MARKETING ETHICS RELATIONSHIP MARKETING GREEN MARKETING VIRAL MARKETING

Marketing Ethics
marketing is viewed as human conduct and is subject to academic analysis and public scrutiny. Ethics is the study of the moral principles that guide that conduct. "Let the buyer beware." "Let the seller beware."

What are the Challenges?

Marketers must be aware of ethical standards and acceptable behavior. This awareness means that marketers must recognize the viewpoints of three key players: the company, the industry, and society.

 Ethical conflicts in marketing arise in two contexts:

when there is a difference between the needs of the three aforementioned groups An example is the tobacco industry. So, cigarette and tobacco marketing have been good for companies and good for the tobacco industry, There is documented proof that cigarette smoking is harmful to health. Making it conflicting for the soceity. when ones personal values conflict with the organization.

 An example of the second type of conflict, when ones personal values conflict with the organizations, occurs when a leader in the company seeks personal gain (usually financial profit) from false advertising. "Cures" for fatal diseases are one type of product that falls into this category of ethical conflict: In their greed to make a profit, a marketer convinces those who may be dying from an incurable disease to buy a product that may not be a cure, but which a desperately ill person (or members of his or her family) may choose to purchase in an effort to save the dying family member suffering. Promoting and marketing such products violates rules of marketing ethics.

What are the Rules for Ethical Marketing?

Professional associations and accrediting bodies have identified guidelines for ethics in marketing. According to one of those associations, the American Marketing Association, the following rules guide marketing behavior: 1. Responsibility of the marketer Marketers must accept responsibility for the consequences of their activities and make every effort to ensure that their decisions, recommendations, and actions function to identify, serve, and satisfy all relevant publics: customers, organizations and society. 2. Honesty and fairness Marketers shall uphold and advance the integrity, honor and dignity of the marketing profession.

3 Rights and duties in the marketing exchange process Participants should be able to expect that products and services are safe and fit for intended uses; that communications about offered products and services are not deceptive; that all parties intend to discharge their obligations, financial and otherwise, in good faith; and that appropriate internal methods exist for equitable adjustment and/or redress of grievances concerning purchases. 4 Organizational relationships Marketers should be aware of how their behavior influences the behavior of others in organizational relationships. They should not demand, encourage, or apply coercion to encourage unethical behavior in their relationships with others.

RELATIONSHIP MARKETING

Relationship marketing is a form of marketing that evolved from direct response marketing in the 1960s and emerged in the 1980s, emphasis is placed on building longer term relationships with customers rather than on individual transactions. It involves understanding the customer's needs as they go through their life cycles.

Customer retention
At the core of relationship marketing is the notion of customer retention. relationship marketing involves the creation of new and mutual value between a supplier and individual customer. Novelty and mutuality deepen, extend and prolong relationships, creating yet more opportunities for customer and supplier to benefit one another. Studies in several industries have shown that the cost of retaining an existing customer is only about 10% of the cost of acquiring a new customer so it can often make economic sense to pay more attention to existing customers.

 It is claimed that a 5% improvement in customer retention can cause an increase in profitability of between 25 and 85 percent (in terms of net present value) depending on the industry.

the increased profitability associated with customer retention efforts occurs because: The cost of acquisition occur only at the beginning of a relationship, so the longer the relationship, the lower the amortized cost. Long-term customers tend to be less inclined to switch, and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume. Long-term customers may initiate free word of mouth promotions and referrals. Long-term customers are more likely to purchase ancillary products and high margin supplemental products. Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share. Regular customers tend to be less expensive to service because they are familiar with the process, require less "education", and are consistent in their order placement.

 Relationship marketers speak of the "relationship ladder of customer loyalty". It groups types of customers according to their level of loyalty. The ladder's first rung consists of "prospects", that is, people that have not purchased yet but are likely to in the future. This is followed by the successive rungs of "customer", "client", "supporter", "advocate", and "partner". The relationship marketer's objective is to "help" customers get as high up the ladder as possible. This usually involves providing more personalized service and by providing service quality that exceeds expectations at each step.

Customer retention efforts involve considerations such as the following: Customer valuation - how to value customers and categorize them according to their financial and strategic value so that companies can decide where to invest for deeper relationships and which relationships served differently or even terminated. Customer retention measurement - Dawkins and Reichheld (1990) calculated a company's "customer retention rate". This is simply the percentage of customers at the beginning of the year that are still customers by the end of the year. In accordance with this statistic, an increase in retention rate from 80% to 90% is associated with a doubling of the average life of a customer relationship from 5 to 10 years. This ratio can be used to make comparisons between products, between market segments, and over time. Determine reasons for defection - Look for the root causes, not mere symptoms. This involves probing for details when talking to former customers. Other techniques include the analysis of customers' complaints and competitive benchmarking (see competitor analysis). Develop and implement a corrective plan - This could involve actions to improve employee practices, using benchmarking to determine best corrective practices, visible endorsement of top management, adjustments to the company's reward and recognition systems, and the use of "recovery teams" to eliminate the causes of defections.

 Retention strategies also build barriers to customer switching. This can be done by product bundling (that is, combining several products or services into one "package" and offering them at a single price), cross selling (that is, selling related products to current customers), cross promotions (that is, giving discounts or other promotional incentives to purchasers of related products), loyalty programs (that is, giving incentives for frequent purchases), increasing switching costs (that is, adding termination costs, such as mortgage termination fees), and integrating computer systems of multiple organizations (primarily in industrial marketing). Many relationship marketers use a team-based approach. The rationale is that the more points of contact between the organizations, the stronger will be the bond, and the more secure the relationship.

The broad scope of relationship marketing

Relationship marketing has been strongly influenced by reengineering. According to reengineering theory, organizations should be structured according to complete tasks and processes rather than functions. That is, cross-functional teams should be responsible for a whole process, from beginning to end, rather than having the work go from one functional department to another. Traditional marketing is said to use the functional department approach. This can be seen in the traditional four P's of the marketing mix. Pricing, product management, promotion, and placement are claimed to be functional silos that must be accessed by the marketer if she is going to perform her task. According to Gordon (1999), the marketing mix approach is too limited to provide a usable framework for assessing and developing customer relationships in many industries and should be replaced by an alternative model where the focus is on customers and relationships rather than markets and products.

The broad scope of relationship marketing

In contrast, relationship marketing is cross-functional marketing. It is organized around processes that involve all aspects of the organization. In fact, some commentators prefer to call relationship marketing "relationship management" in recognition of the fact that it involves much more than that which is normally included in marketing.

The broad scope of relationship marketing

Martin Christopher, Adrian Payne, and David Ballantyne (1991) at the Cranfield Graduate school of Management claim that relationship marketing has the potential to forge a new synthesis between quality management, customer service management, and marketing. They see marketing and customer service as inseparable. In spite of this broad scope, relationship marketing has not lost its core marketing orientation though. It involves the application of the marketing philosophy to all parts of the organization. Every employee is said to be a "part-time marketer". The way Regis McKenna (1991) puts it:
"Marketing is not a function, it is a way of doing business . . . marketing has to be all pervasive, part of everyone's job description, from the receptionist to the board of directors."

Because of this, it is claimed that relationship marketing is a more pure form of marketing than traditional marketing.

Internal marketing
Relationship marketing stresses what it calls internal marketing. This refers to using marketing techniques within the organization itself. It is claimed that many of the traditional marketing concepts can be used to determine what the needs of "internal customers" are. According to this theory, every employee, team, or department in the company is simultaneously a supplier and a customer of services and products. An employee obtains a service at a point in the value chain and then provides a service to another employee further along the value chain. If internal marketing is effective, every employee will both provide and receive exceptional service from and to other employees. It also helps employees understand the significance of their roles and how their roles relate to others'. If implemented well, it can also encourage every employee to see the process in terms of the customer's perception of value added, and the organization's strategic mission. Further it is claimed that an effective internal marketing program is a prerequisite for effective external marketing efforts.

The six markets model

Adrian Payne (1991) from Cranfield University goes further. He identifies six markets which he claims are central to relationship marketing. They are: internal markets, supplier markets, recruitment markets, referral markets, influence markets, and customer markets. Referral marketing is developing and implementing a marketing plan to stimulate referrals. Although it may take months before you see the effect of referral marketing, this is often the most effective part of an overall marketing plan and the best use of resources. Marketing to suppliers is aimed at ensuring a long-term conflict-free relationship in which all parties understand each other's needs and exceed each other's expectations. Such a strategy can reduce costs and improve quality.

The six markets model

Influence markets involve a wide range of sub-markets including: government regulators, standards bodies, lobbyists, stockholders, bankers, venture capitalists, financial analysts, stockbrokers, consumer associations, environmental associations, and labour associations. These activities are typically carried out by the public relations department, but relationship marketers feel that marketing to all six markets is the responsibility of everyone in the organization. At times Payne sub-divides customer markets into existing customers and potential customer, yielding seven rather than six markets. He claims that each market will require its own strategies and recommends separate marketing mixes for each of the seven

When to use relationship marketing

Relationship marketing and transactional marketing are not mutually exclusive and there is no need for a conflict between them. However, one approach may be more suitable in some situations than in others. Transactional marketing is most appropriate when marketing relatively low value consumer products, when the product is a commodity, when switching costs are low, when customers prefer single transactions to relationships, and when customer involvement in production is low. When the reverse of all the above is true, as in typical industrial and service markets, then relationship marketing can be more appropriate. Most firms should be blending the two approaches to match their portfolio of products and services. Virtually all products have a service component to them and this service component has been getting larger in recent decade

Criticisms of relationship marketing

Internal marketing and the six markets model has been criticised as not really being marketing at all.

At the core of marketing is the marketing philosophy of first determining what the market wants, then providing it. It is doubtful that this is what is occurring in influence markets, supplier markets, recruitment markets, or internal markets. What is occurring is closer to public relations, persuasion, and management. It appears to be marketing because it uses some marketing techniques, but it would more accurately be described as salesmanship.

Criticisms of relationship marketing Relationship theorists tend to compare themselves to traditional marketing. In doing so they frequently present traditional marketing in an unfavourable light. For example, Adrian Payne (1991) claims that traditional marketing concentrates on product features, has minimal interest in customer service, limited customer contact, and quality is primarily a concern of production. Although there may still be some marketers that think this way, these statements have not reflected marketing best practices for more than three decades

What is Green marketing?

green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. This early definition has three key components, 1) it is a subset of the overall marketing activity; 2) it examines both the positive and negative activities; and 3) a narrow range of environmental issues are examined. While this definition is a useful starting point, to be comprehensive green marketing needs to be more broadly defined.

What is Green marketing?

Green or Environmental Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural environment

WHY ARE FIRMS USING GREEN MARKETING? . Five possible reasons cited are: Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives Organizations believe they have a moral obligation to be more socially responsible [Governmental bodies are forcing firms to become more responsible Competitors' environmental activities pressure firms to change their environmental marketing activities and Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior

OPPORTUNITIES
McDonald's replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion Tuna manufacturers modified their fishing techniques because of the increased concern over driftnet fishing, and the resulting death of dolphins Xerox introduced a "high quality" recycled photocopier paper in an attempt to satisfy the demands of firms for less environmentally harmful products.

SOCIAL RESPONSIBILITY
1) they can use the fact that they are environmentally responsible as a marketing tool; or 2) they can become responsible without promoting this fact.

GOVERNMENTAL PRESSURE
Governmental regulations relating to environmental marketing are designed to protect consumers in several ways, 1) reduce production of harmful goods or byproducts; 2) modify consumer and industry's use and/or consumption of harmful goods; or 3) ensure that all types of consumers have the ability to evaluate the environmental composition of goods.

COMPETITIVE PRESSURE
Another major force in the environmental marketing area has been firms' desire to maintain their competitive position. In many cases firms observe competitors promoting their environmental behaviors and attempt to emulate this behavior. In some instances this competitive pressure has caused an entire industry to modify and thus reduce its detrimental environmental behavior. For example, it could be argued that Xerox's "Revive 100% Recycled paper" was introduced a few years ago in an attempt to address the introduction of recycled photocopier paper by other manufacturers.

COST OR PROFIT ISSUES

Disposing of environmentally harmful byproducts, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some cases difficult. Therefore firms that can reduce harmful wastes may incur substantial cost savings. When attempting to minimize waste, firms are often forced to re-examine their production processes

SOME PROBLEMS WITH GOING GREEN

One of the main problems is that firms using green marketing must ensure that their activities are not misleading to consumers or industry, and do not breach any of the regulations or laws dealing with environmental marketing. Green marketing claims must; Clearly state environmental benefits; Explain environmental characteristics; Explain how benefits are achieved; Ensure comparative differences are justified; Ensure negative factors are taken into consideration; and Only use meaningful terms and pictures.

SOME PROBLEMS WITH GOING GREEN

When firms attempt to become socially responsible, they may face the risk that the environmentally responsible action of today will be found to be harmful in the future. Take for example the aerosol industry which has switched from CFCs (chlorofluorocarbons) to HFCs (hydrofluorocarbons) only to be told HFCs are also a greenhouse gas. Some firms now use DME (dimethyl ether) as an aerosol propellant, which may also harm the ozone layer . Given the limited scientific knowledge at any point in time, it may be impossible for a firm to be certain they have made the correct environmental decision. This may explain why some firms, like Coca-Cola and Walt Disney World, are becoming socially responsible without publicizing the point.

SOME PROBLEMS WITH GOING GREEN

While governmental regulation is designed to give consumers the opportunity to make better decisions or to motivate them to be more environmentally responsible, there is difficulty in establishing policies that will address all environmental issues. For example, guidelines developed to control environmental marketing address only a very narrow set of issues, i.e., the truthfulness of environmental marketing claims . If governments want to modify consumer behavior they need to establish a different set of regulations. Thus governmental attempts to protect the environment may result in a proliferation of regulations and guidelines, with no one central controlling body.

SOME PROBLEMS WITH GOING GREEN

blindly following the competition can have costly ramifications. A costly example of this was the Mobil Corporation who followed the competition and introduced "biodegradable" plastic garbage bags. While technically these bags were biodegradable, the conditions under which they were disposed did not allow biodegradation to occur. Mobil was sued by several US states for using misleading advertising claims

CONCLUSION
Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, ultimately it is consumers who demand goods, and thus create environmental problems. One example of this is where McDonald's is often blamed for polluting the environment because much of their packaging finishes up as roadside waste. It must be remembered that it is the uncaring consumer who chooses to disposes of their waste in an inappropriate fashion. While firms can have a great impact on the natural environment, the responsibility should not be theirs alone. In the EPA's 1994 study consumers gave the following reasons for why they damage the environment.

Viral marketing
Viral marketing refer to marketing techniques that use pre-existing social networks to produce exponential increases in brand awareness, through self-replicating viral processes, analogous to the spread of a computer virus. It can often be word-of-mouth delivered and enhanced online; it can harness the network effect of the Internet and can be very useful in reaching a large number of people rapidly.

 Viral marketing is popular because of the ease of executing the marketing campaign, relative low-cost (compared to direct mail), good targeting, and the high and rapid response rate. The main strength of viral marketing is its ability to obtain a large number of interested people at a low cost.

Types of viral campaigns

Pass-along: A message which encourages the user to send the message to others. The crudest form of this is chain letters where a message at the bottom of the email prompts the reader to forward the message. More effective are short, funny clips of video which people spontaneously forward. Many of these, such as the Cog (television commercial) from Honda began life as TV commercials and have since circulated on the web by word of mouth. Incentivised viral: A reward is offered for either passing a message along or providing someone else's address. This can dramatically increase referrals. However, this is most effective when the offer requires another person to take action. Most online contests offer more chances of winning for each referral given; but when the referral must also participate in order for the first person to obtain that extra chance of winning, the chance that the

Types of viral campaigns

Undercover: A viral message presented as a cool or unusual page, activity, or piece of news, without obvious incitements to link or pass along. In Undercover Marketing, it is not immediately apparent that anything is being marketed. Particular effort is made to make the discovery of the item seem spontaneous and informal, to encourage natural memetic behavior. Outside world "clues", such as graffiti appearing in cities with key viral words, is often used to direct people to search out the presented "mystery". Because of the large amount of unusual and entertaining content on the internet, this can be the hardest type of viral to spot, especially as companies try to imitate the style and content of amateur websites and authentic underground movements

Types of viral campaigns

"Edgy Gossip/Buzz marketing" ads or messages that create controversy by challenging the borders of taste or appropriateness. Discussion of the resulting controversy can be considered to generate buzz and word of mouth advertising. Prior to releasing a movie, some Hollywood movie stars get married, get divorced, or get arrested, or become involved in some controversy that directs conversational attention to them. An alleged example is the publicity campaign about the dubious love affair between Tom Cruise and Katie Holmes that came out just before each of them released a movie User-managed database: Users create and manage their own lists of contacts using a database provided by an online service provider. By inviting other members to participate in their community, users create a viral, self-propagating chain of contacts that naturally grows and encourages others to sign up as well. Examples of such services include anonymous matching services like eCrush, business contact management services like Plaxo, and other social databases like Evite and [Link].

Methods of transmission
Word of Web: Typing into a web-based form that converts that information into an email, sends to recipients. An example of this is any article at [Link]. In the article, there are links that encourage readers to send the article to a friend; this brings them to a web-based form to be filled out. This form converts all of the information to the recipient in an e-mail. Word of E-Mail: A very common type: forwarding e-mails, such as jokes, quizzes and 'compromising' pictures. Word of mouth Word of IM: Perhaps the fastest-growing mode of transmission, hyperlinks are sent over instant messaging servers such as Jabber, AIM, ICQ, MSN, Yahoo!, or Google Talk. This method is popular with many young people who are arguably more likely to trust a link sent by a friend via IM than by that same friend through e-mail. Reward for Referrals: Sometimes, the marketing company offers a reward for referring customers, encouraging them to use any of the above methods. Communications Protocol: In amateur radio, the ham operators on each end of a conversation generally exchange QSL cards. The communication protocol generally expects each person to transmit their QSL information to the other person. If that QSL information refers to an electronic QSL card exchange, then the subscriber base of the exchange will grow exponentially. Bluetooth: The widespread use of mobile phones which support free Bluetoothing has enabled promotional videos to be distributed virally between handsets. Blog Publicity: When enough opinion leaders in an industry discuss something, it will usually spread to the other blogs as well. Copycat bloggers are pretty common, and the leaders are often a source of information/inspiration/material-to-steal, which means that the sub-readerships of the smaller blogs also get read.