Why it Matters
Overview
Teacher resources for Unit 5 can be found on the next page.
Provided by: Lumen Learning. License: CC BY: Attribution
Why It Matters: Ethics and Social Responsibility
Resources for Unit 5: Ethics and Social Responsibility
Slide Deck - Unit 5: Ethics and Social Responsibility
Discussion Assignments and Alignment: Analyzing Social Responsibility
Simulation Unit 5: “Simulation: Ethics”
Pacing
The Principles of Marketing textbook contains sixteen units—roughly one unit per week for a 16-week semester. If you need to modify the pace and cover the material more quickly, the following units work well together:
- Unit 1: What Is Marketing? and Unit 2: Marketing Function. Both are lighter, introductory units.
- Unit 15: Global Marketing and Unit 16: Marketing Plan. Unit 16 has more course review and synthesis information than new material per se.
- Unit 5: Ethics can be combined with any unit. You can also move it around without losing anything.
- Unit 8: Positioning and Unit 9: Branding. Companion modules that can be covered in a single week.
- Unit 6: Marketing Information & Research and Unit 7: Consumer Behavior. Companion units that can be covered in a single week.
We recommend NOT doubling up the following units, because they are long and especially challenging. Students will need more time for mastery and completion of assignments.
- Unit 4: Marketing Strategy
- Unit 10: Product Marketing
- Unit 13: Promotion: Integrated Marketing Communication
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Why learn about ethics and social responsibility?
Learning Outcomes
- Describe the types of ethical and social responsibility issues that marketing must address
- Explain the laws that regulate marketing
- Explain how ethical dilemmas in B2B marketing differ from those in consumer marketing
- Describe measures companies take to ensure ethical behavior
- Explain how demonstrating corporate social responsibility can impact marketing
Generally speaking, students believe that there are two primary reasons to act ethically:
- Acting ethically is the right thing to do from a moral perspective;
- If you act unethically, then you might get caught and be punished.
Neither of these is a bad reason to apply principles of ethics and social responsibility, but it is worth considering another reason, as well. In most cases strong ethical behavior leads to strong business results. Behaving ethically is actually good business. Let’s look at two different auto companies whose track records on ethical behavior have had very different outcomes.
Tesla and Social Responsibility
Tesla, Inc. was founded in 2003 by a group of engineers who wanted to prove that electric cars could be better than gasoline-powered cars. They hoped to build cars that wouldn’t require the tradeoffs in power and comfort of electric cars in the past. The founders pledged that each new generation of cars would be increasingly affordable, helping the company work toward its mission: “to accelerate the world’s transition to sustainable energy.”1
In order to design and build luxury electric cars, Tesla invented a number of new technologies that it patented in order to protect its competitive advantage. In June 2014 the company announced that it was releasing access to all of its patents, making its technological advances open to competitors and inventors. In the announcement, company CEO Elon Musk said, “Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual-property land mines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”2
Tesla has a mission with an emphasis on social responsibility; it strives to develop products that have both a societal and economic benefit. Industry analysts and consumers alike see this as a distinct advantage in the marketplace. Investment analyst Seeking Alpha explains:
Companies like Toyota Motor and Honda are already pushing for gas-less cars and more and more efficiency from their cars. Tesla is not single-handedly pushing this, but it is part of the overall push to improve one of the most important aspects of our country—how we envision the car. Yet, the company extends beyond this—challenging how we vision luxury, how we understand how to build a car, and what the future electric grid could look like.3
Volkswagen and Ethical Behavior
The car company Volkswagen (which is part of the larger Volkswagen Group) does not have a formal mission statement, but its goal is “to offer attractive, safe, and environmentally sound vehicles that can compete in an increasingly tough market and set world standards in their respective class.”4
In September 2015, the Environmental Protection Agency announced that Volkswagen had installed special software in its cars to manipulate emissions levels (making it appear that the cars are less polluting than they are). A week later Volkswagen disclosed that 11 million diesel vehicles contained the devices, and CEO Martin Winterkorn resigned. The price of Volkswagen stock plunged—losing 30 percent of its value overnight—and the company scrambled to understand what had happened and control the damage to its reputation.
In the months following the discovery of the deceptive devices, investigators identified a team of Volkswagen employees who had hatched the plan and implemented it over a number of years. An internal evaluation identified a “culture of tolerance” for rule breaking at the company. It also came to light that Volkswagen’s emphasis on “results at any cost” had contributed to the breach in ethical standards. Industry experts believe that the company’s violation of consumers’ trust will be exceedingly difficult to repair and that it may take years to rebuild the Volkswagen brand.
- “About Tesla,” Tesla, accessed September 23, 2019, https://www.tesla.com/about
- Musk, Elon. “All Our Patent Are Belong To You,” Tesla, June 12, 2014, https://www.tesla.com/blog/all-our-patent-are-belong-you.
- “Tesla: Social Responsibility Scorecard Shows Strengths And Weaknesses,” Seeking Alpha, Jan 6, 2015, https://seekingalpha.com/article/2801365-tesla-social-responsibility-scorecard-shows-strengths-and-weaknesses.
- Jurevicius, Ovidijus. “Mission statement of Volkswagen,” Strategic Management Insight. September 14, 2013, https://www.strategicmanagementinsight.com/mission-statements/volkswagen-mission-statement.html.
Licenses and Attributions
CC licensed content, Original
- Why It Matters: Ethics and Social Responsibility. Provided by: Lumen Learning. License: CC BY: Attribution
CC licensed content, Shared previously
- Tesla Model S. Authored by: Al Abut. Located at: https://www.flickr.com/photos/alabut/4276454889/. License: CC BY-SA: Attribution-ShareAlike
- VW Jetta TDI. Authored by: RightBrainPhotography. Located at: https://www.flickr.com/photos/rightbrainphotography/3526674386/. License: CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives