Corporate social responsibility and marketing ethics
Companies have a responsibility to society that goes beyond their legal responsibilities, and they need to recognize this. Corporate social responsibility (CSR) refers to the ethical principle that a person or an organization should be accountable for how its acts might affect the physical environment and the general public. Concerns about the environment and public welfare are represented by pressure groups such as Greenpeace and ASH (Action on Smoking and Health).
Marketing managers need to be aware that organizations are part of a larger society and are accountable to that society for their actions. Such concerns led Perrier to recall 160 million bottles of its mineral water in 120 countries after traces of a toxic chemical were found in 13 bottles. The recall cost the company a total of £50 million, even though there was no evidence that the level of the chemical found in the water was harmful to humans. Perrier acted because it believed the least doubt in the consumers' minds should be removed in order to maintain its product's image of quality and purity. Companies are increasingly conscious of the need to communicate their socially responsible activities (see Exhibit 2.2). The term 'Green marketing' is used to describe marketing efforts to produce, promote and reclaim environmentally sensitive products.
Exhibit 2.1 Humorous advertising, like this ad for Nescafe, may not transfer well across national boundaries
Corporate social responsibility is no longer an optional extra but a key part of business strategy that comes under close scrutiny from pressure groups, private shareholders and institutional investors, some of whom manage ethical investment funds. Businesses are increasingly expected to adapt to climate change, biodiversity, social equity and human rights in a world characterized by greater transparency and more explicit values. Two outcomes of these developments have been the growth in social reporting and cause-related marketing.
Social reporting is where firms conduct independent audits of their social performance. These audits usually involve surveys of key stakeholders such as customers and employees. Social audits normally take the form of printed reports, but these are increasingly being replaced by the Internet as the main communication medium. The advantages of the Internet are that it is easy to update, the distribution of information is cost effective, it is searchable, can be produced swiftly and is environmentally friendly. However, it is also the medium most favoured by those who wish to criticize big businesses (see, for example, www.untied.com, a site that is critical of the performance of United Airlines).
Cause-related marketing is a commercial activity by which businesses and charities or causes form a partnership with each other in order to market an image, product or service for mutual benefit.
Cause-related marketing works well when the business and charity have a similar target audience. For example, Nambarrie Tea Company, a Northern Ireland winner of the annual Business in the Community award for excellence in cause-related marketing, chose to sponsor the breast cancer agency Action Cancer. The company and the charity targeted women aged 16 to 60. In a two-month period, Nambarrie released 100,000 specially designed packs promoting its sponsorship of Action Cancer and covered media costs for a TV advertising campaign. This generated income of over £200,000.
A related issue is that of marketing ethics. Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They involve values about right and wrong conduct. There can be a distinction between the legality and ethicality of marketing decisions. Ethics concern personal moral principles and values, while laws reflect society's principles, and standards that are enforceable in the courts.
Exhibit 2.2 This advertisement for BP demonstrates the company's awareness of the importance of environmental issues
Not all unethical practices are illegal. For example, it is not illegal to include genetically modified (GM) ingredients in products sold in supermarkets; however, some organizations (such as Greenpeace) believe it is unethical to sell GM products when their effect on health has not been scientifically proven. Such concerns have led to supermarket chains, such as Iceland and Sainsbury in the UK, to remove GM foods from their own-label products (see Exhibit 2.3). Many ethical dilemmas derive from a conflict between profits and business actions. For example, by using child labour the cost of producing items is kept low and profit margins are raised. Nevertheless, this has not stopped companies such as Reebok from monitoring the overseas production of, say, sporting goods to ensure that no child labour is used. Because of the importance of marketing ethics, many of the chapters in this book end with a discussion of ethical issues. For example, Chapter 4 (Marketing Research and Information Systems) ends with a discussion of ethical issues such as intrusions into privacy and selling in the guise of research.
From left to right
В. A standard supermarket egg from a hen fed artificial colourants.
С. A bright red egg from a hen given a large dose of artificial colourants.
Exhibit 2.3 Retail chain Iceland prides itself on stocking products that are free from artificial colourings and flavourings
2.3 Marketing in Action