CHAPTER 4
Social Responsibility and Ethics in Marketing
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource
Location
Purpose and Perspective
IRM, p. 66
Lecture Outline
IRM, p. 67
Discussion Starters
IRM, p. 73
Class Exercises
IRM, p. 73
Chapter Quiz
IRM, p. 74
Answers to Discussion and Review Questions
IRM, p. 75
Answers to Application Questions
IRM, p. 78
Answers to Internet Exercise
IRM, p. 79
Answers to Developing Your Marketing Plan
IRM, p. 80
Comments on the Cases
IRM, p. 81
Case 4.1
IRM, p. 81
Case 4.2
IRM, p. 82
Strategic Case 2
IRM, p. 83
Instructions for Role-Play Team Case Exercise 2
IRM, p. 84
Examination Questions: Essay
Testing CD
Examination Questions: Multiple-Choice
Testing CD
Examination Questions: True-False
Testing CD
PowerPoint Slides
PURPOSE AND PERSPECTIVE
This chapter surveys the role of social responsibility and ethics in marketing decision making. We begin
by defining social responsibility and exploring the concept and different dimensions of social
responsibility, including economic, legal, ethical, and philanthropic dimensions. We also discuss social
Chapter 4: Social Responsibility and Ethics in Marketing 67
LECTURE OUTLINE
I. The Nature of Social Responsibility
A. In marketing, social responsibility refers to an organization’s obligation to maximize its positive
impact and minimize its negative impact on society. It deals with the total effect of all marketing
decisions on society.
D. Socially responsible activities can generate positive publicity and boost sales.
E. Socially responsible efforts have a positive effect on local communities and indirectly help the
sponsoring organization by attracting goodwill, publicity, and potential customers and employees.
F. An organizational culture conducive to social responsibility helps engender greater employee
commitment and improve business performance.
G. The Dimensions of Social Responsibility
1. Socially responsible organizations strive for marketing citizenship by adopting a strategic
focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities their
stakeholders expect of them.
2. The economic, legal, ethical, and philanthropic dimensions of social responsibility can be
viewed as a pyramid, as shown in Figure 4.1.
a. Economic: All companies have an economic responsibility to be profitable to provide a
return on investment to owners and investors, create jobs for the community, and
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(1) Many organizations link products to a particular social cause on an ongoing or short-
term basis, a practice known as cause-related marketing.
H. Social Responsibility Issues
1. To be successful, a business must determine the social expectations of customers,
2. Sustainability is the potential for the long-term well-being of the natural environment,
including all biological entities, as well as the interactions among nature and individuals,
organizations and business strategies. It includes the assessment and improvement of business
strategies, economic sectors, work practices, technologies and lifestyles while maintaining the
natural environment.
a. Many companies make contributions to environmental protection organizations and adopt
environmentally-friendly practices.
3. Consumerism refers to the efforts of independent individuals, groups, and organizations
working to protect the rights of consumers.
a. A number of interest groups and individuals have taken action against companies they
consider irresponsible by lobbying government officials and agencies, engaging in letter-
Chapter 4: Social Responsibility and Ethics in Marketing 69
sympathetic consideration in the formulation of government policy.
4. As community members, businesses also engage in community relations and try to avoid
harmful actions.
a. Corporate philanthropy is on the rise. Individual communities expect marketers to make
philanthropic contributions to civic projects and institutions and to be good corporate
II. Marketing Ethics
A. Marketing ethics involves principles and standards that define acceptable conduct in marketing.
Acceptable conduct is determined from a number of different stakeholder groups and an
organization’s ethical climate.
2. Consumer distrust of business has increased in recent years because of the financial crisis.
B. Ethical Issues in Marketing
1. An ethical issue is an identifiable problem, situation, or opportunity requiring an individual
or organization to choose from among several actions which must be evaluated as right or
wrong, ethical or unethical. Marketers must be able to identify these issues and decide how to
resolve them.
4. In pricing, common ethical issues are price fixing, predatory pricing, and failure to disclose
the full price of a purchase.
5. Ethical issues in distribution involve relationships among producers and marketing
middlemen. Other serious issues include counterfeiting, manipulating a product’s availability
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c. Managing supply chain ethical decision making is important because many stakeholders
hold the firm responsible for all ethical conduct related to product availability.
Developing good supply chain ethics is important because it ensures the integrity of the
product and the firm’s operations in serving customers.
d. To encourage ethical supply chains, marketers should
(1) Adopt a Global Supplier Code of Conduct and ensure that it is effectively
C. The Nature of Marketing Ethics
1. Individual Factors
a. When people need to resolve ethical conflicts in their daily lives, they often base their
2. Organizational Relationships
a. Marketers resolve ethical issues based on their experiences and what they learn from
others in the organization. The outcome of this learning process depends upon the
strength of personal values, opportunity for unethical behavior, and exposure to others
3. Opportunity
a. Opportunity—conditions that limit barriers or provide rewards—may also shape ethical
marketing decisions.
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4. Codes of Conduct
a. To improve ethics, many organizations have developed codes of conduct (also called
codes of ethics), which consist of formalized rules and standards that describe the
organization’s employee expectations.
D. Improving Marketing Ethics
1. To eliminate unethical conduct, an organization must rid itself of “bad apples” through
screening techniques and enforcement of the firm’s ethical standards.
2. However, organizations sometimes become “bad barrels” themselves, not because the
individuals within them are unethical but because the pressures to survive and succeed create
III. Incorporating Social Responsibility and Ethics into Strategic Planning
A. Although the concepts of ethics and social responsibility are used interchangeably, it is important
to distinguish between the two concepts.
1. Ethics relates to individual and group decisions—judgment about what is right or wrong in a
particular decision-making situation. It is one dimension of social responsibility.
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D. Balancing society’s demands to satisfy all members of society is difficult, if not impossible.
Marketers must evaluate the extent to which members of society are willing to pay for what they
want.
E. Social Responsibility and Ethics Improve Marketing Performance
1. Ethical and socially responsible activities result in increased profits. Evidence suggests that a
broad stakeholder view of the firm can help improve marketing practices that contribute to
improved financial, social, and ethical performance.
2. A stakeholder orientation helps to broaden and redefine marketing by considering primary
Chapter 4: Social Responsibility and Ethics in Marketing 73
DISCUSSION STARTERS
Discussion Starter 1: Corporate Social Responsibility
Project The Pyramid of Corporate Social Responsibility (Figure 4.1) onto a screen. Ask students to talk
Discussion Starter 2: Personal Ethical Issues
Ask students to write about a personal experience they had with an ethical issue related to one of the
CLASS EXERCISES
Class Exercise 1: Dealing with Ethical Issues.
Throughout our lives and careers we must make choices which pose ethical dilemmas. These decisions
are difficult to make and require careful deliberation.
In this exercise you will envision an ethical dilemma. The dilemma can be a situation you have already
encountered or one you learned about from someone else. How would you or did you resolve this
dilemma? Remember ethical dilemmas generally do not have right or wrong answers.
Step 1: Write a brief description of an ethical dilemma about which you have knowledge.
Class Exercise 2: Create a Class the Code of Conduct
Recommended as a group activity
Most organizations and associations have codes of conduct or codes of ethics. These codes formalize
rules and standards that the organization expects from its employees or members. In this exercise you will
practice writing a conduct code for your class.
Step 1: Brainstorm a list of issues which arise as a result of student behavior in class, such as texting
during class or talking during lectures.
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CHAPTER QUIZ
1. The interaction between _____ and _____ helps determine the ethical value system of the firm.
a. corporate culture; executive leadership
b. front-line employees; customers
c. customers; executive leadership
d. managers; executive leadership
e. front-line employees; management
2. A synergistic use of businesses’ core competencies to address stakeholders’ interests and achieve
both organizational and social benefits is known as
3. Silk Soymilk’s use of organic, non-genetically modified soybeans in its organic soy milk products is
an example of
a. green marketing.
b. social consciousness.
c. ethical responsibility.
d. cause-related marketing.
e. corporate benevolence.
4. When Shawna attempts to resolve ethical conflicts in her daily life, she bases her decisions on her
own values. This influence on the ethical decision-making process is called
a. organizational factors.
b. corporate culture.
c. individual factors.
d. opportunity.
e. involvement.
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ANSWERS TO DISCUSSION AND REVIEW QUESTIONS
1. What is social responsibility? Why is it important?
Social responsibility refers to an organization’s obligation to maximize its positive impact and
2. What are stakeholders? What role do they play in strategic marketing decisions?
Stakeholders include those constituents who have a “stake” or claim in some aspect of a company’s
3. What are four dimensions of social responsibility? What impact do they have on marketing
decisions?
Social responsibility includes economic, legal, ethical, and philanthropic dimensions. Economic and
4. What is strategic philanthropy? How does it differ from more traditional philanthropic
efforts?
Strategic philanthropy refers to the synergistic use of organizational core competencies and
5. What are some major social responsibility issues? Give an example of each.
Among major social responsibility issues are the natural environment, consumerism, and
community relations. Students’ responses to the second part of the exercise will vary, but they
should be able to cite appropriate examples for each issue.
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6. What is the difference between ethics and social responsibility?
Marketing ethics is a dimension of social responsibility which refers to principles and standards that
7. Why is ethics an important consideration in marketing decisions?
It is important for marketers to go beyond legal issues and work to foster mutual trust among
8. How do the factors that influence ethical or unethical decisions interact?
Individual factors, organizational factors (e.g., organizational culture, organizational relationships,
organizational pressure), and opportunity are the three factors that interact to determine ethical
9. What ethical conflicts may exist if business employees fly on certain airlines just to receive
benefits for personal frequent flyer programs?
The potential for ethical conflicts would depend on the company’s policy. If the company has a
10. Give an example of how ethical issues can affect each component of the marketing mix.
Answers for these may vary, but students should be able to cite appropriate examples.
Product: The brand name can be misleading. For example, Citrus Hill Fresh Orange Juice was
changed due to the controversy about it being made from concentrate— not from fresh orange juice.
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11. How can the ethical decisions involved in marketing be improved?
Ethical decisions in marketing organizations can be improved by eliminating unethical persons
12. How can people with different personal values work together to make ethical decisions in
organizations?
While individuals may define ethics differently and not agree on personal ethical standards, they
13. What trade-offs might a company have to make to be socially responsible and responsive to
society’s demands?
There are costs associated with many of society’s demands and satisfying these demands often
14. What evidence exists that being socially responsible and ethical is worthwhile?
Research has shown that companies that do not develop strategies and programs to incorporate
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APPLICATION QUESTIONS
1. Some organizations promote their social responsibility. These companies often claim that being
ethical is good business and that it pays to be a “good corporate citizen.” Identify an
organization in your community that has a reputation for being ethical and socially responsible.
What activities account for this image? Is the company successful? Why or why not?
Student answers will vary, but they should support their answers. Make sure that the company’s
2. If you had to conduct a social audit of your organization’s ethics and social responsibility, what
information would most interest you? What key stakeholders would you want to communicate
with? How could such an audit assist the company in improving its ethics and social
responsibility?
This exercise helps students to outline a social responsibility audit. Students will likely focus on
3. Suppose that in your job you face situations that require you to make decisions about what is
right or wrong and then act on these decisions. Describe such a situation. Without disclosing
your actual decision, explain what you based it on. What and whom did you think of when you
were considering what to do? Why did you consider them?
Student answers will vary. They may include only work-related individuals such as their boss or their
4. Consumers interact with many businesses daily and weekly. Not only do companies in an
industry acquire a reputation for being ethical or unethical; entire industries also become
known as ethical or unethical. Identify two types of businesses with which you or others you
know have had the most conflict involving ethical issues. Describe those ethical issues.
5. Compare Google and Microsoft in the areas of economic, legal, ethical, and philanthropic
responsibilities. Assign a weighting coefficient to each factor. You could use 0-5, for
example, with 0 meaning not socially responsible at all and 5 meaning very socially
responsible. How do the two companies compare as socially responsible citizens? What are
some ways that each company might improve their scores?
Students should conduct research on each of the companies’ websites as well as search for current
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INTERNET EXERCISE
Business for Social Responsibility
Business for Social Responsibility (BSR) is a nonprofit organization for companies who want to operate
responsibly and demonstrate respect for ethical values, people, communities, and the natural environment.
Founded in 1992, BSR offers members practical information, research, educational programs, and
1. What types of businesses join BSR, and why?
BSR membership is open to all companies, regardless of size, sector, location, level of CSR
2. Describe the services available to member companies. How can these services help companies
improve their performances?
Member companies get access to networks, newsletters, information, discounts on consulting and
business performance.
3. Peruse the “Conference Overview” link, located at the top of the home page. What are some
advantages to attending the BSR conference and listening to industry leaders and experts in
corporate social responsibility?
According to the website, “The BSR Conference will help companies create lasting change over the
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ANSWERS TO DEVELOPING YOUR MARKETING PLAN
The information obtained from these questions should assist students in developing various aspects
of their marketing plan found in the Interactive Marketing Plan exercise at www.cengagebrain.com.
1. Determine the level of importance that marketing citizenship holds in your company.
Identify the various stakeholders who would be affected by your strategic decisions.
Students should be able to identify relevant stakeholders who are affected by marketing decisions.
2. Referring to Table 4.2 as a guide, discuss how the negative impact of your product’s production
and use could be minimized.
Students should refer to Table 4.2, which discusses major social responsibility issues, when
3. Using Table 4.3, identify additional issues related to your product for each of the 4Ps.
The answer to this question will be highly varied depending on the students’ products. In addition to
Chapter 4: Social Responsibility and Ethics in Marketing 81
COMMENTS ON THE CASES
VIDEO CASE 4.1: TOMS SHOES EXPANDS ONE–TO-ONE MODEL
TO EYEWEAR
Summary
TOMS is known for their for-profit philanthropic business model, which allows the company to
donate one pair of shoes to a child for every pair of shoes purchased. TOMS is now applying that
model to eyewear. For every pair of sunglasses TOMS sells, a person with vision problems in a
Questions for Discussion
1. Do you think TOMS is successful because of its unique products, or is it the firm’s
approach to social responsibility?
Students’ opinions will vary. Some people really like TOMS for its products, regardless of the
2. How does TOMS manage its supply chain in order to ensure ethical and socially responsible
conduct?
TOMS uses factories in China, Argentina, and Ethiopia for manufacturing, which creates
3. How does TOMS’ business model relate to the understanding of stakeholders and strategic
philanthropy?
Strategic philanthropy is the synergistic use of organizational core competencies and resources to
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CASE 4.2: ETHICS DRIVES BARRETT–JACKSON AUTO AUCTION
COMPANY TO SUCCESS
Summary
Classic and vintage car auction company Barrett-Jackson has created an ethical culture that considers
the needs of buyers, sellers, and the community. The company strives to maintain the rights of all
stakeholders involved in the auction, so they instituted a number of programs to ensure that the
Questions for Discussion
1. Why is ethical behavior so important for an auction company such as Barrett–Jackson?
Auctions are associated with a lot of customer concerns. Consumers might not know the value of
2. In what ways does Barrett-Jackson protect the rights of its buyers and sellers?
Barret-Jackson recognizes the inherent rights of the stakeholders involved in auctions transactions. It
3. How do solid community relations help Barrett–Jackson succeed?
Barrett-Jackson’s emphasis on community relations and customer satisfaction has helped secure its
reputation as an ethical company. Buyers and sellers alike can feel confident that they will be treated
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STRATEGIC CASE 2: AT TIMBERLAND, DOING WELL AND
DOING GOOD ARE LACED TOGETHER
Summary
This case deals with the shoe and apparel company, Timberland, and its efforts to be social
responsible and environmentally friendly. Timberland has consulted with its stakeholders to develop
four pillars of social responsibility that it strives to maintain—energy, products, workplace and
Questions for Discussion
1. What forces in the marketing environment appear to pose the greatest challenges to
Timberland’s marketing performance? Explain.
Timberland faces a serious challenge from competitors such as L.L. Bean, Wolverine, and
2. What kinds of ethical issues does Timberland face in its marketing? What is the company
doing to address these issues?
One key ethical issue mentioned in the case is protecting the rights and welfare of workers at the
3. How does Timberland’s reputation for social responsibility serve as a strength when
consumers are turning away from showy, expensive products?
Customers who want to demonstrate their concern for the environment will recognize that
4. Over time, Timberland plans to add labels to show how eco–friendly each of its products
really is. What are the marketing advantages and disadvantages of this move?
Two marketing advantages of adding eco–labels to products are: (1) to reinforce the brand’s
positioning by emphasizing the green features that set it apart from competitors; and (2) to
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INSTRUCTIONS FOR ROLE-PLAY TEAM CASE
ROLE-PLAY TEAM CASE EXERCISE 2: NATIONAL FARM AND
GARDEN INC.
This role-play team case exercise is designed to simulate actual marketing decision making in the real
world. Students take on assigned roles and then participate in a team discussion of the case.
Preparation
Break the class into teams of 5. The entire team should read the Background section.
Each student will take on a role of a particular employee within the organization. Even though all of the
The roles for National Farm and Garden are:
• Divisional Vice President
Team Meeting
Students should try to accurately represent the motivations and interests of their individual roles during a
team discussion (15-45 minutes depending on class activities). Teams should discuss each of the issues in
the case and complete any activities mention in the Background section.
The issues for National Farm and Garden include:
• Owners are not operating Turbo Tillers with safety shields, despite warnings in the product
This case will require students to complete the following activities:
• Use this information to create a plan of action for National Farm and Garden.
Class Discussion (optional)
After the team meetings, instructors may choose to have teams discuss their findings and solutions
with the class. Students may also want to talk about some of the interpersonal dynamics in their
teams and their experiences as they worked toward a solution.