Mba i mm-1 u-5.2 ethics & csr

ETHICS & CSR
1
Course: MBA-I
Subject: MARKETING MANAGEMENT - 1
Unit: 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 organizedConsumerism is an organized
movement of citizens andmovement of citizens and
government agencies to improvegovernment agencies to improve
the rights and power of buyers inthe 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 Sustainability
The 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 Responsibility
ObjectivesObjectives
• 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

DefinitionDefinition
What is Corporate Social Responsibility?
CSR! Is that really
for me? So
technical, very
expensive!!
I’m overwhelmed

‘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

The responsibility of business towards the society

Our Definition
A voluntary initiative on the part of a business to
contribute to a better society and a greener and
cleaner environment.

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

Past, Present and Future TrendsPast, Present and Future Trends
CSR IN SOUTH
AFRICA
Past Trend
–
Pre 1994
Present
Trend –
Post 1994
Future
Trend

CSR Myths, Legislation and Benefits

Myths 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 CSR
Legislative 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 interest
and good
reputation
Benefits
Benefits
Enhanced
Relationship with
stakeholders

REFERENCES
• PHILIP KOTLER (BOOK-MARKETING
MANAGEMENT - CHAPTER-20)

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