THE ROLE OF ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING STRATEGY

In response to customer demands, along with the threat of increased regulation, more and more firms have incorporated ethics and social responsibility into the strategic marketing planning process.

Dimensions of Social Responsibility
Social Responsibility relates to an organization’s obligation to maximize its positive impact on society while minimizing its negative impact.  Four dimensions or responsibilities: economic, legal, ethical, and philanthropic.  From an economic perspective, all firms must be responsible to their shareholders, who have a keen interest in stakeholder relationships that influence the reputation of the firm and, of course, earning a return on their investment.  Economic and legal concerns are the most basic levels of social responsibility for good reason: Without them, the firm, the firm may not survive long enough to engage in ethical or philanthropic activities.  Marketing ethics refers to principles and standards that define acceptable marketing conduct as determined by the public, government regulators, private-interest groups, competitors, and the firm itself.  Ethical marketing decisions foster trust, which helps build long-term marketing relationships.  Marketing ethics includes decisions about what is right or wrong in the organizational context of planning and implementing marketing activities in a global business environment to benefit:

(1) Organizational performance
(2) Individual achievement in a workgroup
(3) Social acceptance and advancement in the organization
(4) Stakeholders
Thinking of corporate philanthropy as a marketing tool may seem cynical, but it points out the reality that philanthropy can be very good for a firm

Marketing Ethics and Strategy
Marketing ethics includes the principles and standards that guide the behavior of individuals and groups in making marketing decisions.  Corporate reputation, image, and branding are more important than ever and are among the most critical aspects of sustaining relationships with key stakeholders.

The Challenges of Being Ethical and Socially Responsible
Although most consider the value of honesty, respect, and trust to be self-evident and universally acceptable, business decisions involve complex and detailed discussions in which correctness may not be so apparent.  Individuals who have limited business experience often find themselves required to make sudden decisions about product quality, advertising, pricing, sales techniques, hiring practices, privacy, and pollution control.  When personal values are inconsistent with the configuration of values held by the workgroup, ethical conflict may ensue.

Deceptive Practices in Marketing: Deceptive Communication and Promotion

Research has shown that one out of every advertisement contains misleading information.  Exaggerated claims are those that cannot be sustained, such as when commercial states that a certain product is superior to any other on the market.  Another deceptive practice that has become more common is greenwashing,-involves misleading a consumer into thinking that a product or service is more environmentally friendly than it actually is.

Regulating Deceptive Marketing Practices

Many firms attempt to regulate themselves in an effort to demonstrate ethical responsibility and to preclude further regulation by federal or state governments.

Organizational Determinants of Marketing Ethics and Social Responsibility

A firm’s culture gives it members meaning and offers direction about how to behave and deal with problems within the firm.  In marketing, we think of ethical climate as that part of a corporate culture that relates to an organization’s expectations about appropriate conduct.  When top managers strive to establish an ethical climate based on responsibility and citizenship, they set the tone for ethical decisions.  To meet the public’s escalating demands for ethical marketing, firms need to develop plans and structures for addressing ethical considerations.  The majority of firms that experience ethical or legal problems usually have stated ethics orders and programs.

Codes of Conduct
Most firms begin the process of establishing organizational ethics programs by developing codes of conduct, which are formal statements that describe what an organization expects of its employees.  A code of ethical conduct has to reflect the board of directors’ and senior management’s desire for organizational compliance with the values, rules, and policies that support an ethical climate. Research has found that corporate codes of ethics often have five to seven core values or principles in addition to more-detailed descriptions and examples of appropriate conduct.
(1) Trustworthiness

(2) Respect
(3) Responsibility
(4) Fairness
(5) Caring
(6) Citizenship
These values will not be effective with distribution, training, and the support of top management in making them a part of the corporate culture and the ethical climate.

Marketing Ethics and Leadership
Employees look to the leader as a model of acceptable behavior.  As a result, if a firm is to maintain ethical behavior, top management must model its policies and standards.

Great leaders:
(1) create a common goal or vision for the company;
(2) obtain buy-in, or support, from significant partners;
(3) motivate others to be ethical;
(4) use the resources that are available to them; and
(5) enjoy their jobs and approach them with an almost contagious tenacity, passion, and commitment.
Ethics training can ensure that everyone in the firm:
(1) recognizes situations that might involve ethical decision-making
(2) Understands the values and culture of the firm
(3) Can evaluate the impact of ethical decisions on the firm in the light of its value structure.

Stakeholders, Market Orientation, and Marketing Performance
One of the most powerful arguments for including ethics and social responsibility in the strategic planning process is the evidence of a link between social responsibility, stakeholders, and marketing performance.  An ethical climate calls for organizational members to incorporate the interests of all stakeholders, including customers, in their decisions and actions.  As employees perceive an improvement in the ethical climate of their firm, their commitment to the achievement of high-quality standards also increases.  These employees exhibit effort beyond both expectations and requirements in order to supply quality products in their particular job or area of responsibility.  Employees who work in less ethical climates have less commitment to providing such quality.

Market Orientation
An ethical climate is also conducive to a strong market orientation.  Market orientation-development of an organizational culture that effectively and efficiently promotes the necessary behaviors for the creation of superior value for buyers and thus, the continuous superior performance of the firm.  Without a strong ethical climate, a competitive workplace orientation can emerge.

Stakeholder Orientation
The degree to which a firm understands and address stakeholder demands
3 sets of activities:
(1) The organization-wide generation of data about stakeholder groups and assessment of the firm’s effects on these groups
(2) The distribution of this information throughout the firm
(3) The organization responsiveness as a whole to this intelligence
Generating data about stakeholders begins with identifying the stakeholders who are relevant to the firm.  A stakeholder orientation is not complete unless it includes activities that address stakeholder issues.  The responsiveness of the organization to stakeholder intelligence consists of this initiative that the firms adopt to ensure that it abides by or exceeds stakeholder expectations and has a positive impact on stakeholder issues.  To gauge a given firm’s stakeholder orientation, it is necessary to evaluate the extent to which the firm adopts behaviors that typify both the generation and dissemination of stakeholder intelligence and responsiveness to it.

Marketing Performance
A climate of ethics and social responsibility also creates a large measure of trust among a firm’s stakeholders.  The most important contributing factor to gaining trust is the perception that the firm and its employees will not sacrifice their standards of integrity.  Firms that do not develop strategies and programs to incorporate ethics and social responsibility into their organizational cultures will pay the price with potentially poor marketing performance, the potential costs of civil or criminal litigation, and damage negative publicity when the public discovers questionable activities.

Incorporating Ethics and Social Responsibility
Ethics compliance programs or integrity initiatives.  Such programs establish, communicate, and monitor a firm’s ethical values and legal requirements through codes of conduct, ethics offices, training programs, and audits.  The marketing plan should include distinct elements of ethics and social responsibility as determined by top-level marketing managers.  Marketing strategy and implementation plans should be developed that reflect an understanding of:
(1) The risks associated with ethical and legal misconduct
(2) The ethical and social consequences of strategic choices
(3) The values of organizational members and stakeholders.
A marketing plan that ignores social responsibility or is silent about ethical requirements leaves the guidance of ethical and socially responsible behavior to the workgroup, which risks ethical breakdowns and damage to the firm.

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