Deck 16: Sustainable Marketing Social Responsibility and Ethics

Question 1

Honest Tea, the Coca-Cola brand that produced $130 million in global revenues last year, got its start because cofounder Seth Goldman didn't like the options in the beverage coolers at convenience stores. So with the help of a former professor, he launched Honest Tea-the nation's first fully organic bottled tea. But the company's drive for success was not based not as much on profits as on a desire to change the world. With social responsibility steeped deep into its business model, Honest Tea set out to help develop the economic structure of impoverished nations. Honest Tea purchased raw ingredients from Native American and South African farmers and invested in its
supplier-farmers to help them become self-reliant. Although Honest Tea has been a wholly owned subsidiary of the Coca-Cola Company since 2011, it continues to operate on the prin-ciples of social responsibility established by its founders. After viewing the video featuring Honest Tea, answer the following questions:
How does Honest Tea practice sustainable marketing?

Answer 1

Sustainable marketing is one of the major principles of many marketing departments across the world. It is built on the principle of ensuring that the company's marketing should support the long-run performance of the marketing system. Sustainable marketing is guided by five different marketing principles that are consumer-oriented marketing, customer value marketing, innovative marketing, sense-of-mission marketing, and societal marketing.
H Tea practiced sustainable marketing by focusing on consumer-oriented marketing which refers to viewing and organizing its marketing activities from the consumers' point of view. H Teas understood that many customers did not like the beverage coolers at the convenience stores. Hence, it introduced organic bottled tea to meet their needs.
It also practices sustainable marketing through sense-of-mission marketing which refers to defining its mission in broader social terms rather than narrow product terms. The company focused on providing ingredients from Native American and South African farmers rather than procuring them from cheaper sources back home. The company has also invested in its suppliers and farmers to help them become self-reliant.

Question 2

What is sustainable marketing? Explain how the sustainable marketing concept differs from the marketing concept and the societal marketing concept. (AACSB: Written and Oral Communication)

Answer 2

Sustainable Marketing means adopting socially and environmental policies that satisfy the current needs of consumers and businesses as well as protects or even enhances the needs of future generations. It is a process that first thinks of the future needs of both the firm as well as the consumer before developing the marketing strategy for the present. Normally the reverse is true when, the gains of today will not be sacrificed for the possibility of gains in the future.
A truly sustainable marketing system requires the actions of the consumers, businesses, policy makers and others to working together in harmony and smoothly. Unfortunately, this hardly ever happens due to vested interests in one or two of the participants.
The Marketing Concept in contrast to sustainable marketing concentrates on the present needs of both the business and the consumer. A slightly better alternative is the Societal Concept which concerns itself with the future welfare of the consumers while considering the present needs of the business.
These are the principle differences between these two concepts and sustainable marketing.

Question 3

Honest Tea, the Coca-Cola brand that produced $130 million in global revenues last year, got its start because cofounder Seth Goldman didn't like the options in the beverage coolers at convenience stores. So with the help of a former professor, he launched Honest Tea-the nation's first fully organic bottled tea. But the company's drive for success was not based not as much on profits as on a desire to change the world. With social responsibility steeped deep into its business model, Honest Tea set out to help develop the economic structure of impoverished nations. Honest Tea purchased raw ingredients from Native American and South African farmers and invested in its
supplier-farmers to help them become self-reliant. Although Honest Tea has been a wholly owned subsidiary of the Coca-Cola Company since 2011, it continues to operate on the prin-ciples of social responsibility established by its founders. After viewing the video featuring Honest Tea, answer the following questions:
With all its efforts to do good, can Honest Tea continue to do well? Explain.

Answer 3

In the modern times, when the marketing departments of organizations are criticized for malicious practices, H Tea took a new approach to marketing. Consumers nowadays give a lot of preference to companies and brands which protect the interests of their various stakeholders. Some academic studies have shown that consumers may even prefer the goods and services of such companies.
H Tea made its mission to practice social responsibility. The company invested in farmers and suppliers. Moreover, it continued its social responsibility practices, even after it was acquired by the company CC. Hence, it can continue to prosper in the future by building a unique competitive advantage that could not be replicated by its competitors in the market.

Question 4

What is planned obsolescence? How do marketers respond to this criticism? (AACSB: Communication; Reflective Thinking)

Question 5

If assigned by your instructor, complete these writing sections from your Assignments in the MyLab.
What is consumerism? What rights do consumers have, and why do some critics feel buyers need more protection? (AACSB: Communication)

Question 6

How can marketers respond to the criticism that marketing creates false wants and encourages materialism? (AACSB: Communication)

Question 7

Critics claim that certain marketing practices hurt consumers. Discuss the bases for this claim and how marketers refute them. (AACSB: Written and Oral Communication)

Question 8

How can marketing practices create barriers to entry that potentially harm other firms? Are these barriers helpful or harmful to consumers? (AACSB: Communication; Reflective Thinking)

Question 9

What is environmental sustainability? How should companies gauge their progress toward achieving it? (AACSB: Written and Oral Communication)

Question 10

The chapter discusses McDonald's responses to social responsibility criticisms. Find other examples of how marketers have responded to social criticisms of their products or marketing practices. (AACSB: Communication; Reflective Thinking)

Question 11

Deceptive advertising hurts consumers and competitors alike, and the Federal Trade Commission has stepped up efforts to combat it. Discuss a recent example of deceptive advertising investigated by the FTC and one investigated by the industry self-regulatory body, the National Advertising Division (NAD). (AACSB: Communication; Use of IT; Reflective Thinking)

Question 12

In a small group, discuss each of the morally difficult situations in marketing presented in Table 16.1. Which ethics philosophy is guiding your decision in each situation? (AACSB: Communication; Ethical Reasoning)
REFERENCE: Table 16.1

Question 13

Facebook changed its policy and now allows teens' posts to become public. Before the change, Facebook would allow 13-to 17-year-old users' posts to be seen only by their "friends" and "friends of friends." Now, however, their posts can be seen by anyone on the network if teens choose to make their posts "public:' Twitter, another social medium gaining popularity with teens, has always let users, including teens, share Tweets publicly. But because of Facebook's vast reach, privacy advocates are very concerned about this latest development, particularly when it comes to children's safety. Online predators and bullying are real safety issues facing youth. Other criticisms of Facebook's decision boil down to money-some argue that the change was just about monetizing kids. Facebook can offer a younger demographic to advertisers wanting to reach them.
Facebook defended its actions, saying the change in policy is due to teenagers wanting the ability to post publicly, primarily for fundraising and promoting extracurricular activities such as sports and other school student organizations. Facebook has added precautions, such as a pop-up warning before teens can post publicly and making "seen only by friends" as the default that must be changed if the teen desires posts to be public.
Is Facebook acting responsibly or merely trying to monetize kids as critics claim? (AACSB: Communication; Ethical Reasoning)

Question 14

Facebook changed its policy and now allows teens' posts to become public. Before the change, Facebook would allow 13-to 17-year-old users' posts to be seen only by their "friends" and "friends of friends." Now, however, their posts can be seen by anyone on the network if teens choose to make their posts "public:' Twitter, another social medium gaining popularity with teens, has always let users, including teens, share Tweets publicly. But because of Facebook's vast reach, privacy advocates are very concerned about this latest development, particularly when it comes to children's safety. Online predators and bullying are real safety issues facing youth. Other criticisms of Facebook's decision boil down to money-some argue that the change was just about monetizing kids. Facebook can offer a younger demographic to advertisers wanting to reach them.
Facebook defended its actions, saying the change in policy is due to teenagers wanting the ability to post publicly, primarily for fundraising and promoting extracurricular activities such as sports and other school student organizations. Facebook has added precautions, such as a pop-up warning before teens can post publicly and making "seen only by friends" as the default that must be changed if the teen desires posts to be public.
Come up with creative ways marketers can reach this demographic on Facebook without alienating parents. (AACSB: Communication; Reflective Thinking)

Question 15

Kmart offers a lease-to-own program targeted to low-income consumers and is taking some heat over it. Rent-to-own is not new chains such as Aaron's and Rent-A-Center have been around for years-but it is new that a mainstream retailer has moved into this market. Kmart's parent corporation, Sears Holdings, launched a similar program, and according to a company executive, it is satisfying the unmet needs of new customers. Some critics say that it is just encouraging instant gratification and exploiting disadvantaged consumers. These types of customers don't qualify for credit and don't have enough cash to purchase desired products outright, such as televisions and other big-ticket items. 0 However, a $300 TV purchased through Kmart's program ends up costing consumers $415 if purchased at the end of the lease. If customers make just minimum payments over the course of the lease, one expert calculated, that it is equivalent to charging a 117 percent annual interest rate. Sears spokespeople defend their service as being better for consumers compared with other rent-to-own options because the retailer does not mark up the price of the product beyond the normal retail markup and limits the lease period to 18 months, whereas other national rental chains' prices are much higher and leases can run two to four years.
Are Sears and Kmart exploiting disadvantaged consumers? Explain why or why not. (AACSB: Communication; Ethical Reasoning)

Question 16

Kmart offers a lease-to-own program targeted to low-income consumers and is taking some heat over it. Rent-to-own is not new chains such as Aaron's and Rent-A-Center have been around for years-but it is new that a mainstream retailer has moved into this market. Kmart's parent corporation, Sears Holdings, launched a similar program, and according to a company executive, it is satisfying the unmet needs of new customers. Some critics say that it is just encouraging instant gratification and exploiting disadvantaged consumers. These types of customers don't qualify for credit and don't have enough cash to purchase desired products outright, such as televisions and other big-ticket items. 0 However, a $300 TV purchased through Kmart's program ends up costing consumers $415 if purchased at the end of the lease. If customers make just minimum payments over the course of the lease, one expert calculated, that it is equivalent to charging a 117 percent annual interest rate. Sears spokespeople defend their service as being better for consumers compared with other rent-to-own options because the retailer does not mark up the price of the product beyond the normal retail markup and limits the lease period to 18 months, whereas other national rental chains' prices are much higher and leases can run two to four years.
Low-income consumers often don't have bank ac-counts and credit cards. Describe how some financial institutions are trying to meet the needs of these "un-banked" consumers. (AACSB: Communication; Reflective Thinking)

Question 17

Kroger, the country's leading grocery-only chain, added a line of private-label organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade A eggs at Kroger costs consumers $1.70, whereas Simple Truth eggs are priced at $3.50 per dozen. One study found that, overall, the average price of organic foods is 85 per-cent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally farmed eggs are $1 million, but an organic egg farmer's fixed costs are three times that amount. Further assume that the organic farmer's variable costs of $1.80 per dozen are twice as much as a conventional farmer's variable costs. Refer to Appendix 3: Marketing by the Numbers to answer the following questions.
Most large egg farmers sell eggs directly to retailers. Using Kroger's prices, what is the farmer's price per dozen to the retailer for conventional and organic eggs if Kroger's margin is 20 percent based on its retail price? (AACSB: Communication; Analytical Reasoning)

Question 18

Kroger, the country's leading grocery-only chain, added a line of private-label organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade A eggs at Kroger costs consumers $1.70, whereas Simple Truth eggs are priced at $3.50 per dozen. One study found that, overall, the average price of organic foods is 85 per-cent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally farmed eggs are $1 million, but an organic egg farmer's fixed costs are three times that amount. Further assume that the organic farmer's variable costs of $1.80 per dozen are twice as much as a conventional farmer's variable costs. Refer to Appendix 3: Marketing by the Numbers to answer the following questions.
How many dozen eggs does a conventional farmer need to sell to break even? How many does an organic farmer need to sell to break even? (AACSB: Communication; Analytical Reasoning)

Question 19

Honest Tea, the Coca-Cola brand that produced $130 million in global revenues last year, got its start because cofounder Seth Goldman didn't like the options in the beverage coolers at convenience stores. So with the help of a former professor, he launched Honest Tea-the nation's first fully organic bottled tea. But the company's drive for success was not based not as much on profits as on a desire to change the world. With social responsibility steeped deep into its business model, Honest Tea set out to help develop the economic structure of impoverished nations. Honest Tea purchased raw ingredients from Native American and South African farmers and invested in its
supplier-farmers to help them become self-reliant. Although Honest Tea has been a wholly owned subsidiary of the Coca-Cola Company since 2011, it continues to operate on the prin-ciples of social responsibility established by its founders. After viewing the video featuring Honest Tea, answer the following questions:
List as many examples as you can showing how Honest Tea defies the common social criticisms of marketing.