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| Business Actions Towards Socially Responsible Marketing |
They thought the criticisms were either
unfair or unimportant.
But by now, most companies have grown to
accept the new consumer rights, at least in principle.
They might oppose certain pieces of
legislation as inappropriate ways to solve certain consumer problems, but they
recognize the consumer's right to information and protection.
Many of these companies have responded positively to consumerism and environmentalism in order to serve consumer needs better. Responsible sellers would attract buyers, either forcing less responsible marketers out of business or forcing them to give up their unsavory practices.
Enlightened Marketing
The philosophy of enlightened marketing
holds that a company's marketing should support the best long-run performance
of the marketing system.
Enlightened marketing consists of five
principles: consumer-oriented marketing, innovative marketing, value marketing,
sense-of-mission marketing, and societal marketing.
Enlightened marketers also ensure that
their marketing approach reflects corporate ethics.
• Consumer- Oriented Marketing
Con sinner-oriented marketing means that
the company views and organizes its marketing activities from the consumer's
point of view. It should work hard to sense, serve and satisfy the needs of a
defined group of customers.
Consider the following example. Richardson
Sheffield, a British cutlery maker, fought off tough competition in a stagnant
cutlery market in the UK in the 1980s, largely by making the customer happy.
Its chairman, Mr. Bryon Upton, claims that
the most important ingredient in Richardson's recipe for success is the great
stress the company puts on customer satisfaction and relationships.
When a request for a kitchen knife that
does not need to be sharpened' came from America's biggest retailer, Sears
Roebuck, instead of saying, as did many competitors approached by Sears, 'We
don't make it; nobody makes it; therefore it can't be made', Richardson
pondered about the problem.
It finally created both the knife and the
machinery needed to automate the grinding of the specially serrated edge.
similar attention to customers' wishes has
resulted in a broad product line, from a range of 30 top-of-the-line chefs
blades to knives given away as petrol-station promotions.IS enlightened
marketing A marketing philosophy holding velvet a company's marketing should
support the best long-run performance of the marketing .system,- its five
principles are co ns user-oriented marketing, innovative marketing, value
marketing, sense-omission marketing, and societal marketing. u on sum er-1 in
ented marketing A principle of enlightened marketing which holds that a
company should view and organize its marketing activities from the consumers'
point of view.
• Innovative Marketing
The principle of innovative marketing
requires that the company continuously seek real product and marketing
improvements.
The company that overlooks new and better
ways to do things will eventually lose customers to another company that has
found a better way.
Ola Ivarsson is the environmental director
at Scandic Hotels and his drive to transform the chain into an EEO-friendly
business has started to revolutionize Europe's leisure industry. Under
Ivarsson's direction, Scandic Hotels has made design improvements that have
drastically reduced the company's environmental impact.
Annual consumption of plastic has been
reduced by 90 tonnes, metal usage has been cut by 25 tonnes, the discharge of
harmful chemicals has fallen by 25 tonnes and the quantity of unsorted waste
produced by the chain has been reduced by 50 percent.
At the same time, Ivarsson's program has
boosted the chain's popularity, which has helped lift Scandic out of the
difficulties it experienced in the early 1990s.
The centerpiece of this design revolution
is the 'recyclable room' that Ivarsson created with the help of his team of
in-house architects. They managed to make the room a remarkable 97 percent
recyclable, and since then Scandic has built 2,700 more worldwide. Ivarsson
explains, 'We identified our customers' most repetitive activities and found
ways of making these less damaging to the environment.' Ivarsson found
• Value Marketing
According
to the principle of value marketing, the company should put most of its
resources into value-building marketing investments. Many things marketers do -
one-shot sales promotions, minor packaging changes, advertising puffery - may
raise sales in the short run. but add less -value than would actual
improvements in the product's quality, features, or convenience.
Enlightened
marketing calls for building long-run consumer loyalty, by continually
improving the value that consumers receive from the firm's marketing offer. The
computer company Dell, which pioneered mail-order selling of personal computers
in the late 1980s, is a good example of an innovative marketer.
The
company recognized that PC buyers were becoming more knowledgeable about
computers and the software they wanted, and were confident about making a
purchase decision without the need for salespeople's advice and interference.
They
wanted fast delivery and reliable after-sales service and maintenance support.
They did not require an intermediary.
Dell
bypassed traditional distribution channels used by the competition and, in
selling direct to customers, created a unique selling point (USP) based on its
innovative distribution arrangements. The approach was so successful that many
competitors followed suit.
Today,
Dell continues to maintain a direct relationship with consumers that enables
the company to listen better, learn faster and become more agile in responding
to their changing and differing needs.17
• Sense-of Mission Marketing
Sense-of-mission
marketing means that the company should define its mission in broad social
terms rather than narrow product terms. When a company defines a social
mission, employees feel better about their work and have a clearer sense of
direction.
For example, defined in narrow product terms, the Co-operative Bank's mission might be to sell banking services, but the company has taken a firm decision to promote a broader mission - to be an ethical bank, refraining from doing business with those companies that engage in so-called unsavory business practices, from companies that are involved in the fur trade to tobacco product manufacturers.
• Societal Marketing
Following
the principle of societal marketing, an enlightened company makes marketing
decisions by considering consumers' wants and long-run interests, the company's
requirements, and society's long-run interests.
The
company is aware that neglecting consumer and societal long-term interests is a
disservice to consumers and society.
A crucial
problem is this. In many cases, customer needs, customer wants and customer
long-run interests are the same things, and customers are the best judges of
what is good for them.
However,
customers do not invariably make decisions that are good for them. People want
to eat fatty food, which is bad for their health; some people want to smoke
cigarettes knowing that smoking can kill them and damage the environment for
others; many enjoy drinking alcohol despite its ill effects.
To control
some of the potential evils of marketing there has to be access to the media
for the counterargument — the counter-argument against smoking, against fatty
foods, against alcohol.
There is
also a need for regulation-self if not statutory—to cheek unsavory demand.
A second
problem is that what consumers want is sometimes at odds with societal welfare.
If marketing's job Is to fulfill customers' wants, unsavory desires leave
marketers with a dilemma.
Consumers
want the convenience and prestige of hardwood window frames, doors, and
furniture, but society would also like to keep the Amazon rain forest;
consumers want the comfort of air-conditioning, yet we need the ozone layer;
consumers worldwide should be using lead-free petrol, yet not all bother.
Marketing
has to be more alert to the inconsistencies between consumer wants and
society's welfare.
Where
there is insufficient drive from within the consumer movement and consumers'
own sense of responsibility, marketers would do better to control or regulate
their own behavior in providing goods or services that are undesirable for
society at large. If not, legislation is likely to do that for them.
A
socially oriented marketer should design products that are not only pleasing
but also beneficial. The difference is shown in Figure 2.2. Products can be
classified according to their degree of immediate consumer satisfaction and
long-run consumer benefit.
Desirable
products give both high immediate satisfaction and high long-run benefits.
Pleasing
products give high immediate satisfaction but may hurt consumers in the long
run.
Examples
are indulgence goods like confectionery, alcohol, and cigarettes.
Salutary
products have low appeal, but benefit consumers in the long run. Seat belts and
airbags in cars are salutary products.
Finally,
deficient products, such as bad-tasting and ineffective medicines, have neither
immediate appeal nor long-run benefits.
The
challenge posed by pleasing products is that they sell very well, but may end
up hurting the consumer.
The
product opportunity, therefore, is to add long-run benefits without reducing the
product's pleasing qualities.
For
example, the British drug and household product manufacturer Reckitt &
Coleman developed a phosphate-free laundry detergent that was relatively more
effective than existing 'green' detergents. The challenge posed by salutary
products is to add some pleasing qualities so that they will become more
desirable in the consumers' minds.
For
example, synthetic fats and fat substitutes, such as NutraSweet's Simplest and
P & G's Olese, promise to improve the appeal of low-calorie and low-fat
foods.
Marketing Ethics
Ethics, in
the broadest sense of the word, is rising to the top of the corporate agenda.
Scarcely a
week goes by without a leading company coming under attack, rightly or wrongly,
for alleged unethical business practices, whether it is Ford removing the black
faces from a sales brochure, Shell UK dumping its redundant oil platform, Brent
Spar, in the North Sea, or MeVities' use of fish oil from sand eels, an
endangered species and puffins' staple diet.
However
far from reality, the accusations of manufacturers' unethical business practices
are companies under attack risk tarnishing their reputation.
And those
found guilty of wrongdoing face hefty legal penalties.
The US
subsidiary of Lucas (automotive components and parts manufacturer) was fined
$106 million for keeping false records of gearboxes, while Daiwa Bank suffered
fines of £340 million for concealing SI billion of losses.18 High-publicity
scandals, which made international news, such as the case of Union Carbide's
plant in Bhopal, India, which negligently released toxic fumes, killing 2,5000
people, serve to remind society of the pressing imperatives for corporations to
act in an ethical manner.
Conscientious
marketers face many moral dilemmas, though the best thing to do is often
unclear.
Imagine
you are trying to win a big public contract in a developing country.
The
minister in charge makes unmistakable references to the disgracefully low pay
of local city officials and the benefits his own children would enjoy if they
could study abroad.
The cost
of providing this (concealed as a 'scholarship' paid for by your company) is
minute compared with the value of the contract. Your competitors, given the
chance, would assuredly find the money. Do you pull out, or pay up? Most
businesspeople in such situations find that their scruples are soon swallowed.
So do most
governments. Germany is one of several European countries where bribes paid abroad
are tax-deductible (although the tax office may want proof that the person paid
is not liable for German income tax).
The United
States is harsher - under the Foreign Corrupt Practices Act, executives can
face jail for paying bribes.
But it is
hard to prove ('I was shocked, shocked to hear that our executive training
scholarship had paid for the minister's children to visit Disneyland'); and
many American firms get third-party consultancies to do their bribing for them.
In
searching for ethical standards for marketing, marketing managers draws upon
postmodernist thinking and philosophies that date back well beyond marketing
itself.
Marketing
Highlight 2.4 introduces some of this,19 Because not all managers have fine
moral sensitivity, companies need to develop corporate marketing ethics
policies.
Such
policies offer broad guidelines that everyone in the organization must follow.
They cover
distributor relations, advertising standards, customer service, pricing,
product development, and general ethical standards. Managers need a set of
principles that will help them figure out the moral importance of each
situation and decide how far they can go in good conscience.
But ta/iat
principle should guide companies and marketing managers on issues of ethics and
social responsibility? One philosophy is that such issues are decided by the
free market and legal system.
Under this
principle, companies and their managers are not responsible for making moral
judgments. Companies can in good conscience do whatever the system allows.
A second
philosophy puts responsibility not in the system, but in the hands of
individual companies and managers.
This more
enlightened philosophy suggests that a company should have a 'social
conscience'.
Each
company and marketing manager must work out a philosophy of socially
responsible and ethical behavior.
Under the
societal marketing concept, each manager must look beyond what is legal and
allowed, and develop high standards of ethics and morality based on personal
integrity, corporate conscience, and long-run consumer welfare.
A clear
and responsible philosophy will help the marketing manager deal with the many
knotty questions posed by marketing and other human activities.
Many
industrial and professional associations have suggested codes of ethics, and
many companies are now adopting their own codes of ethics.
About
half" of European firms (a modest sum) compared to something like 90 percent of America's biggest 2,000 companies have established 'ethical codes of
practice' for their employees. Efforts have been made to establish a general
international ethics code.
Firms also
have 'ethics education' programs to teach managers about important ethical
issues and help them find the proper responses.2 " Written codes do not,
however, assure ethical behavior.
The
guidelines are well-meaning but too abstract to direct action when the
interests of the company diverge sharply from those of its employees, customers, or the local community.
There has
to be a small print to tell employees what to do in specific dilemmas, such
as when being offered or asked for, a bribe. There should also be sanctions to
enforce the code so that ethical pledges are more than mere PR 'puff.
Companies
are urged to provide detailed policies on issues such as conflicts of interest,
bribes, gift-giving, relations with competitors, and shareholders and other
stakeholders' rights. Every function of the business should also have an ethics
policy tailored to them.
For
example, how is the export division, which deals with Saudi Arabia, or many
South American countries, where bribes and kickbacks are routine business
practices, to act Some companies may set tougher standards than others?
The
question arises as to whether a company must lower its ethical standards to
compete effectively in countries with lower standards. Some Western firms have
made a commitment to a common set of shared standards worldwide.
For
example, the ethical code of Levi Strauss, a jeans manufacturer, forbids
bribes, whether or not prevalent or legal in the foreign country involved.
Across
Europe, national cultures naturally impose different standards of behavior on
individuals and organizations.
What is
considered an acceptable practice in one country may be illegal in another
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