Chapter 3

1. Chapter 3 Decision Making in the New Era of Marketing: Enriching the Marketing Environment

2. Welcome to the New Era of Marketing • Marketing is still concerned with the firm’s bottom line, but now many managers also considersocial profit, which is the net benefit both the firm and society receive from a firm’s ethical practices and socially responsible behavior. • What about the NFL? • Ray Rice and domestic abuse • Ray Lewis commenting on ESPN • Questions relating to the severity of offenses and punishments • Consequences for the NFL …

3. Decision Model for Firms in the New Era Of Marketing

4. Doing It Right: Ethical Behavior in the Marketplace • Business ethicsare rules of conduct for an organization. • Codes of Ethicsare written standards of behavior to which everyone in the organization must subscribe. • Unethical behavior in the marketplace can lead to high costs both: • financially, and • to a firm’s reputation.

5. How Are ethics incorporated? • Laws often incorporate ethical rules and guidelines • Formal and Informal groups can prescribe codes relating to acceptable behavior (AMA) • Self-regulation involves the voluntary acceptance of standards established by nongovernmental entities such as AMA • The Media can play an important role in informing the public of actions by individuals or organizations that are good or bad … which are better ratings grabbers? i.e. NFL • Society helps mold individual and corporate behavior … Walmart and NYC; Arizona boycott and MLK Day

6. Ethical Behavior • Ethics are the standard of behavior by which one’s conduct is viewed. • Unwritten rules – fairness and justice • Reclining a chair on a flight • When are laws applicable? • What is the role of the airline

7. Consumer Bill of Rights Right to Be Safe Right to Be Informed Right to Be Heard Right to Choose Freely Consumerism: Fighting Back Consumerism is the Social Movement Directed Toward Protecting Consumers from Harmful Business Practices.

8. Ethics in the Marketing Mix Promoting the Product Ethically Getting the Product Where it Belongs Making a Product Safe Pricing the Product Fairly

9. Ethical Theories • Deontological Theory • The ethical theory that people should adhere to their obligations and duties when analyzing an ethical dilemma. • You have a relative killed by a drunk driver. You work for an ad agency that just gets a contract from A-B … • http://mashable.com/2014/09/22/budweisers-drinking-driving-puppy-ad/ • Utilitarianism • Ability to predict the consequences of an action • Two types • Act utilitarianism – person performs the act that benefits them the most • Rule utilitarianism – take into account the law and shows concern for fairness.

10. Ethical Theories • Casuist Ethical Theory • Compares a current ethical dilemma with example of similar ethical experiences and their outcome • Is there a reasonable equivalent example? • Moral relativism • Theory of time and place ethics. Ethical truths are dependent on the individuals and groups that hold them • No absolute set of beliefs • Virtue ethics – solve ethical dilemmas when you develop and nurture virtues i.e., trust, responsibility, honesty, determination, humility

11. Doing it Right: A Focus on Social Responsibility • Social responsibilityis a management practice in which organizations engage in activities that have a positive effect on society and promote the public good.

12. Environmental Stewardship... ...is a position taken by an organization to protect or enhance the natural environment as it conducts its business activities. • Green Marketingis a marketing strategy that supports environmental stewardship by creating an environmentally founded differential benefit in the minds of consumers. Example: recycling.

13. Social Responsibility • Serving Society: Cause Marketing • Cause Marketingis a strategy of joining forces with a not-for-profit organization to tackle a social problem such as: • illiteracy, • child abuse, • breast cancer. • Organizations hope that this involvement will result in benefits for the cause and increased good will for the organization.

14. Social Responsibility • Serving the Community: Promoting Cultural Diversity • Cultural Diversityis a practice that actively seeks to include people of all different sexes, races, ethnic groups, and religions in an organization’s employees, customers, suppliers, and distribution channel partners. • Practice is important to the long-term financial health of the organization.

15. Legal Environment • The legal environment is the local, state, national, and global laws and regulations that affect businesses. • U.S. laws governing business have two purposes: • ensure that businesses compete fairly with each other, • ensure that businesses don’t take advantage of consumers. • Regulatory agencies monitor business activities.

16. Sociocultural Environment • This includes the characteristics of the: • society, and • people who live in that society, and • Demographicsinclude such observable aspects as size, age, gender, ethnic group, income, education and others. • culture that reflects the values and beliefs of the society.

17. Central Issues of Ethicsand Advertising • Advocacy • Accuracy • Acquisitiveness

18. Criticisms of Advertising • Short-term manipulative arguments • Focusing on style of advertising • Targeting Kids, Teens and the Elderly • Long-term macro arguments • Focus on the social or environmental impact of advertising • Complete information • Deception • Absence of externalities • Social costs

19. Targeting Kids and Teens • Concerns about realistic expectations and understanding advertising • Food and Beverages • Childhood Obesity – fat, sugar, caffeine • Surge and Coca Cola • Healthful Choices (McDonald’s) • Media choices … Saturday morning TV

20. Ethics and Sin Products • Tobacco and Alcohol Products • Budweiser – the “fur factor” • Cigarette products such as Dakota, product placement in movies and TV

21. What do you think? Tobacco Ethics and advertising

22. Ethics and Tobacco • Tobacco and Alcohol Products • Budweiser – the “fur factor” • Cigarette products such as Dakota, product placement in movies and TV

23. Cigarette Controversies

24. Celebrity and Sexism Concerns

25. Targeting the Elderly • Susceptible to Fear ads • Mortality • Financial concerns • Illness and Dependence • Is targeting unethical, good marketing or both??

26. Advertising and the elderly

27. Socially responsible ads

28. Socially responsible

29. Ethical Issues in Advertising • 2/3 of Americans think advertising is often untruthful • Deceptive advertising harms consumers • Labeling is a tool to help reduce potential deception • Advertising is Manipulative and Makes People BUY! • Causes ‘wants’ • Encourages materialism • Subliminal ads attempt to subvert conscious decisions

30. Guidelines to Ethical Advertising • Truthful • Substantiate Claims • Refrain from False Comparisons • no bait! • explicit guarantees • no false price claims • competent witnesses • tasteful and decent

31. The Marketing Environment • Remember your external situation analysis • Economy • Marketplace • Competition • Customer • Technology • Socioeconomic factors • Government • Regulatory agencies i.e., FDA, FTC, SEC • Customers • Gen X • 1965-1978 • Generation “ME” • Gen Y • 1979-1994 • More ethically diverse • 36% family financial help • underemployed • Baby Boomers • 1946 – 1964 • Millenials or New Boomers • 1983-2001 • Civic minded • Narcissistic