Social Responsibility and Marketing Ethics

CHAPTER OBJECTIVES

After reading this chapter, you should be able to:

List and respond to the social criticisms of marketing.

Define consumerism and environmentalis-m and explain how they affect marketing strategies.

Describe the principles of socially responsible marketing. Explain the role of ethics In marketing.

Preview Case

Brown & Williamson Tobacco: 'Keeping Smokers Addicted'

IT HAS LONG BEEN KNOWN that tobacco companies control nicotine levels in their cigarettes. In the 1940s, nicotine and tar levels in cigarettes were more than three times today's levels. Manufacturers have gradually reduced them through refinements in the processing technique to satisfy demand for smoother and lighter cigarettes. A new battle started between the US Food and Drug Administration (FDA) and tobacco companies in June 1994. At the centre of the debate was damning evidence presented to Congress which suggested that US tobacco companies had been deliberately manipulating the amount of nicotine in cigarettes to keep the nation's 46 million smokers addicted.

On 21 June 1994, a House of Representatives subcommittee heard allegations that Brown & Williamson (B & W) Tobacco, a US subsidiary of Britain's BAT Industries, had secretly developed a genetically engineered tobacco ealled Y-1 that contained more than twice the amount of nicotine found in normal tobacco plants. Mr David Kessler, head of the US FDA, informed the committee that B & W had earlier denied breeding tobacco plants for high or low nicotine content. Yet the company had several million pounds of Y-1 tobacco stored in US warehouses and had been using it in five local brands of cigarettes.

Kessler suggested that US tobacco manufacturers had deliberately 'spiked' their products to keep smokers addicted. It is difficult to prove this. However, he said that it is sufficient to show that cigarette companies have the ability to control nicotine levels tn their products, allowing them to remain at addictive levels. Such evidence could he used to implicate B & W in the Y-1 row to push his case for bringing tobacco under his agency's control. He has previously threatened to regulate cigarettes as drugs if he could show that manufacturers intend consumers to buy them to satisfy an addiction. The discovery of the Y-1 high-nicotine tobacco proved beyond doubt that tobacco firms were manipulating and controlling nicotine concentration in their products.

B & W defended the allegations. First, it accused Kessler of blowing the issue out of proportion. Second, it stressed the fact that Y-1 is nothing secret and just one of a variety of local and foreign tobaccos it used to give the unique 'recipe' of ingredients that went into each brand. 'Y-1 was a blending tool for flavour', B &\V said.

Tobacco companies argue that they cannot eliminate nicotine altogether from their products as it is an essential contributor to cigarette flavour. Smokers no longer enjoy cigarettes when the nicotine level falls below a certain point. So, it is important to adjust the level of nicotine and other flavour-enhancers to provide what cigarettes consumers like. Mr Walker Mcrriman, vice-president of the Tobacco Institute, said that 'consumer preference' was the specific reason for having any particular level of nicotine and tar in any particular cigarette. Low-nicotine brands have commanded very low market share, while no-nicotine brands had failed through lack of demand.

In reality, Kessler is more concerned now with two issues: whether cigarettes are addictive, and if manufacturers intend them to be addictive. If so, on either issue, the FDA may be able to bring them under its jurisdiction as a drug. Kessler can then force the tobacco industry gradually to reduce nicotine levels in their products and so wean smokers away from the habit. The industry position is that cigarettes are not a drug, as defined in the 1938 Federal Food, Drug and Cosmetic Act, because they 'do not intend to affect the structure or any function of the body'. Furthermore, manufacturers argue that smoking cannot be addictive because 50 per cent or more of American citizens today who have ever smoked have quit - over 90 per cent of them without professional help. Critics of Kessler's policy say that there is a risk that smokers would smoke even more cigarettes to compensate for the loss of nicotine intake, which raises smokers' exposure to another serious health risk - the carcinogenic ingredients of cigarettes. Besides, this policy would boost industry profits.

One debate is whether tobacco companies like B & W are knowingly manipulating nicotine levels in their products with intent to cause addiction. If so, such socially irresponsible behaviour arguably must be controlled. On past record, it will take a long time to reach the point at which the FDA will bring the tobacco industry under its control. But things are stirring up fast. The race is already on to sue America's tobacco giants. In February 1995, a New Orleans court ruled that every American ever addicted to nicotine — or the relations of any nicotine-depcndent-but-now-dead American - could sue the tobacco companies. Four American states also began to sue for the cost of treating smokers!

These events in the United States trivialize the tobacco advertising debate in Europe. The emergence of medical evidence suggesting that smoking is a health hazard has triggered reactions from anti-smoking groups, who argue that smoking should be at least discouraged, if not banned outright. Over the 1980s, lobbying by anti-smoking campaigners throughout Europe led to enforcement of tighter restrictions, notably on tobacco advertising. Those who rage against the evil of cigarette advertising assume that it is creating droves of new smokers. Tobacco firms argue that the assumption is doubtful, claiming that there is no evidence that advertising has much effect on total consumption. It is true that, according to one study, advertising bans in Norway, Finland, Canada and New Zealand helped to reduce cigarette consumption. But studies in other countries, such as Italy and Sweden, have shown that bans were followed by increases in smoking. Ironically, some argue that a ban would have one drawback: it would end the health warnings that now accompany tobacco advertising.

Current restrictions are already tight. Cigarette companies are prohibited from advertising on television in many European markets. To stave off more draconian legislation, they have agreed: to stop advertising in the cinema or on posters near schools; to reduce advertising on shop fronts; to stop using celebrities in their advertising; and to avoid any hint that smoking brings social or sexual success. Yet, tobacco adverts are not quite dead! Advertisers often resort to the use of cryptic pictures, like red motorcycles - the clue that told consumers to rush out and buy 'Marlboro' (red is the Marlboro brand colour).

In search of new customers, cigarette manufacturers are targeting females. In France, Spain, C.ermany and Britain, between a quarter and a third of smokers are women. In Sweden, they form a majority of smokers. In some cotmtries, like India and Hong Kong, women-only brands have been launched. In the Baltic states, there are massive advertising campaigns tempting women and there is a big increase in the number of women smoking. Worse, tobacco firms are preying on children. Their aggressive campaigns in the less developed Far Eastern countries, with fewer consumer protection laws, are also cause for concern.1

QUESTIONS

You should attempt these questions only after completing your reading of this chapter.

1. Is advertising of hazardous products ethical? Tobacco firms claim that they advertise not to expand demiind for cigarettes, but merely to maintain their market share against competitors' brands. Is this a bogus or friendly argument?

2. Should tobacco firms take greater responsibility for communicating the health hazards of smoking, and discouraging the habit?

3. Can society expect the industry to regulate its own actions and practise socially responsible marketing?

4. Can customers and society, at large, be left to develop their own sense of personal responsibility - to avoid harmful products - even if firms don't? Discuss.

5. Should legislators be the ultimate force that protects innocent consumers from unsavoury marketing?

6. In the interest of consumer safety and well-being, should tobacco firms circumvent current rules?

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