LO1  Explain the differences between legal and ethical behavior in marketing.

A good starting point for understanding the nature and significance of ethics is the distinction between legality and ethicality of marketing decisions. Whereas ethics deal with personal moral principles and values, laws are society's values and standards that are enforceable in the courts. This distinction can lead to the rationalization that if a behavior is within reasonable ethical and legal limits, then it is not really illegal or unethical. Judgment plays a large role in defining ethical and legal boundaries in marketing. Ethical dilemmas arise when acts or situations are not clearly ethical and legal or unethical and illegal.

LO2  Identify factors that influence ethical and unethical marketing decisions.

Four factors influence ethical marketing behavior. First, societal culture and norms serve as socializing forces that dictate what is morally right and just. Second, business culture and industry practices affect ethical conduct both in the exchange relationships between buyers and sellers and the competitive behavior among sellers. Third, corporate culture and expectations are often defined by corporate ethics codes and the ethical behavior of top management and co-workers. Finally, an individual's personal moral philosophy, such as moral idealism or utilitarianism, will dictate ethical choices. Ultimately, ethical behavior rests with the individual, but the consequences affect many.

LO3  Describe the different concepts of social responsibility.

Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions. There are three concepts of social responsibility. First, profit responsibility holds that companies have a simple duty: to maximize profits for their owners or stockholders. Second, stakeholder responsibility focuses on the obligations an organization has to those who can affect achievement of its objectives. Those constituencies include consumers, employees, suppliers, and distributors. Finally, societal responsibility focuses on obligations that organizations have to the preservation of the ecological environment and the general public. Companies are placing greater emphasis on societal responsibility today and are reaping the rewards of positive word of mouth from their consumers and favorable financial performance.

LO4  Recognize unethical and socially irresponsible consumer behavior.

Consumers, like marketers, have an obligation to act ethically and responsibly in the exchange process and in the use and disposition of products. Unfortunately, consumer behavior is spotty on both counts. Unethical consumer behavior includes filing warranty claims after the claim period, misredeeming coupons, pirating music, movies, and software from the Internet, and submitting phony insurance claims, among other behaviors. Unethical behavior is rarely motivated by economic need. Rather, research indicates that this behavior is influenced by (a) a belief that a consumer can get away with the act and it is worth doing and (b) the rationalization that such acts are justified or driven by forces outside the individual—"everybody does it." Consumer purchase, use, and disposition of environmentally sensitive products relate to consumer social responsibility. Even though consumers are sensitive to ecological issues they (a) may be unwilling to sacrifice convictions and pay potentially higher prices to protect the environment and (b) lack the knowledge to make informed decisions dealing with the purchase, use, and disposition of products.