ST 520 Responsible Management Session 8

1. ST 520 Responsible Management Session 8 CSR, marketing and consumers

2. Agenda Ethical marketing – the 4 P's Other marketing topics Product Green marketing Societal marketing BOP marketing Cause-related marketing Price Consumer rights Place Promotion Advertising

3. Product issues • Utility • Health, safety, green marketing • Liability • Planned obsolescence • Eco-conception

4. Product issuesUtility • Is it needed? • Will it improve people's lives? • Does it provide lasting benefits to society? • Traditionally, the real marketing question is…

5. Product issuesUtility • Is it needed? • Is the product effective: will it do what it says it does? • Is "the promise" true? • Orgamism Inc. article: an indictment of big pharma

6. Product issuesUtility - content • Is what's in the package…in the package? • The Kellogg's Corn Flakes surprise discovery

7. Product issuesSafety • Is the product appropriate? • Is it adapted to the culture? • Ex: Nestle's infant formula • African disaster • Baby milk action group, UK • "… one of the world’s most widely criticized and boycotted companies."

8. Product issuesSafety • Does it have the potential to harm people…or the environment? • Should companies market products that are potentially dangerous? • Or that send mixed messages in terms of values (utility)?

9. Product issuesSafety • Does product content or use have the potential to harm ? • Diageo's drink responsibly Drink IQ test • What is responsible drinking? • Is it the company's role to promote it? Pro's and cons'

10. Product issuesSafety "Cigarettes are legal and no one forces people to smoke" - Tobacco multinational spokesperson, late 1990s • Should tobacco companies be allowed to aggressively market cigarettes in Asian and third world countries when legislation and special interest group pressure in their countries makes it more difficult to sell in their own countries? • Do you see any other social responsibility issues regarding the sale of cigarettes?

11. "If a business is managing products which pose health risks, it is all the more important that it does so responsibly" BAT sustainability page

12. Product issuesHealth • Are GMOs dangerous? • U.S. vs. Europe • The case for and against • Processed foods: weight, link to cancer? • Fast food nation

13. Green marketing • AMA: the marketing of products which are considered safe. • Involves changes in • product modification • process technology • packaging • promotion • Lack of standards and consensus as to what constitutes "green"  slow growth of green products • In the U.S., according to market researcher Mintel • 12% are TRUE GREENS – regularly seek out and buy green products • 68% are LIGHT GREENS - buy green sometimes

14. Green marketingSome U.S. figures

15. Product issuesLiability • Legal responsibility for damage caused by a product - consumers or manufacturers • "Caveat emptor" - buyer be aware • Warranties

16. Product issuesConsumer rights • Consumer • Buyer beware • Means to an end • Consumer • Entitled to respect • Right to know • An end in themselves

17. Product issuesProtecting the consumer • Government regulations & watchdog organizations • Consumer rights • To safety • To choose • To know, to have complete information • To be heard, to complain • To full value: get what you pay for, products perform as advertised • To recourse and redress • To privacy

18. Product issuesLiability and consumer rights • McDonald's hot coffee case • Who is liable?

19. Product issuesPlanned obsolescence • Planned short life cycle inciting consumers to replace product • Some mobile phone operators offer incentives to KEEP phones longer.

20. Product issuesEco-friendly products • Examples: • Puma's clever little bag • Waterless car wash products • Yours'? • Eco-conception • Breaking cyclic capitalism: take-make-waste

21. Societal marketing • Marketing which aligns consumer satisfaction, company profits, and society's long-term welfare. • Suggests that focusing only on an exchange relationship with customers is probably not enough to sustain long term success. • A marketing strategy should deliver value to customers in a way that improves both consumer's and society's welfare. • SM activities improve companies' image among customers, shareholders, the financial community, and other relevant publics.

22. Societal marketingTwo examples • Micro-credit • Responsible tourism

23. Societal marketingMarketing financial services to the poor • Micro-financing: The Grameen Bank • What is micro-credit? Pro's and con's • Questions at end of case

24. Societal marketingResponsible tourism • Some responsible tourism behaviors • Buy local products • Be aware of religious and social customs • Pay a fair price • Take an interest local culture • Learn a few key words in local language • Dress and behave respectively • Limit environmental impact (water, carbon) • … • Responsibletravel.com • What is responsible tourism? (video)

25. Pricing issues • Price fixing: a secret agreement between sellers or suppliers • Exploits and misleads consumers who have less power and information • Illegal in the EU and the USA • What is a fair price, given operating costs?

26. Fair pricingFair trade vs. BOP FAIR TRADE Focus: limited number of suppliers in developing countries Objective: local development Fair price BOTTOM OF THE PYRAMID Focus: maximum number of customers in developing countries Objective: market share Low price

27. Fair pricing scenario • A developing country has discovered some valuable mineral reserves and is interested in selling exploration rights to its minerals. • This is the country's first international venture in mineral, and you may be able to negotiate a below-market price for its minerals. In all likelihood, your agreement will become the industry pattern for other MNC negotiations. • What will you do?

28. Place – distribution • Rights conflict of: • traditional small retailers to exist • consumers to a low-priced product • Change • Potential disruption of traditional distribution patterns • Toys 'R Us Japan example. • Bribery: payoff required to enter a market? • Transportation and logistics of distribution network

29. PromotionEthical issues in advertising • Content • Shocking, controversial, indecent • People as objects • Intrusive advertising • telemarketing and junk mail that invade personal privacy. • Ex: selling advertising lists without customer approval.

30. Controversial content • Benneton ad using dead Bosnian soldier's clothes • Message? • Ethical issues "The photo of a bloody tee-shirt and pair of pants belonging to a young Bosnian soldier killed in battle really hurts. In a real battle, people were more professional - a bullet in the head was enough. I'm not trying to say that you wouldn't have found this kind of thing in a mass grave, but using a military uniform to advertise a product is like a bad war movie. Benetton, you're wrong here! " - Former Bosnian soldier

31. Source: Google – Benneton pub

32. PromotionEthical issues in advertising • Psychological-appeal based advertising: • Promising experiences which cannot be delivered • Ex: ideals of masculine or feminine behavior • Reinforcement of stereotypes • Use of children, women, and minorities in advertising. • Roles and life styles presented • Manipulative and coercive advertising • Advertising to vulnerable consumers. • Ex: targeting children, use of subliminal messages

33. PromotionEthical issues in advertising • Concealment of facts from independent surveys • Deception • Claims that are misleading, false, or not easily understood • Not necessarily harmful if consumers are aware of the practice. • Exaggeration • Claims that cannot be supported with evidence • Ex: "low-calorie bread will lead to loss of weight" (how?)

34. PromotionTargeting children in advertising • Access to internet  monitoring issue. • Children's vulnerability and inability • To evaluate accuracy of information • To distinguish between games and data collection • To understand the potential dangers of interacting with strangers To resist pressure to buy and make decisions w/o parents • Exposure to questionable content and terminology • One-to-one marketing and manipulation • Ambiguous frontier between learning, entertainment, and advertising

35. PromotionWomen in advertising • Emphasis on physical beauty and youth • Stereotype – women depicted: • As weak, mindless, submissive, helpless • As moms cleaning or taking care of children. • As permanently beautiful and slim sex objects, not autonomous, rational people.

36. Dove soap ads counter-attack

37. Cause-related marketing • A mutually beneficial collaboration between a corporation and (often) a non-profit organization in which their respective assets are combined to: • create economic and social value • connect with a range of stakeholders - consumers, employees, or suppliers • communicate the shared values of both organizations. • American Express preservation initiatives • Pioneers in "cause-related marketing" in 1983 campaign to raise money for the Statue of Liberty’s restoration. • Donated one cent to the restoration every time someone used its charge card. • Number of new cardholders grew by 45 %, and card usage increased by 28 %.

38. Avon • The Avon foundation organizes walks to raise funds to fight breast cancer (video). • Also campaigns against domestic violence. • What does this have to do with marketing?

39. Body Shop campaigns • Against • sex trafficking of children • domestic violence • Finding a cure for HIV

40. TootingyourownhornSelf-promotion of responsiblebehavior • Is it right for an organization to draw attention to its moral conduct? • NO, if the advertising… • … costs more than the action itself  Example Philip Morris' "People Campaign": ads ($108 mn.) cost more than donations ($60 mn.) to charity organizations. Source Adbusters 2001 • … of moral conduct is perceived as a means to reaching an end of lesser value (profits)