Overview of Socially Responsible Marketing and Selected Issues of Interest to Stakeholders

1. Overview of Socially Responsible Marketing and Selected Issues of Interest to Stakeholders Emmanuel Chéron, Ph.D. Professor of Marketing SOPHIA UNIVERSITY FACULTY OF COMPARATIVE CULTURE International Business/Economics E-mail: j-cheron@sophia.ac.jphttp://www.geocities.com/wallstreet/market/4263

2. Overview of Socially Responsible Marketing and Selected Issues of Interest to Stakeholders • Agenda • Review of social criticisms of marketing • Key socially sensitive areas of consumer behavior • Brief review of some of my previous research in the field • Decision process involved in large corporations • to select sponsorship projects • Financial services needs of low-income individuals: • a comparative study in Canada • A Canadian survey on Environmental Marketing • Management • Discussion about the most sensitive social marketing • issues in Japan

3. Social Criticisms of Marketing High Prices Deceptive Practices Poor Service Marketing’s Impact on Individual Consumers High Pressure Selling Planned Obsolescence Shoddy or Unsafe Products

4. Acquisitions of Competitors Marketing Practices that Create Barriers to Entry Unfair Competitive Marketing Practices Marketing’s Impact on Other Businesses Critics Charge that a Company’s Marketing Practices Can Harm Other Companies and Reduce Competition Through:

5. The Right to Be Informed The Right to Be Safe Basic Consumer Rights Consumerism The Right to Be Heard The Right to Choose

6. Environmentalism Practice Pollution Prevention Practice Product Stewardship Adopt Designs for the Environment Have a Sustainability Vision Plan for New Environmental Technologies

7. Salutary Products Desirable Products Deficient Products Pleasing Products Societal Classification of Products Immediate Satisfaction Low High High Long-Run Consumer Benefit Low

8. Distributor Relations Advertising Standards Product Development Corporate Marketing Ethics Policies Pricing Customer Service General Code Marketing Ethics

9. Consumer and Producer Freedom Curbing Potential Harm Meeting Basic Needs Economic Efficiency Key Principles for a Public Policy Toward Marketing Innovation Consumer Education Consumer Protection Principles For Public Policy Toward Marketing

10. Deceptive advertising Children’s ability to distinguish programs and ads Improving children’s advertising Negligent consumer behavior Product misuse Drivers of compulsive consumption Corporate social responsibility Why firms want to seem responsible Consumer reactions to product recalls Corporate rumors Key socially sensitive areas of consumer behavior

11. Introduction • Firms may engage in unscrupulous behavior. • Consumers also engage in negligent behavior. • Governments regulate buying and selling goods and services to reduce the harmful effects of these behaviors.

12. Major Public Policy Issues • Deceptive advertising • Advertising to children • Telemarketing and Internet fraud

13. Deceptive Advertising • An advertisement which is potentially misleading or literally false is deceptive. • Potentially misleading ads are difficult to evaluate because miscomprehension may often occur. • Miscomprehension is a problem for firms because the audience does not understand the message being delivered. • The FTC regulates deceptive advertising, but not miscomprehension.

14. Advertising to Children • Both policy makers and marketing managers have reacted to criticism of advertising directed at children. • Some countries have banned advertising to children under 12.

15. Telemarketing/Internet Fraud • The elderly are vulnerable to fraud by telemarketers. • A program to combat this fraud is the Know Fraud Program. • Organizations that fight telemarketing fraud are the AARP, the FBI, the Post Office, and others.

16. Negligent Consumer Behavior • Negligent behavior is composed of actions and inactions that may negatively affect the long-term quality of life of individuals and society. • This type of behavior can occur in two different contexts: • Product Misuse • Consumption of Hazardous Products

17. Product Misuse • Many injuries result from misuse of a safe product - not from product defects. • Using a cell phone while driving is being outlawed in some areas. • “The most dangerous component is the consumer, and there’s no way to recall him.”

18. Consuming Hazardous Products • Recently alcohol related accidents have declined. The methods used to increase consumer awareness are: • Informing and Education • Social Controls • Economic Incentives • Economic Disincentives

19. Compulsive Behavior • Some products are hazardous and consumption can become compulsive or addictive over time. • Other behaviors are not harmful in moderation but become addictive when they become compulsive. • Smoking • Compulsive Drinking • Gambling • Compulsive Shopping • Other Compulsions

20. Smoking in the US • Consumers until the late 1960s were exposed to nearly 3000 cigarette commercials per week of 38 different brands. • In 1950 there was already concern over the health hazards of cigarette smoking. • Smoking declined from the 1960s to 1992 but has held steady since then.

21. Compulsive Drinking • As mentioned earlier, there has been a decline in alcohol-related deaths on the road. This suggests a decline in alcohol consumption. • Despite the decrease in sales of hard liquor, there is an increase in alcoholic soft drinks. • These taste like colas or fruit juices but may contain more alcohol than beer does.

22. Gambling in the US • Gambling affects an estimated 8 to 12 million people. • Gambling takes place in casinos in Las Vegas, New Jersey, on river boats and elsewhere. • State-run lotteries make it easy to gamble by visiting a convenience store.

23. Compulsive Shopping • Some consumers “shop till they drop” because shopping can become an addiction similar to alcohol or drugs. • There are drugs available to help relieve this compulsion. • Compulsive shopping may be hereditary.

24. Other Compulsions • Overworking and overeating are some other compulsions. • Research has stressed sociological and psychological influences. Chemical imbalances may also be important. • Multiple compulsions may occur together.

25. Corporate Social Responsibility • Firms have become viewed as responsible for more than generating profits. • “Corporate social responsibility” refers to the idea that firms have an obligation to help the larger society by offering some of their resources.

26. Succeeding in the Long Run • A business’s self-interest could be advanced if the business embraced a long-run view. • This position would permit expenditures in support of socially responsible activities and provide future benefits in the form of consumer approval and loyalty.

27. Acquiring a Positive Public Image • One way of showing that companies are socially responsible is by creating a positive public image. • Another way that firms can show they are socially responsible is by making speedy product recalls.

28. The Diffusion of Rumors • Public peace of mind can be corrupted by diffusion of rumors. • Rumors often plague both large and small companies.

29. Types of Rumors • Pipe dream rumors represent wishful thinking on the part of the circulators. • The bogie rumor is a fear rumor that spooks the market place. • Self-fulfilling rumors are based on a perception of what could happen in the future if something else were to occur. • In premeditated rumors individuals spread rumors that may help them financially or otherwise. • Spontaneous rumors arise when people seek explanations for unusual events.

30. Avoiding Regulation • A final reason to act in a socially responsible manner is to avoid government regulation. • Most of the burden of social responsibility is on marketers. They can do best by following the strategies suggested, and maintaining a positive initial corporate image and responding quickly when difficulties arise.

31. Managerial Implications • Positioning. The concept of corporate social responsibility has direct implications for the positioning of a company. Efforts to create a “good-citizen” image help to position a firm as one that puts customers first. • Environmental Analysis. A company’s actions must be in compliance with laws and regulation. • A firm should be in a position to respond promptly if a response is warranted: An “early-warning system” needs to be in place and functioning continuously.

32. Implications continued… • Research. Market research should be used to determine how consumers view the company. • Market research may also help determine whether customers are using a firm’s product in a novel manner that may be unsafe. • Marketing Mix. Pricing, promotion, product development, and distribution should be socially responsible. • Segmentation. Some population segments are more concerned with issues of corporate social responsibility than are other segments.

33. Decision process involved in corporate sponsorship projects • Study of the Sponsorship Decision Process in 16 large Canadian • Corporations • Method: • Qualitative and quantitative interviews • Post validation of the decision process • Check for convergence of decision processes and synthesis • Content analysis of annual reports and classification of • sponsorship projects • Industries involved: • 3 Oil companies 1 Brewery • 1 Steel manufacturer 5 Food retailers • 1 Aircraft manufacturer 1 Tobacco company • 1 Information systems 2 Banks and 1 Insurance company

34. Relative importance of objectives involved in corporate sponsorship projects • Philanthropic patronage objectives 3.53 • Involvement in the community: 3.85 • To meet our social responsibility: 3.62 • To offer a better quality of life: 3.08 • Commercial sponsoring objectives 3.03 • To increase the company’s visibility: 3.83 • A new way of doing promotion: 3.67 • As a supplement to advertising: 3.54 • To improve our corporate image: 3.45 • … • To attract opinion leaders: 2.45 • To entertain our suppliers: 2.30 • To limit government regulation: 2.0 • Other objectives 2.86 • Personal motives of top management • To obtain fiscal benefits: 2.28 (Degree of agreement on a scale of 1 to 4)

35. Relative importance of criteria for selecting corporate sponsorship projects Sources of revenue of the applicant organization 3.75 Relevance of the amount requested 3.72 Previous experience with the applicant organization 3.69 Target market of the applicant organization 3.62 Domain of activities of the applicant organization 3.58 Budget of the project 3.50 Mission of the applicant organization 3.45 Other sources of funding 3.45 Scope of the market of the applicant organization 3.38 Management structure and expertise 3.23 Specific use of requested funds 3.23 Image and visibility of applicant organization 3.17 Expertise of the project manager 3.08 Comments of other donors 3.00 Personal knowledge of applicant 2.83 Importance of the cause promoted 2.72 (Degree of agreement on a scale of: 1 to 4)

36. 1 Screening role Intention Written request received Advising and bargaining role Preliminary screening Decision Reception of requests and analysis step Selection and processing step In depth analysis Refusal Acceptance Evaluation Receiving Organization Evaluation of requests step Costs/Benefits Analysis Feedback and evaluation of donation Implementation Recommendation Advising role Execution role Evaluation of activity Discussion 1 Roles, steps and activities involved in corporate sponsorship projects Average number of participants involved: 3.92 Average size of the selection committee if any: 4.60 Average frequency of the committee meetings: once a month

37. Classification of sponsorship projects

38. Low-Income Individuals: • a Comparative Study in Canada : Financial products : Socio-economic and demographic variables Proportion of variance accounted for by dimension 1: 56.50 % Proportion of variance accounted for by dimension 2: 29.30 % http://www.geocities.com/WallStreet/Market/4263/ijbm98.doc

39. 1. Environmental overview 2. Review of mission, culture and values of company 3. Setting of environmental objectives 4. Development of the environmental plan 5. Parties involved and implementation Employees Suppliers Distributors Governments Pressure Board of of the action plan groupsdirectors Environmental Audit Environmental laws Scientific knowledge Social and environmental context Environmental corporatepolicy Environmental objectives Marketing R & D Production Environment. Public Relations Action plan General public Environmental Marketing Management

40. American Council on Consumer Interests Issues 1. Media issues: lack of factual information, stereotyping 2. Product issues: no international standards for food, product recalls, warning labels, health claims 3. Financial issues: identity theft, consumer debt, promotion of credit cards, financial products, online shopping 4. Public policy issues: regulation of products (tobacco, alcohol, prescription drugs), control of big business 5. Ethical issues: privacy, marketing to vulnerable audiences, sweatshop labor, effects of technology on consumers, CSR 6. Counter marketing issues: effectiveness of programs to counter obesity, alcohol and tobacco usage, visibility of public services