Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 17 CORPORATE SOCIAL RESPONSIBILITY AND ETHICS
While the impact of social marketing on the social role attached to the marketing 
discipline has considerable social importance, our focus here is somewhat broader, and 
is concerned with the impact of the corporate social responsibility stance of the firm on 
its marketing and business strategy and performance. Social initiatives and ethical stand-
ards have become part of how companies compete and create value. The structure we 
are adopting to evaluate these issues and the key questions to address are summarised in 
Figure 17.1 .
17.1 
Marketing strategy and corporate social responsibility 
At one time, the issue at stake was primarily a matter of ‘corporate philanthropy’ ( Porter 
and Kramer, 2002 ), such as making donations of financial or other support to good causes, 
or entirely a question of moral obligation or pure altruism – for example when MAC cos-
metics decided to donate all earnings from its Viva Glam lipstick range to HIV-related causes 
( Jack, 2008 ). However, corporate social responsibility (CSR) is now increasingly recognised 
as a source of competitive advantage (or disadvantage if we are weaker than others in this 
area), and thus a corporate resource, as well as an important part of how competitive 
relationships operate. Certainly, good corporate citizenship is a marketing asset that can 
yield benefits in customer loyalty and employee commitment and business performance, but 
corporate social responsibility is now seen as a strategic resource. Strength in this resource, 
as in any other, may bring competitive advantages; weakness in this resource, as in any 
other, may bring vulnerability ( Branco and Rodrigues, 2006 ). Consider, for example, the 
following situations. 
Figure 17.1 
Key issues in assessing corporate social responsibility and marketing strategy
Marketing strategy
and CSR
The scope of
CSR
Drivers of CSR
initiatives
The other side of
CSR initiatives
Defensive CSR
initiatives
CSR and innovative
competitive advantage
How companies are responding
to the CSR mandate
CSR and customer
value
Do we understand
where CSR and
ethics fit in our
strategic thinking?
Can we map out
the factors driving
CSR in our type of
business?
Are we aware of
the risks to our
company if we get
it wrong?
Are we just
defending our
position or
developing a new
business model?
Are we ahead or 
behind competitors?
Does CSR create
customer value
 
in our market?

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MARKETING STRATEGY AND CORPORATE SOCIAL RESPONSIBILITY
In 2007, Microsoft dropped one of its UK suppliers because that supplier failed to meet 
Microsoft’s standards on employee diversity. Microsoft in the UK is one of a growing num-
ber of British companies that monitor suppliers to ensure that they employ a representative 
mix of women and ethnic minorities. The decision resulted from Microsoft’s diversity audit 
at its 250 largest British suppliers (Taylor, 2007). In the USA, many large companies, includ-
ing Microsoft, already insist on good diversity practices from suppliers, and are reducing 
or terminating the business they do with suppliers who fail to heed requests to diversify 
their workforces. Suppliers unable or unwilling to meet the social responsibilities defined 
by major customers stand the considerable risk of losing those customers.
In 2014, Apple extended its supply chain clean-up beyond Chinese factories that produce 
its devices, to pressure all its suppliers to make their own sourcing more ethical. The goal 
was to cut the amount of conflict resources ending up in iPhones and iPads sourced from 
mines in Africa (conflict resources are materials extracted in a conflict zone and sold to per-
petuate and support the fighting). The company wants to stop using materials from mines 
that are unacceptable from a human rights perspective (Bradshaw, 2014).
Further concern extends to questions of ethics in executive behaviour, to which we will 
return, where inappropriate behaviours in managing buyer/seller relationships can cause 
expensive losses. The accusations of corruption and bribery levelled against Volkswagen 
and Siemens executives in Germany – for example, the alleged Siemens ‘slush fund’ to pay 
bribes to win international contracts – have been extremely damaging to both companies 
(Woodhead, 2007). Appositely, it should be noted that many practices regarded in the 
past as wholly acceptable – for example, ‘corporate hospitality’ – may now be enough to 
undermine or destroy buyer/seller relationships, not to mention the careers of individual 
executives. The impact is magnified by growing transparency and information availability, 
so dubious practices are more difficult to hide. A review of the ‘integrity land-mines’ faced 
by companies concludes:
The changes in laws, regulations, stakeholder expectations, and media scrutiny that have 
taken place in the past decade can now make a major lapse in integrity catastrophic. Fines, 
penalties and settlements are counted in the hundreds of millions (or billions) of dollars. . .
And worse, in some cases (as Enron and Arthur Andersen demonstrated) – a company 
can actually implode.
(Heineman, 2007)
The management of business-to-business buyer–seller relationships has to be placed into 
this more demanding ethical context.
Moreover, at the level of the brand, questions of social responsibility and the ethics 
and morality of corporate behaviour are increasingly significant, posing both risks and 
opportunities. In 2007, the ethically minded coffee company Starbucks found itself in the 
midst of a damaging and intractable struggle over the legitimacy of coffee trademarking 
by the Ethiopian government. While the Ethiopian government – one of the world’s poor-
est countries – wanted to trademark some of its most famous coffees, Starbucks objected 
to the trademarks as damaging to its own brand. The dispute was played out live on the 
video website YouTube. One commentator suggested that Starbucks was ‘playing Rus-
sian roulette’ with its brand (Rushe, 2007). Indeed, more recently, Starbucks’ reputation 
has been further threatened by its tax avoidance policies – with its first-ever fall in UK 
sales after calls for a boycott from outraged consumers (Skapinker, 2014). Importantly, 
there may be an increasing number of trade-offs faced by companies between CSR and 
commercial goals.
There are important signs that consumers do indeed appear to be discriminating between 
brands and companies on issues of societal impact and ethical standards, although they may 
be less impressed by corporate posturing than some companies may believe. For example, 
consumers were less than amused to discover that Philips and Osram ‘Eco’ light bulbs 

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