Chapter 8 Ethics and Social Responsibility in Marketing Strategy
MULTIPLE CHOICE
1. __________ is a broad concept that relates to an organization’s obligation to maximize its positive
impact on society while minimizing its negative impact.
a.
Marketing ethics
d.
Strategic philanthropy
b.
Corporate philanthropy
e.
Social engineering
c.
Social responsibility
2. Being economically responsible is the most basic social responsibility of any business. This
responsibility has the most immediate effect on:
a.
customers.
d.
the media.
b.
shareholders.
e.
All of the above.
c.
the government.
3. The principles and standards that define acceptable marketing conduct as determined by the public,
government regulators, private-interest groups, competitors, and the firm itself are termed:
a.
marketing standards
d.
marketing ethics
b.
societal standards
e.
social responsibility
c.
codes of conduct
4. Ben & Jerry’s is well known for its use of __________ in that it ties its products and marketing
strategy to social causes such as environmental stewardship.
a.
cause-related marketing
d.
environmentalism
b.
ethical branding
e.
welfare-related marketing
c.
sustainability
5. Some companies choose to engage in a deceptive marketing practice called __________, which
involves misleading consumers into thinking that a product is more environmentally friendly than it
actually is.
a.
environmentalism
d.
eco-lableling
b.
green marketing
e.
greenwashing
c.
LEED
6. The role of ethics in marketing strategy can be distilled into one word. Without __________,
marketers run the risk of alienating stakeholders and inviting financial ruin.
a.
reputation
d.
sustainability
b.
trust
e.
verification
c.
responsibility
7. Which of the following IS NOT a challenge associated with being ethical and socially responsible?
a.
Business decisions involve complex and detailed discussions in which correctness may not
be so apparent.
b.
Individuals who have limited business experience often find themselves required to make
sudden decisions concerning marketing’s gray areas.
c.
A person’s experiences and decisions at home, in school, and in the community may be
quite different from the experiences and the decisions he or she has to make at work.
d.
When personal values are inconsistent with the configuration of values held by the work
group, ethical misconduct may increase.
e.
Most employees perceive that the values of honesty, respect, and trust are infrequently
applied in the workplace.
8. Each of the following is a potential product-related ethical issue EXCEPT:
a.
Failure to disclose potential hazards or defects
b.
Misleading warranties
c.
Invasion of privacy
d.
Counterfeit goods
e.
Quality/Design issues
9. __________, which occurs when a firm charges different prices to different customers, occurs in both
consumer and business markets. However, it is very common among different members of the supply
chain.
a.
Price discrimination
d.
Differential pricing
b.
Price fixing
e.
Superficial discounting
c.
Predatory pricing
10. Many large firms, such as Walmart, Home Depot, Lowe’s, and Barnes & Noble, have been accused of
predatory pricing because their business practices have put many local, mom-and-pop firms out of
business. In reality, these large firms are not necessarily guilty of predatory pricing. Why?
a.
Because the courts have found little evidence that predatory pricing has occurred.
b.
Because the weak marketing activities of the local firms are to blame.
c.
Because the large firms have efficient cost structures and lower variable costs.
d.
Because the large firms are more guilty of superficial discounting than predatory pricing.
e.
Because the large firms simply have stronger brand equity than local firms.
11. Colgate promotes its toothpaste using a claim that states “helps fight plaque and gingivitis.” What
potential ethical issue does Colgate have with respect to its promotional strategy?
a.
bribery
d.
superficial claims
b.
ambiguous statements
e.
false advertising
c.
fraud
12. With respect to regulating marketing ethics, a key advantage of self-regulatory programs like the
Better Business Bureau is the fact that they are:
a.
less costly and more practical to implement.
b.
typically stricter than government regulations.
c.
easier to enforce.
d.
tied to state and local regulatory agencies.
e.
All of the above.
13. Most firms that experience ethical or legal problems actually have a code of conduct or an ethical
compliance program in place. Why is it that these firms can still have ethical problems despite having
a code of ethics or compliance program?
a.
Their codes typically don’t cover high risk issues.
b.
Their codes are typically written by consultants outside the firm.
c.
Their codes are typically not integrated into daily decision making.
d.
Their codes are written with no input from employees or customers.
e.
Their codes are mandated by regulation rather than originating from within the firm.
14. Research has found that corporate codes of ethics should contain six highly desirable core values or
principles. Which of the following IS NOT one of these core values?
a.
trustworthiness
d.
fairness
b.
respect
e.
citizenship
c.
legality
15. Why is the connection between marketing ethics and leadership so important in nurturing a strong
ethical culture?
a.
Employees look to the leader to enforce the ethical code of conduct.
b.
Employees expect the leader to punish unethical behaviors.
c.
Employees look to the leader to ensure that the firm is in legal compliance.
d.
Employees look to the leader as a model of acceptable behavior.
e.
Employees expect the leader to clearly specify in writing the high-risk activities in the
firm’s daily operations.
16. The link between marketing ethics/social responsibility and firm performance has been documented
repeatedly over time. This link is most evident in firms that have a strong __________.
a.
market orientation
d.
ethical climate
b.
stakeholder orientation
e.
employee satisfaction program
c.
sense of customer loyalty
17. Research indicates that being ethical and socially responsible has a number of benefits for the
organization. Which of the following IS NOT one of these benefits?
a.
increased customer goodwill
b.
increased stakeholder orientation of the organization
c.
increased employee commitment and satisfaction
d.
increased marketing performance
e.
increased competitive orientation
18. Essentially, having a climate of ethics and social responsibility is all about creating trust among a
firm’s stakeholders. To gain trust, the firm and its employees must continuously uphold:
a.
their promises with respect to advertising and promotion.
b.
their standards of integrity.
c.
the firm’s right and responsibility to be profitable.
d.
their standards of fair competition in the marketplace.
e.
their legal responsibilities.
19. Socially responsible firms tend to enjoy higher __________ because customers perceive that the firm
is dedicated to doing the right thing and treating customers fairly.
a.
profit margins
d.
corporate integrity
b.
sales volume
e.
corporate reputations
c.
customer loyalty
20. To ensure that ethics and social responsibility are thoroughly incorporated into the firm’s strategic
planning process, the firm’s __________ should never be silent about ethical requirements and social
responsibility.
a.
marketing plan
d.
culture
b.
code of conduct
e.
training materials
c.
leadership team
ESSAY
1. Why have ethics and social responsibility become so important in recent years? Why is it important
that marketing ethics be incorporated into the firm’s strategic plan?
demands and changes in federal law. Furthermore, ethical and socially responsible behavior improves
marketing performance and profits. Marketing ethics does not just happen by hiring ethical people; it
organization’s reputation can be damaged by poor performance or ethical misconduct. However, it is
much easier to recover from poor marketing performance than from ethical misconduct. Obviously,
stakeholders who are most directly affected by negative events will have a corresponding shift in their
perceptions of a firm’s reputation. On the other hand, even those indirectly connected to negative
2. Draw, label, and explain the pyramid of social responsibility. What are the requirements for a firm if it
truly wants to be ethical and socially responsible?
also serves employees and the community at large due to its impact on employment and income levels
in the area that the firm calls home.
Marketers also have expectations, at a minimum, to obey laws and regulations. This is a challenge
At the next level of the pyramid, marketing ethics refers to principles and standards that define
acceptable marketing conduct as determined by the public, government regulators, private-interest
increasing their overall positive impact on society, their local communities, and the environment, with
the bottom line of increased goodwill toward the firm, as well as increased profits. Many firms try hard
to align their philanthropy with marketing and brand image. During major crises, like Hurricane
Katrina or the more recent financial meltdown, firms are given an opportunity to make their
3. Identify and discuss the many challenges of being ethical and socially responsible. Focus on
challenges at both the individual (employee) level and the managerial level.
decisions about product quality, advertising, pricing, sales techniques, hiring practices, privacy, and
pollution control. The personal values learned through socialization from family, religion, and school
may not provide specific guidelines for these complex business decisions. In other words, a person’s
experiences and decisions at home, in school, and in the community may be quite different from the
experiences and the decisions that he or she has to make at work. Moreover, the interests and values of
4. Describe the role that a code of conduct plays in ensuring ethical compliance within a firm. How
should a code of conduct be developed, what should it contain, and what are the keys to ensuring that
the code is successfully implemented?
ANS:
Most firms begin the process of establishing organizational ethics programs by developing codes of
conduct (also called codes of ethics), which are formal statements that describe what an organization
expects of its employees. These codes may address a variety of situations from internal operations to
5. What is the relationship among marketing ethics, strategic planning, and organizational performance?
How is this related to having a stakeholder orientation?
ANS:
performance. An ethical climate calls for organizational members to incorporate the interests of all
stakeholders, including customers, in their decisions and actions. Hence, employees working in an
ethical climate will make an extra effort to better understand the demands and concerns of customers.