CHAPTER XIII

Corporate Social Responsibiliy

Learning Objectives
Marketing ethics
Social impact of marketing
Business regulations in marketing
Principles of public policy towards marketing

Structure
13.1Society And Marketing
13.2Social Regulations In Marketing
13.3Business Regulations In Marketing
13.4Principles of Public Policy towards Marketing
13.5Levi's Social Responsibility
13.6Summary

INTRODUCTION
The word 'ethics' is known as 'ethikos' in Greek and 'ethicus' in Latin. It is derived
from ethos, which means character or manners. Ethics therefore is said to be the science of
morals, moral principles and rules of conduct.

The characteristics that define acceptable conduct in marketing are called marketing ethics.
Certain fundamental ethical issues have been codified into statutory regulations, to be
followed by manufacturers. However, it is not enough to follow these legal regulations if
manufacturers want to build a long- term relationship with their customers. To nurture their
relationship with customers, manufacturers need to conform to ethical standards which
society expects them to follow. The expectations of customers and the general public should
be observed carefully. If the marketing efforts of a company deviate from these ethical
standards, it might face serious problems. In certain cases, even if the company's actions are
legal, it may have to stop them, due to intense public protest. Shell faced similar problems a
few years ago.

Therefore, it is very important for organizations to follow ethical standards. As awareness

among customers is on the rise, many customers prefer not to buy products or services of
companies that have resorted to unethical practices either in the past or at preset. Thus, if
companies do not ensure that their policies and practices are ethical, they are bound to lose
potential customers. These customers may also engage in a negative campaign against the
company.

13.1 SOCIETY AND MARKETING

An organization can create a positive impact on society if produces products that are useful to
society and do not harm it. Organizations seriously started considering their responsibility
towards society, around forty years ago. They have realized that organizational social
commitment comprises of four types of responsibilities. They are economic, legal, ethical and
philanthropic responsibilities. Although these four categories of responsibilities have existed
for decades, ethical and social dimensions have gained increased significance in recent years.
Firms are established largely to offer goods and services to people and their aim is to
maximize profits. In their profit maximizing efforts, their responsibilities towards society are
almost forgotten.

As consumers now realize the need to protect environment and society, companies are also
forced to realize their responsibilities towards society and environment. A firm doing
business must comply with the law of the land. It needs to strictly adhere to the laws of the
central, state and local governments. Apart from the legal factors, a firm has to focus its
attention on ethical issues as well. Although a firm is not legally bound to follow ethics,
following ethics helps organizations build a positive image in society and this in turn helps
them improve their market value.

Philanthropic acts are different from ethical commitments. A firm, which contributes some of
its resources for the betterment of the society is said to be performing a philanthropic act. A
firm is considered socially responsible when it fulfills its economic, legal, ethical and
philanthropic commitments, Microsoft, for example, is increasingly becoming a socially
responsible company by combining its business activities.

Individual Customer

Consumers are becoming increasingly aware of the social commitments of organizations and
some prefer to buy products of those firms that are socially responsible, if the services,
quality and prices are equal for all firms. Organizations are gradually realizing that following
unethical practices for short -term gains would spoil a company's image in the long run and
the costs incurred in becoming socially responsible would improve organizational
sustainability in the long run.

Firms must give maximum importance to the customers they are serving. Consumer needs
and their purchasing power should be kept in mind while developing products and services.
Products should satisfy the quality requirements of target customers. Companies must also
ensure that they deal with customers in a fair and respectful manner at all points of contacts.

Several companies have been criticized for misleading customers through advertisements,
pricing and packaging. Some companies recalled their products when they found that their
products were either not performing at the desired efficiency level or were unsafe for
consumer use or were harming the environment, Several automobile companies have recalled
their vehicles to rectify defects that were detected in them. For instance, in November 2003,
Ford recalled 340,000 of its Windstar vehicles (2001-(13 models) to replace latches of the
bench seats. Chrysler group recalled 438,000 of its Jeep Liberty sports utility vehicles (2002-
03 models) to rectify the front suspension. Similarly, other automobile companies like
Chevrolet and Volvo have also recalled their vehicles for rectifications.

Automobile companies are constantly seeking to produce environment friendly vehicles. For
instance, the development of environment friendly technologies and 'greening' of the
automobile was an important issue for Toyota in the 1990s. A company release in 1999 stated
that Toyota -saw itself in the 21st century as furthering its efforts to provide safe, clean and
affordable mobility for people everywhere. The company stressed on innovation and urged its
employees to explore new technologies.

The launch of Pirus, the world's first mass produced hybrid car, was a major step towards
cleaner vehicles. Toyota claimed that this car used fuel twice as efficiently as conventional
cars and was 90 per cent cleaner than what Japanese regulations specified. Company sources
revealed that teams continuously worked on leaner cleaner power train technology, on lighter,
safer bodies and on recyclable and recycled materials. The 'Eco Project' team looked out for
new possibilities for greener transport which included fuel cell technology. Toyota secured a
global patent for its NOx catalytic system, a major breakthrough in controlling pollution.

Society

Every business establishment contributes to society in some form or the other. Similarly,
society also helps business organizations by creating an environment for them to grow in.
Since businesses depend on society for their survival, they need to pursue their activities in a
manner that does not harm the environment and society, and in fact proves beneficial to them
Many organizations have begun to realize their responsibility towards society. For instance,
Procter & Gamble Hygiene and Health Care India initiated project Drishti, a sight restoration
project, aimed at restoring sight of over 250 blind girls across the country by corneal
transplantation. This project was undertaken with the help of National Association for the
Blind. It also launched a project called 'Open Minds' aimed at educating working children.

Some companies put consumers and the society first, Johnson & Johnson showed that it put
the health of consumer’s first when some consumers died after consuming Tylenol syrup for
headache. Companies need to be environment conscious, and sensitive towards issues like
global warming and ozone layer depletion. Till recently, CFC (Chloro Fluoro Carbon) that
damages the ozone layer was used in most countries to manufacture compressors for
refrigerators. However, of late, many companies have developed alternate ways of
manufacturing and have banned the use of CFC in any product or process. They should also
adopt fair practices of employment like, giving equal opportunities to both men and women
of the community, and provide a safe and healthy work environment for employees along
with adequate compensation packages.

Companies need to follow a code of conduct in dealing with their suppliers and customers. In
some industries, various players have come together to regulate the industry and have
designed a code of conduct that every firm in the industry needs to follow. Similarly, some
companies have also developed their own code of conduct. Their efforts have been
recognized and appreciated in society. Over the years, organizations have performed a variety
of tasks in society. They are financial tasks, economic and production tasks, maintenance
tasks, political tasks and environmental tasks.

Financial tasks

Businesses are going global. As a result, they need a large amount of funds that are usually
borrowed from the public or from financial institutions. When shareholders invest their
money in a firm, it becomes the company's responsibility to ensure that their investments or
capital remains safe and that they get adequate returns on their investments. There have been
certain instances in the recent past in which shareholder wealth was destroyed. For example,
WorldCom, a US based telecommunication company, became bankrupt because of certain
fraudulent accounting and auditing practices. And shareholders' wealth eroded in a period of
three years. In August 1999, WorldCom shares were trading at $75.75. Its share prices
dropped significantly and shares were trading at $.1.41 in April 2002, Manipulating share
prices for short term gains severely damages a company's reputation and credibility in the
long run.

Economic and production tasks

Economic and production tasks relate to activities that are commercial or rather those that are
aimed at the creation of wealth. There is a lot of scope for the adoption of unethical practices
in the manufacture of products and services and their subsequent distribution. For example,
distributors of certain products can create scarcity through illegal hoarding. However,
companies need to refrain from unfair means if they want to achieve long-term credibility in
the market.

Maintenance tasks

Maintenance activities help in the proper functioning of society. Activities that shape society
and culture by imparting knowledge fall under this category. Educational establishments,
religious institutions, health and hospitality services provide society with better resources
through knowledge. Media also plays a significant role in the transformation of society.
Welfare activities of firms too, fall under this category.

Political tasks

Companies with global operations need to formulate policies that respect the laws of the land
in which they are operating. Every firm is expected to uphold human rights and not violate
the rights of its shareholders and employees. Companies need to proactively seek solutions to
global problems concerning the business environment. Companies with global operations
need to respect the political framework of the countries they are operating in and carry on the
business within those limitations.

Environmental tasks

Firms need to protect the environment and ensure that none of their activities affect the
environment adversely. The issue of effluent disposal has gained significance in recent times,
and most countries have enacted laws for environmental protection. Firms should take steps
to tackle industrial waste that causes severe damage to the environment and sometimes, even
loss of human life. The Bhopal gas tragedy, one of the biggest industrial tragedies, occurred
due to negligence and caused the death of over 10,000 people. A firm's commitment to
environmental protection reflects its corporate and social responsibility.

Other Businesses

A firm's marketing practices can substantially affect other businesses as well. If a company
acquires the business of a competitor with the idea of eliminating competition, it is clearly an
unethical trade practice. Such acquisitions will lead to fewer choices of products and services
for customers. Certain firms, adopt unethical marketing practices, like setting the price of the
product below the cost, or threaten to cut-off business with the suppliers. These are intended
to wipe out competition. To prevent such unethical practices governments make antitrust
laws.
13.2 SOCIAL REGULATIONS IN MARKETING
The social regulations in marketing include customer rights, Consumer Protection
Act, consumer forums, Bureau of Indian Standards, competition policy, environmentalism
and public action to regulate marketing.

Consumerism
Consumerism can be understood as an organized movement by consumers to protect
themselves from exploitation by sellers. Consumerism in India emerged as a reaction against
the black marketeering and other unethical practices of sellers in the country. Indian
consumers raised their voice against the exploitative practices of sellers. Various non-
government organizations also began to voice their concern against the exploitative practices
of marketers. For instance, The Centre for Science and Environment is a nongovernment
organization that recently raised the issue of pesticides in the soft drinks of various
companies. As a result, many individuals and organizations boycotted the consumption of
these cold drinks. As consumers are aware of their rights and the need for companies to
pr0tect environment and society, it has become necessary for companies to operate in a
society responsible manner.

Customer Rights
One of the most important social commitment issues in marketing is the consumer
movement. Consumer movement can 'be described as a collective endeavor of individuals or
organizations to protect consumer rights. The rights were the right to safety, the right to be
informed, the right to choose and the right to be heard. The right to safety proposed that firms
could not knowingly offer such goods to the consumers that may harm them, i.e. all products
offered to the market must be safe. Otherwise, clear instructions must be provided to the
customers about the safe usage of the products. The right to be informed proposed that
consumers should have adequate information about the product. The right to choose conveys
that consumers should have a wide range of products to choose from. The right to be heard
proposed that the consumers should have a say in the formulation of business policies by the
government. Sellers should also give consumers a fair chance to complain about their
offerings. The Consumer Protection Act 1986, enacted by the Government of India, confers
o~ Indian consumers all the above rights.

Community relations
Companies need to maintain good relations with communities. Firms, which
undertake philanthropic work and actively participate in resolving social issues or concerns,
have a good image in society. In India, several organizations are spending money to create
public awareness on AIDS, road safety, ill effects of alcohol consumption, smoking and
chewing of tobacco.

Green marketing

Green marketing is a recent phenomenon, in which manufacturers focus on producing

environment friendly products. All marketing efforts are directed towards achieving this goal.
The product development, pricing policies, promotional activities and distribution strategies
are developed in a way that will not cause any damage to the environment there are certain
organizations, which observe companies' efforts towards green marketing and give a seal of
approval to these companies. This seal can be used in their advertising and promotional
campaigns.

The primary interest of producers is to increase consumption of their goods. This interest
clashes with the interest of saving the ecology. People who are concerned about the
environment and ecological imbalance will reduce their consumption. This psychology wills
affect producers adversely.

However, the number of people "'hose consumption is dependent on the environment

friendliness of a producer is few. However, in the future, it might increase because more and
more people are becoming aware of environmental issues. Finns have also started showing
their customers that they care for the environment.

Consumer Protection Act

The Consumer Protection Act in India was enforced in 1986. The Act paved the way for
setting up of consumer redressed forums at the district, state and national level. The Act
gained momentum in 1990 after these forums had been set up throughout the country. The
enactment of the Consumer Protection Act brought about increased consumer rights
awareness in the country and many organizations came into existence to fight for the cause.
These organizations o ff e r t h e i r s e r v i c e s t h r o u g h w e b s i t e s. T h e s e i n c l u d
e www.consumerindia.com, www.itheconsumer.com, www.indiainfo.com, w w w. i n d i a
n c o n s u m e r n e t. c o m, w w w. p l a n e t c u s t o m e r. c o m , www.cgsiindia.org/c-
rights.htm. These sites provide necessary services to consumers who want to seek a remedy
under the Consumer Protection Act. Since their establishment many customers and
organizations have approached they for redressed of their grievances Awareness among
consumers about their rights and the option of seeking timely and just remedies through
consumer forums have made business establishments more responsible in their offerings
towards customers. People have started demanding better quality products and services.
Organizations, both public and private have realized their responsibility to offer the best
quality products and services to their customers. The Act applies to all goods and services
(excluding services that are rendered free of cost) in the country, until and unless the central
government categorically exempts a product or a service from it. The Act covers all the
business establishments in the country irrespective of their nature. It also confers a right, that
is, the right to seek remedy against those who adopt unfair trade practices or exploit
consumers.

Services of doctors have also been included in the Act. A controversy has been raging over
this issue for several years with doctors claiming that their services should not be included in
the Act. Investment in the healthcare industry has increased significantly and a large number
of corporate hospitals have been set up in the recent past. The need for redressed is however,
much more important.

Consumer forums

Under the Consumer Protection Act of 1986, the Government of India has set up consumer
redressed forums at the district, state and national levels. They were established to provide
faster remedies to aggrieved consumers, free of cost. There are 569 district forums in the
country, with 33 state commissions and a National, Consumer Disputes Redressed
Commission located in the country's capital, New Delhi acting as the apex institution. A
former or a sitting district court judge or any person who is eligible to be appointed as a
district judge, heads the district forums while the state commissions are headed by a former
or a sitting judge of a High Court The National Commission constituted in 1988, is headed by
a former or a sitting judge of the Supreme Court of India. The district consumer redressed
forums accept written complaints from customers claiming monetary losses up to Rs 20 lakh,
while the state commissions accept complaints up to Rs one crore and the National
Commission beyond Rs one crore. Consumers can appeal against the judgment of the district
forum in the state forum and against the judgment of the state forum in the national forum.
The National Commission has the right to control the state commissions in matters relating to
administration and pending cases.

Bureau of Indian Standards

The Indian Parliament enacted the Bureau of Indian Standards Act in 1986. It was
specifically setup by the government to standardize the quality of goods and services being
produced in the country by issuing certifications to those companies that meet the minimum
requirements laid down by it from time to time. The Bureau of Indian Standards (BIS) issues
certification under the Indian Standards Institution (ISI) seal. The Bureau establishes
standards regarding products or services by constituting committees comprising of
consumers, manufacturers, technologists, scientists and other officials. These standards are
established after giving a fair chance to all the parties concerned to voice their opinion. Any
business establishment seeking a license from the BIS has to submit an application form in a
specific format issued by the Bureau. An applicant's product or process is then verified by the
Bureau for conformance to quality according to Indian standards. If the product or process
conforms to the stipulated standards, then the Bureau issues a license to the manufacturer
enabling him to display the ISI mark on its products, under certain conditions. The Bureau of
Indian Standards, headquartered in New Delhi, is headed by a Director General and has
branch offices and regional offices in all parts of the country. The Bureau also awards the
Rajiv Gandhi National Quality Award annually to companies on the basis of their leadership
skills, policies and strategies, human resource policies, resources, processes, customer
satisfaction, employee satisfaction, impact on environment and society and business results.

Competition Policy

In India, the competition policy was formulated to create and sustain an environment of
active and healthier competition among firms. This policy helps in the implementation of
liberalization policies. The competition policy in a country should be developed keeping in
mind the socio-economic, cultural and historical perspective of the country. The relation
between competition, trade and investment policies on the one side and macro-economic
factors on the other must also be taken into consideration. The competition policy can be
effective only if the finance, commerce, industry and law ministries combine their efforts for
its development.

The SVS Raghavan Committee has formulated the latest competition policy in India in the
year 2000. The committee has called for abolition of the Monopolies and Restrictive Trade
Practices Act 1969 (MRTP) and suggested that all cases that pending with the MRTP
commission may be transferred to their respective consumer courts under the Consumer
Protection Act 1986. The liberalization, privatization and globalization policies of the
government should support the competition policy and vice-versa. An important aspect of the
new competition policy is that the Industries (Development and Regulation) Act 1951 is
considered only for environmental protection and protection of monuments and national
heritage sites. The Industrial Disputes Act, 1947 needs to be amended for easy exit of non-
viable and loss making companies. The Board for Industrial Finance and Restructuring
(BIFR), set up under the provisions of Sick Industrial Companies (Special Provisions) Act
1985 has to be abolished. Certain other points envisaged by the commission are:

 All trade practices should be open without any discrimination. . All anti-competitive
practices should be considered illegal.

 Unauthorized agreements regarding territory sharing, unusual price reductions to gain

undue advantage should be considered illegal
 State governments should significantly reduce their share in slate monopolies and
subsequently privatize those business establishments in all the sectors except for those
that are strategically important like defense related industries.
 The businesses owned by the state governments and foreign companies operating in the
country must be brought under the competition policy.
 The government should carefully examine the anti-competition practices in industries,
especially those that arise with the implementation of World Trade Organization
agreements.
 The entry barriers created in an industry and the abuse of position by the dominant firm
should be seriously dealt with.
The committee has also suggested the establishment of a separate commission named
Competition Commission of India to implement the Indian Competition Act. It has further
suggested that the commission should consist of experts from different fields. All complaints
regarding violation of the Competition Act should be directed towards the competition
commission. India has signed the General Agreement on Trade in Services to upgrade the
Indian service sector to match international standards.

Environmentalism

Environmentalism is yet another critical issue that needs to be considered by firms.

Organizations need to ensure that they produce eco-friendly products and minimize industrial
pollution. Consumer awareness and social concern for ecological issues have helped firms
realize their responsibility towards nature and society. Today, firms around the globe are
focusing on producing environment friendly products through increased research and
development activities. However, more efforts are required in this direction as the
environment has suffered a lot of damage due to commercialization of natural resources.
Exploitation of the world's natural resources by industrialized nations poses a threat to the
ecological balance.

The release of Greenhouse gases like carbon dioxide and carbon monoxide into the
atmosphere by industries is causing global warning.

Public Action to Regulate Marketing

Consumer awareness and their expectations from producers have been increasing over the
years. People have started boycotting products that are of low quality and are unsafe for the
environment. Consumers have become united and formed groups to protect their rights.
These groups have started discouraging consumers from buying certain types of goods and
services. These customer groups have checked businesses adopting unfair and unethical
practices, to a large extent. The Consumer Protection Act also helps them control such
activities of producers through legal action. However, most organizations have realized the
importance of producing goods that are environmental friendly and are also adopting fair and
ethical marketing practices. They have understood that long-term benefits can be accrued by
adopting customer friendly practices. Many organizations conduct social audit to evaluate
their business activities. There are three vital steps in a social audit. First, an organization
identifies the positive and negative impacts of its marketing activities. Second, it tries to
minimize the negative impact and maximize the positive impact. Third, it evaluates these
impacts and analyses their implications for the management. Three methods can be applied to
evaluate the social responsibility of an organization. In the first, customers, suppliers and
employees are asked to fill up a questionnaire. The second comprises of a social
responsibility report, prepared by the management and the third, is a socio-economic
operating statement, in which the management estimates the social costs and benefits.
13.3 BUSINESS REGULATIONS IN MARKETING
Firms in the 21st century need to understand the importance of being socially
responsible and perform ethical marketing activities. Regulators in marketing such as
enlightened marketing, ethical marketing practices, following a corporate code of conduct
and maintaining high standards of public policy to the marketing activities will help
organizations perform their business processes in a better way.

Enlightened Marketing

Intelligent producers identify the needs of potential customer’s first and put in all their efforts
to satisfy those needs. An enlightened producer's efforts should be directed towards
improving the quality of life of his customers by offering them innovative and best quality
products at affordable prices. The products should be environment friendly or they should at
least not harm the environment. Producers need to feel more responsible towards society.
Enlightened marketing activities of a firm are aimed at leveraging long-term benefits through
business practices such as customer-specific marketing, social responsibility marketing,
innovative marketing, value marketing and sense-of-mission marketing.

Customer-specific marketing: In this type of marketing, all marketing efforts of an

organization are directed towards satisfying the requirements of its consumers with good
quality products that will enhance their living standards. Producers should focus on
producing goods that will satisfy their customers so that they are retained and refer their
products to others leading to long-term profits and sustainability.

Social responsibility marketing: As discussed earlier, socially responsible marketing gives

more importance to the society and environment rather than products and profits in the
production and distribution of products to customers. For instance, Levi, a US based leading
apparel manufacturer and seller, has been known for its values, social commitment and
community services. Similarly, McDonald's had set up the Ronald McDonald House of
Charities (RMHC) in 1974 in Philadelphia to provide homes for families of sick children
being treated at nearby hospitals. There were more than 190 RMHCs in 14 countries. About
20,000 volunteers contributed nearly one million hours of time each year to the RMHCs.

Innovative marketing: As the name suggests a company should innovate new products faster
than its competitors devise new ways to reach customers communicate with them and
identify how their unfulfilled needs can be fulfilled. Value marketing: Companies should
focus on creating maximum customer value through their product offerings. The more the
value derived by customers through the products, the more loyal they become to the
companies. And loyal customers provide long-term profitability to companies. Sense-of-
mission marketing: Mission statements of firms must reflect their responsibility towards
society rather than just their profit motives.

Marketing Ethics

Producers must develop ethical standards that are followed by the entire organization and
ensure that these standards are never compromised. A firm, which strictly adheres to these
standards without compromising on them for short-term benefits would definitely find itself
in a profitable position in the long run. Though it might be legal to use children in
advertisements, it may be unethical to use them. Similarly a pharmaceutical company can
provide technical details about its products in advertisements, but can hide critical
information about their side effects. In such case, the company might not be breaking any
rule, but it will be normally incorrect to deprive customers of the information which may
affect their health adversely. A salesperson of a financial services company can sell a product
to a customer, which does not suit his need.

Concern about the ethical values adopted by organizations is on the rise. The increasing
impact of media and the increase in its reach are making information available to the public,
fast. For example, media, on a number of occasions, has focused attention on alleged
exploitive employment practices of suppliers used by some of the biggest brand names in
sportswear. There is a myth that if a company acts ethically, its profit objective will be
adversely affected. It actually adds to profitability in the long run. For example, good safety
standards and employment policies can improve productivity,

Corporate Code

Producers should keep in mind ethical factors while formulating a corporate code of conduct.
A code of ethics helps an organization follow rightful ethical practices and avoid unethical
business processes. However, the increasingly complex and competitive environment and
businesses operating across countries are complicating the process of developing ethical
standards.

Therefore, it is important for producers to carefully analyze and understand the complex
ethical standards governing society and the organizational environment. Cultural factors also
deeply influence the organization's efforts in developing its code of ethics people from
different cultures work in organizations. Their values and ethical standards differ widely: The
code of ethics should be developed by keeping in mind the type and nature of the society in
which an organization is working. For instance, there are societies where individualism is
highlighted and maximum importance is given .to individual decisions. On the other hand,
there are societies that uphold collective decision making efforts. Producers need to consider
such factors while developing a corporate code of ethics. A framework is generally used to
analyze the effectiveness of the corporate code of ethics of an organization. The framework is
segmented into four divisions depending on the competition and the industry in which the
firm is operating. In the first segment, industrial atmosphere does not support strong ethics
and most firms look towards profit maximization and do not concentrate much of their efforts
in building a corporate code of ethics. In such organizations, the management should slowly
direct the company's efforts in building and maintaining ethical standards, encouraging
employees to be ethical and communicating the dangers of being unethical in the long run. In
the second segment, there is a highly competitive entrepreneurial environment and individual
professional ethics dominate a firm's environment. The professional code of ethics must be
adapted to cultural factors thereby helping the firm in developing a strong corporate code of
ethics. In the third industrial segment, industrial environment is stable and the corporate code
of ethics is standardized. However, these organizations must adapt themselves to the
changing market scenarios

In the fourth segment there is a stress factor working on the corporate code of ethics, because
the environment is highly volatile. Due to frequent changes in the environment, a company
constantly focuses on adjusting its ethical standards on the basis of the changes in the
cultural, individual and professional ethics. Therefore, to maintain an ethical corporate code
in such industries, managers should constantly communicate to the employees the ethical
standards that they should follow.
13.4 PRINCIPLES OF PUBLIC POLICY TOWARDS MARKETING
There are about seven modem marketing principles that address the public policy towards
marketing. They are:

Principle of consumer and producer freedom: This principle describes that any marketing
effort will be successful if it improves the quality of life of customers. It implies that an
individual will excel in his pursuit if he is given complete freedom.

Principle of curbing potential harm: Effective measures should be taken by the government
and customer groups to ban harmful products. Legal action should be taken against
producer’s offering goods that can harm customers.

Principle of meeting basic needs: It is the most important criterion because marketing
activities should be directed towards fulfilling the basic needs of customers and
simultaneously uphold the values of society.

Principle of economic efficiency: Organizations should strive towards achieving economic

efficiency by producing goods of high quality and selling them at affordable prices.
Organizations should adopt the best policies towards achieving economic efficiency.

Principle of innovation: It is imperative for organizations to constantly innovate new products

to sustain and grow in the market profitably. However, these innovative practices should suit
the changing needs of customers. .

Principle of consumer education and information: Offering timely information and creating
awareness among consumers about products and services are fundamental for producers to
succeed. It helps consumers select the products that meet their requirements.

Principle of consumer protection: Companies should always be cautious towards consumer

protection and should try to protect consumer interests in all their activities. Governments and
consumers forums should take an active part ill protecting consumer interests at all points of
time.

An organization must focus on these seven principles to achieve its goals. If an organization
follows these principles, it will be acting in R socially responsible manner and will be able to
achieve its profit objectives in the long run.
13.5 LEVI'S SOCIAL RESPONSIBILITY
Levi had a long history of commitment to the communities among which it operated.
This heritage went back to the founder, Levi-Strauss, who had devoted substantial time and
resources to charitable and philanthropic activities. Levi showed its commitment to social
issues. The company took part in corporate initiatives such as the red tab foundation, which
donated a portion of corporate revenues to support communities and employee-sponsored
community involvement teams (CITs), which enabled employees to volunteer and help
people and communities in need.

Levi was considered to be a model employer. Especially by women. In April, 1994, the
council on economic priorities gave Levi an award for its "Unprecedented commitment to
non-exploitative work practices in developing countries." In 1984, the company was named
one of the hundred best companies to work for in America.

Levi had strict standards with regard to the work environment. The Levi Board of Directors
decided to close out $40 million a year in production contracts in China to protest against
human rights violations. When the company found that its contractors in Dhaka, Bangladesh,
were hiring girls as young as eleven as full time seamstresses, it worked out an agreement by
which it decided to pay the wages of these girls while sending them to school and decided to
pay for their uniforms, books and tuitions. When they reached the age of fourteen, the
minimum employment age set by International Labor Organization standards, they would
return to work. In 1992, Levi adapted a set of comprehensive standards for contractors
worldwide regarding wages, working hours, working conditions, ethics and environment.

In 1995, the Haas family was honored with the lifetime achievement award from the business
enterprise trust for providing steadfast social leadership while successfully competing
globally. US president, Bill Clinton, honored Levi with the first annual Ron Brown Award for
corporate leadership in 1998. The award was in recognition for the company's efforts to
combat institutions racism through its unique grassroots initiative known as Project Change.
13.6 SUMMARY
The characteristics that define the acceptable conduct in marketing arc called as
marketing ethics. Organizations need to market their products and services in such a manner
that they do not have any negative impact on society and environment. They also need to
realize the importance of satisfying customer needs and improving the quality of their lives.

Many organizations have realized their responsibility towards society. Consumers are
becoming increasingly aware of the social commitments of organizations and prefer to buy
products of the firms that are socially responsible. Organizations are realizing that following
unethical practices for short-term gains spoils their image in the long run. On the other hand
the costs incurred for being socially responsible help them in their long-term survival.

The social regulations in marketing include customer rights, consumer protection act,
consumer forums, Bureau of Indian Standards, competition policy, environmentalism and
public action to regulate marketing. The Consumer Protection Act in India was enacted in
1986. The Act paved the way for setting up consumer redressed forums at the district, state
and national level. They were established to solve consumer grievances faster without
charging any amount from them. The enactment of consumer protection act increased
awareness of the consumer rights in the country and many organizations fighting for the
cause were established.