Socially Responsible Marketing

Businesses and people face constraints on what can ethically be done to make money or in their pursuits of goals. Fraud and deception are not only morally wrong but also clog up the efficient functioning of the economy. There are also behaviors that, even if they are not strictly illegal, cannot be undertaken with a good conscience. There are a number of areas where a person must consider his or her conscience to decide if an action is acceptable. For example, Some “paycheck advance” loan operators charge very high interest rates on small loans made in anticipation of a consumer’s next paycheck. Depending on state laws, effective interest rates (interest rates plus other fees involved) may exceed 20% per month. In some cases, borrowers put up their automobiles as security, with many losing their only source of transportation through default. Although some consider this practice unconscionable, same may assert that such loans may be the only way that a family can obtain cash to fill an immediate need. Because of costs of administration are high, these costs, when spread over a small amount, will amount to a large percentage. Also, because the customer groups in question tend to have poor credit ratings with high anticipated rates of default, rates must be high enough to cover this.

Different individuals vary in their ethical convictions. Some are willing to work for the tobacco industry, for example, while others are not. Some are willing to mislead potential customers while others will normally not do this. There are also broader societal and company wide values that may influence the individual business decision maker. Some religions, including Islam, disfavor the charging of interest. Although different groups differ somewhat in their interpretations of this issue, the Koran at the very least prohibits usury—charging excessive interest rates. There is some disagreements as to whether more modest, fair interest rates are acceptable. In cultures where the stricter interpretation applies, a firm may be unwilling to set up an interest-based financing plan for customers who cannot pay cash. The firm might, instead, charge a higher price, with no additional charge for interest. Some firms also have their own ethical stands. For example, Google has the motto “Do no evil.” Other firms, on the other hand, may actively encourage lies, deception, and other reprehensible behavior. Some firms elect to sell in less developed countries products that have been banned as unsafe in their own countries.

Many see the tobacco industry as the “enemy” and may not want to do anything that can benefit the industry. However, in principle, it may actually be possible to make it profitable for the tobacco industry to “harvest”—to spend less money on brand building and gradually reduce the quantities sold.  The tobacco industry is heavily concentrated, with three firms controlling most of the market. Some other industries are exempt from many antitrust law provisions. If the tobacco companies were allowed to collude and set prices, the equilibrium market price would probably go up, and the quantity of tobacco demanded would then go down. It is been found that among teenagers, smoking rates are especially likely to decrease when prices increase. The tobacco companies could also be given some immediate tax breaks in return for giving up their trademarks some thirty years in the future. This would reduce the incentive to advertise, again leading to decreased demand in the future. The tax benefits needed might have to be very high, thus making the idea infeasible unless the nation is willing to trade off better health for such large revenue losses.

In some cases, it may actually be profitable for companies to do good deeds. This may be the case, for example, when a firm receives a large amount of favorable publicity for its contributions, resulting in customer goodwill and an enhanced brand value. A pharmacy chain, for example, might pay for charitable good to develop information about treating diabetes. The chain could then make this information on its web site, paying for bandwidth and other hosting expenses that may be considerably less than the value of the positive publicity received.

Non-profit groups often spend a large proportion of the money they take in on fund raising. This is problematic both because of the inefficiency of the process and the loss of potential proceeds that result and because potential donors who learn about or suspect high fund raising expenses may be less likely to donor. This is an especially critical issue now that information on fund raising overhead for different organizations is readily available on the Internet.

An alternative approach to fund raising that does not currently appear to be much in use is the idea of “sponsored” fund raising. The idea here is that some firm might volunteer to send out fund raising appeals on behalf of the organization. For example, Microsoft might volunteer to send out letters asking people to donate to the American Red Cross. This may be a very cost effective method of promotion for the firm since the sponsor would benefit from both the positive publicity for its involvement and from the greater attention that would likely be given a fund raising appeal for a group of special interest than would be given to an ordinary advertisement or direct mail piece advertising the sponsor in a traditional way.

One issue that comes up is the potential match between the sponsor and sponsee organization. This may or may not be a critical issue since respondents are selected for the solicitation based on their predicted interest in the organization. Microsoft—directly or indirectly through the Bill and Melinda Gates Foundation—has been credited with a large number of charitable ventures and has the Congressional Black Caucus as one of its greatest supporters. In many cases, firms might volunteer for this fund raising effort in large part because of the spear heading efforts of high level executives whose families are affected by autism.

As Globilization continues to expand, the issues dealing with ethics and how they apply to marketing will be of growing concern. Where this may be seen the most is in dealings with other cultures, religions, and even governments. It is hard enough at times to always make the right decisions as an individual, as for a business it is hard to fully fathom the full implications.