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Overview of Socially Responsible Marketingand Selected Issues of Interest to Stakeholders

Emmanuel Chéron, Ph.D.Professor of Marketing

SOPHIA UNIVERSITY

FACULTY OF COMPARATIVE CULTUREInternational Business/Economics

E-mail: j-cheron@sophia.ac.jphttp://www.geocities.com/wallstreet/market/4263

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Overview of Socially Responsible Marketingand Selected Issues of Interest to Stakeholders

Agenda• Review of social criticisms of marketing• Key socially sensitive areas of consumer behavior• Brief review of some of my previous research in the field

Decision process involved in large corporations to select sponsorship projectsFinancial services needs of low-income individuals: a comparative study in Canada

A Canadian survey on Environmental Marketing Management

• Discussion about the most sensitive social marketing issues in Japan

Social Criticisms of MarketingSocial Criticisms of Marketing

HighPrices

HighPrices

Shoddy or Unsafe

Products

Shoddy or Unsafe

Products

PoorService

PoorService

DeceptivePractices

DeceptivePractices

PlannedObsolescence

PlannedObsolescence

HighPressureSelling

HighPressureSelling

Marketing’s Impact on Individual Consumers

Acquisitionsof

Competitors

Acquisitionsof

Competitors

Marketing Practices

that Create Barriers

to Entry

Marketing Practices

that Create Barriers

to Entry

Unfair CompetitiveMarketing Practices

Unfair CompetitiveMarketing Practices

Critics Charge that a Company’s Marketing Practices Can Harm Other Companies and Reduce

Competition Through:

Marketing’s Impact on Other BusinessesMarketing’s Impact on Other Businesses

ConsumerismConsumerismThe Right to Be Safe The Right to Be Informed

The Right to Be Heard The Right to Choose

Basic Consumer Rights

PracticeProduct

Stewardship

PracticeProduct

Stewardship

PracticePollution

Prevention

PracticePollution

Prevention

Have a Sustainability

Vision

Have a Sustainability

Vision

Adopt Designsfor the

Environment

Adopt Designsfor the

Environment

Plan for New EnvironmentalTechnologies

Plan for New EnvironmentalTechnologies

EnvironmentalismEnvironmentalism

Societal Classification of ProductsSocietal Classification of Products

SalutaryProducts

DeficientProducts

DesirableProducts

PleasingProducts

Lo

ng

-Ru

n C

on

sum

er B

enef

it

Low High

Immediate Satisfaction

High

Low

Marketing Ethics

Marketing Ethics

Customer Service

Customer ServicePricingPricing

DistributorRelations

DistributorRelations

GeneralCode

GeneralCode

Product Development

Product Development

AdvertisingStandards

AdvertisingStandardsCorporate

MarketingEthics

Policies

CorporateMarketing

EthicsPolicies

Principles For Public Policy Toward MarketingPrinciples For Public Policy Toward Marketing

KeyPrinciples

for aPublic Policy

TowardMarketing

KeyPrinciples

for aPublic Policy

TowardMarketing

EconomicEfficiency

EconomicEfficiency

Meeting BasicNeeds

Meeting BasicNeeds

InnovationInnovation

Curbing PotentialHarm

Curbing PotentialHarm

ConsumerEducation

ConsumerEducation

Consumer Protection

Consumer Protection

Consumer andProducer Freedom

Consumer andProducer Freedom

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Key socially sensitive areas of consumer behavior

Deceptive advertising Children’s ability to

distinguish programs and ads

Improving children’s advertising

Negligent consumer behavior

Product misuse

Drivers of compulsive consumption

Corporate social responsibility

Why firms want to seem responsible

Consumer reactions to product recalls

Corporate rumors

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Introduction

Firms may engage in unscrupulous behavior.

Consumers also engage in negligent behavior.

Governments regulate buying and selling goods and services to reduce the harmful effects of these behaviors.

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Major Public Policy Issues

Deceptive advertising Advertising to children Telemarketing and Internet fraud

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Deceptive Advertising

An advertisement which is potentially misleading or literally false is deceptive.

Potentially misleading ads are difficult to evaluate because miscomprehension may often occur. Miscomprehension is a problem for firms because the

audience does not understand the message being delivered.

The FTC regulates deceptive advertising, but not miscomprehension.

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Advertising to Children Both policy makers and marketing managers have

reacted to criticism of advertising directed at children.

Some countries have banned advertising to children under 12.

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Telemarketing/Internet Fraud

The elderly are vulnerable to fraud by telemarketers.

A program to combat this fraud is the Know Fraud Program.

Organizations that fight telemarketing fraud are the AARP, the FBI, the Post Office, and others.

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Negligent Consumer Behavior Negligent behavior is composed of actions

and inactions that may negatively affect the long-term quality of life of individuals and society.

This type of behavior can occur in two different contexts: Product Misuse Consumption of Hazardous Products

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Product Misuse

Many injuries result from misuse of a safe product - not from product defects.

Using a cell phone while driving is being outlawed in some areas.

“The most dangerous component is the consumer, and there’s no way to recall him.”

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Consuming Hazardous Products Recently alcohol related accidents have declined.

The methods used to increase consumer awareness are: Informing and Education Social Controls Economic Incentives Economic Disincentives

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Compulsive Behavior

Some products are hazardous and consumption can become compulsive or addictive over time.

Other behaviors are not harmful in moderation but become addictive when they become compulsive. Smoking Compulsive Drinking Gambling Compulsive Shopping Other Compulsions

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Smoking in the US Consumers until the late 1960s were

exposed to nearly 3000 cigarette commercials per week of 38 different brands.

In 1950 there was already concern over the health hazards of cigarette smoking.

Smoking declined from the 1960s to 1992 but has held steady since then.

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Compulsive Drinking

As mentioned earlier, there has been a decline in alcohol-related deaths on the road. This suggests a decline in alcohol consumption.

Despite the decrease in sales of hard liquor, there is an increase in alcoholic soft drinks. These taste like colas or fruit juices but may contain

more alcohol than beer does.

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Gambling in the US

Gambling affects an estimated 8 to 12 million people.

Gambling takes place in casinos in Las Vegas, New Jersey, on river boats and elsewhere.

State-run lotteries make it easy to gamble by visiting a convenience store.

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Compulsive Shopping

Some consumers “shop till they drop” because shopping can become an addiction similar to alcohol or drugs.

There are drugs available to help relieve this compulsion.

Compulsive shopping may be hereditary.

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Other Compulsions

Overworking and overeating are some other compulsions.

Research has stressed sociological and psychological influences. Chemical imbalances may also be important.

Multiple compulsions may occur together.

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Corporate Social Responsibility

Firms have become viewed as responsible for more than generating profits.

“Corporate social responsibility” refers to the idea that firms have an obligation to help the larger society by offering some of their resources.

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Succeeding in the Long Run

A business’s self-interest could be advanced if the business embraced a long-run view.

This position would permit expenditures in support of socially responsible activities and provide future benefits in the form of consumer approval and loyalty.

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Acquiring a Positive Public Image

One way of showing that companies are socially responsible is by creating a positive public image.

Another way that firms can show they are socially responsible is by making speedy product recalls.

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The Diffusion of Rumors Public peace of mind can be corrupted by

diffusion of rumors. Rumors often plague both large and small

companies.

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Types of Rumors Pipe dream rumors represent wishful thinking on the

part of the circulators. The bogie rumor is a fear rumor that spooks the market

place. Self-fulfilling rumors are based on a perception of what

could happen in the future if something else were to occur.

In premeditated rumors individuals spread rumors that may help them financially or otherwise.

Spontaneous rumors arise when people seek explanations for unusual events.

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Avoiding Regulation

A final reason to act in a socially responsible manner is to avoid government regulation.

Most of the burden of social responsibility is on marketers. They can do best by following the strategies suggested, and maintaining a positive initial corporate image and responding quickly when difficulties arise.

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Managerial Implications Positioning. The concept of corporate social

responsibility has direct implications for the positioning of a company. Efforts to create a “good-citizen” image help to position a firm as one that puts customers first.

Environmental Analysis. A company’s actions must be in compliance with laws and regulation. A firm should be in a position to respond promptly if a

response is warranted: An “early-warning system” needs to be in place and functioning continuously.

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Implications continued… Research. Market research should be used to

determine how consumers view the company. Market research may also help determine whether

customers are using a firm’s product in a novel manner that may be unsafe.

Marketing Mix. Pricing, promotion, product development, and distribution should be socially responsible.

Segmentation. Some population segments are more concerned with issues of corporate social responsibility than are other segments.

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Decision process involved in corporate sponsorship projects

Study of the Sponsorship Decision Process in 16 large CanadianCorporationsMethod:• Qualitative and quantitative interviews• Post validation of the decision process• Check for convergence of decision processes and synthesis • Content analysis of annual reports and classification of sponsorship projectsIndustries involved:3 Oil companies 1 Brewery 1 Steel manufacturer 5 Food retailers1 Aircraft manufacturer 1 Tobacco company1 Information systems 2 Banks and 1 Insurance company

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Relative importance of objectives involved in corporate sponsorship projects

Philanthropic patronage objectives 3.53• Involvement in the community: 3.85• To meet our social responsibility: 3.62 • To offer a better quality of life: 3.08Commercial sponsoring objectives 3.03• To increase the company’s visibility: 3.83• A new way of doing promotion: 3.67• As a supplement to advertising: 3.54• To improve our corporate image: 3.45 …• To attract opinion leaders: 2.45• To entertain our suppliers: 2.30• To limit government regulation: 2.0Other objectives 2.86• Personal motives of top management • To obtain fiscal benefits: 2.28

(Degree of agreement on a scale of 1 to 4)

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Relative importance of criteria for selecting corporate sponsorship projects

Sources of revenue of the applicant organization 3.75Relevance of the amount requested 3.72Previous experience with the applicant organization 3.69Target market of the applicant organization 3.62Domain of activities of the applicant organization 3.58Budget of the project 3.50Mission of the applicant organization 3.45Other sources of funding 3.45Scope of the market of the applicant organization 3.38Management structure and expertise 3.23Specific use of requested funds 3.23Image and visibility of applicant organization 3.17Expertise of the project manager 3.08Comments of other donors 3.00Personal knowledge of applicant 2.83Importance of the cause promoted 2.72

(Degree of agreement on a scale of: 1 to 4)

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Roles, steps and activities involved in corporatesponsorship projects

Written request received

Preliminary screening

In depth analysis

Decision

Refusal Acceptance

Receiving Organization

Implementation

Evaluation of activity Discussion

Intention

1

Screening role

Evaluation

Costs/Benefits Analysis

Recommendation

Reception ofrequests andanalysis step

Evaluation of requests step

Advising andbargaining role

Advising role Execution role

1

Selection and

processingstep

Feedback and

evaluationof donation

Average number of participants involved: 3.92Average size of the selection committee if any: 4.60Average frequency of the committee meetings: once a month

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Classification of sponsorship projects

Philanthropic Philanthropic goalgoal

Marketing Marketing goalgoal

Type Pure philanthropy

Targeted philanthropy

Hybrid corporate citizen

Exploratory sponsoring

Pragmatic sponsoring

Industries Information systems

Public utilities

Steel

Aviation

Insurance

Oil (3)

Food I

Banks (2)

Financial Institutions (2)

Brewery

Tobacco

Food II

Unassisted objectives

Good corporate citizen

Community involvement

Community involvement

Quality of life of employees

Social responsibility

Image, visibility

Marketing tool

Business relationships

Community involvement

Marketing tool

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Low-Income Individuals:a Comparative Study in Canada

Car loan

Unemployed

25-34 yrs

Common law

Employed35-44 yrs

MortgageStocks

MarriedUniversity

Owners

Men

Singles

WomenCollege

RRSP

Higher income45-54 yrs

Mutual funds

BondsTerm deposits

65 yrs +

RetiredElementary

55-64 yrs

DivorcedHigh school

Credit l ine

Automatic savings

Low-income

Tenants

18-24 yrs old

: Financial products: Socio-economic and demographic variablesProportion of variance accounted for by dimension 1: 56.50 %Proportion of variance accounted for by dimension 2: 29.30 %http://www.geocities.com/WallStreet/Market/4263/ijbm98.doc

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1. Environmental overview  2. Review of mission, culture and values of company  3. Setting of environmental objectives  4. Development of the environmental plan    5. Parties involved and implementation Employees Suppliers Distributors Governments Pressure Board of

of the action plan groups directors

 

Environmental Audit

Environmental laws

Scientific knowledge

Social and environmental context

Environmental corporate policy

Environmental objectives

R & D Production Marketing Environment.

Public Relations

Action plan

General public

Environmental Marketing Management

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American Council on Consumer Interests Issues

1. Media issues: lack of factual information, stereotyping2. Product issues: no international standards for food, product recalls, warning labels, health claims3. Financial issues: identity theft, consumer debt, promotion of credit cards, financial products, online shopping4. Public policy issues: regulation of products (tobacco, alcohol, prescription drugs), control of big business5. Ethical issues: privacy, marketing to vulnerable audiences, sweatshop labor, effects of technology on consumers, CSR6. Counter marketing issues: effectiveness of programs to counter obesity, alcohol and tobacco usage, visibility of public services