15 – Sustainable Marketing

Introduction

Sustainable marketing integrates the demands of the client, the organisation, and society over time. It entails creating and marketing products and services that can be utilised unanimously by all consumers worldwide over lengthy periods without harming the consumers or the environment. It is becoming more usual for businesses to obtain this status to gain customer favour. However, there are no hard and fast rules for determining whether a company is sustainable.

Some authors say sustainable marketing is linked to social responsibility and ethical principles. These ideas are based on the idea that the company’s job is to determine the target markets’ needs, wants, and interests and then efficiently deliver the desired level of satisfaction. The key is to preserve or improve the consumer’s and society’s well-being. This class will teach you about ethical and social responsibility issues in marketing.

15.1 Firms’ Ethical Behaviour

Ethics refers to values and choices and focuses on moral norms, laws, and regulations governing individual behaviour. According to Erik N. Berkowitz et al., ethics are moral principles and values that guide an individual’s or group’s actions and decisions. In marketing, ethics is the moral assessment of marketing activities and decisions as correct or incorrect. Whether a marketing behaviour is ethical or immoral is determined by commonly accepted norms of behaviour created by society’s expectations of conduct, numerous interest groups, rivals, the company’s management, and the individual’s personal and moral values. Based on these principles, each individual decides how to behave, while the general public and diverse interest groups assess whether the activities are ethical or unethical.

15.1.1 Understanding Ethical Behaviour

One reason for many instances of unethical behaviour, among other things, is that businesses generally do not understand how people make decisions when they face ethical quandaries, leading to ethical conflict. Whether to use one’s values or the company in a particular decision is unclear. Understanding how people build their moral standards and what motivates them to engage in unethical behaviour may help reduce instances of unethical behaviour.

Understanding Ethical Behaviour in Marketing Decisions

Individual Factors

When marketing executives meet ethically tricky situations and cannot resolve them on their own, they feel ethical conflict, even if they make judgments in their daily lives based on their conceptions of right and wrong. Individuals can – and do – freely make ethical decisions in business contexts. However, a lot relies on a person’s moral views. According to O. C. Ferrell and John Fraderick, moral philosophies are rules or concepts people employ to determine right or wrong. People acquire these moral philosophies through socialisation through family, church, formal education, and social groupings. Utilitarianism and ethical formalism are the two significant principles related to marketing settings.

1. Utilitarianism seeks to maximise the greatest good for most individuals. Marketing executives who believe in utilitarianism are likelier to weigh all available options and select the one that provides the best outcomes for the most significant number of people. In this case, the result of a decision is determined by the implications for all persons affected.
2. Ethical formalism concerns an individual’s intentions about a given behaviour and the rights of the individual in question. According to F. Neil Brady, ethical formalism produces specific rules of behaviour by investigating whether an action may be perceived as consistent and embraced as a general rule without considering alternative consequences. In this case, whether a decision is correct or incorrect is determined by whether it violates individual rights or universal laws.

Organisational Factors

It is essential to recognise that people do not operate in a vacuum. Decisions are usually made in work groups or committees or during casual conversations with coworkers. Interaction with colleagues is a learning experience that shapes how individuals resolve ethical concerns. The strength of an individual’s values, perception of available opportunity, and judgement of others’ ethical or unethical actions, such as seniors, peers, and subordinates who impact the ethical part of the decision-making process, determine the level of influence of this learning process. As a result of the challenges of the marketing environment, marketing managers encounter various ethical issues virtually every day. Most decision-makers face ongoing pressure to compromise ethics to achieve company and personal goals. Aside from family and friends, the prevalent organisational culture is a powerful component influencing ethical judgments. A corporate culture is a set of shared values, beliefs, goals, standards, and so on that are reflected in day-to-day work through work habits and other activities. To a considerable extent, top management’s attitude and behaviour toward an organization’s commitment to ethics in its operations heavily influences its ethical practices.

Perceived Opportunity

Opportunity is a group of favourable conditions that reduce obstacles or generate rewards. Most marketing executives do not actively take advantage of every chance for unethical behaviour in their organisations. Individual and organisational values, of course, are crucial. Suppose an individual takes advantage of an opportunity to act unethically and is neither punished nor rewarded. In that case, the behaviour is reinforced, and the likelihood of repeating unethical behaviour grows as new opportunities emerge.

For example, if a salesperson submits a fake report of his day’s number of calls and is not chastised, such behaviour is likely to be repeated in the future. It may appear to be a hypothetical circumstance; however, it is common in India for excellent corporations to allow their marketing executives to travel pleasantly on company business and grant AC rail prices, yet others frequently see them travelling in buses or lower-class rail compartments. They explain that everyone else in the firm does the same thing.

To close a sale, salespeople are known to offer misleading promises to customers. Some items fail to live up to the claims stated in advertisements. According to O. C. Ferrell, Larry G. Gresham, and John Fraedrich, the potential to act unethically is generally a stronger predictor of unethical behaviour than personal principles. These are real-life situations, but the organisation and the concerned individual’s credibility also suffer.

15.1.2 Ethical Issues in Marketing

Ethics in marketing activities is a critical topic that requires greater understanding and awareness to better its application. An ethical issue is a scenario, problem, or opportunity that may be identified and compels a person or organisation to choose between several behaviours that must be evaluated as right or wrong, ethical or unethical. For example, when marketing managers or consumers feel tricked or cheated, it becomes a moral issue, regardless of whether the behaviour is legally correct.

Whatever the reasons for unethical behaviour, marketing executives must decide how to remedy the problem once it has been detected. This necessitates familiarity with the majority of the ethical issues associated with marketing that frequently occur. In general, most unethical behaviour issues arise in the context of products and marketing.

Product and service marketing, for example, frequently provides several examples of various circumstances, including ethical difficulties, such as false and misleading advertising and manipulative or deceptive sales promotions. There have been instances of misleading advertisements promoting obesity control and weight loss programmes that have misled clients — and some have gone to court.

Many advertisements have been chastised for exploiting excessive nudity to entice viewers. Bribery or misleading promises in personal selling settings are unethical. Occasionally, media reports highlight instances of unethical behaviour by organisations involved in giving bribes to obtain huge orders. Such actions undermine trust and fairness, ultimately harming and tarnishing the reputation of the organisation in question.

Example: Set Wet Deodorant advertisements, Amul Macho advertisements, VIP innerwear advertisements, and so on were deemed unethical for displaying excessive nudity. Even advertisers, such as Calvin Klein and L’Oreal, have been chastised for employing overt sex appeals in their advertisements, depicting women as sex objects. Calvin Klein was also boycotted a few years ago for featuring disturbing photographs of teenagers in nakedness.

15.1.3 Promoting Ethical Behaviour

The American Marketing Association has standards of ethics that member organisations commit to follow. Individual Indian organisations create their code of ethics.

Seminars on themes such as “corporate governance” are held occasionally to promote ethical company practices. Codes of ethics are organisational rules and policies that serve the members of an organisation in the form of written standards for professional behaviour. Employers can help employees better understand what is expected of them. Rewards and sanctions linked with ethical or unethical behaviour impose codes of ethics and limit opportunities or proclivity to engage in unethical behaviour. Fairness in enforcement should contribute to a broader acceptance of moral standards. A brief self-assessment test can help an individual determine whether a particular decision is ethically correct:

1. Is this decision legally sound? If the response is ‘No,’ one must quit because it can lead to significant problems.
2. Is this choice fair to all parties involved? It is likely not ethically correct if it is unfair to everyone involved.
3. How would this decision affect my self-esteem? Unethical decisions usually induce anxiety and remorse; when made public, they cause shame and disgrace.

When a company’s top management creates programmes to encourage ethical behaviour, those programmes become a force. Marketing professionals are familiar with the policies regulating ethical behaviour and can swiftly settle competing ethical issues. According to Tom Rusk and D. Patrick Miller, an active ethical approach to marketing should take into account at least four essential interpersonal communication values:

(1) respect,

(2) understanding,

(3) care, and

(4) fairness.

These core values must be applied in five steps:

1. Continue to listen; do not argue, criticise, or defend yourself until you comprehend the topic.
2. Consider the ethical considerations involved in a decision that may impact coworkers and consumers, as well as the perspectives of those involved.
3. Ignore your rage and desire for power or prestige, and brainstorm as many options as possible before analysing.
4. Determine the best solution from your point of view, considering respect, understanding, care, justice, honesty, and so on.
5. Explain your decision to a neutral and trusted colleague, give yourself time to reconsider, and discuss with others before making a final decision.

Whatever firms ultimately decide to create a formal guideline to include ethics in marketing practises, one aspect is critical: the character of the individuals. Most examples of employees engaged in deliberately unethical behaviour may be traced back to the individual’s character. People are supposed to understand right and wrong and have the guts to act accordingly.

15.2 Social Responsibility

According to Keith Davis and William C. Frederick, society expects businesses to be socially responsible members of the social community and deliver products and services efficiently. The obligation of a business to make intentional efforts to maximise its good contributions and minimise its negative influence on society as a whole and diverse group of persons within society is referred to as the social responsibility of business. Social responsibility is a more significant idea than marketing ethics. Ethics focuses on individuals and groups doing the right thing while making business decisions, and social responsibility entails meeting the obligation to achieve a balance for all stakeholders within and outside the business.

When the significant parts of corporate social responsibility are considered, the issues generally pertain to economic, legal, ethical, and philanthropic considerations. The business duty of contributing to financial prosperity and operating within legal constraints has long been recognised. In recent years, the philanthropic and ethical components have received much attention. According to Margaret A. Stroup and Ralph L. Newbert, socially responsible businesses try to learn and anticipate society’s expectations, determine actions that will be perceived as socially responsible, and allocate resources accordingly to accomplish objectives in this area and measure up to expectations.

Pyramid of Corporate Social Responsibility

It is critical for a company’s success to identify and constantly evaluate any changes in social responsibility that consumers, employees, government regulations, rivals – and society in general – anticipate. According to Margaret Stroup and Ralph L. Newbert, there is growing acknowledgement that the long-term value of conducting business in a socially responsible manner surpasses the short-term costs for a company’s survival and competitive advantage. The industrialised world is more conscious of corporate social responsibility issues than the developing world. According to a survey of 1000 households, nearly 90% of respondents responded that when quality, service, and pricing are comparable among competitors, they are more likely to buy from a company with a sterling reputation for social responsibility.

Example: CSR Initiatives by Indian Companies

Aircel: Mobilises public opinion in partnership with WWF India for the ‘Save Our Tigers Initiative’

Coca-Cola India: Partners with government agencies and NGOs to combat water scarcity and depleting groundwater levels

Dabur India: Its initiative, SUNDESH, in UP and Uttrakhand, aims for the overall socio-economic development of the poor

Maruti Suzuki India: Runs employee volunteering programme, ‘e-Parivartan’, with NGO Literacy India, for teaching underprivileged people

Nasscom Foundation: Promotes development through use of information and communication technology, provides tech donations to NGOs

15.2.1 Social Responsibility Issues

Consumer Movement (Consumerism)

It refers to various initiatives by independent individuals, groups, and organisations to preserve consumer rights.

1. According to the Right to Safety, items must be safe for their intended use, and marketers must not advertise a product that could harm or injure customers deliberately. Marketers should have tested the product to guarantee its quality and dependability, and buyers should be given detailed and clear instructions.
2. The Right to Be Informed entails consumers’ freedom to access and review all information about a product or service before purchasing it. Companies must print thorough component information and usage directions (such as product labels, warnings, etc.) on product packages.
3. The Right to Choose refers to customers’ right to select and purchase a product or service at a reasonable price and to be assured of good quality and service at a reasonable price. Competition should develop without allowing a company to become so powerful that consumers cannot seek new, improved products or services.
4. The Right to Be Heard ensures that the government takes full and sympathetic consideration when drafting laws and regulations. It also guarantees that if a consumer has a complaint about a product or a marketer, they will be treated fairly.

This significant action by one country has raised awareness among developed and nearly all emerging economies. Consumers in most developing nations are becoming more aware that they, too, can have or have certain rights to protect themselves against deceit and injury caused by a marketer.

Ecological Concerns

Ecology studies the interactions between living creatures on Earth and their surroundings. The difficulties are related to our natural surroundings. Business leaders must take active actions to reduce the environmental impact of their activities. Rising air, water, and land contamination with toxic compounds such as chemicals, sewage, and rubbish is a critical issue today.

Manufacturing plants and the ever-increasing number of automobiles on the road pollute the air with carbon monoxide and other toxic compounds discharged into the atmosphere by burned fuel. As a result, everyone is compelled to breathe dirty air, even though stricter emission rules for automobiles have recently been established to control pollution generated by motor vehicles. Scientists have found that the ozone layer, which shields us from the sun’s harmful ultraviolet radiation, is depleting. Because of industrial waste, the land is becoming polluted.

Green Marketing

Green marketing entails creating environmentally friendly products and packaging to mitigate the harmful effects on the environment. This necessitates the conservation of natural resources and the control of pollution. Some global and domestic corporations have taken proactive measures in this regard. They create environmentally friendly product packaging and employ recycled materials. Todd L. Hooper and Bart T. Rocca believe that organisations that thrive at green marketing would profit from improved relationships with customers, regulatory authorities, suppliers, and other businesses in their industry.

For example, a Samsung refrigerator sold in India is labelled “CFC free.” Many more goods that claim to use recycled materials have hit the market. Many claims have been made about fuel-efficient cars and appliances. Consumers are becoming more aware of these issues and should opt to purchase eco-friendly items. Consumers convey their environmental concerns through market behaviour. As a result, the company must bear this in mind when developing a promotional strategy. Companies must make accurate environmental statements while promoting their products.

To be effective, a green marketing campaign must have top management commitment and a company atmosphere that encourages green marketing, rewards employees for decreasing waste, produces new environmentally friendly products, and makes them affordable to consumers.

15.2.2 Social Responsibility Issues – Indian Scene

Consumerism in India arose for reasons other than previously described by the United States. It arose as a reaction to adulteration, exorbitant prices for critical goods, and severe shortages of products, which were sometimes purposefully generated by producers or traders. In the past, producers and marketers were unconcerned about consumers, fooling them by offering dangerous or even counterfeit goods. In India, the Consumer Protection Act allows for the following:

1. The right to health and safety protection
2. The Right to Information
3. The Right to Be Heard
4. The right to improve one’s standard of living (Ecological concern)

Consumer Protection Act, 1986

In this Act, a consumer is defined as someone purchasing a product for personal use and if the buyer is different but enables someone else to use the product or service. If a person purchases a product or service with the intent of reselling it, he or she is not a customer. The Act’s aims include:

(1) promoting and safeguarding consumers, consumer movements, and their organisations;

(2) facilitating consumer education; and

(3) protecting consumers against commercial misconduct, notably that of traders.

Consumer Forums

The Act calls for the central and State Governments to form Consumer Protection Councils. Disputes are resolved at three levels: the District Forum, the State Commission, and the Consumer Dispute Redressal Commission (National level, established by the central government). Consumer Forums are obligated to provide reasons for their judgments to avoid arbitrariness and to assist higher Forums in determining the accuracy of the offered reasons.

If the consumer complaint is deemed valid, the opposing party may be granted an order to rectify the fault or replace the defective goods with a new one. The commission has the authority to force the withdrawal of an unsafe product and to compensate the party who has been harmed. The National Commission has authority over all State Commissions to check the institution, disposition, and quantum of pending cases regularly and to issue instructions on

(1) adopting uniform procedure in case hearings,

(2) copies of documents produced by opposing parties,

(3) quick grant of copies of documents, and

(4) generally monitoring the operation of State Commissions and District Forums.

Competition Policy

A proposal to repeal the Monopolies and Restrictive Trade Practices Act and disband the MRTP Commission, as well as a proposal to establish a new Competition Commission of India, has been submitted to the Government of India (CCI). The Competition Law should apply to all consumers who purchase goods or services, regardless of the reason for the purchase. Individuals, businesses, corporations, and Central or State Governments may file complaints with the Competition Commission alleging violations of Competition Law.

Corporate Responsibility Issues

Some of the more critical corporate social responsibility issues in India are anti-pollution measures, adopting villages to achieve progress and development, starting and funding family planning programmes, making efforts to provide clean drinking water facilities in backward areas, providing vocational training to unemployed educated people, providing educational healthcare sports facilities, and organising tournaments to promote sports talent. The top priorities are population control, education, rural development, and poverty eradication.

Evaluation Concerns of Special Interest Groups

Titan Industries, for example, grants scholarships to meritorious impoverished kids in Tamil Nadu for their education and vocational training. They also employ physically challenged individuals in Dehradun (UP) and Hosur (Karnataka) factories.

Otis India assists mentally impaired people and promotes sports for them. The company sponsored 350 exceptional athletes from Maharashtra in the World Special Olympics in 1995. The company also raises funding for the mentally retarded on its dime.

Larsen & Toubro, Bajaj Auto, Sriram Investments, Associated Cement Companies (ACC), Mafatlal Group, Escorts Ltd., Godrej, Kirloskar, Hindustan Steel, and Sahara India are some additional names worth noting in this regard. Such socially conscious businesses have significantly contributed to various social action programmes.