Social Mk Tg
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Overview of Socially Responsible Marketing and Selected Issues of Interest to Stakeholders Emmanuel Chéron, Ph.D. Professor of Marketing SOPHIA UNIVERSITY FACULTY OF COMPARATIVE CULTURE International Business/Economics
E-mail: [email protected] http://www.geocities.com/wallstreet/market/4263
1
Overview of Socially Responsible Marketing and 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 projects Financial 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 2
Social Criticisms of Marketing High Prices Poor Service
Planned Obsolescence
Marketing’s Impact on Individual Consumers Shoddy or Unsafe Products
Deceptive Practices High Pressure Selling
Marketing’s Impact on Other Businesses Critics Charge that a Company’s Marketing Practices Can Harm Other Companies and Reduce Competition Through: Acquisitions of Competitors
Marketing Practices that Create Barriers to Entry Unfair Competitive Marketing Practices
Consumeris m The Right to Be Safe The Right to Be Informed
Basic Consumer Rights
The Right to Be Heard
The Right to Choose
Environmentalism Practice Pollution Prevention
Practice Product Stewardship
Adopt Designs for the Environment
Have a Sustainability Vision Plan for New Environmental Technologies
Long-Run Consumer Benefit
Societal Classification of Products Immediate Satisfaction Low High
Low
High
Salutary Products
Desirable Products
Deficient Products
Pleasing Products
Marketing Ethics Product Development
Distributor Relations Corporate
Advertising Standards
Marketing Ethics Policies Pricing
General Code
Customer Service
Principles For Public Policy Toward Marketing Consumer and Producer Freedom Curbing Potential Harm
Key Principles for a Public Policy Toward Marketing
Meeting Basic Needs Economic Efficiency Innovation Consumer Education Consumer Protection
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 10
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.
11
Major Public Policy Issues
Deceptive advertising Advertising to children Telemarketing and Internet fraud
12
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. 13
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.
14
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. 15
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 16
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.”
17
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
18
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 19
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. 20
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.
21
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.
22
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.
23
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. 24
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.
25
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.
26
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.
27
The Diffusion of Rumors
Public peace of mind can be corrupted by diffusion of rumors. Rumors often plague both large and small companies.
28
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 29 explanations for unusual events.
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.
30
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. 31
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. 32
Decision process involved in corporate sponsorship projects Study of the Sponsorship Decision Process in 16 large Canadian Corporations Method: • 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 projects Industries involved: 3 Oil companies 1 Brewery 1 Steel manufacturer 5 Food retailers 1 Aircraft manufacturer 1 Tobacco company 1 Information systems 2 Banks and 1 Insurance company 33
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: 3.08 Commercial 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 (Degree of agreement … on a scale of 1 to 4) • To attract opinion leaders: 2.45 • To entertain our suppliers: 2.30 • To limit government regulation: 2.0 Other objectives 2.86 • Personal motives of top management • To obtain fiscal benefits: 2.28 34
Relative importance of criteria for selecting corporate sponsorship projects
(Degree of agreement on a scale of: 1 to 4)
Sources of revenue of the applicant organization Relevance of the amount requested Previous experience with the applicant organization Target market of the applicant organization Domain of activities of the applicant organization Budget of the project Mission of the applicant organization Other sources of funding Scope of the market of the applicant organization Management structure and expertise Specific use of requested funds Image and visibility of applicant organization Expertise of the project manager Comments of other donors Personal knowledge of applicant Importance of the cause promoted
3.75 3.72 3.69 3.62 3.58 3.50 3.45 3.45 3.38 3.23 3.23 3.17 3.08 3.00 2.83 2.72
35
Roles, steps and activities involved in corporate sponsorship projects 1
Screening role Reception of requests and analysis step
Written request received
Intention
Preliminary screening
Decision
In depth analysis
Refusal
Evaluation
Advising and bargaining role Acceptance
Receiving Organization
Evaluation of requests step
Costs/Benefits Analysis
Advising role
Recommendation
Implementation
Discussion 1
Execution role Evaluation of activity
Average number of participants involved: 3.92 Average size of the selection committee if any: 4.60 Average frequency of the committee meetings: once a month
Selection and processing step
Feedback and evaluation of donation
36
Classification of sponsorship projects Philanthropic goal
Marketing goal
Type
Pure philanthropy
Targeted Hybrid philanthropy 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
37
Low-Income Individuals: a Comparative Study in Canada 18-24 yrs old T enants Unemployed Car loan
Low-income Singles Automatic savings
65 yrs + Retired
25-34 yrs
High school Common law Cre dit line Divorced Bonds Women Employed Te rm de posits College 35-44 yrs Higher income Men University 45-54 yrs Mutual funds Married RRSP Elementary Owners Mortgage Stocks 55-64 yrs
: Financial products : Socio-economic and demographic variables Proportion 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 %
38
Environmental Marketing Management 1. Environmental overview
Environmental Audit
2. Review of mission, culture and values of company
Scientific knowledge
Social and environmental context
Environmental corporate policy
3. Setting of environmental objectives 4. Development of the environmental plan
Environmental laws
Environmental objectives
R&D
Production
Marketing
Environment.
Public Relations
Action plan
5. Parties involved and implementation of the action plan
Employees Suppliers Distributors Governments Pressure groups
Board of directors
General public
39
American Council on Consumer Interests Issues 1. Media issues: lack of factual information, stereotyping 2. Product issues: no international standards for food, product recalls, warning labels, health claims 3. Financial issues: identity theft, consumer debt, promotion of credit cards, financial products, online shopping 4. Public policy issues: regulation of products (tobacco, alcohol, prescription drugs), control of big business 5. Ethical issues: privacy, marketing to vulnerable audiences, sweatshop labor, effects of technology on consumers, CSR 6. Counter marketing issues: effectiveness of programs to counter obesity, alcohol and tobacco usage, visibility of public services 40
E-mail: [email protected] http://www.geocities.com/wallstreet/market/4263
1
Overview of Socially Responsible Marketing and 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 projects Financial 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 2
Social Criticisms of Marketing High Prices Poor Service
Planned Obsolescence
Marketing’s Impact on Individual Consumers Shoddy or Unsafe Products
Deceptive Practices High Pressure Selling
Marketing’s Impact on Other Businesses Critics Charge that a Company’s Marketing Practices Can Harm Other Companies and Reduce Competition Through: Acquisitions of Competitors
Marketing Practices that Create Barriers to Entry Unfair Competitive Marketing Practices
Consumeris m The Right to Be Safe The Right to Be Informed
Basic Consumer Rights
The Right to Be Heard
The Right to Choose
Environmentalism Practice Pollution Prevention
Practice Product Stewardship
Adopt Designs for the Environment
Have a Sustainability Vision Plan for New Environmental Technologies
Long-Run Consumer Benefit
Societal Classification of Products Immediate Satisfaction Low High
Low
High
Salutary Products
Desirable Products
Deficient Products
Pleasing Products
Marketing Ethics Product Development
Distributor Relations Corporate
Advertising Standards
Marketing Ethics Policies Pricing
General Code
Customer Service
Principles For Public Policy Toward Marketing Consumer and Producer Freedom Curbing Potential Harm
Key Principles for a Public Policy Toward Marketing
Meeting Basic Needs Economic Efficiency Innovation Consumer Education Consumer Protection
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 10
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.
11
Major Public Policy Issues
Deceptive advertising Advertising to children Telemarketing and Internet fraud
12
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. 13
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.
14
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. 15
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 16
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.”
17
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
18
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 19
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. 20
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.
21
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.
22
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.
23
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. 24
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.
25
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.
26
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.
27
The Diffusion of Rumors
Public peace of mind can be corrupted by diffusion of rumors. Rumors often plague both large and small companies.
28
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 29 explanations for unusual events.
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.
30
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. 31
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. 32
Decision process involved in corporate sponsorship projects Study of the Sponsorship Decision Process in 16 large Canadian Corporations Method: • 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 projects Industries involved: 3 Oil companies 1 Brewery 1 Steel manufacturer 5 Food retailers 1 Aircraft manufacturer 1 Tobacco company 1 Information systems 2 Banks and 1 Insurance company 33
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: 3.08 Commercial 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 (Degree of agreement … on a scale of 1 to 4) • To attract opinion leaders: 2.45 • To entertain our suppliers: 2.30 • To limit government regulation: 2.0 Other objectives 2.86 • Personal motives of top management • To obtain fiscal benefits: 2.28 34
Relative importance of criteria for selecting corporate sponsorship projects
(Degree of agreement on a scale of: 1 to 4)
Sources of revenue of the applicant organization Relevance of the amount requested Previous experience with the applicant organization Target market of the applicant organization Domain of activities of the applicant organization Budget of the project Mission of the applicant organization Other sources of funding Scope of the market of the applicant organization Management structure and expertise Specific use of requested funds Image and visibility of applicant organization Expertise of the project manager Comments of other donors Personal knowledge of applicant Importance of the cause promoted
3.75 3.72 3.69 3.62 3.58 3.50 3.45 3.45 3.38 3.23 3.23 3.17 3.08 3.00 2.83 2.72
35
Roles, steps and activities involved in corporate sponsorship projects 1
Screening role Reception of requests and analysis step
Written request received
Intention
Preliminary screening
Decision
In depth analysis
Refusal
Evaluation
Advising and bargaining role Acceptance
Receiving Organization
Evaluation of requests step
Costs/Benefits Analysis
Advising role
Recommendation
Implementation
Discussion 1
Execution role Evaluation of activity
Average number of participants involved: 3.92 Average size of the selection committee if any: 4.60 Average frequency of the committee meetings: once a month
Selection and processing step
Feedback and evaluation of donation
36
Classification of sponsorship projects Philanthropic goal
Marketing goal
Type
Pure philanthropy
Targeted Hybrid philanthropy 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
37
Low-Income Individuals: a Comparative Study in Canada 18-24 yrs old T enants Unemployed Car loan
Low-income Singles Automatic savings
65 yrs + Retired
25-34 yrs
High school Common law Cre dit line Divorced Bonds Women Employed Te rm de posits College 35-44 yrs Higher income Men University 45-54 yrs Mutual funds Married RRSP Elementary Owners Mortgage Stocks 55-64 yrs
: Financial products : Socio-economic and demographic variables Proportion 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 %
38
Environmental Marketing Management 1. Environmental overview
Environmental Audit
2. Review of mission, culture and values of company
Scientific knowledge
Social and environmental context
Environmental corporate policy
3. Setting of environmental objectives 4. Development of the environmental plan
Environmental laws
Environmental objectives
R&D
Production
Marketing
Environment.
Public Relations
Action plan
5. Parties involved and implementation of the action plan
Employees Suppliers Distributors Governments Pressure groups
Board of directors
General public
39
American Council on Consumer Interests Issues 1. Media issues: lack of factual information, stereotyping 2. Product issues: no international standards for food, product recalls, warning labels, health claims 3. Financial issues: identity theft, consumer debt, promotion of credit cards, financial products, online shopping 4. Public policy issues: regulation of products (tobacco, alcohol, prescription drugs), control of big business 5. Ethical issues: privacy, marketing to vulnerable audiences, sweatshop labor, effects of technology on consumers, CSR 6. Counter marketing issues: effectiveness of programs to counter obesity, alcohol and tobacco usage, visibility of public services 40
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