2022-09-30 15:48:36

Transcript

The year was 1988, and the RJ Reynolds Tobacco Company had a problem.

Phillip Morris, the company's main competitor in the United States, had been beating out Reynolds for more than a decade, with sales of Philip Morris’s Marlboro brand cigarettes surpassing those of Reynolds Winston brand cigarettes in 1975. Over the next few years, the company continued to lose market share. Reynolds needed a way to attract newer smokers, a marketing strategy that could stand up to Phillip Morris’s highly successful Marlboro Man campaign and give its cigarettes a new hip image.

Enter Joe Camel.

First introduced to European markets in 1974, Joe was Reynolds’ answer to the Marlboro man. A mascot designed to associate the companies Camel brand cigarettes with masculinity, good times and all things cool. A riff on the brand's original logo, the cartoon camel appeared in print advertisements, driving expensive sports cars, wearing fancy suits, dating beautiful women and rocking a pair of sunglasses, always while smoking a camel brand cigarette.

At first, Joe Camel's introduction to the US market was a big success. Sales of Camel cigarettes jumped as US smokers took a shine to the funny character and his fancy lifestyle. Very soon, however, the new campaign ran into trouble.

Worried that Joe Campbell's cartoonish features would make him appealing to children, US anti smoking activists pressured the federal government to tighten regulations around cigarette advertising. Their efforts eventually forced Reynolds and other tobacco marketers into a 368.5 Billion dollar settlement deal and saw Joe Camel officially retire in 1997.

Reynolds has always denied that it designed the mascot to appeal to kids. But whatever his true purpose, Joe Camel presents marketers with some difficult questions about the ethics of promoting a dangerous, addictive product like cigarettes.

Was it OK for Reynolds to show Joe Camel driving fast cars and wearing expensive clothes, even though smoking cigarettes doesn't actually help consumers get those things? How much information does a company owe its customers, especially when its product comes with inherent risks? What makes a marketing campaign unethical?

Our answers to these questions have real consequences. As Professor Robert M. Proctor of Stanford University pointed out in a 2013 op-ed. For the Los Angeles Times, the Camel brand has sold more than 4 trillion cigarettes during its first 100 years of operation. Leading, in his estimate, to about four million deaths.

I'm Myles McDonough, and you're listening to the Free Ranger.

Welcome to the Free Ranger, a podcast about telling the stories that matter. On this podcast, we'll be learning about storytelling from the people who turn important issues into stories. The writers, film makers, marketers, and other professionals who weave together the facts to create compelling narratives that make a difference.

This season, we'll be speaking with experts on marketing ethics, the moral principles that guide us as we tell stories about products, services, and organizations, and how to make sure we're putting those principles into practice.

We're honored to welcome OC Ferrell, James T Purcell, senior eminent Scholar of Ethics and Director, Center for Organizational Ethical Cultures at Harvard College of Business, Auburn University. Doctor Farrell is a past president of the Academic Council of the American Marketing Association and has co-authored several leading textbooks on business ethics, marketing strategy, and management skills. During our talk, doctor Farrell discussed the differences between ethical and unethical marketing behavior, the temptation to cut corners, and the importance of acting according to ethical standards...

Myles: O. C. Ferrell, thank you so much for coming on to the Free Ranger podcast. We're happy to have you here today.

O. C.: Well thank you Myles.

Myles: To get us started here: you are a professor of business ethics, marketing ethics. How do you define ethics?

O. C. Ethics can be defined in many ways, as you probably know. So if you go into the philosophy area, we'll talk about moral philosophy and the morals of human beings and how they make decisions. Business ethics is quite different because when we're looking at business ethics, most of the decisions. involve more than one person, and many people know about the decisions that are being made. Where in your personal life you can kind of control that and make your own types of decisions. There may be consequences, but you're in control. In a business environment you have much less control. So business ethics truly relates to making right or wrong decisions that will impact especially the internal workplace that people exist.

And ethics in an organization is driven by compliance. Most companies, all Fortune 500 companies, have codes of ethics. And some of those parts of those codes are legally mandated. Other parts are things that represent the ethical culture that that firm wants to have.

Myles: What is it that makes ethics important for marketers in particular?

O.C.: People don't deal with marketers very often, especially sales, and expect them to be unethical. And they don't necessarily always suspect that they could trust, you know, people in a selling or marketing situation advertising all the different areas that interface with the consumer. And marketing is the only business that brings revenue into the company. Not profit organization. That's all. What does accounting do? They count it. What's operations do? they carry out the different procedures to make a product available.

But marketing is where the rubber meets the road, and without good marketing, your company will go out of business. So that's why it's so important. It's important for companies to be ethical because it's tied directly to profitability. Because if you don't trust the company you're not going to buy their products. If they don't recover from failing to provide good service, you don't believe what they're saying. You’re not going to buy their product. There are other companies out there.

So ethics, is at the core. Creating good principles, values and norms that create an ethical culture where companies can flourish and we can all, you know, look at companies we trust and those that we don't.

Myles: What's your favorite example of unethical marketing behavior? Maybe something that you would share in a class or something that you remember over the course of your career.

O. C. You can have unintentional unethical behavior that many people participate in. But some of the most egregious forms involve personal decisions to take advantage of, not only customers but the company as well. And that would include areas like bribery. Accepting bribes or favors may be under the table that even the company doesn't know about. And it’s widespread. Internationally and in this country.

Also looking at knowing that there are Product Safety issues and covering those Product Safety issues up. It's just this really bad, unethical thing that happens. And there are two ways to do it. One is just knowing it and not communicating it, the other is just communicating untruthful information about the product’s performance and safety.

I have a good friend, actually, who was a marketing professor and he was working in a sales position. And the person that he was dealing with at the company told him that every time he comes, his car door will be unlocked, and he wanted a bottle of Jack Daniels whiskey put into his back seat.

So he went along with that. And guess what happened one day? The person that was the individual’s boss saw him doing it. It didn't turn out well. That’s really a good one. There's also a major--it's widespread, I’ve reconfirmed it, I would recognize it. And in that particular case, one of the buyers was taking a bribe from one of their suppliers. And the person at the company found out about it. He got on the plane. He flew up to the supplier. He said here’s evidence and we’ll never do those business with you again. We don’t trust you.

Misconduct is widespread, but I think most people think there's more than there really is. Most companies try to be up. And socially responsible. There are pockets of individuals in every organization that will take advantage of situations if the opportunity arises. We actually have evidence on that, but it's probably about 10% of the population. That take advantage if they think they won't get caught. Then there’s 90% that try to do the right thing.

Myles: In your article “New Directions for marketing ethics and social responsibility research,” It was published, I believe, a couple of years ago now, you write that “real world ethical dilemmas of firms cannot be solved by better understanding of the moral philosophies of individuals.” I think that touches on what you've been discussing here so far, could you expand on that a bit, looking at the moral philosophies of individual actors at a firm versus the ethical dilemmas of the firm as a whole?

O. C.: Yes, individuals will have, you can actually measure this, a certain type of moral philosophy. For example, some people operate more as utilitarian, some act more idealistically. We have words to describe that, but I'll just keep it fairly simple and say there's a continuum. For those who, from a normative standpoint, always want to do the absolute best thing and adhere to normative behavior of what we would expect the right thing to do in any situation, regardless of the consequences.

On the other hand, there's others would be much more utilitarian. You know, they're being looking at what is gained from that decision. You know, there are trade-offs. Some bad things happen. That's OK. If there's more good than bad, that occurs.

When you get into a firm, you're probably more intuitive than calculating basal some moral philosophy. Yeah, we have done a lot of research to show the most important influence in ethical decision making and learning social contexts: Significant others. Those around you. Your superiors, your coworkers. And if you think about it the first day you go to work at a company, you learn from your peers. And we're often told, well, those are. The rules that's not how we do it here. Would you like an example?

Myles: Yes, please.

O. C.: I went to a very well known university and when I joined it, they said: At this particular university, we don't have money for alcohol when we're entertaining guests or potential candidates for jobs. So what we do is we pass it off as desert. And I'm new. I'm not tenured. This is the way we do it. You're caught up in it. Yeah, but most people would say, oh, I'm not going to do that, 'cause it's not right. No, it's slippery slope.

Guess what? A few years later it was discovered. We’ve all done things like that. Everybody faces issues like that. When I was a dean, I had to sign, paper work every day. I didn't have time to read it all. And I think anyone in a managerial position is going to be. In potential harm's way and you just have to navigate it as best you can.

Myles: It sounds like there's a balance between the sheer logistics of running a large organization, an organization of any size really, and the best instincts of your own personal ethical code. And part of being at the forefront of an organization will involve finding out how to navigate between those two for the benefit of the folks that rely on you.

O. C.: You’re ultimately responsible for your conduct. And we should never do anything that we know is wrong and has serious consequences. There's going to be some grey areas, just to live in the world. But we are 100% responsible. For any negative outcomes from decisions you make, so you can't be pushed into a corner. And do things that you know are not all. In many cases, not only wrong, but illegal. Look at ethics within an organization like systems, along with a lot of these compliance systems connected with their ethics programs have legal ramifications. And you as an employee normally are not a lawyer. And unless someone tells you, you can't do that. It has anti trust ramifications. It may be discriminatory. You know, there's all kinds of ramifications. That you don't understand.

So I would say my suggestion to anyone that goes to work for any organization is make sure you understand the code of ethics. That they offer.

Myles: That’s good advice. Earlier you were touching on the difference between addressing ethics and addressing social responsibility issues. I imagine a lot of people tend to conflate those two things when they are speaking casually or just thinking about how organizations conduct themselves in the world. How do you see those two things as distinct from one another?

O. C.: There is an excellent question. Organizational ethics and social responsibility are two different areas, but they overlap. And they work together.

First of all, we'll talk about ethics, ethics, particularly decisions that impact the reputation of the company, the brand. They are internal decisions that happen as we make products, interact with customers, suppliers. In the community. You don't see those ethical decisions as a consumer, but when something goes wrong, such as overcharging customers, engaging in certain types of fraud. When it all bubbles to the top, ethics is everything in terms of the reputation of the company and the brand.

Social responsibility is more external. It can involve things like philanthropy. It can involve sustainability issues. Social issues. Things that the company does that actually can become highly visible. And support it. But just because your company that gives a lot of money to charity. And then if you commit. International bribery, that trumps it. You can't spend enough on social responsibility to make up for bad ethical behavior.

And a good example of that was Wells Fargo. They had repeated problems overcharging. Creating fake accounts and everything, but Wells Fargo has good social responsibility programs that really are doing great things in communities. But it couldn't overcome the negative publicity they got from the many incidences of being charged for misconduct in how they interacted with their customers.

Myles: In that same article, you also mentioned the fact that there is a new what you and a few other researchers refer to as a social contract that is emerging between people and brands. What will that social contract look like in the near future?

O. C.: More and more, we're finding that consumers are willing to pay for socially responsible companies who are highly ethical and make high quality products. And so the social contract develops in what we would call in marketing kind of relationship marketing. We willing to interact with the company that you obtain products from. Over half of consumers are willing to pay more for products that, let's say, are environmentally responsible. That are reducing our carbon footprint.

I think we all. You know are. Joining in. And that's developing a social contract which. It's not like transition—transactional, where we're just going to buy a product, we go in the next time and find the cheapest product no. We're buying your products because we believe in the company.

Myles: So I can imagine how the social responsibility activities of a given organization can become pretty readily visible to consumers and build trust in the brand. How does an organization communicate its dedication to ethics to people in a way that really makes a difference? You know, right? Everybody says we love ethics. Were super ethical. What's the key? What's the difference that makes people look at a company and say, yes, this is an ethical company and it's one that I want to do business with, or I want to donate, or I want to be involved in some way?

O. C.: I'll almost reverse your question to say: How do we stay out of trouble? Consumers expect you to be ethical. And they're not going to give you a lot of credit, because you don't go to jail. You're not fined. Because that's their expectation. They don’t want to deal with companies that are doing bad things.

I do think that certain, highly visible social responsibility issues as it could relate to diversity, inclusion. Sustainability, consumer protection. A good example is media companies could do things like expand Wi-Fi availability to underserved areas: that really helps the image of your company. It'll help you even more if you don't do anything wrong.

For example, at least as of a few years ago, one of the least respected companies was Facebook. And one of the reasons is because of all the data and privacy breaches and it lowered the level of trust.

Myles: So you start off with a certain amount of credit. Really easy to lose it. Not so easy to gain more, or to get it back once you have, uh, once you've crossed that line.

O. C.: I like to quote Warren Buffett. He says it takes many, many years to build a reputation as a company. It only takes 5 minutes to destroy it.

Myles: What do you think is the biggest ethical issue that marketers will face in the next few years?

O. C.: Well, I think it's pretty obvious that because we're moving toward AI implementation--and it's been estimated that half of the operational aspects of companies. And really the next few years will be. Uh, you know, AI driven. And so there's no doubt the biggest challenge is gonna be privacy. Companies as we become more and more automated, and as we don't have enough employees to job train right now. Many businesses are not operating at full capacity because they don't have enough employees, and often it's that they don't have people with the right training.

And so as we--we’re automating, even McDonald's is on the road to maybe automating everything. Kitchen, making hamburgers, ordering, everything. So how do we protect our privacy in this world? And are willing to give it up in order to obtain products? Everything we buy--you know, we're going to be giving codes, credit cards and other information, so privacy is huge.

Myles: What research are you most excited about in the near future?

O. C.: I'm working on several projects in AI ethics. And I've got a study going on right now where we've done a text analysis to find out how AI ethics is being approached. We've talked to executives in major companies. Qualitative study now. We've also interviewed developers and consumers all in this one study. To try to gauge the state of AI ethics. And so what companies are seeing is that they're using principles. And in order to develop AI ethics. What we found, they don't know how to implement them through the development stage into algorithms, and so we're in unchartered territory about how we're going to handle ethics with AI.

Myles: What would you tell young marketers who are either looking at a college program or just getting out of a college program who are thinking about these questions as they head into their careers. What should they keep in mind? What should they do as they take on their first clients and get started?

O. C.: Well, I think. Something, well teaching a business ethics class, I say the first thing I want to do in this class is to keep you out of jail. We want you to be ethical, but we also want you to understand there are many pitfalls out there. And there's where I would tell any new person in an organization: Don't be, don't go into areas and make decisions just because everyone else is doing it. We know that's what drives ethical decision making. Protect yourself.

Make sure that you understand your code of ethics for your company. You understand you've got a good common sense. Something, by the way, AI has no common sense. But people do, and they can make decisions about what's appropriate. If you have a question of whether this is the right thing to do, you should go to your superior. If you don't get an answer you like, then you should go to your ethics officer or department and most companies have it. Keep asking questions.

Myles: Do you have any parting thoughts, things that you would like to share with marketers, anybody who happens to be listening to the podcast right now?

O. C.: One thing I would say is, I really believe we have an incredible business community. And I really feel bad when top executives are criticized for not caring about consumers. You know not doing what they can do to support society. So don't bring all businesspeople down just because there's a few bad eggs.

Myles: Think that'll just about do it here. O. C., thank you so much for coming on the Free Ranger podcast. We really appreciate your thoughts and insight today.

O. C.: Thank you very much, goodbye.

Since Joe Camel's retirement in 1997, the US government has imposed additional restrictions on the marketing of tobacco and nicotine products. The 1998 Master Settlement Agreement officially banned the use of any cartoons in cigarette advertising and prevented tobacco companies from advertising on billboards and transit systems. A 2006 federal court decision banned tobacco companies from describing cigarette brands as “light” or “low tar.” While the 2009 Family Smoking Prevention and Tobacco Control Act took cigarettes out of vending machines for good.

Still, the issue of cigarette marketing is far from settled.

Ethical marketing is hard. As marketers, we may sometimes be tempted to hide or bend the truth, especially when so much depends on our performance. But as O. C. Farrell points out, ethical choices are worth the effort. Doing right by our coworkers, partners and customers can mean the difference between a good reputation and a bad one. Between happy customers and angry reviewers. Between success...and fail.

This has been the Free Ranger. Thanks for listening.

If you enjoyed this podcast, please be sure to subscribe and share it with someone else who'd like it too. The Free Ranger is a production of Free Range studios, a storytelling and innovation agency helping mission-driven organizations promote social good. If you'd like to learn more, please visit us at FreeRange.com.