PSYC 495 Week 13 Social Responsibility PDF

Social Responsibility and Ethics PS YC 495 Dr. Eri n Sh an ahan Fal l 202 4  Outline 1. Dark Marketing Practices 2. Dark Consumer Behaviours 3. Bright Behaviours 4. Practice! Dark and Bright Behaviours o Transactions between buyers and sellers should...

Social Responsibility and Ethics PS YC 495 Dr. Eri n Sh an ahan Fal l 202 4  Outline 1. Dark Marketing Practices 2. Dark Consumer Behaviours 3. Bright Behaviours 4. Practice! Dark and Bright Behaviours o Transactions between buyers and sellers should be balanced such that both sides benefit (i.e., a Win-Win scenario) o Achieving these results requires both sides to adhere to norms about how to behave during these transactions o The buyer or seller may deviate from these norms in ways that take advantage of the other party, referred to as “dark” behaviours o Some players do more than expected in a transaction and tr to create benefits for broader communities or environments, referred to as “bright” behaviours Dark Marketing Practices Unsafe Marketplace o Generally, there has been an increase in protections for consumers when dealing with marketers o However, there are some ways in which the marketplace is becoming increasingly unsafe o Online purchase scams (e.g., fake websites, counterfeit goods) o Diet and Health Supplements (e.g., “miracle” weight-loss pills, Hormone Balancing) o Loan and income tax scams o Cryptocurrency scams o Romance scams Example: Hormone Balancing Example: Hormone Balancing o This podcast suggests that based on scientific research, the claims around hormone balancing are not only false but also quite dangerous o While some of the proposed remedy’s may be innocuous, others can have quite negative effects on individuals’ health Hormone Balancing: Should You Try It? | Science Vs Business Ethics o Ethics: the study of morality—what is considered right or wrong by society o Business ethics studies morality existing in business practices and values o Moral rules affect multiple groups of stakeholders including consumers, employees, investors/shareholders, vendors/suppliers, local community, larger society, government, other companies, other countries o Other important consideration include the treatment of animals and effects on the environment/future inhabitants of the planet A Need for Business Ethics Reasons for the adoption of business ethics: o Improved capacities of production o Fiercer competition among businesses o Increased consumer choice and need for differentiation o Space exploration and scientific research o Globalization and world population growth o Political and environmental activism Business Ethics Ethical principles: general rules guiding moral actions and decisions in ethical dilemmas. Organizations follow eight ethical principles: 1. Fiduciary (diligence and prudence) 2. Property (safeguarding tangible and intangible elements) 3. Reliability (making reasonable promises and fidelity to commitments) 4. Transparency (honesty, truth, disclosure) 5. Dignity (respect for other people, protection) 6. Fairness (equity, treating like cases alike) 7. Citizenship (respects for the law and natural environment) 8. Responsiveness (fast reactions to problems) The Dark Behaviours of Marketers Dark Marketing Behaviours: marketing tactics that are misleading, exploitative, and unethical such that they violate one of more of the eight ethical principles Unethical Marketing and the 4P’s Marketers deliver value through the 4P’s: 1. Product- Consumers want products to be safe and functional 2. Price- Consumers expect non-discriminatory pricing practices that are based on the company's costs and fair competition 3. Promotion- Expect communications to honestly represent products, be fair to the competition, and not take advantage of vulnerable individuals 4. Place- Expect online and offline retailers and distributers to treat them with respect and care o However, these 4P’s can fail to create value if the they are misused in ways that violate the eight ethical principles Unethical Marketing and the 4P’s Strategy Common Use Unethical/Dark Use Product Developing a good, service, or Creating products that are experience that will satisfy intentionally faulty, harmful, unsafe, consumers’ needs or that don’t meet consumers expectations. Not disclosing that additional parts or subscriptions are needed for a product/service to work properly. Place Distributing products or services Intentionally limiting product through many different channels and availability in certain markets to in many locations. increase demand and raise prices.  Unethical Marketing and the 4P’s Strategy Common Use Unethical/Dark Use Price Offering a transparent price in Misleading individuals about the price exchange for goods or services that of product or basing prices on factors is based on the company’s costs other than costs and market and fair market competition. competition (i.e., price fixing). Predatory pricing tactics that limit consumer choice. Promotion Transparently and honestly Promoting products in ways that are communicating a product or misleading or out-right false such as services features and value to bait-and-switch advertising, false consumers using advertising, sales advertising, and green washing. promotions, word-of-mouth, etc. Advertising designed to target and take advantage of vulnerable populations. Example: VW “Clean Diesel” o Between 2009 and 2015 Volkswagen advertised its vehicles as “Clean Diesel” indicating that they had lower emissions and were more environmentally friendly than the competition o In 2015, it was discovered that these vehicles were fitted with illegal devices designed to “defeat” emission testing o The vehicles were actually emitting up to 40 times more nitrogen oxide (NOx) than the allowable limit Example: VW “Clean Diesel” Which of the 4P’s are being misused in this situation? Which of the eight ethical principles are being violated? Consequences of Unethical Practices Negative consequences for marketers acting unethically include: o Loss of profits due to fraud or ceased operations o Legal charges and fines o Public relations (PR) disasters o Tarnished image o Reduced investments and drops in stock prices o Distrust from partners o Demotivated employees o Consumer cynicism: suspicion, mistrust, skepticism, and distrust of an agent’s or organization’s motives Example: VW “Clean Diesel” Outcomes: o Had to pay over $30 Billion in fines, penalties, restitution, and settlement costs o When given a choice between returning their vehicles and having the modified to comply with emissions regulation 86% chose to return o Stock prices feel by 1/3 days after the scandal was announced and profits dropped by 20% in the first quarter of 2016 o Volkswagen was eventually able to restore its brand image under new leadership by embracing zero-emissions technology, advocating for the introduction of ambitious standards to reduce pollution, and demonstrating an overall cultural shift toward ethical business practices and collaboration Discussion o Can you think of any cases where it has come to light that a company you purchase from has been engaging in unethical business practices? o How did this impact your perceptions of the brand and your willingness to purchase from them again? Discouraging Unethical Marketer Behaviours o Activism: any activities or efforts that draw attention to an issue in order to achieve a positive change in society o Movements, marches, protest demonstrations, rallies, strikes, boycotts, whistle blowing, government lobbying, fundraising, canvassing, watchdogs (e.g., consumer rights organizations), internet activism Discouraging Unethical Marketer Behaviours o Quiet activism: the recognition that for social change to happen, any effort— however small or gentle—is a good start, even if what you say or do makes a tiny impact, or convinces, influences, or supports just one more follower o E.g., making more mindful consumption choices or refusing to support unethical companies and trends o However, other criticize younger generations for not doing enough to discourage unethical practices o Slacktivism: passively participating in activism through small tokens up support (e.g., online likes, sharing posts, signing petitions) o Suggest this form of activism is dangerous because of moral licensing Governmental Regulation o Governmental regulation reflects society’s concerns and acts as a countervailing power to business self-interest and exploitation o Have the power to enforce compliance with regulations o However, governments are also interested in the economic growth made possible by businesses and protect them through financing and by regulating competition, trade, and intellectual property rights o Examples of federal regulatory agencies include, Health Canada, Industry Canada, Transport Canada, the Competition Bureau of Canada, the Canadian Radio-television and Telecommunications Commission (CRTC), the Privacy Commissioner of Canada, and the Canadian Food Inspection Agency Governmental Regulation Consumer Privacy o The Department of Justice, Industry Canada, and federal and provincial privacy commissioners play an important role in protecting and promoting the privacy rights of individual Canadian consumers o Canada’s federal privacy laws are currently governed by the Personal Information Protection and Electronic Documents Act (PIPEDA), which has been in effect since 2000 and was updated in 2011 Governmental Regulation Canada’s Anti-Spam Law (CASL) o Canada’s Anti-Spam Law (CASL) came into effect on July 1, 2014, and was followed by the prohibition against malware on January 15, 2015 o Express consent: unequivocal opt-in consent from the recipient for a stated communication purpose, which does not require any inference on the part of the organization. Discussion Do you think marketing activities should be regulated by the government? Why is there a need for restrictions? What are some of the positive effects of regulatory legislation? Are there any negative effects? Self-Regulation o Self-regulation is voluntary and imposed by the industry or the corporation itself and not by the government or market forces o Examples of self-regulatory agencies at the industry level include The Better Business Bureau (BBB), Canadian Association of Broadcasters, Concerned Children’s Advertisers, the Public Interest Advocacy Centre, Canadian Marketing Association, and the Association of Canadian Advertisers o A common criticism of self-regulatory organizations is that when the standards are violated, non-governmental regulators have limited power to remediate and penalize the offenders Dark Consumer Behaviours Consumer Ethics o Often assume that consumers act according to socially agreed upon norms and scripts for how to behave in the marketplace o However, there isn’t always a clear answer about whether a behaviour is right or wrong o Judgements of right and wrong depend on existing and changing norms, personal morality, and perceptions of harm and justice o Researchers are interested in assessing how acceptable or tolerable consumers find various behaviours that cause harm to businesses/marketers Activity o Complete the modified Muncy-Vitell Consumer Ethics Scale by rating your perceptions of each behaviour on the scale provided o Calculate your mean score for each of the categories Muncy-Vitell Consumer Ethics Scale o Category A: Behaviours where consumers actively benefit at the expense of a company. These actions are initiated by the consumer and are illegal. o Vitell and Muncy (1992, 2005) found that these behaviours are perceived as the most wrong (M = 1.45) o Category B: Behaviours that where the consumer passively benefits or “gets back” at business by not revealing the truth. o Vitell and Muncy (1992, 2005) found that these behaviours are also perceived as very wrong with mean ratings differing only slightly from Category A (M = 1.87) Activity o Category C: Questionable behaviours that are technically legal o Vitell and Muncy (1992, 2005) found that these behaviours are seen as more tolerable than Categories A and B but still somewhat wrong (M = 2.21) o Category D: Behaviours perceived (often erroneously) as not causing harm o Vitell and Muncy (1992, 2005) found that these behaviour are seen as the most permissible (M = 3.45) Discussion o How did your results on the modified CES compare to the patterns identified by Vitell and Muncy? o Researchers often find that consumers ethical beliefs assessed using a self- report scale do not predict their actual behaviour. That is, consumers may state that a behaviour is wrong but do it anyway. What do you think might explain this attitude-behaviour gap? Dark Consumer Behaviours o Consumer misbehaviour: acts that violate the accepted norms of conduct and disrupt the consumption order o Consumer misbehaviour is self-indulgent, self-interested, and carried out without concern for others o Consumers know the “accepted” norms of their encounters and possess self- control to follow the norms, but either misjudge the situation or choose not to follow rules o E.g., shoplifting, filing fraudulent claims, drunk driving Dark Consumer Behaviours o Consumer problem behaviour: an overreliance on or overuse of certain products, or an engagement in compulsive behaviours o Most damage done is to the consumers themselves, but their relationships and families in the long run also suffer, and some behaviour can also be harmful to bystanders o Serious problem behaviours cannot be solved with self-control alone o E.g., alcohol/drug abuse, compulsive shopping/eating Dark Consumer Behaviours o Deviant Acquisition Behaviours: consumer misbehaviour and problem behaviours in acquiring goods o Consumer aggression o Theft o Compulsive buying Consumer Aggression o Aggressive and violent behaviour has become expected and is a significant part of the retail mythology around major sales events like Black Friday o Aggressive consumer behaviours may be a reaction perceived lack of freedom and loss of control Consumer Aggression o Evolutionary perspectives suggest that aggression and violence develop to protect against threats to survival o Limited quantity promotions and/or product scarcity can lead consumers to act violently because other consumers are viewed as a competition threat o E.g., Cabbage Patch Riots 1983 o Inspired the Movie Jingle All the Way which similarly depicts parents engaging in violent and aggressive behaviours to obtain a highly valued but scarce toy for their children o https://www.youtube.com/watch?v=4IdRtRjFEDA Theft o Consumer theft: stealing as a way of acquiring goods o Costly for companies, so it is important for businesses to have strategies for handling consumer theft o Costly for consumers, who are left with higher prices that have been raised to cover unpaid goods o One study suggests that roughly 1 in 11 consumers who walk into a store will leave with at least one item they did not pay for o Some studies estimate that the rate of theft may be even higher o Larger stores may experience some form of theft 15-20 times a day Theft o Reasons for stealing: o Addiction to items that shoplifters cannot afford o Poverty or unfortunate circumstances o Compulsion, emotional reasons, or a desire for a thrill o To maintain a standard of living o Popular items for consumer theft are those that are CRAVED—Concealable, Removable, Available, Valued, Enjoyed, and Disposable. o Also, embarassing or illegal products Theft o Discouraging shoplifting o Making access to expensive goods difficult o Keeping frequently stolen items behind a counter, under a panel, or secured with metal cables o Video cameras o Security guards and an “aggressive hospitality” tactic o Security tags Compulsive Buying o Compulsive buying/shopping: an unusual obsession with shopping that significantly affects the person afflicted o Chronic problem behaviour o Uncontrolled o Secret behaviour o Financial, psychological, personal consequences Compulsive buying o Reasons for compulsive buying o Driven by the experience of shopping and the associated emotions o Desire to offset low self-esteem and low mood, or cope with stress and anxiety o Feeling powerless or lacking control in other aspects of life o Endorsement of materialistic values o Companies need to be aware of the potential unintended consequences of marketing campaigns that portray shopping as a way to relieve stress (“retail therapy”) Bright Marketing Practices Being Bright in the Marketplace o Bright behaviours: those that involve some self-sacrifice in order to change the status quo o Corporate social responsibility (CSR): companies not only pledge to behave ethically but also to correct their predecessors’ wrongs and establish “bright” initiatives o Allows a company to better manage its resources, differentiate itself from competitors, communicate its values, carve out a niche, attract like-minded consumers o Socially responsible marketing is associated with favourable consumer evaluations, increased customer satisfaction, and the likelihood of increased sales Corporate Social Responsibility Types of Corporate Social Responsibility o Ethical Responsibility: conducting business in a morally sound and principled manner o E.g., focusing on employee safety, promoting employee health and wellness, initiatives to increase equity, diversity, and inclusiveness o E.g., Netflix o Philanthropic Responsibility: giving back to communities o E.g., advocacy, supporting community initiatives, charity drives, foundations or corporate trusts, endorsing employee volunteer programs o E.g., TOMS, Ben & Jerry’s Corporate Social Responsibility Types of Corporate Social Responsibility o Economic Responsibility: prioritizes financial sustainability and contributes to the economic well-being of other business and their community o E.g., fair trade initiatives, sourcing products from local businesses, economic development initiatives o E.g., Patagonia o Environmental Responsibility: minimizing the negative impact of a business on the planet o E.g., reducing carbon emissions and energy usage, eco-friendly packaging, recycling programs o E.g., IKEA Discussion o How much do you value corporate social responsibility when choosing what products to purchase? o What are some examples of brands that you like that engage in corporate social responsibility? Sustainability o Sustainability: the ability to be maintained at a given level indefinitely o Implies a concern for the endurance of a practice o Three types of sustainability in business referred to as Triple bottom line (3BL) accounting: 1. Profit (economic sustainability) 2. People (social sustainability) 3. Planet (environmental sustainability) Sustainability and Packaging o Packaging has long been an important element of marketing because it allows a brand to differentiate its product from the competition o However, packaging is also a major contributor of waste o The environmental impact of waste is one of the biggest problems of modern consumerism o Landfills can leach chemicals into groundwater and release toxic gas into the air which can have serious negative health effects o Canada leads the world in per capita production of trash Sustainability and Packaging o Plastics are particularly damaging to the environment and as a result many countries have implemented regulations around single-use plastics o Push to eliminate plastic packaging altogether o A challenge for companies is finding alternative packaging methods that are similar in cost and weight that will provide the same degree of product protection with the same shelf-life Sustainability and Packaging o To reduce waste, companies also need to think about ways to support the “circular economy” of using and reusing (recycling) that needs to replace the “throwaway” economy o Consumers should consider ways to reduce the waste they produce through consumption, repair and reuse products instead of throwing them away, and recycle product packaging wherever possible Voluntary Simplicity o Voluntary simplicity (VS): a lifestyle choice where people opt to limit material consumption and free up resources o Involves a wide spectrum and variety of practices and values o Highly committed simplifiers: fully embrace the ideas around reducing consumption drive by ethical concerns to own and use fewer goods o Change behaviour in highly disruptive ways (e.g., homesteading) o Less committed simplifiers: maintain similar levels of consumption but consume differently so as to be in line with specific ethical standards o Change behaviour is less disruptive ways (e.g., buying fair-trade coffee) Review Questions ◦ Define and provide examples of dark marketing practices. ◦ Describe 2-3 of the eight ethical principles and provide examples of marketing practices that may violate them. ◦ Describe how marketers typically use the 4 P’s to create value for consumers discuss how these strategies may be used in unethical ways. ◦ Discuss the role of activism, government regulation, and self-regulation in discouraging unethical marketing practices. Review Questions o Distinguish between consumer misbehaviour and consumer problem behaviour and provide an example of each. o Discuss the relationship between limited-quantity promotions and scarcity in producing consumer aggression and violence. o Describe what items are popular for theft using the acronym CRAVE. o Define compulsive buying, distinguish it from impulsive behaviour, and describe why it occurs. o Define Corporate Social Responsibility and describe the four different types that companies might engage in. Practice Questions  Question 1 The ethical principle of dignity refers to A. Treating like cases alike B. Safeguarding tangible and intangible elements of a business C. Respecting other people D. Respecting the law and natural environment  Question 2 _________ is defined as any activities, efforts, or vigorous campaigns that draw attention to an issue in order to achieve a positive change in society. A. Socialism B. Activism C. Mechanism D. Cooperation  Question 3 Shoplifting is best described as ____________. A. An illegal consumer misbehaviour B. An illegal consumer problem behaviour C. An aggressive behaviour D. Compulsive shopping  Question 4 Black Friday events create _________ condition that can lead to aggression. A. Availability B. Typical C. Scarcity D. Abundance