The importance of ethics in marketing

In the U.S. right now there is a lot of fear regarding China. Now of course there is good reason. They have a huge army, love selling weapons to dictators, put anyone who looks funny into jail and God knows what else. But the really scary part is China's growing economy. Back in the day there was a term called "Chinese Marketing," which spoke of the fallacy of assuming that because an economy had X number of people you would be able to get them all to agree to purchase your product.

What should be of even greater concern is the concept of a growing move for ethics in China. I was speaking to a colleague just back from China who was impressed by a banner he saw throughout a Chinese company. Loosely translated it read, "Social responsibility is good for our business and our good business is good for you." I laughed when I read it because it sounded so very simple and at the same time was an ideal testimony to what this organization wished to convey to its customers.

This topic reminds me of an article in Business Week last week about a Chinese company whose CEO has made it very clear to investors that they come last in his pecking order. First, is his company's customer's, second are his employees and then come investors. By doing this he has a both a satisfied customer base and satisfied employees who combine to deliver exceptional results that result in satisfied investors quarter after quarter.

Contrast that with companies in the United States who see "flipping," or going public as a quick way to pocket a few dollars and then leave the market. They show no long term interest in growing for the customers and the customer is quite often an ends to a means. I have had the miserable experience of having my sales rep ignore me more or less until the end of the quarter. Then magically we are best buddies if my contract is up for renewal. Sadly this is typical of companies where meeting "the numbers" is what passes for business and as we see from the examples of Enron and so many other companies earlier in the decade, and Bernie Madoff recently, even out and out fraud are often practiced with little regard for the long term marketing problems.

Two companies should be put into the marketing hall of fame for how they handled a problematic ethical issue, which was ironically not of their own making. Johnson and Johnson and the Tylenol issue in 1982 showed how a company should handle any issue that concerns the safety of their customers. They were publicly traded but showed how concern for ones customer can result in a stronger result down the road. Speaking for myself, if I am looking to buy an over the counter medicine more than 25 years after the Tylenol poisoning, I reach for a Johnson and Johnson product when ever possible because to me, they have my best interests in their mind. God knows how many times they recouped the losses from those terrible days.

The second case is less well known but worth remembering as a teaching moment. In the summer of 1993 people claimed they were finding used hypodermic needles in Pepsi cans. Pepsi went back and shut down production to figure out how this was possible and where in there production process something might have gone wrong. They pulled products from any of the areas where the needles were found and then retooled the process so no foreign object can be put into one of the cans.

More importantly, they sat down with Coca-Cola and more or less said, "Today it is us, tomorrow it might be you." Combined, both companies worked out a solution which did two things, it proved the people with the needles were liars but also developed a combined PR campaign which proved that both leaders had worked together to secure their production process from any type of problem,

The take away here is that there is more to ethics in business than simply writing a plan and feeling good about yourself. You need to have a plan in place which will roll in and protect your brand. An ethical breech can cost you millions of dollars if not your entire brand! Act aggressively to be a good ethical citizen and remember social responsibility is good for your business and good business is good for you!