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PUBLIC POLICY, ETHICS, AND SOCIAL RESPONSIBILITY

STAKEHOLDERS
include those who have a personal interest in the organization's products, its outcomes, its operations, or the environment in which it operates.  These might also be called constituencies.

Stakeholders include not only the people who own the organization, but anyone who is in some way affected by it.  This can include customers, product users, employees, the local community, or anyone in society who is affected by the actions of the organization. 

Recall that with a marketing orientation, an organization strives to do a better job of meeting prospective buyer needs than competitors.  In many cases, however, this isn't enough to remain in business.  An organization that is a bad citizen in the local community, for example, might ultimately face zoning or other regulatory inflexibilities that affect its profitability or its ability to compete effectively.  Holding a societal orientation, or acting in a way that is socially responsible, is often necessary.

Ethics have to do with a marketer's standards of conduct from the perception of stakeholders or constituencies. 

Corporate social responsibility is the idea that business has an obligation to help society with its problems by offering some of businessís resources.  In being socially responsible, an organization should consider the following factors:

  • Philanthropic: be a good citizen
  • Ethical: do what is right, avoid harm
  • Legal: play by societyís rules
  • Economic: be profitable


CONSUMERISM
an organized movement to improve the rights and power of buyers in relation to sellers

e.g., in the U.S.:

  • Consumer's Union
  • Nader's Raiders

paradox:
Consumer activism resulted in auto safety concerns, and, eventually, in auto safety legislation.  One of Lee Iacocca's (few) product failures, however, was the launch of an automobile with seat belts, padded dash, etc. when he worked for Ford in the 1950s.  Automobile buyers didn't want to be reminded that a car was unsafe, and so a car that was promoted on safety was a marketing flop.  Contrast this with his successful Mustang, attacked by consumer groups as an unsafe car. 

The answer to this problem lies in public policy. In absence of auto safety laws, marketers have no incentive to produce safe products if safety results in higher prices than those of competitors but no additional sales.  If government laws require that all manufacturers provide specific safety features, then all manufacturers are on an equal footing.

Consider the more recent passage of improved labeling laws in the U.S.  If one seller labels its food products as "low in fat," then competing products with the same fat content will be at a disadvantage if they do not also label their products as such.  Without a common definition of "low fat" by an industry organization or a government body, marketers who would personally hold a more rigorous definition would be at a competitive disadvantage.  Public policy, set by either an agreement between manufacturers or set as a governmental law, creates an even playing field for all competitors and can additionally ensure that consumers know that they are not being deceived.

Note that public policy can be set by a government agency in the form of laws or by members of an industry:

  • Regulation occurs at federal, state, and local levels.
  • Regulation can also occur within non-government agencies (industry self regulation)
    - e.g., Better Business Bureau, National Advertising Review Board.


CONSUMER BILL OF RIGHTS
drafted by President Kennedy, it proposes that consumers have the:

  • right to safety
  • right to be informed
  • right to choose
  • right to be heard

Right to Safety

  • the right to be protected against goods and services that are hazardous to health and life

Right to be Informed

  • the right to be protected against fraudulent, deceitful, or misleading advertising or other practices and

  • the right to be given the facts they need to make an informed choice

Right to Choose

  • the right to be assured, whenever possible, access to a variety of goods and services at competitive prices.

  • In those industries in which competition is not workable, government regulation is substituted to ensure satisfactory quality and service at fair prices.

Right to be Heard

  • the right to be assured that consumer interests will receive
  • full and sympathetic consideration in the formulation of government policy and
  • fair and expeditious treatment in its administrative tribunals

Many consumer laws in the U.S. have been guided by these rights.  Note, however, that this is a philosophical statement driven by culture.  For example, not all cultures would agree that advertising for political candidates is something that is good, and is, therefore, a fundamental consumer right in providing information.  Importantly, not all cultures agree that consumers should have a right to choose.  Choice, in the form of multiple suppliers of the same product, can be seen as inefficient.

Public policy, then, is necessarily different in different cultures.


PUBLIC POLICY
goal is to have a marketing-consumer environment that is efficient but fair for marketers and consumers alike

i.e., put all competitors on an even playing field and to ensure that the market is fair for buyers

Some legislation in the U.S. that is relevant to marketers:

  • Sherman Antitrust Act (1890)
    prevents businesses from restraining trade and monopolizing markets
    - e.g., competitors cannot fix prices

  • Clayton Act (1914)
    prohibits specific practices that might decrease competition
    - e.g., prohibits exclusive dealer arrangements

  • Federal Trade Commission Act (1914)
    established the Federal Trade Commission (FTC; theFTC regulates many marketing practices including antitrust regulation and consumer protection

  • Wheeler-Lea Act (1938)
    outlaws unfair and deceptive acts or practices
    - e.g., prohibits false or misleading advertising

  • Robinson-Patman Act (1936)
    prohibits pricing or services on terms not offered equally to all purchasers
    - e.g., prohibits arbitrarily charging one price to one customer but a lower price to another customer unless the lower price is justified by, for example, lowered costs of doing business with that customer

  • Nutrition Labeling and Education Act (1990)
    requires food manufacturers to provide certain kinds of information on food labels

  • Children's Online Privacy Protection Act
    empowers the FTC to set rules regarding how and when marketers obtain parental permission before asking marketing research questions to children


Regulatory Environment
laws and regulations that federal, state, and local governments develop to exert control over business practices.

Making laws is "setting public policy."


SOME PUBLIC POLICY ISSUES

deceptive advertising
an ad which has the capacity to deceive a measurable proportion of the public.

advertising substantiation
FTC idea that companies must provide evidence for the truth of their claims

corrective advertising
advertising that is mandated by a federal agency (U.S.) to correct consumer impressions that were formed by previously misleading (deceptive or unsubstantiated) advertising


edited 13 JUN 05