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MKTG 3015

Socially Responsible Marketing

Seminar 1. Introduction

Dr. Tracy Zhang


Objectives
Through this seminar, we will have an overview of

Contributions and Negative Impacts of Marketing


Social Criticism of Marketing
Introduction to the Course
Recap: What is Marketing?
American Marketing Association:
Marketing is an organizational function and a set of
processes for creating, communicating, and delivering
value to customers and for managing customer relationship
in ways that benefit the organization and its stakeholders.

3
Recap: The Diverse Factors Influencing
Marketing Activities

4
Marketing and Society
So, Marketing is subject to a wide range of expectations since it has large influences
on the society
Legal &
Governmental
Regulations

Business/Industry
Norms & Social Norms
Regulations &
Marketing
Expectations
Practices
Marketings Contributions: Economic System
Employment and personal incomes
Freedom of Choice in consumption
Delivery of a standard of living
Assistance in infrastructure development
e.g., transportation, communications, financial sector
Mass-market efficiencies
i.e., lower costs, lower prices
Diffusion of innovations
Marketings Contributions: Quality of Life
Some examples of social / psychological benefits created for
consumers:
Bonding
Socializing
Accomplishment
Prestige and Status
Control
Excitement
Pleasure
Negative Impacts on Individual Consumers
1. High price
High cost of distribution
Greedy intermediaries mark up price beyond the value of service
High advertising and promotion costs (e.g., infant formula)
Pushing up prices to finance heavy advertising and sales
promotion; much of the promotion adds only psychological value
to the product rather than functional value
Excessive mark-ups
Mark up goods excessively
Negative Impacts on Individual Consumers
2. Deceptive practices: lead consumers to believe they get more value than
they actually do

Deceptive pricing
Falsely advertising factory price
Deceptive promotion
Misrepresent products feature
i.e., Skechers Shape up while you walk ($45 million settlement)
Deceptive packaging
Exaggerate package content through subtle design
i.e., P&G -- Olay skincare products ($850,000settlement); toilet paper
Negative Impacts on Individual Consumers
3. High-pressure selling: salespeople persuade people to buy
things they had no thought of buying
4. Shoddy, harmful, or unsafe product
Concern about poor product quality or function
Products are not made well and services are not performed well
Many products deliver little benefits, or even be harmful
Negative Impacts on Individual Consumers
5. Planned obsolescence
e.g., cannibalization: McintoshIpadIPhone6
Is it good?
6. Poor product / service to disadvantaged consumers
A classical case - Nestle boycott:
The Nestle boycott is a boycott launched on July 4, 1977, in US against Nestle corporation
The promotion of infant formula over breast-feeding has led to health problems and deaths among
infants in less economically developed countries, since the breast milk has many natural benefits
lacking in formula and mothers in those developing countries have insufficient nutrition
knowledge. The case was dropped in 1984.
Negative Impact on Other Business
Critics also charge that a companys marketing practices can harm other companies
and reduce competition
Acquisitions of competitors
Marketing practices that create barriers to entry
Unfair competitive marketing practices
Negative Impact on Other Business
1. Acquisitions of competitors
Firms are harmed and competition reduced when companies expand by acquiring
competitors rather than developing their own new products
Over the past decades, within many major industries, the number of major
competitors is shrinking
e.g., retailing, entertainment, financial services, utilities, transportation, automobiles,
telecommunications and health care industries
Negative Impact on Other Business
2. Marketing practices that create barriers to entry
Large companies can use patents and heavy promotion
spending, and they can tie up suppliers or dealers to
keep out or drive out competitors

3. Unfair competitive marketing practices


Some companies set their prices below the costs, threaten to cut off business with
suppliers, or discourage the buying of competitors product with intention of hurting
or destroying firms
Negative Impact on Society
1. False wants and too much materialism
greedy is good: shop till you drop
Marketing is seen as creating false wants that benefit industry more than they benefit
consumers
However, on a deeper level, our wants and values
are influenced not only by marketers, but also by family,
peer, religion, and cultural background
Example: UA Finance/Prime credit-- Borrow money to purchase;
Negative Impact on Society
2. Too few social goods
Overselling private goods (e.g., cars, mobile phones) at the expense of public goods
e.g., overselling of cars at the expense of highways and parking spaces
The overselling of private goods results in social costs
e.g., overselling of cars results in traffic congestion, air pollution and gasoline shortage

Who should bear the social costs?


Government/Producers/Consumers?
Negative Impact on Society
3. Too much political power
Advertisers are accused of holding too much power over the mass media, limiting
media freedom to report independently and objectively
Regulators try to balance the interests of big business against those of the public, but
big corporations usually lobby immensely against regulations
Government contracts are often given out to corporations which have spent
significant amount of money in lobbying (e.g., Boeing).
Lobbying can get corporations increased access to information and allow for them to
take advantage of opportunities which those without access would miss
(e.g., JP Morgan execs being briefed about the impending bailouts).
(source: WOLF PAC)
Negative Impact on Society
4. Cultural pollution
Our senses are being constantly assaulted by marketing and advertising
e.g., pages of ads obscure magazines, billboards in front of beautiful scenery
Marketers arguments:
Mass-communication made ads to reach people who have no interest in the product and are
therefore annoyed (i.e., mismatch of channels and target audiences)
Ads make much of television and radio free to users and keep down the costs of magazines
and newspaper
Marketing and Society
Marketing is subject to a wide range of expectations since it has large influences on
the society
Legal &
Irresponsible marketing practices bring Governmental
negative influences to everyone Regulations

Business/Industry
Norms & Social Norms
Regulations &
Marketing
Expectations
Practices

So how we can use marketing techniques to make positive social impacts?


Social Responsibility
Recognizing the societal role of the business
When examining social responsibilities in the marketing process, it is important not
to look only through marketers perspectives, but to consider the roles of consumers,
business and government as a whole
Course introduction
By the end of this course, you will:
Be able to judge whether a marketing action is socially responsible
Give practical advice on improving social responsibilities of existing marketing
campaigns
Understand the concerns others may have on marketing practices

Even better,
Come to see yourselves as future marketers who are endowed with certain social
responsibilities
Decide to consider social responsibilities in your professional and personal actions
The Format of This Course
Lectures and discussion: Understanding social responsibility concerns in marketing
practices
Workshops: Using marketing knowledge and skills to make positive impacts
Guest lectures: keeping abreast of industry practices and industry experts views
Preview of Lecture 2
Lecture 2: CSR initiatives
Organizations nowadays are increasingly encouraged to consider the social and environmental
consequences of their actions for all parties in society. People argue that a firm has obligations
to act in a socially responsible way. Then what are the popular corporate social responsibility
initiatives in business world nowadays? Which are most relevant to marketing practices? We
will discuss several marketing-related CSR initiatives.