do. Since leaders guide, direct, and enable others towards a destination, a good leader

is someone who does this successfully and, presumably, efficiently. Good leaders are effective at getting followers to their common destination.

But not every good leader is an ethical leader. One key difference lies with the means used to motivate and achieve one’s goals

(utilitarianism).


Means ( used to motivate and achieve one’s goals) Make ethical responsible decisions

Ethical Culture: compliance and value-based

Leadership

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The leader’s role in ensuring social responsibility behavior is to establish an organizational culture of socially responsible behavior.

Awareness – Be aware of the actions and projects within the organization. Culture – Establish a culture that rewards socially responsible behaviors. Continuous improvement – Support many, small, impactful changes must be

recognized. Strategy – The project selected should be linked to the overall strategy of the firm

i.e. the 4 Greenness Strategies (light green, market green, stakeholder green, and dark green)

Competitive Advantage

Stakeholder Green (Value Chain, Supporting Industries, Communities Clusters)

Factor Condition: Innovation in particular (Dark Green)

Market Condition: Market Green

Light Green: Ethical governance,

Compliance with the Laws

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Deontology Utilitarianism Means ( used to motivate and achieve one’s goals) The Methods

Make ethical responsible decisions The goals


Leadership

While some means may be ethically better than others (e.g., persuasion rather than coercion), it is not the method alone that establishes a leader as ethical.

In other words, while perhaps necessary, ethical means of leading others are not sufficient for establishing ethical leadership, and the other element of ethical leadership involves the end or goal towards which the leader leads.

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Leadership

One cannot be a leader and there cannot be followers unless there is a direction or goal towards which one is heading.

In the business context, productivity, efficiency, and profitability are minimal goals.

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Culture

LeaderA strong leader with a sense of responsibility and connection to the community

Identify stakeholders (responsibility to whom): CSR across the value chains and beyond

CSR: CSR suggests that a business identify its stakeholder groups and incorporate their

needs and values within its strategic and operational decision-making process.

Extent of responsibility: Me-We-World Utilities and Values (CSR contributes) beyond the maximization of profits For public good – a social mission. Share profits, make

society a better place. Incorporating CSR can lead to differentiation and

competitive market advantage for the business, something that can contribute to the company’s brand for the present and future, reduce risk, better stakeholder relationships and supporting long-term strategic interests.

Social contract – Rules and Principles, the basic rules of society that embodied in law and ethical custom.

Business is responsible: it is reliable, dependable, trustworthy, providing good customer service.

Obey law and beyond i.e. not to violate anyone’s rights, to prevent harms.

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Culture

LeaderA strong leader with a sense of responsibility and connection to the community

Identify stakeholders (responsibility to whom): CSR

CSR: CSR suggests that a business identify its stakeholder groups and incorporate their

needs and values within its strategic and operational decision-making process.

CSR increases the sustainability of an organization by meeting the needs of its supporting constituencies.

Employees are well treated in their work environments may prove more loyal and more effective and productive in their work.

Reputation. Brand recognition. Brand loyalty.

Dormant Stakeholder

Discretionary Stakeholder

Demanding Stakeholder

Dangerous Stakeholder

Dependent Stakeholder

Dominant Stakeholder

Definitive Stakeholder

Power

Legitimacy

Urgency

Stakeholder Typology

1

23

4

5

6

7

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Dormant stakeholders possess power to impose their will on a firm, but by not having a legitimacy relationship or an urgent claim, their power remains unused. Example: Employees fired or laid off could seek to exercise their latent power.

Lack power, depend upon others for the power necessary

to carry out their will.

Only lacking legitimacy. Could use coercion or violence i.e. environmentalists spiking trees or employee sabotage.

When stakeholder’s claim is urgent (in particular the moderately and highly salient stakeholders), managers have a clear and immediate mandate to attend to and give priority to that stakeholder’s claim.

Else, demanding is urgent only, like “mosquitoes buzzing in the ears” of managers.

Absolutely no pressure on managers to engage active relationship due to lacking of power and urgency.Typically the recipients of philanthropy i.e. non-profit organizations like schools and hospitals who receive donations and volunteer labors.

Having power and legitimacy to draw active attention i.e. board of directors, government and employees. Actions taken include annual report, HRM practices, public relations.

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Low salience stakeholders(1,2,3)

Highly salient stakeholders (7)

Moderately salient stakeholders(4,5,6)

(Latent Stakeholders)

Salience – as the degree to which managers give priority to competing stakeholder claims. Thus stakeholder salience will be high where all three of the stakeholder attributes – namely, power, legitimacy and urgency – are perceived by managers to be present.

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Employee / HRM: Focus on employee rights to fair treatment and due process in the

workplace: Due process is the right to be protected against the arbitrary use of authority. In legal contexts, due process refers to the procedures that police and courts must follow in exercising their authority over citizens.

Due process in the sense that employees are constantly supervised and evaluated in the workplace, (and such benefits as salary, work conditions, and promotions can also be used to motivate or sanction employees).

Basic fairness – implemented through due process – demands that power or authority be used justly.

Employees’ health and safety are both means for attaining other valuable ends (and as ends in themselves).

Rewards and compensation structures (reward fairly) Employment at will – Unless an agreement specifies otherwise, employers

are free to fire an employee at any time and for any reason. But, justice demands that such tools not be used to harm other people.

Reverse discrimination – to encourage greater ethnics and cultural diversity.

Affirmative action – known as positive discrimination and as employment equity, referring to policies that take factors including race, color, religion, sex, or national origin into consideration in order to benefit an underrepresented group.

Employee / HRM: Employees’ Health and Safety at

work Provide well-being and positive

motivation to employees (i.e. through rewards and compensation structures)

Benefits such as salary, work conditions and promotions.

Business expansion, Improves economy, and thus more job opportunities and job market for the employees.

HRM Perspective:

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Sustainability: Eco-efficiency: Doing more with less. Biomimicry: Closed-loop production which seeks to integrate what

is presently waste back into production. In an ideal situation, the waste of one firm becomes the resource of another, and such synergies can create eco-industrial parks. Just as biological processes such as photosynthesis cycle the waste of one activity into the resource of another, this principle is often referred to as biomimicry. The ultimate goal of biomimicry is to eliminate waste altogether rather than reducing it.

Cradle-to-cradle responsibility: This extends biomimicry further, responsible for incorporating the end results of its products back into the productive cycle.

Beyond eco-efficiency and biomimicry, towards a sustainability that involves a shift in business model from products to services, enabling a service-based economy i.e. clothes cleaning, floor covering, illumination, entertainment, cool air, transportation, word processing, and so forth. Services aimed to solve customers’ problems directly and efficiently, and thus saves costs and reduce environmental impact.

Sustainability Perspective:

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New definition of Marketing:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for consumers, clients, partners, and society at large (American Marketing Association, 2008)

Offerings include products, services, experiences, places, persons, ideas, and causes.

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Thus, marketing the mission to: Consumers Employees Channel Partners Shareholders

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Moving towards Marketing 3.0:

Marketing 1.0 Marketing 2.0 Marketing 3.0

Mind Heart Spirit

Product-Centered Customer-oriented Value-driven

Economic value People value Environmental value

Profits Social Progress Sustainability

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The challenge: Re-moralize the market Re-localize the economy Re-capitalize the poor

What is value? Value = Benefit – Cost (Transactional)

04/11/2023 62Deontology Utilitarianism


Leadership

The Age of Participationand collaborative Marketing

The Age of Globalization Paradox and cultural Marketing

The Age of Creative Society and Human Spirit Marketing

Technology

Market

Political legal

Socio cultureEconom

y

Com

petit

ive

Env

ironm

ent A

naly

sis:

Value Creation

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New wave technology facilitates the widespread dissemination of information, ideas, and public opinion that enable consumers to collaborate for value creation.

Technology facilitates the widespread dissemination of information, ideas and public opinion which enables customers to collaborate in value creation.

Technology also drives globalization of political and legal, economy and social culture landscape which will create paradoxes and opportunities. The iconic brands which address the anxiety and desire of the customers will win the competition in this world of paradox. In an interlinked economy, the “butterfly effect” exists. A small change in one part of the world can make big changes in other parts of the world. A business leader who captures this small change might gain significant advantage.

Consumers’ sophistication generates the future market – the creative consumer market.

In order to stay relevant in Marketing 3.0, companies should always target the consumers as a whole human – has physical body, a mind capable of independent thought and analysis, a heart which can feel emotion, and a spirit – soul and philosophical center.

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Targeting the mind – the battle in the consumer’s mind. That is, how you position the product in the mind of the prospect relevantly is what matters.

Touching the heart – the marketing concept evolved because the world became more emotional. Targeting the mind is no longer enough. Marketers should also target the hearts of the consumers through emotional marketing, experiential marketing, emotional branding, etc. Examples: Starbucks’ concept of “third place for drinking coffee”, Apple’s “creative imagination” are the implementations of emotionally relevant marketing. These aimed at our emotional hearts which bear feelings.

Transcending the spirit – The concept will need to evolve once more to embrace the spirit of the consumers. Marketers should discover the anxieties and desires of the consumers and do what Stephen Covey calls “unlocking the soul’s code” in order to stay relevant.

Co-Creation

Communitization

Character Building Transformative

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Co-Creation

Communitization

Character Building Transformative

A brand possesses great characters when it becomes the symbol of a movement that addresses the problems in the society and transforms people’s lives – (business as usual)

Example: The Body Shop is the symbol of social activism Disney a symbol of family ideal Wikipedia the symbol of collaboration eBay the symbol of user governance.

The Disciplines of Marketing

Today’s Marketing Concept

The Four Ps (product, price, place, promotion)STP (segmentation, targeting, and positioning)Brand building

Future Marketing Concept

Co-creation

Communitization

Character building

The future of marketing : Horizontal not vertical

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Product Customers

Brand

Product Management

Customer Management

Brand Management

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Product Management

1950s-1960s

Customer Management

1970s-1980s

Brand Management

1990s-2000s

Value Management

2010s – 2020s

Evolution of Marketing:

Creating a social dimension to the value proposition

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Consider Whole Foods Market, whose value proposition is: to sell organic, natural, and healthy food products to customers who are passionate about food and the

environment.

Creating a social dimension to the value proposition: Social issues are fundamental to what makes Whole Foods unique in food retailing and to its ability to command

premium prices. The company’s sourcing emphasizes purchases from local farmers through each store’s procurement process.

Buyers screen out foods containing any or nearly 100 common ingredients that the company considers unhealthy or environmentally damaging.

The same standards apply to products made internally. Whole Foods’ baked goods, for example, use only unbleached and un-bromated flour.

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HealthinessEnvironmental RM Source Screening

The Firm

The Rivalry

Investment in competitive context

Creating a social dimension to the value proposition: Whole Foods’ commitment to natural and environmental friendly

operating practices extends well beyond sourcing. Stores are constructed using a minimum of virgin raw materials.

Recently, the company purchased renewable wind energy credits equal to 100% of its electricity use in all of its stores and facilities, the only Fortune 500 company to offset its electricity consumption entirely.

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Environmental RM Source Screening: Food Cleaning products

The Firm

The Rivalry

Price Env. Friendly infrastructure

Env. Friendly process / transports

Env. Friendly waste treatment

Philanthropy

Unique market positioning

Self-sustaining capability

Creating a social dimension to the value proposition: Spoiled produce and bio-degrable waste are trucked to regional centers for composting. Whole Foods’ vehicles are being converted to run on biofuels. Even the cleaning products used in its stores are environmentally friendly.

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Creating a social dimension to the value proposition: And through its philanthropy, the company has created the Animal Compassion Foundation to develop more

natural and humane ways of raising farm animals. In short, nearly every aspect of the company’s value chain reinforces the social dimensions of its value

proposition, distinguishing Whole Foods from its competitors.

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Creating a social dimension to the value proposition: Not every company can build its entire value proposition around social issues as Whole Foods does, but adding

a social dimension to the value proposition offers a new frontier in competitive positioning. Government regulation, exposure to criticism and liability, and consumers’ attention to social issues are all

persistently increasing. As a result, the number of industries and companies whose competitive advantage can involve social value propositions is constantly growing.

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Gov. regulation, exposure to criticism and liability, consumers’ attention to social issues

Creating a social dimension to the value proposition: Sysco, for example, the largest distributor of food products to restaurants and institutions in North America, has

begun an initiative to preserve small, family-owned farms and offer locally grown produce to its customers as a source of competitive differentiation.

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In short, CSR across the entire value chain:

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Firm Infrastructure: e.g., financing, planning, investor relations: Financial reporting practices Government practices Transparency Use of lobbying

HRM: Education and job training Safe working conditions Diversity and discrimination Health care and other benefits Compensation policies Layoff policies

Technology Development: Relationships with universities Ethical research practices, e.g.,

animal testing, GMOs Product safety Conservation of raw materials Recycling

Procurement: Procurement and supply chain practices, e.g.,

bribery, child labor, pricing to farmers Uses of particular inputs, e.g., animal fur. Utilization of natural resources

Transportation Impacts: Emissions Congestion

Operations: Emissions and Waste Biodiversity and ecological impacts Energy and water usage Worker safety and labor relations Hazardous materials

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Utilitarianism

De-ontology

Type of responsibility

Societal Expectation Explanations

Required of business by society

Required of business by society

Expected of business by society

Desired/Expected of business by society

Be profitable. Maximize sales, minimizes costs. Make sound strategic decisions. Be attentive to dividend policy. Provide investors with adequate and attractive returns to their investments.

Obey all laws, adhere to all regulations. Environmental and consumer laws. Laws protecting employees. Comply with Sarbanes-Oxley Act. Fulfill all contractual obligations. Honor warranties and guarantees.

Avoid questionable practices. Respond to spirit as well as to letter of law. Assume law is a floor on behavior, operate above minimum required. Do what is right, fair, and just. Assert ethical leadership.

Be a good corporate citizen. Give back. Make corporate contributions. Provide programs supporting community – education, health or human services, culture and arts, and civic. Provide for community betterment. Engage in volunteerism.

Economic

Legal

Ethical

Philanthropic

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CSR Definition and Pyramid are minimal level of sustainable stakeholder models: Each of the 4 components of responsibility addresses different stakeholders in terms of the

varying priorities in which the stakeholders are affected. Economic responsibilities – most dramatically impact owners or shareholders and employees

(because if the business is not financially successful, owners, and employees will be directly affected). When the economic recession hit, employees were displaced and significantly affected.

Legal responsibilities are certainly crucial with respect to owners, but in today’s society, the threat of litigation against businesses emanates frequently from employees and consumer stakeholders.

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CSR Definition and Pyramid are sustainable stakeholder models: Ethical responsibilities affect all stakeholder groups, i.e. consumers, employees, and the

environment. Philanthropic responsibilities most affect the community, but it could be reasoned that

employees are next affected (research suggested that a company’s philanthropic performance significantly affects its employee’s morale).

The definition and pyramid are sustainable in that they represent long-term responsibilities that overarch into future generations of stakeholders as well.

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Company

Owner

Stakeholders

Community (We, World)

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Ethically driven, ecologically sustainable

All indispensableUnified whole

Pyramid as a unified whole – A CSR or stakeholder perspective would focus on the total pyramid as a unified whole and on how the firm might engage in decisions, actions, policies, and practices that simultaneously fulfill all its component parts.

This pyramid should not be interpreted to mean that business is expected to fulfill its social responsibilities in some sequential fashion, starting at the base. Rather, business is expected to fulfill all its responsibilities simultaneously.

Total corporate social responsibility = economic responsibilities + legal responsibilities + ethical responsibilities + philanthropic responsibilities.

Stated in more practical and managerial terms, the socially responsible firm should strive to: Make a profit Obey the law Be ethical Be a good corporate citizen

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Example of philanthropic responsibilities: Timberland underwrites skills training for women working for its suppliers in China. In Bangladesh, it helps provide

microloans and health services for laborers.

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Example of philanthropic responsibilities: Chick-fil-A, the fast-food restaurant, through the WinShape Centre Foundation, operates foster homes for more than

120 children; sponsors a summer camp that hosts more than 1,700 campers every year, from 24 states; and has provided college scholarships for more than 16,500 students.

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The Body Shop continues to increase its positive environmental practices. In 2001, The Body Shop UK region and service-centre head offices in Watersmead, switch to Ecotricity, providing them with energy from renewable sources. In addition, a number of The Body Shop® stores have now converted to green electricity.

Campaign successes include the Against Animal Testing campaign. The campaign leads to a UK-wide ban on animal testing of cosmetic products and ingredients in November 1998, and the largest ever petition (four million signatures) being delivered to the European Commission in 1996.

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Ecotricity Rolls Out the World's First Wind Powered Car Charger

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When Blake Mycoskie was on a visit to Argentina in 2006, a bright idea struck him. He was wearing alpargatas – resilient, lightweight, canvas slip-ons – shoes typically worn by Argentinian farmworkers, during his visit to poor villages where many of the residents had no shoes at all.

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He formulated the plan to start a shoe company and give away a pair of shoes to some needy child or person for every shoe the company sold. This became the basic mission of the company.

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In the summer of 2006, he unveiled his first collection of Toms shoes. Stores such as American Rag and Fred Segal in Los Angeles, and Scoop in New York, started stocking his shoes. By fall, the company had sold 10,000 pairs and he was off to the Argentinian countryside, along with several volunteers, to give away 10,000 pairs of shoes.

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In an article in Time magazine, Blake was quoted as saying, “I always thought I’d spend the first half of my life making money and the second half giving it away. I never thought I could do both at the same time.”

By February 2007, Blake’s company had orders from 300 stores for 41,000 of his spring and summer collection of shoes, and he had big plans to go international by entering markets in Japan, Australia, Canada, France, and Spain in the summer of 2008.

The company is also planning to introduce a line of children’s shoes called Tiny Toms. Another shoe drop is planned for Argentina, with future trips targeting Asia and Africa.

Fun, Easy slip-on, Comfort, Fashion

Leading philanthropic responsibilityPrice

Competitors

Toms shoes Customer Value Proposition

Strategy Canvas (Value Curve)

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CSR enabled business strategies

Innovative customer and market value propositions

Creating waves of customer showing interest and buy-in

Gear out production and operations – business expansion

Benefits back to societies (Globally)

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Summary: To really develop and implement strategic CSR, companies must shift from a fragmented, defensive posture

to an integrated, affirmative approach. Perceiving CSR as building shared value rather than as damage control or as a PR campaign will require

dramatically different thinking in business. The focus must move away from an emphasis of image to an emphasis on substance. Corporations are not responsible for all the world’s problems, nor do they have the resources to solve them

all. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit.

Addressing social issues by creating shared value will lead to self-sustaining solutions that do not depend on private or government subsidies.

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Dimensions:

Integrity: Fragmented, defensive CSR Integrated, affirmative approach to CSR

Activeness: CSR as damage control CSR as building shared value / PR campaign

through

Content: Emphasis on image Emphasis on substance

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In fact, all these examples illustrate that in CSR the leaders make that a personal mission. Actions must be taken. Thus Corporate Social Responsibility is given a trust and commitment on action towards Corporate Social Responsiveness:

Corporate Social Responsiveness: Corporate social responsiveness is depicted as an action-oriented variant of CSR. The connotation of “responsibility” is that of the process of assuming an obligation. It places an

emphasis on motivation rather than on performance. Responding to social demands is much more than deciding what to do. There remains the management task of doing what one has decided to do, and this task is far from trivial.

Obligation Decided what to do Actually doing it

Motivation:Performance: extending motivation to performance (Action Phase of management’s response in the social sphere)

Corporate Social Responsiveness: Sethi’s three-stage scheme: Sethi proposes a three-stage schema for classifying corporate behavior:

social obligation, social responsibility, and social responsiveness. Social responsiveness suggests that what is important is that corporations be “anticipatory” and

“preventive”, and is concerned with business’s long-term role in a dynamic social system.

time

Corrective

Preventive

Anticipatory

Long-term role

Responsiveness

Obligatory nature

Social responsibility nature

Social responsiveness nature

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Corporate Social Responsiveness: Frederick’s CSR1, CSR2, CSR3. CSR1 refers to the traditional, accountability concept of CSR. CSR2 is responsiveness focused. It refers to the capacity of a corporation to respond to social

pressures. It involves the literal act of responding to, or achieving, a responsive posture to society. It addresses the mechanisms, procedures, arrangements, and patterns by which business responds to social pressures.

CSR3 refers to corporate social rectitude, which is concerned with the moral correctness of the actions or policies taken. CSR3 integrates business ethics into responsiveness.

CSR1

CSR2

CSR3

Being accountable Being responsive

Moral correctness value

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Three dimensions of the CSP Model: Definition and dimension of corporate social responsibility – the economic, legal, ethical, and discretionary

(philanthropic) components. Social responsiveness dimension – continuum of responsive actions. Social (or stakeholder) issues involved – concerns the scope or range of social or stakeholder issues that

management must address in the first two dimensions. The model is useful step toward understanding social responsibility and provides a framework that could lead to

better-managed social performance. The model could be used as planning and diagnostic problem-solving tool. It can assist the managers by

identifying categories within which the organization and its decisions can be situated.

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Definition and dimension of corporate social responsibility

Social (or stakeholder) issues involved Performance

Social responsiveness dimension

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Legal Responsibility

Consumerism Environment Discrimination Product Safety Occupational Safety

Shareholders

Social (Stakeholders) Issues

Ethical Responsibility

Legal Responsibility

Economic Responsibility

Discretionary Responsibilities

Carroll’s Corporate Social Performance Model

Reaction

Defense

AccommodationProactive

Philosophy of

Social

Responsiveness

So

cial

Res

po

nsi

bil

ity

Cat

ego

ries

Corporate Citizenship: Corporate citizenship is a collective term embracing the concepts of corporate social responsibility, responsiveness,

and performance. It is a term practitioners and academics alike have grown fond of but it is really not distinct from CSR, CSR, CSP. Corporate citizenship has become an important practitioner-based movement and that it conveys a sense of

responsibility for social impacts or a sense of neighborliness in local communities.

Corporate Citizenship

Broad View Narrow View

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CSR View and Motivation CSR Behavior CSP / Stakeholder Needs Met


Broad View Narrow View

Corporate community relationship – It embraces the functions through which business intentionally interacts with nonprofit organizations, citizen groups, and other stakeholders at the community level.

Extend to global community levels.

Corporate citizenship encompasses terms that basically embraces all that is implied in the concepts of social responsibility, responsiveness, and performance:

Social responsibility – a reflection of shared moral and ethical principles.

Social responsiveness – a vehicle for integrating individuals into the communities in which they work.

Social performance – a form of enlightened self-interest that balances all stakeholders’ claims and enhances a company’s long-term values.

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What drivers companies to embrace corporate citizenship and what are the benefits of good corporate citizenship to business itself?

Internal motivators: Compliance Tradition and values Reputation and image Business strategy Recruiting or retaining

employees Compassionate urge

External pressures: Customers and consumers Expectations in the community Laws and political pressures


Improved employee relations (i.e., improves employee recruitment, retention, morale, loyalty, motivation, and productivity)

Improved customer relationships (e.g., increases customer loyalty, acts as a tiebreaker for consumer purchasing, and enhances brand image)

Improved business performance (e.g., positive impacts bottom-line returns, increases competitive advantage, and encourages cross-functional integration).

Enhanced company’s marketing efforts (e.g., helps create a positive company image, helps a company manage its reputation, and supports higher prestige pricing)

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Dimensions on the stages of corporate citizenship:Responding to society: Inside-Out

Citizenship concept Strategic intent Leadership Structural

Relating to society: Citizenship Outside-in: Issues management Stakeholder relationships Transparency

The development of corporate citizenship reflects a stage-by-stage process in which seven dimensions (citizenship concept, strategic intent, leadership, structure, issues management, stakeholder relationships, and transparency) evolve as they move through five stages, and companies become more sophisticated in their approaches to corporate citizenship. This is a five-stage model beginning with Stage 1, which is Elementary, and growing toward Stage 5, which is Transforming.

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Stage 1: Elementary

Stage 2: Engaged

Stage 3: Innovative

Stage 4: Integrated

Stage 5: Transforming

Credibility

Capacity

Coherence

Commitment

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Top 10 Reasons companies are becoming more socially responsible: Enhanced reputation Competitive advantage Cost saving Industry trends CEO or board commitment Customer demand SRI (Socially responsible

investment) demand Topline growth Shareholder demand Access to capital


Making decisions based on ethical principles Making decisions based on ethical consequences

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In summary: As consumers become more collaborative, cultural and spiritual,

the character of marketing also transforms.

Building Blocks of Marketing 3.0:

Building Blocks Why?

What to offer:Content Collaborative Marketing The Age of Participation (the Stimulus)

Value-Creation

Context Cultural Marketing The Age of Globalization Paradox (the Problem, the Opportunity)

How to offer: Spiritual Marketing The Age of Creativity (the Solution)

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Brand integrity

Brand identity Brand

imag

e

Brand

DifferentiationPositioning

3i

The 3i Model

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Kotler proposes a triangle of Positioning (Strategy, Explore, Mind Share), Differentiation (Tactics, Engage, Market Share), and Branding (Value, Execute, Heart Share) as the core of Marketing.

Mind-Share Market-Share

Heart-Share

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Brand stories with strong integrity pose no reason to worry.

Marketing should be redefined to its root as a triangle of Positioning, Differentiation, and Brand. A brand should be clearly positioned in the consumer’s mind to give it a clear Brand Identity. To give Brand Integrity to your Positioning, it must be supported by strong Differentiation. Positioning supported by strong Differentiation will in turn lead to strong Brand Image.

Brand Identity is about positioning your brand in the minds of the consumers. The positioning should be unique for your brand to be heard and noticed in the cluttered marketplace. It should also be relevant to the rational needs and wants of the consumers.

Brand Image is about acquiring the consumer’s mind share. Your brand values should appeal to consumer’s emotional needs and wants beyond product functionalities and features.

Brand Integrity is about fulfilling what is claimed through the positioning and brand value through solid Differentiation. It is about being credible to your promise and establishing the trust of the consumers to your brand. The target of Brand Integrity is the Spirit of the consumers.

It is the main message of this triangle: Marketing shall not be regarded as telling lies for selling purposes. Instead it should be regarded as keeping the promise to your customers.

Value CurveProduct-Centric Marketing(Marketing 1.0)

Consumer-Oriented Marketing(Marketing 2.0)

Value-driven Marketing (Marketing 3.0)

Marketing 1.0

Product-centric

Marketing

Marketing 2.0

Consumer-oriented

Marketing

Marketing 3.0

Values-driven

Marketing

Objective Sell products Satisfy and retain the consumers

Make the world a better place

Enabling forces Industrial Revolution Information technology New wave technology

How companies see the market

Mass buyers with physical needs

Smarter consumer with mind and heart

Whole human with mind. heart, and spirit

Key marketing concept

Product development Differentiation Values

Company marketing guidelines

Product specification Corporate and product positioning

Corporate mission, vision, and values

Value propositions Functional Functional and emotional

Functional, emotional, and spiritual

Interaction with consumers

One-to-many transaction One-to-one, to-many Many-to-many collaboration

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Marketing in its culmination will be a consonance of three concepts: Identity So people get to known you Integrity So people have trust and confidence on you Image So people recognize you to deliver relevant value

Marketing is about clearly defining your unique identity and strengthening it with authentic integrity to build strong image.

Marketing 3.0 is also about the marketing of meaning embedded in the corporate mission, vision, and values. Marketing should no longer be considered as only selling and using tools to generate demand. Marketing should be considered as the major hope of a company to restore consumer trust and to promote social well-being.

Meaning Marketing

Deliver SATISFACTION

RealizeASPIRATION

PracticeCOMPASSION

Profit Ability Return Ability Sustain Ability

Be BETTER DIFFERENTIATEMake a

DIFFERENCE

MIS

SIO

N(W

hy

)V

ISIO

N(W

ha

t)V

AL

UE

S(H

ow

)

Mind Heart Spirit

Values-Based Matrix (VBM) Model

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