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CORPORATE SOCIAL RESPONSIBILITY (CSR) AND

ETHICS IN MARKETING

 By

 Miss. P. PIRAKATHEESWARI, Lecturer in Commerce,

Sri Sarada College for Women (Autonomous), Salem – 16.

 Introduction

Kotler and Levy, in their book, Corporate Social Responsibility define corporate social responsibility as “a commitment to improve community well-being through discretionary business practices and contributions of corporate resources”.  Some of the benefits of being socially responsible include (a) enhanced company and brand image (b) easier to attract and retain employees (c) increased market share (d) lower operating costs and (e) easier to attract investors. A socially – responsible firm will care about customers, employees, suppliers, the local community, society, and the environment. CSR can be described as an approach by which a company (a) recognizes that its activities have a wide impact on the society and that development in society in turn supports the company to pursue its business successfully and (b) actively manages the economic, social, environmental and human rights. This approach is derived from the principles of sustainable development and good corporate governance. Marketing managers within different firms will see some social issues as more relevant than others. The relevance of a given social issue is determined by the company’s products, promotional efforts, and pricing and distribution policies but also by its philosophy of social responsibility.

• Focus entirely in profits (and profitable firms typically serve society well)
• Explicitly incorporate social responsibility into its day-today marketing decisions to minimize negative effects on society and enhance positive effects
• Go even further and engage in social projects that are unrelated to the corporate mission and even detrimental to profits ( which could net out to be socially undesirable)
• The Success strategies of a Business formed out of abundance and grounded in ethics and cooperation are powerful and long-lasting and they help you feel good about yourself even while bringing in profits ( Shel Horowitz)
• Management must decide which of these three levels of social responsibility to adopt and which social issues are relevant to its business.

Ethical Conflict faced by the Marketers

 Marketers must be aware of ethical standards and acceptable behavior. This awareness means that marketers must recognize the viewpoints of three key players: the company, the industry, and society. Since these three groups almost always have different needs and wants, ethical conflicts are likely to arise. Ethical conflicts in marketing arise in two contexts : First, when there is a difference between the needs of the three aforementioned groups ( the company, the industry, and society) a conflict may arise. Second and ethical conflict may arise when one’s personal values conflict with the organization. In either case, a conflict of interest is a possible outcome.

Ethical dilemmas facing marketing professionals today fall into one of three categories: tobacco and alcohol promoting, consumer privacy, and green marketing. Standards for ethical marketing guide business in efforts to do the right thing. Such standards have four functions: to help identify acceptable practices, foster internal control, avoid confusion, and facilitate a basis for discussion.

Consumerism

Consumerism is concerned with broadening the rights of consumers. The concepts of social responsibility and consumerism go hand-in-hand. If every organization practiced a high level of social responsibility the consumer movement might never have begun. Consumerism is a struggle for power between buyers and sellers; specifically, it is a social movement seeking to increase the rights and powers of buyers in relation to sellers.

Seller’s rights and powers are presented in the following list:  

• To introduce any product in any size and style they wish into the marketplace, so long as it is not hazardous to personal health or safety or if it is hazardous, to introduce it with the proper warnings and controls
• To price the product at any level they wish, provided there is no discrimination among similar classes of buyers
• To spend any amount of money they wish to promote the product, so long as the promotion is not defined as unfair competition
• To formulate any message they wish about the product provided that it is misleading or dishonest in content or execution
• To introduce any buying – incentive schemes they wish

 In contrast, here are buyers’ rights and power: 

• To refuse to buy a product that is offered to them
• To except the product to be safe
• To expect the product to essentially match how the seller represented it
• To receive adequate information about the product

It is in the best interest of marketers to understand the level of consumer standards and the nature of consumer perceptions, as well as what is required to foster realism and accuracy among consumers.

Marketing and the Natural Environment

Another significant area of social concern is the environment. Marketing is ultimately dependent on the use of scarce resources to fulfill human needs, without harming or unnecessarily using scare resources.  Marketing managers should help to determine which products are produced, and which products are indirectly affecting the environment:

• The natural resources and materials used
• The amount of energy required in the production process
• The residuals (e.g., waste water) that result from production
• The consumption of resources and energy that is required to use products ( cars, air conditioners)
• The generation of pollutants (e.g., exhaust fumes) in using products
• The amount of packaging material that may have to be discarded. (packaging comprises less than 14 percent of collectible solid waste, but consumers often estimate its share of that waste at 40 to 80 percent)

Relationship Marketing and Ethics

Nowadays, most ethicists believe that Relationship Marketing is a reasonable practice leading to positive relationships between buyers and sellers. Relationship marketing requires that rules are not necessarily contractual..

Relationship marketing allows buyers and sellers to work together. However, there are disadvantages to this approach- relationship marketing requires time to develop a list of expected conduct or “rules of behavior.” According to a recently published book on this subject, a shift in emphasis in marketing ethics – towards buyers interests and away from seller’s interests – characterizes the new country.

If this is true, new challenges are presented for marketing ethics and professionals in the field of marketing who want to conduct business in an ethical way.

Green Marketing and Ethical Issues

 

The next important area the marketer needs to know about what is the relevance of Social

Marketing in order to protect the environment and to improve the quality of life and are concerned with issues that include conservation of natural resources, reducing environmental pollution, protecting endangered species, and control of land use. The three Rs of environmentalism are Reduce, Reuse, and Recycle. Many companies are finding that consumers are willing to pay more for a green product. Toyota has become quite successful with their hybrid cars.

Green marketing refers to the development and distribution of ecologically-safe products.  It refers to products and packages that have one or more of the following characteristics: (1) are less toxic, (2) are more durable, (3) contain reusable materials, or (4) are made of recyclable material. In short, these are products considered “environmentally responsible”.

To sight an example One Canadian Executive stated that “Any marketing executive who does not put a ‘green’ filter on their strategies is looking at losing market share. The whole idea of disposal is going to become unacceptable”. In West Germany and Canada, Procter & Gamble has found high consumer acceptance of pouches of liquid detergents and fabric softeners so consumers can refill rather than discard large plastic bottles.

Cause – Related Marketing and Ethics

Cause-related marketing should not be confused with social marketing. A key difference is that a major purpose of cause-related marketing is to help a business. It might be used to improve the image of the firm or to increase market share. The technique involves associating a business with a cause. Social marketing, on the other hand, is generally not associated with any company and issued solely to help society by dealing with a social problem.  Cause-related marketing has to be done correctly or it can hurt a company. A firm may look like it is exploiting a charity. It is important for the firm to be transparent and honest about what it is doing. There should also be a fit between the company and the cause. A good fit would be, for example, might be a bottled water company and a cause, it deals with providing clean water for poor people in Asia and Africa.

Social Marketing and Ethics

Social Marketing is defined as the use of marketing principles and techniques to influence a target audience to voluntarily accept, reject, modify, or abandon a behaviour for the benefit of individuals, groups or society as a whole. Social marketing is usually done by a non-profit organization, government, or quasi-government agency. The goal is either to steer the public away from products that are harmful to them and / or society (e.g., illegal drugs, tobacco, alcohol, etc.) or to direct them towards behaviors or products that are helpful to them and / or society (e.g., having family meals, praying together, etc.).

Ethnic Marketing and Ethics

Another aspect the marketer has to know about Ethnic Issues while going for global marketing and still take care of Ethics. Culture plays an important role in defining ethical standards because dissimilar cultures socialize their people differently, according to what is acceptable behavior.

The potential significance of ethnic groups for marketing justifies inquiry into the moral judgments, standards, and rules of conduct exercised in marketing decisions and situations arising from decisions whether or not to focus on individual ethnic groups within an economy. Identifying and targeting ethnic groups for marketing purposes are tasks fraught with many ethical difficulties. In a multicultural society consisting of a dominant group and many diverse, minority groups defined by ethnicity, these problems can be expected to increase substantially. Consequently, marketers may include minority ethnic consumers in their mainstream marketing programs. In itself, this has ethical consequences. Alternatively, if marketers seek to target individual minority ethnic groups within the same economy a further set of ethical consequences needs to be considered.

The international environment is recognized as attracting more difficulties for marketers because their “ethics” parameters may not match the notion of “good” in the foreign country where they wish to operate. This is a problem because it may compromise successful international market penetration, that is, a firm’s ability to compete in the international market. To the extent that international operations are part of an overall competitive strategy (either because of a firm’s need to have a presence where its main customers operate, or because the firm must/needs to follow its competitors) this also can influence a firm’s ultimate survival in its domestic market. Ethical concerns are thus clearly important both in the parent country and also in the host country..

One possible approach to ethnic marketing ethics within one country, understood as ethics applied to marketing practice targeting minority ethnic groups, is to apply the same procedures that firms use to deal with ethics problems in the international context.  Ethnic minority consumers, particularly in their first time of settlement in a new country, may be inexperienced in relation to what is available, where, and for how much, as well as being unaware of market dos and don’ts. This justifies their possible reliance on referral or recommendation by others they trust, eventually their minority ethnic group of affiliation, particularly when communication difficulties limit the number and range of accessible secondary sources. Within such a scenario, ethnic minority consumers may be perceived as disadvantaged because they are arguably more vulnerable to be taken advantage of through deceptive practices.

Targeting of minority ethnic consumers with ethically unsound strategies may lead to alienation of the ethnic markets. Careful consideration needs to be exercised before ethnic marketing strategies are developed and implemented.

Ethical Norms and Values for Marketers

Professional associations and accrediting bodies have identified guidelines for ethics in marketing. According to one of those associations, the American Marketing Association, the following rules guide marketing behavior. The American Marketing Association commits itself to promoting the highest standard of professional ethical norms and values for its members. Norms are established standards of conduct that are expected and maintained by society and / or professional organizations. Values represent the collective conception of what people find desirable, important and morally proper. Values serve as the criteria for evaluating the actions of others. Marketing practitioners must recognize that they not only serve their enterprises but also act as stewards of society in creating, facilitating and executing the efficient and effective transactions that are part of the greater economy. In this role Marketers should embrace the highest ethical norms of practicing professionals and the ethical values implied by their responsibility toward stakeholders (e.g., customers, employees, investors, channel members, regulators and the host community).

1. Responsibility of the marketer. Marketers must accept responsibility for the consequences of their activities and make every effort to ensure that their decisions, recommendations, and actions function to identify, serve, and satisfy all relevant publics: customers, organizations and society
2. Honesty, Integrity and Quality are far more important than quick profits
3. Rights and duties in the marketing exchange process: – Participants should be able to expect that products and services are safe and fit for intended uses; that communications about offered products and services are not deceptive; that all parties intend to discharge their obligations, financial and otherwise, in good faith; and that appropriate internal methods exist for equitable adjustment and / or redress of grievances concerning purchases
4. Organizational relationships: – Marketers should be aware of how their behavior influences the behavior of others in organizational relationships. They should not demand, encourage, or apply coercion to encourage unethical behavior in their relationships with others.
5. Conduct your business so as to build long term loyalty. When you get a customer, you want to keep that customer and build a sales relationship that can not only last years, but also create a stream of referral business.
6. Marketers must do no harm. This means doing work for which they are appropriately trained or experienced so that they can actively add value to their organizations and customers. It also means adhering to all applicable laws and regulations and embodying high ethical standards in the choices they make.
7. Marketers must foster trust in the marketing system. This means that products are appropriate for their intended and promoted uses. It requires that marketing communications about goods and services are not intentionally deceptive or misleading. It suggests building relationships that provide for the equitable adjustment and / or redress of customer grievances. It implies striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process.
8. Marketers must embrace, communicate and practice the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system. These basic values are intentionally aspiration and include honesty, responsibility, fairness, respect, openness and citizenship.

Education and Ethics

Ethics and values become an important concern in the US in the 80′s. In US there are about 500 courses offered in the field of Ethics by various universities. Hayward Business School earmarked USD 30 Million in 1987 to focus on teaching Business ethics to MBAs. In India AICTE (The All India Council for Technical Education) recommended the inclusion of Business ethics as a course in MBA curriculum in 1995. The aim of teaching Ethics or Ethics in marketing particular is to provide the budding marketing managers / managers to

a)      Share knowledge, build skills and develop minds of the young entrepreneurial managers of tomorrow

b)      To provide and clarify and insights into concepts of business so that young managers avoid business misconduct, when they really go and conduct the business.

c)      To create High level of integrity moral and social awareness so that they can decide when faced with business dilemma.

IIM Lucknow has started a course that seeks to provide students with an understanding of changing relationship between business and environmental management. The budding managers should be imparted with the knowledge of social responsibility and ethics. IIM-C is already having a Management centre for Human Values, and they are publishing a journal on Human values. They are also offering a course on Ethics and Values in Business.

Role of Social Responsibility in Indian companies

In a global CSR study undertaken in 7 countries (viz. India, South Korea, Thailand, Singapore, Malaysia, The Philippines and Indonesia) by the U.K. based International Centre for CSR in 2003, India has been ranked second in the list. This ideally shows the value that is important to customers in India. Bharat Petroleum and Maruthi Udyog have been ranked as the best companies in the country. The next comes in the list are Tata Motors and Hero Honda. Canara Bank, Indal, Gujarat Ambuja and Wipro are involved in community development work of building roads, running schools and hospitals. ACC has been rendering social service for over Five decades. They are setting up schools, health centers, agro-based industries and improving the quality of rural life. BHEL is actively involved in the Welfare of the surrounding communities is helping the organization to earn good will of the local people BHEL is also providing drinking water facilities, construction of roads and culverts, provision of health facilities, educational facilities, and so on companies like ONGCs are encouraging sports by placing good players on their pay rolls. TISCO, TELCO and HINDALCO won the award for excelling in CSR, jointly given by FICCI and Business world for the 2003.

ONGC has also committed resources by adopting a few villages to implement President Dr. Abdul Kalam’s idea of PURA (Provision of Urban Amenities in Rural Areas). NTPC has established a trust to work for the cause of the physically challenged people. Similarly in the private sectors like Infosys, Wipro and Reliance are believed to be most socially responsible corporations.

In 1999 Kofi Annan of the United Nations invited corporate leaders for a Global Compact to promote nine principles covering three areas: human rights, labor rights, and sustainable development. Today, India can be legitimately proud to have had the second largest number of companies from any country subscribing to the Global Compact. Several public sector companies have joined together to form the Global Compact Society of India.

Conclusion

Several forces are driving companies to practice a higher level of corporate social responsibility: rising customer expectations, changing employee expectations, government legislation and pressure, the inclusion of social criteria by investors, and changing business procurement practices. Companies need to evaluate whether they are truly practicing ethical and socially responsible marketing. Business success and continually satisfying the customer and other stakeholders are closely tied to adoption and implementation of high standards of business and marketing conduct. The most admired companies in the world abide by a code of serving people’s interests, not only their own. The following are the suggestions that the society must use the law to define, as clearly as possible, those practices that are illegal, anti-social, or anticompetitive. Next, companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold its people fully responsible for observing ethical and legal guidelines. And, individual marketers must practice a “social conscience” in their specific dealings with customers and various stakeholders.

NFC is a wireless technology that communicates wirelessly in both directions over a short range between two devices. NFD can used in many fields such as purchasing goods or ticketing information, according to Radio Frequency Identification RFID technology, The potential of services such as NFC are attracting business and consumer attention.
NFC has an advantage in usabilty and security over blue tooth even if their maximum speeds are slower. Near Field Communications is a wireless technology that operates over short distances; devices can implement this technology to permit an user to, for example, store credits to be used to securely and instantly pay for public transport, eliminating inconvenient additional steps. In addition, NFC uses less power than Bluetooth and can work when one of the devices is off.
NFC has the potential to integrate a wide spectrum of devices due to it’s flexibility. NFC provides reliably secure and fast transactions for transport, electronic identification and access control. At the cutting edge of technology, our fobs can be found in phones, devices and PC peripherals. Since it requires a mobile, it is likely that Near Field Communications will become common in the market.

With more than 4 billion mobile devices on the market, NFC has not even approached its full potential. But, while the important barriers to growth still remain the same, the mobile industry is working together to address them and move NFC from the pilot stage to full scale commercial roll-outs. By the year 2014, one sixth of mobile phone users will have NFC-enabled units that will enable them to conduct small-scale transactions, according to the estimations of industry analysts at Juniper Research.
Collaboration between various players from different sectors of the mobile ecosystem is needed to make NFC an essential requirement of our everyday lives.

There must be partnerships between mobile operators, manufacturers, service providers and third parties. NFC has partnerships with Banka Koper, Mastercard Europe and Mobitel in Slovenia. There subscribers can pay for things by a simple tap.
Many businesses. like Sagem Wireless, are dedicated to leading the field in developing new devices that use Near Field Communications. Sagem Wireless is using NFC to give retirees more freedom in their transactions. As an example, NFC is used by the phone to enable simple calling as well as to allow access to data services by permitting users to wave their Cosyphone past shortcut cards that are pre-configured and customized in order to call friends and family, or services like doctors and grocery shopping.
Customized Cards for a calender or diary is another option available to users. Waving the device past the cards can send personalized texts, like happy birthday or happy anniversary.
Without the backing of other major interests in this field, the implementation
of the NFC may no be able to move forward. NFC needs mobile network operators since technology is creating new connected services, therefore enabling new revenue streams to be accessed though the mobile network.
NFC services are more likely to grow with the support of mobile operators.
Equally important are banks and credit card companies who want to deliver the expected levels of security for simple but suitable payment transactions using NFC.

Despite the hurdles to widespread acceptance of NFC in connected devices, 2010 was a key milestone to determine the future industry leaders in mobile network operators, device manufacturers and service providers.

With the emergence of Near Field Communications, there are new things pertaining to mobile devices that need to be learned. The expansion of the Smartphone has caused the public to want more mobile data services. At the same instance, monetising mobile usage through new products and services has become a core market driver, and lifestyle brands and mobile operators alike are seeing the revenue potential of creating devices which can drive m-commerce and data usage. Through personalized services which target the specific needs of different communities, this company is looking to reclaim their audience from the Smartphone and generic App store and to develop their own pricing structure by offering connected lifestyle devices and benefits.
NFC is a technological revolution that makes brands and operators to have a connection with their target communities through these new services.
Near Field Communications enabled mobile devices have the potential to transform the way we pay for goods and services and are an integral part of our connected lifestyles.
NFC has been a pioneer in contactless ticketing pilots across the globe. The convenience of making payments over the mobile phone has caught the fancy of the users.

Trials in some European nations have found that NFC devices improve the “smart” card experience. NFC enables its users to do much more than just touching in and touching out, they can also check and modify their balance, and retrieve travel information
Payment methods: There are other options for NFC enabled cell users to pay their monthly bill. The NFC device can handle multiple credit and debit cards, giving the user access to a wider range of payment options. Obviously, for the “virtual wallet” to be fully accepted, stores, restaurants, bars and other merchants must gradually adopt new payment devices that support NFC. Global events like the 2012 London Olympics can kick-start this process, by having plans like smart tickets for the Olympic Games, which can create a contactless payment and help to make the Olympic Village cashless.

Juniper Research say that while the Asian market is already established in making contactless payments, by 2014 these services will take off in North America and Europe as well, totaling $110 million. Trials at Disneyland Paris (France) and Australia’s Telstra have been a success.
We want to share our mobile devices which are packed with photos, videos, games and other content. The users can access the music, videos and pictures simply at their fingertips, thanks to the NFC technology. All levels of society will find this useful: from kids sharing videos to video-conferencing in the boardroom.

By creating posters and promotional materials ,which are NFC compatible, marketing and advertising industries are being changed by NFC. When end users see posters that have products peaking their interests advertised on them, they will be able to whip out their phone and download information for their use and to send to their friends. By sharing data with each other, marketers can reward their customers for answering about their personal preferences.

An example of this would be working with the art musuem, the Centre Pompidou, in Paris. The project is called Smart Muse. When visitors wave Sagem Wireless NFC-enabled mobile phones at exhibits that have NFC tags, the visitor can get details on the artist and his work, see videos and hear interviews. Social networking sites such as Facebook will allow users to share information and opinions about the exhibit. The system will be launched to coincide with the new Teen Gallery’s which will make an entry later this year.
At the same time, Nice, a city located in southern France, will have the distinction of becoming the first city to widely use NFC technology, including the implementation of an NFC tour guide of its historic old city center. The Smart Muse project, funded by a grant from France’s Ministry of Economy, provides tags and contextualized-location and time-based-content management systems.
There are no limits in site when it comes to NFC technology. With the continuing development of infrastructure, more apps will be created as technology improves. As the number of NFC users increases, mare applications will arise.

Near Field Communications supports multiple transactions on handsets with the first applications being implemented in the transportation sector. Pilot programs across the world have all yielded positive results. With more and more NFC compatible devices being launched by device manufacturers, mobile operators and service providers need to work closely to put in place the infrastructure that will facilitate and drive rollout of the technology.