LECTURE 2

MARKETING ETHICS AND

CORPORATE SOCIAL
RESPONSIBILITY

RUDOLPH WALLACE 2021

 OUTCAST - OBSERVER, NOVEMBER 13, 2015
CULTURAL AND PERSONAL LEVELS OF ETHICS

Let’s consider the case of Jabary Williams

Does anybody side with the community?
Did the rightful owner of the money do anything wrong?
Is it unethical for Jabary to whine about his ‘reward’?
What advice would you have given him if he came to you up front?
Would you advise him differently if he didn’t know the owner’s identity?

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LET’S START WITH YOUR OWN ETHICS
• “Ethical behavior is doing the right thing when no one else is watching -
even when doing the wrong thing is legal.” Aldo Leopold
•
An Armored Truck Spilled Thousands of Dollars on
an Atlanta Highway. What Would You Do?
More than a dozen drivers pulled over to scoop up some of an estimated
$175,000 that blew out of a Garda truck on Interstate 285, the authorities
said. They are asking for it to be returned.
July 10, 2019 - Detectives were trying to contact drivers by looking for license plate numbers on
cellphone videos that had been posted on social media. But Sergeant Parsons said that the
authorities had no intention of prosecuting anyone who returns the money.
“No harm, no foul,” he said. “But you need to turn that money in.”
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 CONSUMER ETHICS

• Consumer returns
• Software piracy
Do you think creative consumer practices that avoid airline baggage fees
(Schiffman p. 402, 2nd parag.) are unethical? Why or why not?

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 PERSONAL ETHICS IN THE ORGANIZATION
• How far should an individual’s personal ethics intrude in the work
environment?
• Have you ever lied on behalf of your company?
Is there any company in Jamaica you would not work for, for ethical reasons, even
if they doubled your current salary?
Are there any laws that challenge your ethics as a ‘law abiding’ citizen [Sourcing
foreign exchange in the 1980s]

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 DOES ETHICS HAVE ANYTHING TO WITH RELIGION?
• Late Gleaner columnist Ian Boyne used to argue that atheists have
no reason to act morally
• Should ethical requirements for clergymen be
Higher – Should they set an example?
Lower – Don’t they have more forgiveness coming?
The same as everybody else’s?
Consider the actions of famous born-again Christians: Mike Pence, Mike Pompeo,
Al Miller and the Moravian ministers

• On what basis can we judge a business as ethical or unethical?

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 ETHICS
• Defined as moral conduct ”In the service industry the relationship
• A difficult area for marketers, between the consumer and the service
provider is all that matters. If
especially in areas of consumers perceive that they are
communication and behaviour being treated unethically they will go
elsewhere. But, not only will they leave,
• Stephenson (Is Marketing they will take with them as many
Ethics an Oxymoron?): Caveat others as they can. The risk that
emptor must be replaced by a organizations face by treating their
customers/ clients unethically is too
public responsibility and
great to let this happen”. - James
enlightened self-interest. (Is Stephenson
this really the same as ‘ethically
sound’?)
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 CORPORATE AND PERSONAL LEVELS OF ETHICS

The culture of an organization is set by senior leadership,

but validated or eroded by the everyday decisions in
many “moments of truth”
– quote from the ‘president of a major airline’
 UNETHICAL CORPORATE PRACTICES - GLOBAL

• Connections – every country in the world considers

‘networking’ an asset
• Gift-giving vs. bribery vs. incentives – how far does one go in
“paying respects to a relationship”?
• Discrimination – there are rarely any clear hiring rules that
mention age, gender, sexual orientation or race

RUDOLPH WALLACE 2021

 UNETHICAL CORPORATE BEHAVIOUR - JAMAICA
JPS Report On Megamart Theft| Gleaner December 13, 2007 |
The Jamaica Public Service Company (JPS) is working with the management of
Megamart to collect the payments for stolen electricity.
The proprietor of Megamart, Gassan Azan, has since reported that the
management did not know of the illegal devices at its two stores in Portmore and
Kingston.
The incident forced Azan to resign as the chairman of the country’s promotions
agency Jamaica Trade and Invest [JAMPRO].
How much business do you think Megamart lost as a result of this episode?
Would this incident affect your patronage of Megamart? Why, or why not?
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DO FIRMS PAY A PRICE FOR UNETHICAL BEHAVIOUR?

Amelia Hill – “Shoppers Buy Value, Not Values” – Observer

(UK) Oct 1, 2000
• Customers say they prefer to buy from socially responsible
companies
• 88% claimed to be ethical shoppers who took environmental
and social concerns into consideration
• Only 23%, when interviewed in a supermarket, could name
any behaviour on their part to justify these claims
Is ‘ethical shopping’ just a middle class indulgence?
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IS SOCIAL RESPONSIBILITY ONLY ABOUT SELF-INTEREST?
“Marketers have to 'self regulate' and become more socially responsible”
or “they will become subject to more government controls.” - Stephenson
What if there are no sanctions against unethical behaviour? Is there
any reason why companies should be socially responsible? Suppose:
• Consumers willingly accept bad service in exchange for low
prices
• Government takes a hands-off approach to business
• It’s a one-off purchase (e.g. a house)

RUDOLPH WALLACE 2021

 CORPORATE BEHAVIOUR VS. THE MISSION STATEMENT
• A Mission Statement should reflect an organization’s core values and priorities
• Very often these statements have very little to do with actual practice [Look up
Enron’s “Statement of Values”]
• Flow’s Mission Statement:
• To offer clients top-quality, innovative, integrated communication solutions.
• To build long-term, value-adding relationships with our clients, based on
knowledge of their business strategies, imperatives and needs.
Is this what Flow’s customers have been experiencing?

RUDOLPH WALLACE 2021

“IN A MANNER CONSISTENT WITH THE WELL-BEING OF THE SOCIETY”
CORPORATE SOCIAL RESPONSIBILITY

• A European Commission 2001 Green Paper defines CSR as:

“a concept where companies integrate social and
environmental concerns in their business operations and in
their interaction with their stakeholders, on a voluntary basis”
– quoted by Hooley et al

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• 3 CATEGORIES OF CORPORATE SOCIAL RESPONSIBILITY
G. LANTOS (2002)

1.Ethical – morally mandated beyond the legal and economic obligations of the
organization
2.Altruistic – concerned with the welfare of various societal stakeholders
3.Strategic – concerned exclusively with the self-interest of the organization,
pursuing only those actions that achieve strategic business goals
Khamile Reid, local communications strategist, accuses Jamaican firms of
treating CSR like charity

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Marketing strategy and corporate social responsibility

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CSR and customer value propositions

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 Activities that Affect a Company’s Image
Image Destroying Activities Image Building Activities

• Discrimination • Empowerment of employees

• Harassment • Charitable contributions
• Pollution • Sponsoring local events
• Misleading communications • Selling environmentally safe
• Deceptive communications products
• Offensive communications • Outplacement programs
• Support community events
• Corporate Social Responsibility Audit
• RUDOLPH WALLACE 2021
THE DEADLIEST GREENHOUSE GAS? THE HOT AIR OF CSR
• Strategic CSR tries to combine social and commercial goals, but very
often these CSR initiatives misfire:
• Stefan Stern in “The Hot Air of CSR” says that businesses should not get
involved in social causes
• Some experts argue that firms that claim to be cost-effective and
profitable while being environmentally-friendly are guilty of empty
boasting
• Dominic Lawson* states that organic food is just a tax on the gullible
•Are these pundits questioning the strategic value of CSR?
*Sunday Times, August 11 2009
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 GREENWASHING – MAKING A COMPANY APPEAR MORE
ENVIRONMENTALLY FRIENDLY THAN IT REALLY IS

• Firms engage in CSR activities to distract from negative publicity and pre-empt
regulations that might hurt them. [Tobacco and packaging companies positioned
themselves as good corporate citizens sponsoring campaigns like ‘Keep America
Beautiful’ – rather than undertake the substantive changes needed in their industries]
• Firms can mislead the public and gain customer loyalty by resorting to
‘environmentally-friendly’ strategies
• Environmental Imagery – showing trees and rivers in ads
• Misleading labels – false claims of recyclable or biodegradable
• Unsubstantiated Claims – ‘organic’, ‘25% less plastic’

RUDOLPH WALLACE 2021

 ANYTHING SIGNIFICANT HERE?
• PSOJ Presses Gov't On Cockpit Country Boundaries Decision
• Published:Friday | November 3, 2017 | 12:00 AM

William Mahfood, chairman of PSOJ’s energy and environment

committee, said: "The Cockpit Country is a very important part of
Jamaica's ecosystem and environmental sustainability. It is
important for us to protect this very important area for the future
of our children…

RUDOLPH WALLACE 2021

GLOBAL BUSINESS AND ETHICS
Corruption: Misuse of public power for private benefit
Beware of Transparency International’s Corruption Perceptions Index!

• Western Europe, home to 6 of the top 8 countries (clean public sector at home) is
strongly linked to corruption elsewhere.
• Sweden, ranked 3rd in 2018, owns 37% of TeliaSonera, which is accused of
paying millions of dollars in bribes to secure business in Uzbekistan, which comes
in at 158th out of 180 countries in the index. (Ja. is 70th)
• Consider Jamaica’s own alleged bribery scandal involving Trafigura, a firm out of
Netherlands (ranked 8th- in the Index)
• USA, ranked at #18 in 2016, now sits at #23, tied with France, a country that has
assassinated 22 African leaders since 1963 (look it up)

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ETHICS LESSON FROM THE USA

• In reference to the Foreign Corrupt Practices Act of 1977, the former

American president is quoted:
“It’s just so unfair that American companies aren’t allowed to pay
bribes to get business overseas,” Trump reportedly told Tillerson.
“We’re going to change that.” Extract from upcoming book,
A Very Stable Genius: Donald J. Trump’s Testing of America.
RUDOLPH WALLACE 2021
 ARE THERE ETHICAL STANDARDS PECULIAR TO JAMAICA?
1. Attitudes towards homosexuals
•Who said, “Not in my cabinet”?
•Could a PM get away with that in 2021?
2. Hiring on the basis of appearance
• How does this differ from racial discrimination?
3. Corporate marketing decisions made to benefit the ‘personal brands’ of assorted marketing
functionaries
• How do we explain the proliferation of pseudo-marketing people on page 2 of the Jamaican
Observer?
Does your bank hire people with dreadlocks? Visible tattoos? Should they?

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Guess the colour
of the winning
school

How ethical is it
for employees to
boost their
personal brand
with their
employers
money?
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 JAMAICAN ‘AREA LEADERS’
Role of area dons – two weeks ago, the National Security minister called for
‘benevolent area leaders’ to be replaced by ZOSOs
• Should police cooperate with known criminals to control violence?
• Distinguish between extortion and protection
• Should ‘area leaders’ be invited to participate in the redevelopment of
Kingston?
Is the ‘public private partnership’ only valid for PSOJ types?
Is it ethical to school your children with the don’s money then hide your daughter when
she turns 13?
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 BUSINESS ETHICS – FACTORS TO CONSIDER

• When faced with an ethical dilemma, consider

• Alternatives
• Stakeholders – costs and benefits; rights being violated
• Principles – justice, fairness
• Practical constraints – legal ramifications, industry culture,
dangers
• Decide
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 THE PERILS OF PRECISION TARGETING

• Narrowcasting
• Directed messages to small audiences
• Data obtained though internet and credit card use sold to marketers
• GPS
• Cell phones and cars
• Gives marketers your location

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 PRIVACY ISSUES
• Using Wi-Fi signals from smartphones to track consumers in stores
• E-Scores: undisclosed digital calculations of people’s buying power
and value as consumers
• Measures that claim to protect consumer privacy – do these work?
• “Do not track” mechanism
• Regulation of data brokers
• Opt-in for monitoring
• Turquoise triangle

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 UNETHICAL, OR JUST GOOD MARKETING?
• Targeting children
• “Overaggressive” promotion
• Promotion of prescription medications
• Narrowcasting
• Product placement
• Stealth marketing
• Ambush marketing
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 MARKETING TO CHILDREN
• Guidelines by Children’s Advertising Review Unit (CARU)include:
• No misleading claims about product’s performance or benefits
• Must not exploit children’s imagination
• Can not create unrealistic expectations
• Products must be shown in safe situation
• No encouragement of inappropriate behavior (Gatorade’s iPhone game Bolt
told kids to always avoid drinking water)
• Avoid ads that
• encourage children to pressure their parents to buy the products advertised
• lead children to feel that ownership of a given product will make them more
accepted by peers
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FALSE OR MISLEADING ADVERTISING
• Puffery
• Truth-in-advertising laws
• Deceptive advertising
• Corrective advertising
• Promotional violations in drug marketing
• Unsubstantiated effectiveness claims
• Omitted risk information
• Unsubstantiated superiority claims RUDOLPH WALLACE 2021
 COVERT MARKETING
• Distinguish between covert (masked, stealth), guerilla and
ambush marketing
• Covert – The target does not know he/she is being
marketed to (e.g. product placement)
• Guerilla – Unconventional, usually in public places for
maximum effect and w-o-m (e.g. flash mobs)
• Ambush – Calculated to upstage the legitimate sponsor of
an event

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AMBUSH MARKETING - PROMOTING YOUR
BRAND? AT AN EVENT SPONSORED BY A COMPETITOR
• How do you best describe…….?
• Dutch brewery Bavaria’s World Cup publicity stunt
• Usain Bolt holding aloft his Puma spikes at Adidas-
sponsored Olympics
• TVJ’s ‘coverage’ of World Cup football
• Using an athlete’s image without permission in a
‘congratulations’ ad
• Digicel’s use of Calabar athlete at 2015 Champs
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MASKED MARKETING PRACTICES (1)
Practice Description
Posers (disguised Actors or salespeople who pretend to be ordinary people
communicator) or researchers conducting a survey to explain product
benefits and give potential consumers the chance to
examine, sample, or use a product.
Buzz and viral Recruitment of people to talk about products through free
marketing (disguised samples or discounts before the product is available to the
communicator) general public and suggestions on what to say and how to
approach people about the product. Some refer to this as
viral marketing when the contact with potential consumers
is done electronically.
Advertorials (disguised Advertisements that appear to be information from an
format) RUDOLPH WALLACE 2021independent source, such as prepared television news
 MASKED MARKETING PRACTICES (2)
Practice Description
Disguised monitoring Use of invisible metatags by a marketer or the sale of
of queries via search priority by a search engine of the results from a particular
engines query when the results are not identified as biased.

Urgent ad-formation Advertisements that appear in the form of important

(disguised format) account information from firms with an existing business
relationship, government notices, sweepstakes prize
notices, or checks that are simply discount coupons.

Advertainment Product and advertising placement in television shows, at

(disguised RUDOLPH
format) sporting events, and in video games.
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36
 MONDAY SESSION

1. Project update: Group lists [3 teams of 5; 3 of 4]

2. Our personal ethics – Jabary; Atlanta highway
3. Group discussions cases: CSR: Wisynco Gives Bigga Soft Drinks
Ethics: Software Dynamics Inc
Inside Information

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 GROUP CASE
WISYNCO GIVES BIGGA SOFT DRINKS TO KSAC FEEDING PROGRAMME

• On April 16 2020 the Gleaner reported that Wisynco had donated supplies of
Bigga soft drinks to a feeding programme organized by Kingston and St Andrew
Corporation (KSAC) to assist communities undergoing hardship during the
COVID-19 restrictions. This comes in the wake of a government-sponsored
campaign aimed at reducing the consumption of sugary drinks.
• a) Are there ethical issues surrounding KSAC’s public acceptance of this
donation? What would you have done in their situation? Give reasons for your
answer.
• b) Analyze the Corporate Social Responsibility ramifications of Wisynco’s soft
drink donation.

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 Software Dynamics, Inc
 The senior management of Software Dynamics, Inc. had just completed its Business
Roadmap, spelling out SDI’s Vision, Mission, Values and Guiding Principles.
 One section described the company’s position toward its customers: “We realize we
are dependent on close relationships with our clients, and will go the extra mile to
assure we are meeting their requirements and serving their needs.”
 Shortly after, the purchasing agent for one of SDI’s largest customers asked to meet
privately with Paul, SDI’s sales manager. It was soon clear he wanted more than good
service, delivery and competitive pricing. He wanted a personal “commission,” a
percentage of SDI’s next order, and demanded Paul’s immediate response.
 The loss of this key account would affect everyone at SDI. The company had, after all,
committed to “go the extra mile” for its customers. But Paul considered a larger issue
at stake, expressed in SDI’s Corporate Values—to always act with integrity. Paul’s very
next words could impact SDI’s future for years to come.
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 In-class discussion: Software Dynamics
Evaluate using ‘factors to consider’, slide 27
1. Is there a way through this dilemma that preserves
the business yet retains SDI’s integrity?

2. Is there no alternative but to “fire the customer”?

 What if you know that your leading competitor
will gladly accept the same deal?

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Inside Information
Tom Jones has recently joined the sales force of Wood Truss, a manufacturer of
wooden structural parts for commercial buildings. Large contractors issue requests for
bids for a bill of materials required to construct a commercial project. Tom’s job
includes reviewing the bill of materials and developing his firm’s bid.
Tom’s new boss, Mark Smith, gave Tom a request for bids from Strong Built, a
commercial contractor. The request involved the construction of a 300,000 square foot
warehouse. Tom immediately set about costing out the materials specified in the bill.
The day before the bid was due, Mark came in and handed Tom two brown envelopes.
Mark said the envelopes, which contained copies of the bids from Wood Truss’s two
main competitors, had just been received from their inside man at Strong Built. He
also said that the Wood Truss bid must be just under the lowest bid from the
competition. Wood Truss was always the lowest bidder on major jobs; competitors
were allowed to win a few of the smaller jobs so as riot not to arouse suspicion.
When Tom protested that using the information was not right, Mark said that this is
the way things are done in the construction industry. The firm with contacts stays in
business. He said Tom is now working for a winner and should be glad that he signed
on with the right company. RUDOLPH WALLACE 2019
INSIDE • 1. Can Tom avoid using the bid information
INFORMATION and still comply with Mark’s orders to be
the low bidder?
• 2. Should Tom be concerned about using
the competitors’ bid information, seeing
that it came from a Strong Built
employee?
• 3. If everybody in the construction industry
acts this way, should Tom?

RUDOLPH WALLACE 2019