Hikes and Massages may be harmful to you

After giving my presentation (with the arcane title "Supply Chain Integration as a Marketing Lever: An Enhanced Conceptual Model for Customer Relationship Management") at the NARTS conference, I drove to the Phoenix Mountains with the intention of running a few miles up the mountain. However, as soon as I started running, there appeared before me a hiking trail with a couple of people of people starting the journey. I abandoned my running and decided to hike the trail. After reaching close to the summit point, realization dawned that a) running a few miles is quite different from hiking, b)I was in no physical shape to undertake a hike of this sort, c) I should have gathered data about the trail and got the right tools (shoes) before the hike. After completing the hike I read about it and found that it was one of the steepest and most strenuous hikes in the country (4 stars).
These are the lessons that are applicable to the U.S. economy and its population at large. As Andy Grove of Intel might put it, the economy and the standard of living are at an 'inflection point.' Given the daily dose of bleak news about the economy, some of my students and friends keep suffering from anxiety attacks and ask me to prognosticate about the immediate future. While recognizing that I might appear sillier than any Wodehousian villain, I will lay out in the next few posts a few ways of looking at the 'landscape' ahead and figuring out whether the country is prepared for the 'strenuous hike' ahead. However, there is good reason to tell any forecaster to 'take a hike.' To make forecasts with some level of confidence, one needs data, clean data. Unfortunately, we have to rely on public (and sometimes private) agencies for quite a few economic numbers. Often, these numbers are massaged, some by statisticians, some by bureaucrats and some by politicians. This will be the subject of the next post.

History of an "Ownership Society"

A few weeks ago, a student in my class commented that all the history courses she took were very limited because they all seemed to end with World War II or earlier. Other students chimed in- it appeared that stuff that happened in the recent past was of no historical relevance. As this was in my business course, I decided to give them a ten minute education on recent history related to the economy- the past fifteen years.

• 1992-1993 Beginning of the widespread use of the browser- we really need to thank Marc Andreessen and his buddies at U of I for making this blog and everything else on the Internet accessible so easily.
• 1992-2000 Massive (over) investments in technologies, esp. Communications, and Finance. This can be looked at as pulling future investment 'into' the present, thus forcing reduced investment in the future (reversion to the mean effect).
• 2001-2002 Reality check. Dawned on investors that some investments made above will never pay off, and some would take many years. Collapse of investment.
  9/11- collapse of travel.
  Recession.
  Job Losses, especially the higher paying high tech ones.
  Outsourcing of tech (part of the payoff from capital investments in 1992-2000).
  
• 2003 - 2Q 2007: President George Bush's two part response- Iraq War and Create an 'Ownership' Society.
  Shift the gains from wage earners to 'owner-investors.'
  Fed Chair Greenspan responds by lowering interest rates to 1% in July 2003. Became very cheap to borrow money, both for individuals and institutions.
  Reduced regulatory environment and lax enforcement made it very easy to borrow and lend money.
  Tax code changed to significantly benefit investors and owners- shifting the burden to wage-earners.
  Tougher bankruptcy laws made it more favorable for lendors.
  Massive borrowing to finance housing and other needs, as opposed to funding from savings.
  Spawns asset bubbles- Housing Bubble, Real Estate bubble, Stock Market Bubble, Commodities bubble, etc.
  Lower interest rates, with higher global demand, spawns inflation
  
• 2005-2007 Fed responds by raising rates trying to lower inflation
• 1Q 2007-3Q 2007 Cheap money not available. Borrowing to finance spending becomes difficult.
  Job Losses
• 3Q 2007 to present. Fed dramatically lowers rates and puts in other extra-ordinary measures to make it easier to 'borrow.'
  Assets being repriced.
  Ownership (that arose from borrowing) being reduced.
  

Next step is to take a stab at the future- that's for another blog.

PAC your problems- Look through RBV Lenses

PAC = Partition and Conquer; RBV = Resource-Based View

Doc has made an intriguing comment on my last post, referencing a resourcer-resource mismatch and the efforts of the affected to reach the resource in a quicker, better and efficient manner. This broad topic can be explored in many ways.
An Operations Researcher like myself looks at the world through a 'Resource-Based View' lens- or RBV. To him, the world (or the individual) has finite (often scarce) resources that have to be allocated so as to maximize (or minimize) certain objective functions. Often there are constraints on these resources, so this view is also referred to as Constraint Based Optimization (CBO).
At an institutional level, taking this view and using the PAC (partition and conquer) approach to the bigger problems has resulted in solutions that may be locally optimal for certain groups or individuals but are far from being optimal in a broader social sense.
As an example, by a number of estimates the world food supply in the recent past has been more than sufficient to feed the entire world population, but clearly dire hunger exists in several parts of the U.S., not to mention other countries. This resource has been allocated 'optimally' or dismally, depending on who's asked. Currently the shift by farmers to planting corn for ethanol is 'optimal' for one constituency, painful for another. There are plenty of lung surfactant drugs available to treat babies born with small lungs, but still babies die because of lack of access or affordability. OTOH Bill Gates decided that the optimal way to 'consume' his resources is through not-for-profit socially benefiting activities.

For an individual to get access to a resource he/she needs another resource to exchange or substitute, and information about resource availability and costs. Information asymmetry can distort resource constraints and allocation and deployment, but at the end of the day, it is the objective function- what we want to maximize or minimize, that matters. To that end, universal access to information and the education to process that information is, IMHO, the only long-term solution. Part of the education is 'social justice.'

An enjoyable and interesting book: Animal, Vegetable, Miracle: A Year of Food Life
by Barbara Kingsolver et al.

Education in America- An Article I wrote on January 25, 2007

Reports of potential employers and educators expressing serious concern at the skill levels of our high school and college students and their inadequate preparation for professional life are appearing with increasing frequency. A report[i] released on Oct. 2 by a consortium of business research organizations states that “The future U.S. workforce is here—and it is woefully ill-prepared for the demands of today’s (and tomorrow’s) workplace.” While this is a serious issue, a more ominous one is the preparation of today’s youth to be the ‘public’ citizens of the future. The youth of today are learning from the examples set by their parents, business leaders, politicians, educators and the like- examples that stand out for their notoriety.

A recent study[ii] found that 56% of graduate business students admitted to cheating one or more times in the past academic year, compared to 47% of nonbusiness students. Other reports indicate that acts of academic dishonesty, including cheating, are common in colleges and universities. On December 3, 2006, Columbia's Graduate School of Journalism announced that it was investigating charges of academic misconduct, i.e. cheating, in the final exam for the required ethics course "Critical Issues in Journalism." Before vilifying the students, the American public at large needs to examine its own acts, and the way it rewards positive and negative behaviors and actions. It is also imperative to remember that a “corporation” is a legal entity, and the actions of a corporation are always performed by people. Here are a few examples.

1. On January 2, a New York subway rider, Wesley Autrey, jumped onto the tracks of the New York Subway to save a man’s life from an oncoming train. He later pointed out that while many people were present, only he and two women aided the distressed person. He was later rewarded with the Bronze Medallion, New York City’s highest civilian honor, by the Mayor. Donald Trump cashed in on some publicity by giving a gift of $10,000, and a few others made other gifts to Mr. Autrey, a true hero.
On the other hand, on January 3, the Board of Directors of Home Depot Inc., removed Robert Nardelli from the Chief Executive Officer position for poor performance. After paying him $225 million during his six-years as the CEO, the Board gave him a farewell gift of $210 million as part of his separation package. Pfizer Inc.'s Board asked its CEO, Henry (Hank) McKinnell, to take “an early retirement,” in part because Pfizer’s stock price declined more than 40% when the market was up . However, the Board gave him a retirement package valued at more than $180 million as a farewell gift.

2. President Bush, in his address to the Nation on January 10, said “The situation in Iraq is unacceptable to the American people -- and it is unacceptable to me. …Where mistakes have been made, the responsibility rests with me.” Without saying that mistakes have been made, it is unclear as to what he meant by the statement “the responsibility rests with me.” Taking responsibility means paying a personal price for a person’s actions. For instance, on Mar 14, 2006, South Korean Prime Minister Lee Hae-chan resigned because he accepted responsibility for playing golf at a time when the country’s rail workers were on strike.

3. In the same January 10 speech, Bush reminded people that “The year ahead will demand more patience, sacrifice, and resolve.” While the families of those serving in the armed forces have demonstrated plenty of patience and sacrifice , the President’s sacrifices are unknown, as yet. Of course, he has taken more than 330 vacation days during his tenure, including an extended retreat at his Texas ranch last year which Hurricane Katrina rudely cut short. President Bush, based on public reports, apparently does not even sacrifice his sleep.

4. In a December 29, 2006 SEC filing, Apple Computer Inc. disclosed that records were falsified to support a 2001 options grant to its CEO Steve Jobs of 7.5 million shares. Apple disclosed that this grant was ``improperly recorded as occurring at a special board meeting on Oct. 19, 2001. Such a board meeting did not occur.'' The Company recognized total additional non-cash stock-based compensation expense of $84 million after tax, including $4 million and $7 million in fiscal years 2006 and 2005 respectively. In addition, the company reported that “although the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications.” It does not seem to matter that a person who made hundreds of millions by exercising stock options is not expected to know the immorality of “backdating” options, or appreciate the accounting mischief. Apple has cleared him of wrongdoing, and the shareholders have bid up Apple’s stock price to an all time high.

5. On January 9, 2007, Lou Dobbs railed against Venezuelan President Hugo Chavez on his Lou Dobbs Tonight show on CNN. In a piece titled a “Leftist Menace” he said that “Venezuela's leftist president, Hugo Chavez, takes a major step toward socialism with his plans to nationalize two key industries in his country.” Earlier, President Chavez had said that he would consider nationalizing Venezuela's electrical and telecommunications assets because they "ought to be the property of the Venezuelan nation." Ironically, a little later in the same broadcast, Mr. Dobbs severely criticized state governments, including New Jersey and its governor John Corzine, for selling state toll ways to private interests. He claimed that these assets belonged to the ‘American people.” Of course, Mr. Dobbs does not call himself a socialist or a “leftist menace” for suggesting government control of assets.

America’s future depends on its youth. It is vital that parents, politicians, businesspeople, teachers, and others collectively educate them, with personal examples, to engage in broader intellectual discourse than to just apply labels, and reward them for socially positive behaviors.

---

[i] Report titled “Are They Really Ready To Work? Employers’ Perspectives on the Basic Knowledge and Applied Skills of New Entrants to the 21st Century U.S. Workforce.” Published Oct. 2, 2006 by The Conference Board, Corporate Voices for Working Families, the Partnership for 21st Century Skills, and the Society for Human Resource Management.

[ii] Paper titled "Academic Dishonesty in Graduate Business Programs: Prevalence, Causes, & Proposed Action,” by Trevino, Linda., et al, to be published in an upcoming issue of the Academy of Management Learning and Education.

Civic Engagement and Social Justice

Civic Engagement, Social Justice and Integrated Learning are the buzz words being hummed in the hallowed halls of higher learning (see AAC&U). How to get students to be engaged civically and to deal with the issues of social justice is an interesting challenge. Further, integrating learning across experiences, both in and out of the classroom, is conceptually elegant but practically migraine-inducing. At the same time, the realities of outsourcing and the pressure on students to be able to compete make educators think.
Last fall, I decided to experiment with these ideas. I offered a new course titled 'Local Choices, Global Effects' to incoming freshmen. The course description read "Students, like other members of society, face choices in nearly every aspect of life. These choices often made locally can in the aggregate have powerful global consequences. This course introduces students to “sustainable living” concepts including food, energy, and waste management. It examines how individual choices in these areas can lead to significant global effects.Models from multiple disciplines including economics, physical sciences, political science, and business are used in analyzing the global impact of local choices. Students gain hands-on experience in identifying, selecting and implementing their choices in the College campus and within the community." I did not expect this to appeal to freshmen, but thirteen students signed up. I co-taught this course with a colleague from Student Affairs. In this course we dealt primarily with civic engagement, with some elements of social justice and an integrated learning approach. It is interesting to read to the reflections by students. This course has changed their lives, and it has taught me that even garbage (waste management) can be great food for thought. These freshmen and others have certainly given me a flash of light- illuminating positive change in the world....one student clued me in to using wind-up flashlights!

The Roof Caves In

Back on July 19, 2005, in an article titled 'Assessing the Demand for Residential Real Estate' I had written "The expectation with the housing market now is quite different. Despite the new bankruptcy law that makes filing Chapter 7 more difficult, house buyers are purchasing financial products with greater risk on the downside. Investors are pouring more money into the homebuilders and the lenders. Part of the bet is that with the scale of liabilities of the mortgage industry, especially the GSEs, the Fed and the government will bail out the financial sector from any disasters, shifting the burden to the public. As alluded to by others, ‘character’ is being tested- that of buyers, lenders, builders, investors, and the public at large."

The recent 'bailout' of Bear Stearns and other Wall Street banks by the Federal Reserve and the Government is precisely what I expected. While the Fed and the Government are grossly shifting the burden to the public, there is no public outcry at the gross injustice. In a subsequent post I will examine how much loot the executives of the big banks and the investors stashed away while betting safely that the government was going to bail 'em out.

Ethics in Marketing

Abstract:

Ethics in marketing is taking center stage in today’s business. This article summarizes the opinions on marketing ethics expressed by fifteen undergraduate students in an International Marketing course. Students want to create marketing plans that are based on ethical profitability. Today’s marketing professionals will find it useful to look at ethics through the eyes of the marketers of the future.

Article
The world of marketing is in upheaval on many fronts. In the intellectual property area the notion of copyrighting a product and using that exclusivity in marketing it is undergoing significant change. Quite a few innovators are pursuing “business models” radically different from those commonly practiced. An example is the development of Linux kernel by Linus Torvalds and subsequent distribution of Linux software under a GNU General Public License. This is a radical departure from the common distribution of such products by marketers under “copyright” protection. On the issue of product liability the decision making surrounding the global recall of Vioxx by Merck & Co. revolves around marketing ethics. Trying to get a handle on current students’ perception of ethics in marketing I asked the students in my International Marketing upper level undergraduate course to analyze and discuss the ethical issues marketing managers face in their daily work life. I have listed their analyses and opinions below, with my own commentary in italics. It is quite interesting to look at ethics from the eyes of the marketers of tomorrow. They conceptualize that there are issues in marketing that are ethically wrong and then there are issues in marketing that are morally wrong and that both need serious attention.

1. If a company markets its products to an uneducated customer base that is not aware of the serious consequences of a certain product, such as selling cigarettes in developing countries, that’s an ethical issue that needs to be addressed. The target market in Rwanda is not aware of the fact that cigarettes are addictive and will most likely cause health problems later in life. They are not aware of these issues, therefore it is morally wrong to sell them cigarettes. First of all, I would never work for a cigarette company but, if I did, I would include in every ad that I run that smoking causes serious health problems. I would make sure it’s in the language they speak and in terms they understand. I would not sell them to underage youngsters.
   There is an ‘ethical’ obligation on companies to go the extra distance to ensure uneducated consumers become aware of the consequences of using products.

2. Pricing AIDS drugs so that many African patients cannot afford them is one of the most awful problems I have ever heard. I do not understand how the CEOs of these companies can go to bed at night. I would make it a rule that these drugs be sold without making a profit in Africa. This caring image carries over to the marketing strategy in the developed world. The company who really cares about people can be my new slogan and I’d have the facts to actually back it up.
   Market the company as a “person” that really cares about people.

3. Ethics and morality don’t stay in the car when you go into your company in the morning. It is very important to always be an example and to always treat people the same way you want to be treated.
   The leading companies should set an example, even in ethics.

4. Business and ethics often times can contradict each other. I read an article that I found in the ABI/Inform database, titled “Children and the Changing World of Advertising,” by Elizabeth Moore. This article debates whether it is ethical to advertise to children. It was estimated that children spend an average of 4 hours per day watching television, and can be exposed to as many as 25,000 commercials per year. About 88% of children between 5-14 years old have access to computers and 53% have access to the internet. To me, it seems that it is very easy to access children through any of these media portals. Even if it is wrong to advertise to children, I think that a lot of the companies cannot hold back from easy accessibility to children. In addition, it was estimated that children account for up to $24 billion in direct spending each year and have an influence on $500 billion in family purchases. The debate seems to be that the children cannot comprehend and evaluate the selling and marketing messages. It was also debated that children lack the power to resist persuasive claims. Also, the blending of advertisements in entertainment is increasing which leads me to believe that it will not go away. Others, however, have said that these problems have been overstated and that by advertising they are giving more information to the children and the parents in order to make more informed choices. Most of the arguments against advertising to children are based on the fact that children are vulnerable. This may be true, but I believe that ultimately it is the parents’ responsibility to help their children make well-informed decisions and teach their children that they should not always believe what they hear. Children tend to have a more positive view about advertising than older, more experienced people. This is why I believe that the responsibility lies mainly with the parents to help teach their children about the messages behind the advertising. I think that it would be very hard to stop companies from advertising to children because of the possible market that it opens up. However, I do not think that cigarettes, alcohol, or other potentially harmful products should be advertised to children at all. It is difficult to cut out all advertising, especially because some products are potentially harmless.
   Role of parents is stressed here as being important in dealing with the messages from the marketing world. The student presents the view that a message that is informative from a marketer’s standpoint might be viewed as being exploitative by others.

5. The ethical issues a marketing manager might face are just as described in the question: a marketing manager may be faced with ‘fibbing’ a little to get their product off the ground, like Coca Cola with Dasani in England. They may be faced with the challenge of placing a value on a persons’ life; how much money should we get in order to help save someone’s life? I believe that all of these ethical issues need to be addressed immediately, for the companies’ sake. Coca Cola, for example, sold tap water in bottles in England. That might not have had any adverse affect on people’s lives, but once the people of England found out that they were drinking expensive tap water, they thought less of Coca Cola for not being completely honest. There is a fine line between telling people what they don’t want to know, and what they should know. The Dasani problem was stupid in my opinion, it was an easy way for Coca Cola to make money, and in the end it hurt the company. In the AIDS drugs being priced so high, many people everywhere cannot use them because of insurance issues. Yes, the bulk of the AIDS epidemic is in Africa, but even in the U.S. the medicine is not available to everyone. If I were a marketing manager faced with this ethical issue, I would devote my time to looking for a way to help in Africa much more than under-pricing the drugs and losing profit. I would look into finding a way to globalize the company in Africa. This way the African people would have a chance to work for decent wages, and they would have company benefits, such as educational seminars on what company they work for, what products the company makes and what they are used for. Education is a huge step in helping with the AIDS epidemic; it’s a problem that will take a long time to solve, but I feel that starting anywhere will help. I know that as a marketing manager one must think about everything. I feel that ethics need to be a top priority when it comes to selling. If there is any dirt on a company, small or large, it will reflect poorly on the company and sales will drop. I would much rather work for a company that produces quality, and gains profit from an honest day’s work, than for a company that is deceitful. With everything in life, one must think ‘outside the box’; there is always a way to make things right.
   The burden is on the marketer. If she searches hard, she WILL find an ethical and profitable way!
   
   
6. The major ethical issue facing an international marketing manager is respecting the cultural and political environment of foreign countries. Each country is so diverse, any manager assuming that he can continue doing business with no change to practices or standards will eventually alienate there potential market. Many countries do not have labor laws protecting citizens from unfair business practices. It is a manager’s job to find ways to make money without violating a country. Governments in many countries accept bribes as regular business practices or allow certain companies room within the law for a share of the profits. It can be difficult to do business in these countries without participating in ‘normal government practices’. An ethical manager must comprehend the consequences the company would face at home by engaging in illegal acts despite being in a foreign country, and act accordingly. When discussing marketing in this day and age the topic of ethics always arises. Whether it is a false claim that a company has made or the high prices of a certain product/ service, ethics is a hot topic now more than ever. People have diverse views on ethics and what constitutes ethical behavior versus unethical behavior. But one thing is for sure, everyone has one, and in marketing it is crucial that you find a way to take everyone’s opinion into consideration. It’s a difficult job, but that’s why marketing managers get paid the “Big Bucks.”

7. One issue that could arise when marketing a certain product is that of making false claims. Companies are notorious for doing this in the United States and it could possibly take years any type of government agency to find out. If false claims or untruths were told in a foreign country and the company behind these lies knew about them and never mentioned anything, people of that country would undoubtedly question the validity of, not only that company, but of anything that maybe associated with it. Those repercussions could have significant impact on the financial position of more than one company. This is just one of the ethical issues that a marketing professional could face when marketing in a foreign land. “If this action is held up to public scrutiny, will I still feel that it is what I should have done and how I should have done it?” (Cleveland, H. 1972. The Future Executive, 104. New York: Harper Row.)
   This student presents the notion that the implications of unethical behavior by an individual or a company extend much beyond its own borders.

8. Marketing and Environment. Humans have had a great impact on the environment, and those impacts affect both humans and other animals. Pollution to the environment has three forms:
• Adding toxic materials to it.
• Rearranging it for our own purposes.
• Removing pertinent parts from it such as by mining, forestry, oil, and gas industries.

As marketing managers we can deal with this by understanding that it is it important to promote positive impact on the environment such as by fostering use of renewable resources and less-polluting products and services.
The implication here is that marketers need to consciously incorporate environmental impact when writing product or service requirements or when dealing with the development organization.

9. Marketing and Use of Animals. Companies use animals in order to:

• Test cosmetics, medication, or other products.
• Learn through experimentation.
• Teach.
• Entertainment

We first have to figure out whether it matters if the animals experience discomfort or death. Does it matter if the animal is taken from its natural habitat? We need a framework in order to discuss this and find ways of dealing with this issue or figure out a better way of experimenting with new products without using animals.
This supports the classical “ethical behavior towards all species” argument.

10. Marketing and human social causes. It is a reality that there are economically disadvantaged people and communities. Not everyone is born with the same benefits and opportunities to succeed. So a marketer has to consider the long-term benefit to society. This is a very difficult issue to deal with. Is our company benefiting the surrounding area where our business is located? Are we providing assistance in the community to build a strong and educational community not only for us but for our kids?
    There is an implication here that a marketer has a “special” role to play in promoting long term benefits in the areas where the company does business.
    
    
11. Marketing and Religious causes. Marketing decisions and non-religious purchases should not be based on religious reasons that lack an ethical basis. Doing so would be religious discrimination. A valid ethical issue to support is the right for each person to choose and practice her own beliefs as long as they don't infringe on other people's rights.
    This mentions that marketing decisions are sometimes driven by religious reasons, but attempts to draw a distinction between those with an underlying ethical justification versus those that do not.
    
12. Advertising ethics. There is a very slim line between ethical and unethical business practices. Especially in marketing this line is visible as some countries may allow some marketing practices and others may see them as unlawful and unethical. Some of the problems that exist today are:

· Advertising to children

· Usage of sexual or seductive messages in order to gain more attention and product recognition

· Subliminal messages

· Indirect information

· Use of exaggerated claims (puffery)

· Withholding the truth or advertising partial truth in messages

· Taking advantage of lack of laws that forbid some messages and claims

Marketing managers face some of these problems daily. I personally would like to avoid anything that may be portrayed as unethical because this reflects negatively on the whole company. I can only imagine what will happen with Coca Cola sales (not only Dasani) in UK after discovering that the Dasani brand is just plain tap water. It is easy to say that some unethical decisions can be lucrative but this situation usually doesn’t last very long and when it is discovered by media and publicity, it hits the company very hard. Managers need to ask themselves a question “Is it worth in the long run to do this, and risk company’s image for a short term high profits?” I personally am against unethical practices, because the image and the longevity of the company is the priority. For me it is important to keep consumers and establish a lifelong relationship with them. Marketing can be done the legal and ethical way, and we have multiple examples of companies who are leaders in the market but don’t engage in such practices.
This student brings up the notion of marketing as establishing a lifelong relationship and views ethics in that context.

13. Researchers at Merck & Co. believe that a drug they have developed for animals might be an effective treatment for human river blindness, a debilitating illness that affects hundreds of poor people in the Third World. The process of development and testing, however will be enormously costly. A question that comes up is:

· Should the company devote critical resources to developing the drug, knowing that, even if it were medically successful, it would yield little financial return?

The way I would deal with this issue is: Yes, the concept of “doing good” in the real world is very complex but Merck & Co. is a company whose products are essential to human life and health. Even though the process of producing this product will be very costly they should bring it to the market. Another issue that might come up is: can the people in the Third World countries afford to buy it? They should offer it for the minimum acceptable price where they don’t come out losing but where they don’t gain enormous profits either. Also they should ask for sponsorship from other companies who are interested in the development of the Third World countries. That way maybe they can lower their cost on development and testing of the product.
This student deals with the complex subject of developing products with high R&D costs but pricing it so many in the world benefit from it. The notion of obtaining sponsorship for offsetting costs is an interesting one.

14. There are several ethical issues that marketers face in foreign countries. Some examples would be cutting costs by cutting quality drastically enough to where the products could break and cause damage to the consumer, for example cars that roll easily or have parts that explode easily or manufacturing a company’s products in factories that use child labor and failing to disclose such information. A similar ethical issue can arise with ethical pharmaceuticals where a product is developed for a certain illness and tested and approved, and then it is discovered later that the product has harmful side effects. I would deal with these issues by maintaining a strong quality control program that checks every aspect of the product for health, safety, and effectiveness, and try to maintain an attitude that does not put profits over people, because that seems to be where most of these ethical issues stem from, when companies consider profits more important than public health and safety.
    
    
15. One issue a marketing manager might face is with foreign customs officials in countries where bribing is common place. There are a couple of options when faced with this issue. Usually the corrupt foreign customs holds on to the high value items since the more the value of the items the higher the bribe will be. If this is the case and you are shipping something that contains intellectual property value, for example a CD with software on it, you can claim the value of the items as the physical value of the CD around $2 and the software should go through without a problem. This is something I would do; try to play with the numbers to get past customs faster rather than bribing them, therefore eliminating the problem without bribes.
    This student presents a view that one type of ethical violation is preferable to another.
    
    
16. Ethical issues are always difficult ones to combat. For example, suppose an automaker like GM would have to recall one line of their cars in China. It would cost them a lot of money to do a recall of that size. In addition to that they would probably lose consumer confidence especially as they are new in the market. Some people would probably not trust the company as much if it did a recall. First of all GM should try to figure out if doing to the recall would be a good thing or would it hurt the company and many lives as well. Would GM want to be held liable in case something goes wrong with a car that was supposed to be recalled and was not? I don’t think so; I would go ahead and do the recall even if it meant that some consumers would therefore no longer buy GM, because the risk would be too great to take that chance.
    
    
17. There is a difference between operating within the boundaries of the law and the boundaries of ethics, because the law doesn’t always consider ethics. As a marketing manager, you will experience ethical issues like:

· deciding between making more profit for the company or making the product more affordable

· pricing strategies that hurt the consumer but are profitable

· selling a product that is bad for consumer’s health

· a product that is bad for the environment

· having a very low cost strategy that hurts the local established small companies

· false advertising

· sacrificing the conditions for workers in order to cut cost

Those are the ethical issues that marketing managers have to deal with on daily basis. I think that as long as you’re doing more overall good than evil to the society as a whole, you’ll be fine. Also, I think it’s better to inform the public of things you don’t necessarily have to, because it could backfire later on and people might turn away from you and buy from your competitor. Ethics are very important for a company if they want to keep a good image, especially in today’s world were the competition is getting more intense every day.

As the above opinions illustrate students are keenly aware of the multidimensional nature of ethics in the global marketplace. They are interested in creating marketing plans that can withstand scrutiny under an “ethics” microscope, and want to implement them with ethical profitability in mind. This thinking should reinforce our confidence in the future of corporate America.

This article is based on a collection of min-essays written by students of International Marketing at Elmhurst College.

LEARNING FROM THE BEST- CREATIVE BRANDING CAMPAIGNS BY GOVERNMENT AND CONGRESS

When the subject of marketing best practices and successful branding campaigns comes up for discussion, the government and the lawmakers, irrespective of their political stripes, do not rank at the top of the list. However there is much to be learnt from this group for creating succinct, attractive and effective branding concepts in support of strategic positioning of their key issues, and then deploying a very effective branding campaign.

An exemplary example is the positioning of a number of initiatives under the “Ownership society” brand. This brand includes products like home ownership, financial ownership, as well as ownership of the future. No matter which political or economic belief a customer swears by, she can relate to the simple, effective concept of “ownership.” Further, this campaign is being driven by the chief executive, President George W. Bush. By positioning this brand directly with customers, he has ensured high awareness and belief in the value of the brand, as evidenced by media coverage and public opinion polls in support of the brand. Once the branding has proven successful, it has been expanded to include the launch of a new product, the “Social Security Privatization” initiative.

Another example of the power of the brand is the “JOBS” bill. Short for “Jumpstart Our Business Strength” this bill was drafted as part of a drive to repeal a $5 billion-a-year subsidy for U.S. exporters that the World Trade Organization ruled illegal. Highlighting this bill as a response to the WTO ruling would have played poorly in the public opinion as caving in to WTO. However, when branded as a “Job Creation” bill, it lends itself to a number of initiatives that can be promoted under this umbrella. The final bill, titled "American Jobs Creation Act of 2004" was signed this into law by President Bush on October 22, 2004. One of the items in this bill allows a U.S. corporation with a stake in certain foreign corporations may make a one-time election this year to shift foreign earnings to their U.S. headquarters at an effective 5.25% rate, instead of the typical 35% corporate rate. Another item reduces excise taxes on the sale of bows and arrows, fishing tackle boxes and sonar fish finders. While these initiatives might have been hard to sell on a stand-alone basis, the branding power of the JOBS bill enhances the marketing of them. This bill has been actively promoted by corporations and legislators alike as a key driver for job growth, since there are attractive elements for many constituencies.

There are a few more examples of the power of branding campaigns by the legislature, including the “Unborn Victims of Violence Act”, the “Leave No Child Behind Act”, the Affordable College Tuition Act of 2004, and the “Clean Money, Clean Elections Act.” The marketing lesson is quite clear- ignore the politics, and learn from the branding!