The Importance of Ethical Marketing
Marketing ethics are essentially the moral guidelines that allow companies to scrutinize their marketing strategies and actions. It means that a marketer has an obligation to ensure that all marketing activities adhere to core ethical principles, such as integrity and honesty—both internally and externally.78
As we’ll see below, ethical marketing is a crucial factor in an organization’s overall growth over time, and it produces many benefits:
- Customer Loyalty. Every company wants customers who keep coming back to buy their products and services. Companies have learned over time that, with the adoption of common-sense ethics in marketing, they can more easily earn the trust of consumers.79
- Improved Credibility. Look beyond customers when considering this factor and think in terms of the respect and credibility an ethical company earns with its investors, competitors, and other parties.
- Brand Enhancement. Consumers, competitors, investors, and others have begun to look beyond product features and pursue brands that consider the three Ps of sustainability—people, planet, and profits.
Millennials and Generation Z: Purchases Follow Beliefs
During the American Industrial Revolution in the early 1900s, the United States saw the rise of iconic business enterprises like Ford, US Steel, J.P. Morgan, Union Pacific Railroad, and many others. Some (a few) gave generously to charitable causes. Others made their wealth using unscrupulous means, exploiting labor and using questionable business practices.
Corporate social responsibility (CSR) is the concept that a company should integrate social and environmental concerns into its business operations and practices. It didn’t begin to take hold in the United States until the 1970s. In 1971, the Committee for Economic Development released a policy statement declaring the concept of a “social contract” between business and society, wherein the business has an obligation to constructively serve the needs of society.80 This concept was further fueled in part by President George H. W. Bush’s call for a “thousand points of light.”81 The bottom line is that CSR changed business as usual. Today, Fortune Global 500 firms spend approximately $20 billion on CSR initiatives each year, and companies take public positions on diversity, inclusion, education, and the environment.82
We are witnessing an evolution in consumer expectations as consumers begin to vote with their wallets. Millennials (those born between 1981 and 1996) and Generation Z (those born between 1997 and 2012) are now the biggest global generation, making up 65 percent of the world’s population,83 so it stands to reason that, as these generational cohorts enter their prime spending years, many companies have begun to focus their marketing efforts on this segment of the population. What marketers have discovered is that millennials and Zoomers (aka Gen Z) engage with brands differently than older generations like Generation X (born between 1965 and 1980) and the baby boomers (born between 1946 and 1964). They’re more likely to steer clear of mass-market branded products in favor of smaller, eco-friendly brands. They are the most likely to make buying decisions on values and principles. For example, consider some statistics from a First Insight report that shows that 62 percent of both millennials and Zoomers are willing to spend more for sustainable products, compared with only 54 percent of Gen X and 39 percent of Baby Boomers.84
Nielsen, the information, data, and marketing firm, surveyed over 30,000 consumers in 60 countries to find out what influences and affects their buying habits. The results were somewhat amazing:
- 66 percent of global consumers are willing to pay more for sustainable products.85
- 73 percent (nearly three out of four) of millennials indicated that they would be willing to pay extra for sustainable goods.86
What implications does this have for marketing to these generations? The bottom line is that CSR is more than just a buzzword for these generational cohorts. To make an impact, companies need to use their resources to show—not just tell—these younger generations how business enterprises are making an impact through authenticity and transparency.
Key Ethical Considerations in Strategic Planning
It’s no secret that the primary goal of marketers is to increase growth by creating and maintaining customers. However, sometimes pursuing that growth to satisfy shareholder goals to the exclusion of other groups (like customers) has led to high-profile ethical dilemmas. Let’s consider a few:
According to a Gallup poll in 2021, approximately 6 percent of US adults report that they have used e-cigarettes within the past week87 despite health warnings about vaping. The sale and distribution of e-cigarettes is banned or regulated in a growing number of countries much to the dismay of vaping aficionados. Where do you draw the line? Is vaping a matter of personal choice, or are people influenced by the marketing efforts of e-cigarette producers like Juul?
Consider the ethical implications behind this. Should e-cigarette manufacturers sell customers what they crave, or should they tailor their offerings based on what health experts say? Who gets to make that choice? Does the decision fall to the consumer, the producer, a public watchdog group, or the federal government?
Consider another ethical issue. During the first decade of the new millennium, Toyota vehicles experienced problems with unintended, uncontrolled acceleration that prompted over 6,200 complaints to the National Highway Traffic Safety Administration and were linked to more than 89 deaths over the next five years.88 Early on, Toyota blamed driver error. Later, it issued recalls to address floor mats that pinned down accelerators in some cases. But the company hid a flawed gas pedal design and lied to regulators, Congress, and the public for years about the sudden acceleration problem, ultimately leading to a fine of $1.2 billion by the Justice Department, which contended that Toyota’s efforts to conceal the problem and protect its “corporate image” led to a series of preventable fatalities. The settlement is being called the largest criminal penalty imposed on a car company in US history.89
Could these situations have been avoided with a stronger ethical focus and an eye toward the greater good? It all starts with the strategic planning process, which can be used to build “good” into the core of the organization.
Broader Participation
As pointed out in Marketing and Customer Value, an organization must consider all parties that it might impact, including investors, communities, governments, customers, employees, and suppliers. In the context of corporate social responsibility, this means that leaders of companies must create value for all of these groups while simultaneously producing a fair return for shareholders or owners.
Organizational and Individual Values
When considering organizational and individual values, the marketer needs to ask (and answer candidly) the following questions:
- Does the organization’s mission reflect current activities that are focused on the triple bottom line?
- Does the organization’s vision statement lead to outcomes that contain elements of social good?
- Do the organization’s values reflect respect for one another, the community, and the environment?
- Are those values authentic, and do members of the organization live by them daily?
- Has the organization included goals and objectives that refer specifically to elements of social good?
These questions can help inform the organization’s activities as it works through the strategic planning process. Thoughtful analysis and design at this stage can build strong organizations that not only deliver profits but also produce positive social outcomes for all parties.
Chapter Summary
This chapter explores the topic of marketing strategy in more detail. Strategy starts with understanding where a company is, where it wants to go, what the operating environment looks like, and what tools it has to work with or could acquire. The foundation of who a company is is established based on the vision, mission, values, and goals and objectives of the organization.
The vast majority of organizations have a single product line or market focus. However, there are circumstances where a company may view its enterprise as consisting of a portfolio of products or operating units. In this chapter, we explore tools such as SWOT analysis and the BCG matrix that can help a company organize and analyze its portfolio.
We need to define a strategy for our organization whether we have one product or dozens. The strategy selected for each product line or business unit does not have to be the same. We explored strategies associated with market penetration, market development, product development, and diversification.
A well-known saying asserts, “If you fail to plan, you are planning to fail.” This chapter explores the motivation for creating a formal marketing plan and the elements that should be included. The chapter also explores KPIs and the metrics required to organize, monitor, and manage an organization. The chapter finishes with a discussion of ethics, especially in terms of how authenticity, social justice, and doing business for good resonate with millennials and the Generation Z demographic.
Key Terms
- BCG matrix
- Boston Consulting Group’s framework for analyzing an organization’s strategic business units
- business portfolio
- the group of products, services, and business units that a company possesses
- business-level strategy
- outline of the actions and decisions a company plans to take to reach its goals and objectives
- buyer persona
- a semi-fictional representation of your ideal customers based on data and research
- concentric diversification
- the addition of similar products or services to an existing business
- conglomerate diversification
- the development and addition of new products or services that are significantly unrelated to a company’s current offerings
- corporate social responsibility (CSR)
- the concept that a company should integrate social and environmental concerns into its business operations and practices
- corporate-level strategy
- strategy that establishes the overall value of a business through setting strategic goals and motivating employees to achieve them
- customer acquisition cost
- the amount an organization invests in attracting a new customer
- customer lifetime value (CLV)
- an estimate of how much a single customer is worth to a company over their customer life span
- executive summary
- a brief overview of a marketing plan
- functional strategy
- actions and goals assigned to business units that support the overall business strategy
- gap analysis
- an internal analysis of a company or organization to identify and review its inherent deficiencies that may hinder its ability to meet its goals
- goals
- the outcomes one intends to achieve
- horizontal diversification
- the development of new and perhaps even unrelated products or services to market to existing customers so that a company can garner a larger customer base
- key performance indicators (KPIs)
- quantifiable measure gauging a company’s performance against a set of targets, objectives, or competitors
- market development strategy
- a growth strategy that identifies and develops new market segments for current products
- market penetration strategy
- a strategy used when a company focuses on growing its market share in its existing markets
- marketing dashboard
- summarizes important marketing metrics and key performance indicators into easy-to-understand measurements
- marketing ethics
- area of applied ethics dealing with the moral principles behind the operation and regulation of marketing
- marketing metrics
- what marketers use to monitor, record, and measure progress over time; are varied and can change from platform to platform
- mission statement
- action-based statement declaring the purpose of an organization
- objectives
- specific targets to be achieved within a specified period of time
- product development strategy
- complete process of delivering a new product or improving an existing one for customers
- product diversification strategy
- strategy to increase profitability and achieve higher sales volume through new products
- product positioning
- strategic exercise that defines where a product or service fits in the marketplace
- strategic business unit
- a relatively autonomous division of a large company that operates as an independent enterprise with responsibility for a particular range of products or activities
- strategy
- set of plans, actions, and goals that outlines how a business will compete
- SWOT analysis
- identification of internal strengths and weaknesses and external opportunities and threats impacting a business
- vision statement
- aspirational statement that articulates what an organization aims to achieve
Applied Marketing Knowledge: Discussion Questions
Critical Thinking Exercises
Building Your Personal Brand
There are many brands that recognize the benefits of hiring brand ambassadors. Red Bull is one of these brands. Because college students constitute a major portion of its target market, Red Bull relies on student ambassadors (also called Marketeers) to interact with customers. According to Red Bull’s Student Marketeer website, “student Marketeers are in direct contact with various consumers and customers, inviting product trial, helping establish Red Bull consumption in diverse occasions, supporting our sales teams, working with renowned athletes and of course ensuring an unforgettable brand experience for consumers at Red Bull events. Based on your skills, knowledge, experience and availability, your focus will be either on your campus or you’ll cover the entire region on board the iconic Mini.”90
Identify another brand that follows the strategy of welcoming brand ambassadors and express how finding this sort of part-time job might enhance your own brand.
What Do Marketers Do?
Consider the city where you live. Why do you live there? Why have businesses chosen to locate there? Call your Chamber of Commerce and ask to speak to the chamber director or marketing director. Ask the following questions:
- Have you used strategic planning to explore growth opportunities?
- What are the strengths of our city that you express to Chamber members or businesses considering relocating here?
- Have there been any changes in politics, culture, ecology, or technology that offer opportunities to attract businesses to this community?
- Are there weaknesses or threats that our city must overcome to improve its growth and viability?
- How do college students contribute to the strengths of our city or overcome workforce threats?
Marketing Plan Exercise
Complete the following information about the company and products/services you chose to focus on as you develop the marketing plan throughout the course. You may need to conduct research in order to obtain necessary information.
Instructions: Using the Marketing Plan Template file you created from the Marketing and Customer Value assignment, complete the following sections of your marketing plan:
- Executive Summary
- Mission Statement
- SWOT Analysis
- Marketing Goals and Objectives
Submit the marketing plan to your instructor for grading and feedback.
Closing Company Case
Blue Zones
When adventurer Dan Buettner set off around the world, riding his bike and visiting far-off destinations, he put a way of living into motion. Through the study of various communities around the world, Dan discovered pockets where populations of older people seemed to be living longer than anywhere else on earth. There were five such places where people lived a very long time and were healthier than many of the world’s people. Dan called these places “Blue Zones.” The Blue Zones included Okinawa, Japan; Sardinia, Italy; Nicoya, Costa Rica; Ikaria, Greece, and Loma Linda, California.
The Blue Zone concept grew and developed through the work of Gianni Pes and Michel Poulain. They originally identified Sardinia as a part of the world where there was a high concentration of older men. As the two began mapping the regions of longevity, they highlighted the villages and termed the inner circle of them “Blue Zones.”
“Dan and the team of demographers and researchers found that all blue zone areas share nine specific lifestyle habits that they call the Power 9.”91
The Blue Zones became a New York Times best seller. Media attention followed, and soon there was increased interest in the lifestyles within the Blue Zones. People began to recognize the Blue Zones as the happiest places to live. Communities were looking for ways to emulate the lifestyles and successes of these regions and in turn boost their longevity.
Dan realized he had not only a business, but a mission. What would happen if Blue Zones were created around the world? What if every community became a Blue Zone and a happy and healthy place where people lived longer? Could chronic disease be eradicated? Would health care costs drop?
In 2009, Albert Lea, Minnesota, teamed up with Blue Zones by applying the same concepts seen in the other Blue Zone locations. The location was suffering a severe economic crisis and needed a strategy to get out of it.92
What do these communities get for signing on to be a structured Blue Zone? Lower obesity rates, smoking cessation, increased exercise among their populations, reduced health care expenses, and a happier and more productive community. The initiatives are incredibly effective at making changes in how people live, work, and play. The Blue Zones project is population health at work. Adopting Blue Zones is creating a culture and community of complete well-being—one in which the people have increased productivity due to less illness.
Creating these communities includes a phased in approach. Blue Zones starts with Phases I and II, which build the foundation. Through assessment and an understanding of current state and desired future state, the gaps and issues are identified. The plan is drawn, and then in Phase III there is a full transformation that includes the people, the places, and the policy. When the plan is fully accepted and implemented, people will enjoy longevity, lower health care costs, and the recognition that the community is a great place to live and work.
How does the Blue Zones process work for the communities that participate? The effort is a collaboration between the community and the Blue Zones team. Starting with a complete evaluation of the community, Blue Zones experts work with community leaders and residents to assess the current state of well-being. Understanding the challenges currently facing the community provides the team with the greatest opportunity to develop the opportunities that will transform the community.
The statistics speak for themselves. Now communities across the United States are working to find ways to combat the crippling effects of the nation’s health care crisis. Blue Zones could be the answer. “The Blue Zones Project helped our community set amazing, aggressive, and achievable strategies that moved the Public Health agenda further in 10 months than what I could have expected in 10 years,” said Lois Ahern, director of Freeborn County Health (retired), in Albert Lea.93
Case Questions
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