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 busi ness 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

Highpublicity 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 devel oping country. The minister in charge makes unmistakable references to the disgracefully low pay of local civil 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 swal lowed. So do most governments. Germany is one of several European countries where bribes paid abroad are taxdeductible (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 gaol 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 thirdparty 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

Business Actions Tmoards Socially Responsible Marketing • 65

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 judgements. 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 behaviour. 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 longrun 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 ethies. About half" of European firms (a modest sum) compared to something like 90 per cent 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 ethies code (see Marketing Highlight 2.5). Firms also have 'ethics education' programmes to teach managers about important ethics issues and help them find

the proper responses. 2 " Written codes do not, however, assure ethical behaviour. The code of the Prudential Corporation, a life insurancetoproperty group, pledges to work f'or the good of its shareholders, customers and staff. It notes that 'in providing its business, the Prudential aims are ... to abide by the spirit of laws as well as their letter and to be a significant contributor to the development and wellbeing of the wider community in which we operate". 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 the 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 policy on issues such as conflicts of interest, bribes, giftgiving, relations with competitors, and shareholders' and other stakeholders' rights. Every function of the business should also have an ethics policy tailored for them. For example, how is the export division, which

66 • Ctt&pter 2 Marketing and Society

From Plato's Republic to Supermarket Slavery

Marketing Ethics