ETHICS & CSR

1

Course: MBA-ISubject: MARKETING MANAGEMENT - 1Unit: V

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.

NIKENIKE – Socially Responsible? – Socially Responsible?

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

consumers

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?

Deceptive Practices Deceptive Pricing

Falsely advertising “factory”, “wholesale”, “clearance” or other seemingly large reductions from a phony high original retail (list) price.

Deceptive Promotion Overstating a product’s features or performance, running

rigged or fraudulent contests. “Bait-and-Switch” advertising

Deceptive Packaging Exaggerating package contents through slick design,

misleading quantity or quality imagery and misleading labeling

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.

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

McDonald’s and Obesity

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

Planned Obsolescence Refers to: Products needing replacement before they should

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?

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

Marketing’s Impact on Society as a Whole

Marketing creates false wants and needs

Marketing makes people materialistic

Marketing promotes poor quality products

Cultural Pollution

Does constant exposure to advertisements assault our senses?

Consumerism

Consumerism is an organized Consumerism is an organized movement of citizens and movement of citizens and

government agencies to improve government agencies to improve the rights and power of buyers in the rights and power of buyers in

relation to sellers.relation to sellers.

Buyers have the right to:1. not buy a product offered for sale.2. expect the product to be safe.3. expect the product to perform as claimed.4. be well informed about important aspects of the

product.5. be protected against questionable products and

marketing practices.6. influence products and marketing practices in

ways that will improve their “quality of life.”

Buyers’ Rights

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

Environmental SustainabilityThe Dell recycling program helps customers recycle or donate old computer equipment.

Societal Classification of Products

Global Marketing Ethics Business standards and practices vary

greatly between countries. Bribery and kickbacks are illegal in the U.S., but are legal

and even standard business practice in other countries.

Should companies maintain a consistent set of ethical standards to be used worldwide?

Corporate Social ResponsibilityObjectivesObjectives

• Understanding the basics and fundamental principles of Corporate

Social Responsibility (CSR)

• To appreciate the impact of CSR on businesses

• To discuss how CSR initiatives can benefit businesses

Corporate Social ResponsibilityDefinitionDefinition

What is Corporate Social Responsibility?

CSR! Is that really for me? So

technical, very expensive!!

I’m overwhelmed

Corporate Social ResponsibilityDefinitionDefinition

What is Corporate Social Responsibility?

‘Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’.

– World Business Council For Sustainable Development

Corporate Social ResponsibilityDefinitionDefinition

What is Corporate Social Responsibility?

The responsibility of business towards the society

Corporate Social Responsibility

Corporate Social ResponsibilityDefinitionDefinition

Our Definition

A voluntary initiative on the part of a business to contribute to a better society and a greener and

cleaner environment.

Corporate Social ResponsibilityDefinitionDefinition

Analysis of the definition by the World Business Council For

Sustainable Development

• Expectation of stakeholders that companies

should behave ethically

• Expectation that business should contribute to

economic development

• Expectation that business should improve the

quality of life of its workforce and their families

• Expectation that business should play active part

in the improvement of the society

CSR in South Africa

Corporate Social Responsibility

Corporate Social ResponsibilityPast, Present and Future Trends Past, Present and Future Trends

CSR IN SOUTH AFRICA

Past Trend –

Pre 1994

Present Trend –

Post 1994

Future Trend

CSR Myths, Legislation and Benefits

Corporate Social Responsibility

Corporate Social ResponsibilityMyths surrounding CSR

CSR is not for small businesses

It is too complicated and technical

It is too expensive

It is a market gimmick

It is a separate corporate initiative

Corporate Social ResponsibilityLegislative Framework Legislative Framework

Companies Act 71 of 2008

King III

BBBEE Act 53 of 2003

Corporate Social ResponsibilityBenefits of CSRLegislative Framework

Benefits of CSR

Winning new businesses

Enhancing your influence in the

industry

Attracting, Retaining and

Maintaining a happy workforce

Increase in customer retention

Differentiating yourself from the

competitor

Saving money on energy and operating cost

Access to funding opportunities

Media interestand goodreputation

Ben

efits

Ben

efits

Enhanced Relationship with

stakeholders

REFERENCES• PHILIP KOTLER (BOOK-MARKETING

MANAGEMENT - CHAPTER-20)