Chapter 2 Flashcards
(19 cards)
Business Ethics
the rules of conduct that guide the marketplace
Why could advertising be unethical?
At least in the U.S. they promote this idea that you can fix a problem by purchasing things.
EX: Ben and Jerry’s Rainforest Crunch ice cream promotes that by eating their ice cream, you can solve the rainforest problem!!
What are the 3 key consumer courses of action?
- Voice
- Private
- Third Party Response
What is Voice?
This is where you speak directly with the brand to let them know about your issue. They want consumers to speak up because it’s an opportunity for them to save a customer.
EX: Marty opened a can of broken Pringles and called the number on the can. They responded by giving her two coupons.
What is Private?
This is where you express your issues with your sphere of influence.
EX: Marty opened the can of broken Pringles and told her 1:30 class about it.
What is Third-Party Response?
Posting about your bad experience online and EXPOSING the company. This is very common among Gen Z – we expect the ability to make reviews and voice our opinions openly.
EX: When people have a delayed flight or issues in general, they go on TikTok and expose the company for it. Or having to wait a really long time at a restaurant, and posting a Google review.
What are consumed consumers?
People who are used or exploited, willingly or not for commercial gain in the marketplace.
What is Shrinkage?
Inventory or cash losses from shoplifting and employee theft. Common at places with poor working conditions.
EX: Costco pays its employees a much higher wage because it knows it translates to a low shrinkage wage. This is because employees are happier with working conditions (generally).
What are Serial Wardrobers?
People who buy an outfit, wear it once, then return it. Or people who return items with old receipts.
What is Anticonsumption?
Where people are simply NOT purchasing –> deinfluencing. People just want to fight back against materialism because it makes them feel good about themselves.
What is the 1966 Fair Packaging and Labeling Act?
The first piece of legislation that directly addresses consumer protection. It requires manufacturers to provide info about package contents and origin.
What is the Federal Trade Commission (FTC)?
They monitor deceptive advertising practices (asking if the ad deceived a “reasonable person”). Marketers must keep up to date with changes in FTC regulations to avoid costly fines.
What is the Food and Drug Administration (FDA)?
Enforces laws and regulations on foods, drugs, cosmetics, and veterinary products. Marketers of pharm products, OTC meds, must get FDA approval before promoting.
BUT an industry that is NOT regulated is the supplement industry. Many products are not backed by science, so a lot of the worst unethical marketing happens here.
EX: Prevagen ads –> a study showed that the medicine does not, in fact, better brain health! It goes back to the question of whether advertising is unethical. It is because ads say that if people buy the product, their problems will be solved.
What is the Circular Economy?
Sustainable growth can only happen through ongoing reutilization of resources and materials with the ultimate goal of generating zero waste.
What is the Triple Bottom Line?
Companies maximize return in three ways
1/ Financial
2/ Social
3/ Environmental
What is the Sustainable Business Model?
This is not just about reducing a company’s carbon footprint. In fact, 6 in 10 companies that follow a sustainable business model have profited financially.
EX: Walmart does this not just because it creates a positive public image, but it saves them money!
What is Greenwashing?
Companies that make false or exaggerated claims about how environmentally friendly their products are.
Be suspicious of the word “natural” because it is not regulated. Yet, many companies use the word and because of heuristics, we think it is synonymous with organic.
What is Cause Marketing?
Aligning a company or brand with a cause to generate business and societal benefits.
EX: Chillhouse partnering with #HalfTheStory or Cocokind launching a campaign with us.
What is Pinkwashing?
Using breast cancer to sell products, often without actually supporting the cause.
EX: Yoplait – if you mail in your lid, they’ll donate 10 cents to this breast cancer research fund. If they had donated every lid, they would have donated over a million dollars (when the cap was only 50k). This drove sales, but was pinkwashing!
