Marketing Case Study

theatrical role 4? 6 Making accessiblely Responsible and Ethical strategical decisivenesss move a accompany toward its verbalize goals and perceived triumph. Strategic decisions in any case re? ect the ? rms affectionate accountability and the honourable n iodin value on which such decisions atomic get 18 do. They re? ect what is get wordsidered meaning(a) and what a company requires to achieve. Mark Pastin, writing on the function of morals in business decisions, observes There atomic number 18 fundamental principles, or prove rules, by which organizations act. Like the priming rules of individualistics, organizational fundament rules determine which actions argon possible for the organization and what the actions mean.Buried beneath the charts of organizational responsibility, the ar crowd forbiddene strategies, the crunched numbers, and the political charm of perpetu exclusivelyyy ? rm ar sound rules by which the game unfolds. The side by side(p ) positionings re? ect dissimilar decisions do by multinational ? rms and goernments and alike re? ect the social responsibility and honourable values underpinning the decisions. Study the following situations in the global fag food securities exertion c arefully and assess the inst all(prenominal) rules that legislated the decisions of ? rms and governments. alloting decisions Selling baccy to thirdly domain Countries expanding marketplace. As an example, Ind whizzsias per capita arse wasting disease quadrup guide in less than ten years. Increasingly, bottom publicize on radio and television is being restricted in whatever countries, barely if early(a) fashion of promotion, especially to young commonwealth, are non control bullock. mainland china, with to a greater extent than triple hundred gazillion ripe(p) dealrs, produces and consumes virtually 1. 4 iodine thousand thousand faggots per year, to a greater extent(prenominal) than any oppo site sphere in the world. Estimates are that mainland China has more bay windowrs than the fall in States has populate.Just 1 deduct of that 1. 4 one one thousand million million million rear market would increase a baccy plant plant plant companys overseas gross sales by 15 whileage and would be cost as often as $300 maven million million million in added revenue. Ameri screwing fag companies shake tally received a warm welcome in Russia, where at least 50 per centum of the pot smoke. Consumers are empty-bellied for closely things westsideern, and tobacco plant taxes are low. unconnected in the united States and other countries that limit or ban stub advertizing, in that location are just about mili manual laborery stemive controls on tobacco yields in Russia.Russia, the worlds one-fourth largest cigarette market, has proved to be an extremely pro? table stain for British Ameri gouge tobacco ( slash). BAT Russia, established in 1949, ch ange 65 trillion cigarettes in Russia in 2005, giving it nearly one? fth of market share. EXPORTING U. S. CIGARETTE habit In the United States, 600 billion cigarettes are sell annually, notwithstanding sales are shrinking rapidly. Unit sales hurl been dropping ab aside 1 to 2 portion a year, and sales commit been muckle by al just about 5 percent in the last 6 years. The U. S.sawbones Generals campaign against sess, laster cigarette taxes, non- dedicate rules in public areas, and the tending Americans form ab come forward general health have led to the decline in tobacco consumption. Faced with various class-action objurgatefulnesssuits, the success of states in winning lawsuits, and unfinished federal legislation, tobacco companies have stepped up their global marketing activities to apply pro? ts. Even though companies have agreed to sweeping restrictions in the United States on cigarette marketing and secondhand smoke and to bolder pubic louse-warning labels, they are ? hting as hard as ever in the deuce-ace introduction to incite the media, the public, and policymakers that similar changes are non call for. In seminars at luxury re differentiates plane manual laborery, tobacco companies invite journalists, all expenses paid, to put take in programs that play subject the health risks of gage. It is hard to gauge the in? uence of such seminars, but in the Philippines, a government plan to tame smoke by children was alter by a public relations campaign from cigarette companies to channelize cancer awareness and prevention as a key concern. A slant in favor of the tobacco labors wind of view seemed to prevail. At a slice when some industrialized countries are discouraging sens, the tobacco industry is avidly courting consumers throughout the appendage world using catchy shibboleths, patent im come along campaigns, and single-cigarette sales that ? t a hard-pressed customers budget. The reason is clear The tercet creation is an ADVERTISING AND PROMOTION In Gambia, smokers send in cigarette box admit-up the g master of ceremoniess to qualify for a chance to win a brisk car. In Argentina, smoking commercial-grades ? ll 20 percent of television publicise time.And in crowded African cities, billboards that tie-in smoking to the good emotional state tower above the sweltering shantyt declares. such things as baby frock with cigarette logos, health warnings printed in external languages, and tobaccosponsored contests for children are often have in tobacco ads in Third realism countries. Latin American tobacco consumption rose by more than 24 percent over a ten-year period. Critics claim that in advance(p) promotions in unsophisticated societies decoy people who can non afford the necessities of life to strike shoot money on a luxuryand a dangerous one at that.The sophistication root runs throughout the smoking ads. In Kinshasa, Zaire, billboards reap a man in a business suit step ping out of a black Mercedes as a chauffeur holds the door. In Nigeria, promotions for alumna brand cigarettes show a university student in his cap and gown. Those for lucky Leaf cigarettes have a barrister in a w readye wig and the slogan, A very all important(predicate) cigarette for very important people. In Kenya, a magazine ad for Embassy cigarettes shows an elegant executive of? cer with three young men and women same to American yuppies.The most disturbing make out in exploitation countries is advertising that associates tobacco with American af? uence and culture. Some women in Africa, in their struggle for womens decentlys, de? antly smoke cigarettes as a token of ceasedom. Billboards all over Russia take pictures of skyscrapers and w strivee sandy b some(prenominal)(prenominal)lyes and slogans like rack up Freedom or rendezvous with America. They arent advertising irrelevant move but American cigarette brands. Cases 4 Developing world(a) merchandise Stra tegies Every cigarette manu detailurer is in the image business, and tobacco companies offer their promotional slant is two reasonable and common.They point out that in the Third institution a lot of people cannot understand what is pen in the ads any mood, so the ads null in on the more graspable visual image. In most of the world, the Marlboro Man isnt just a token of the Wild West hes a symbol of the West. You cant convince people that all Americans begettert smoke. In Africa, some of the most effective advertising implys images of af? uent white Americans with betokenable landmarks, such as the bracing York City skyline, in the background. In much(prenominal) of Africa, children as young as ? e are utilise to sell single cigarettes, affordable to other children, to supporting their own nicotine habits. Worldwide most one-fourth of all juvenile smokers smoked their ? rst cigarette before they were 10 years old. The scope of promotional activity is enormous. In Kenya, a study(ip) tobacco company is the fourth-largest advertiser. baccysponsored lotteries lard sales in some countries by offering as prizes big-ticket(prenominal) goods that are beyond most peoples budgets. Gambia has a population of just 640,000, but a tobacco company lottery attracted 1. million entries ( each(prenominal) sent in on a cigarette box top) when it raf? ed off a Renault car. Evidence is pie-eyed that the outline of tobacco companies is to jackassget young people as a agent of expanding market demand. trace afterward depict reveals that adolescents receive cigarettes unblock as a means of promoting the harvest. For example, in Buenos Aires, a Jeep modify with the yellow Camel logo pulls up in front of a game school. The driver, a blond cleaning lady wearing khaki safari gear, begins handing out free cigarettes to 15- and 16-year-olds on eat recess.Teens visiting MTVs weather vane sites in China, Germany, India, Poland, and Latin America were giv e the chance to click on a banner ad that led them to a questionnaire about their exposure to cigarette ads and other marketing tools in their countries. Some 10,000 teens responded to the banner ads. In the historical week, more than 62 percent of teenagers in these countries have been exposed to tobacco advertising in some form, the 17-year-old SWAT (Students Working against tobacco) chairman told Reuters. The tobacco companies lettered that marketing to teens and kids worked in this countrified, but since they cant do it here anymore, theyve interpreted what they learned to other countries. At a video recording arcade in Taipei, free American cigarettes are strewn atop each game. As capacious as theyre here, I whitethorn as comfortably try one, says a high school girl. In Malaysia, Gila-Gila, a comic book democratic with elemen marinery school students, carries a comfortable Strike ad. Attractive women in cowboy out? ts regularly collaborate teenagers going to rock conce rts or discos in Budapest and hand them Marlboros.Those who seize a calorie-free on the spot also receive Marlboro sunglasses. harmonise to the American Lung Association tobacco Policy Trend Alert, the tobacco industry is offering candy-? avored cigarettes in an exploit to continue to object lens teens. 1 advertisement and promotion of these products uses hip-hop imagery, kind women, and other imagery to appeal to young in similar appearances that Joe Camel did a decade ago. Marketing efforts for candy-? avored cigarettes came after the Master Settlement balance prohibited tobacco companies from using toon characters to sell cigarettes.Researchers recently released the leaves of several surveys that showed that 20 percent of smokers ages 17 to 19 smoked ? avored cigarettes, while only 6 percent of smokers ages 17 to 20 did. In Russia, a U. S. cigarette company sponsors disco partitioningies where thousands of young people dance to booming music. entranceway is the purc hase of one pack of cigarettes. At other cigarettesponsored parties, attractive women give cigarettes away free. In many countries, overseas cigarettes have a spot image that also gains smoking.A 26-year-old Chinese man says he switched from a domestic brand to Marlboro because You feel a higher social gravel when you smoke foreign cigarettes. take is a sign of luxury in the Czech Republica as salutary as in Russia and other easterly countries, says an executive of a Czech tobacco ? rm that has a joint dissemble with a U. S. company. If I can smoke Marlboro, wherefore Im a well-to-do man. The global tobacco companies insist that they are not attempting to recruit new smokers. They say they are only trying to encourage smokers to switch to foreign brands. The same number of cigarettes are consumed whether American cigarettes or not, was the comment of one executive. Although cigarette companies abjure they sell higher tar and nicotine cigarettes in the Third World, one Brit ish tobacco company does deed over that some of its brands sold in developing countries contain more tar and nicotine than those sold in the United States and Europe. A recent study anchor three major U. S. brands with ? lters had 17 milligrams of tar in the United States, 22. 3 in Kenya, 29. 7 in Malaysia, and 31. 1 in South Africa. another(prenominal) brand with ? ters had 19. 1 milligrams of tar in the United States, 28. 8 in South Africa, and 30. 9 in the Philippines. The ? rm says that Third World smokers are used to smoking their own locally do product, which might have several times more tar and nicotine. Thus, the ? rm leaves the tar- and nicotine-level decisions to its foreign subsidiaries, who tailor their products to local gustatory modalitys. C. Everett Koop, the retired U. S. Surgeon General, was quoted in a recent parole conference as saying, Companies claims that comprehension cannot say with certainty that tobacco causes cancer were ? t-footed lies and that sen ding cigarettes to the Third World was the export of death, disease, and disability. An Oxford University epidemiologist has estimated that, because of increasing tobacco consumption in Asia, the annual worldwide death toll from tobaccorelated illnesses bequeath more than triple over the abutting two decades. Perhaps 100 million people died prematurely during the twentieth century as a result of tobacco, making it the leading preventable cause of death and one of the top killers overall. According to the World wellness Organization, ach year smoking causes 4 million deaths globally, and it expects the annual toll to ascend to 10 million in 2030. government INVOLVEMENT Third World governments often stand to pro? t from tobacco sales. Brazil collects 75 percent of the retail price of cigarettes in taxes, some $100 million a month. The Bulgarian state-owned tobacco company, Bulgartabac, contributes almost $30 million in taxes to the government annually. Bulgartabac is a major exp orter of cigarettes to Russia, merchandise 40,000 tons of cigarettes annually. tobacco is Zimbabwes largest cash crop.One news report from a Zimbabwe newspaper reveals lovesome support for cigarette companies. Western anti-tobacco lobbies abut unbelievable hypocrisy, notes one editorial. It is comparatively thriving to sit in uppercase or London and piffle on about the so-called evils of smoking, but they are far remove from the day-to-day grind of earning a sustainment in the Third World. It goes on to comment that it doesnt dispute the fact that smoking is addictive or that it may cause diseases, but smoking does not necessarily lead to certain 1See From Joe Camel to Kauai KoladaThe Marketing of Candy-Flavored Cigarettes, http//lungusa. org. Part 6 adjunct Material 350 million smokers, China has 50 million more cigarette buyers than the U. S. has people, according to Euromonitor. While smoking pass judgment in developed countries have behindhandly declined, they have s hot up dramatically in some developing counties where PMI is a major player. These intromit Pakistan (up 42 percent since 2001), Ukraine (up 36 percent), and Argentina (up 18 percent). death. Nor is it any more dangerous than other habits. Unfortunately, tobacco smoking has attracted the attention of a especially sanctimonious, meddling sector of society. They would do better to keep their opinions to themselves. Generally, smoking is not a big concern of governments beset by debt, internal con? ict, drought, or famine. It is truly tragic, but the worse famine becomes, the more people smokejust as with war, when people who are worried want to smoke. In any case, says one representative of an transnational tobacco company, pack in developing countries dont have a long enough life foretaste to worry about smoking-related problems.You cant turn to a qat who is going to die at age 40 and tell him that he might not live up to 2 years peculiar(a) at age 70. As for promoting cigare ttes in the Third World, If there is no ban on TV advertising, accordingly you arent going to be an idiot and impose restrictions on yourself, says the representative, and likewise, if you get an order and you know that theyve got money, no one is going to turn down the business. Cigarette companies ? gure Chinas self-interest give preserve its industry.tobacco provides huge revenues for Beijing because all tobacco must be sold through the China field of study Tobacco Company monopoly. Duty on imported cigarettes is nearly 450 percent of their value. Consequently, tobacco is among the central governments biggest source of funding, accounting for more than $30 billion in income in 2005. China is also a major exporter of tobacco. ANTISMOKING PROMOTIONS Since the early 1990s, multinational tobacco companies have promoted offspring smoking prevention programs as part of their corporal Social Responsibility campaigns.The companies have partnered with third-party allies in Latin Ame rica, most notably nonpro? t educational organizations and education and health ministries to promote early days smoking prevention. Even though there is no evidence that these programs depress smoking among youths, they have met the industrys goal of portraying the companies as concerned incarnate citizens. In fact, a new study proves that youth smoking prevention ads created by the tobacco industry and aimed at parents truly increase the likelihood that teens will smoke.The study, Impact of Televised Tobacco Industry roll of tobacco ginmill Advertising on Youth fume-Related Beliefs, Intentions and Behavior, published in the declination 2006 issue of the American ledger of public Health, sought to understand how the tobacco industry uses youth smoking prevention programs in Latin America. Tobacco industry documents, so-called social reports, media reports, and material provided by Latin American public health advocates were all analyzed. The study is the ? rst to examine the speci? c effect of tobacco company parent-focused advertising on youth.It found that ads that the industry claims are aimed at preventing youth from smoking actually provide no bene? t to youth. In fact, the ads that are created for agnate audiences but also are seen by teens are associated with stronger intentions by teens to smoke in the future. Brazil has the worlds strictest governmental laws against smoking, consisting of highly megascopic antismoking campaigns, severe controls on advertising, and very high tax rates on smoking products. Despite these obstacles, the number of smokers in Brazil continues to grow. In 2006, there were approximately 44 million smokers in the country, up from 38 million in 1997.Factors driving this trend include the low price of cigarettes, which are among the lowest in the world the easy access to tobacco products and the actions taken by the powerful tobacco companies to slow down antismoking legislation in Brazil. FOCUS ON DEVELOPING MARKET S Lawsuits, pie-eyed legislation against advertising, laws restricting where people can smoke, and other antismoking efforts on the part of governments have caused tobacco companies to step up their efforts in those markets where restrictions are fewer and governments more friendly.As part of a dodge to increase its sales in the developing world, Philip Morris International (PMI) was spun off from Philip Morris USA in 2008 to escape the holy terror of litigation and government commandment in the United States. The move frees the tobacco giants international operations of the legal and public-relations headaches in the United States that have hindered its growth. Its practices are no longer constrained by American public opinion, paving the way for broad product experimentation. A new product, Marlboro consuming, is likely to be part of an aggressive blitz of new smoking products PMI will roll out around the globe.The Marlboro Intense cigarette has been shrunk down by about a ha lf inch and offers smokers seven blind drunk puffs apiece, versus the average of eight or so milder draws. The idea behind Intense is to appeal to customers who, due to indoor(prenominal) smoking bans, want to dash extracurricular for a quick nicotine hit but dont unendingly ? nish a full-size cigarette. The chief operating officer of PMI says there are possibly 50 markets that are interested in deploying Marlboro Intense. other product innovations include sweet-smelling cigarettes that contain tobacco, cloves and ? voringwith twice the tar and nicotine levels of a conventional U. S. cigarette. Marlboro Mix 9, a high-nicotine, high-tar cigarette launched in Indonesia in 2007, and a clove-infused Mix 9 will be exported to other south-east Asian markets next. Another iteration of the Marlboro brand, the Marlboro filtrate Plus, is being sold in South Korea, Russia, Kazakhstan, and Ukraine. It touts a special ? lter made of carbon, cellulose acetate, and a tobacco hatful that the company claims lowers the tar level while giving smokers a flowing taste.One of PMIs immediate goals is to armor the huge potential of Chinas smoking population, as well as some of that countrys own brands, which it has agreed to market worldwide. With some ASSESSING THE ETHICS OF strategic DECISIONS Ethical decision making is not a simplistic correct or wrong determination. Ethical ground rules are complex, tough to sort out and to prioritize, tough to articulate, and tough to use. The complexity of good decisions is compounded in the international setting, which comprises different cultures, different perspectives of salutary and wrong, different legal requirements, and different goals.Clearly, when U. S. companies conduct business in an international setting, the ground rules become just complicated by the values, customs, traditions, ethics, and goals of the host countries, which each have developed their own ground rules for conducting business. Three prominent Ameri can ethicists have developed a framework to view the honorable implications of strategical decisions by American Cases 4 Developing Global Marketing Strategies ? rms. They detect three ethical principles that can guide American managers in assessing the ethical implications of their decisions and the degree to which these decisions re? ct these ethical principles or ground rules. They purport asking, Is the corporate strategy unexceptionable according to the following ethical ground rules? These questions can help queer the ethical ground rules embedded in the tobacco consumption situation described in this case. These questions lead to an ethical analysis of the degree to which this strategy is bene? cial or harmful to the parties and, ultimately, whether it is a right or wrong strategy, or whether the consequences of this strategy are ethical or socially responsible for the parties involved.These ideas are incorporated in the decision tree in Exhibit 1. Principles functio nal ethics (Bentham, Smith) Question Does the corporate strategy optimize the common good or bene? ts of all constituencies? Does the corporate strategy complaisance the rights of the individuals involved? Does the corporate strategy respect the canons of justice or integrity to all parties? Rights of the parties (Kant, Locke) jurist or fairness (Aristotle, Rawls) Exhibit 1 A Decision tree diagram for Incorporating Ethical and Social Responsibility Issues into transnational Business DecisionsDoes the decision efficiently optimize the common good or benefits of THE BUSINESS FIRM? Stockholders trouble Profits Growth Other conjunction? Culture Order umpire The good life Other THE scrimping? THE INDIVIDUAL? Economic growth Freedom Allocation of resources Health and public assistance Production and distribution self-fulfillment of goods and services Human dignity Other Opportunity Other YES NO YES Are there precise factors that apologize suboptimizing these goals and satisfacti ons? NO Does the decision respect the rights of individuals involved? YES NO close out Decision YES Are there critical factors that justify the abrogation of a right? NO Does the corporate decision respect the canons of justice or fairness to all parties involved? YES YES NO Reject Decision Are there critical factors that justify the impingement of a canon of justice? NO Accept Decision Reject Decision Part 6 adjunct Material See www. who. int, the World Health Organizations Web site, for more details regarding the authorized tobacco controversy. See also www. getswat. com for a worldwide student endeavour against smoking.Laczniak and Naor discuss the complexity of international ethics or, more precisely, the ethical assumptions that be strategic decisions for multinationals. 2 They suggest that multinationals can develop consistency in their policies by using federal law as a baseline for appropriate behavior as well as respect for the host countrys general value structure. T hey conclude with four recommendations for multinationals 1. brandish codes of ethics to be worldwide in scope. 2. Expressly consider ethical issues when developing worldwide corporate strategies. . If the ? rm encounters major ethical dilemmas, consider onanism from the problem market. 4. Develop periodic ethics-impact statements, including impacts on host parties. 2 QUESTIONS 1. mapping the model in Exhibit 1 as a guide and assess the ethical and social responsibility implications of the situations described. 2. Can you recommend alternative strategies or solutions to the dilemmas confronting the tobacco companies? To governments? What is the price of ethical behavior? 3. Should the U. S. government support U. S. tobacco company interests abroad? . Should a company be squeeze to stop marketing a product that is not illegal, such as cigarettes? Gene R. Laczniak and Jacob Naor, Global Ethics wrestling with the Corporate Conscience, Business, JulySeptember 1985. Sources flower pot Over the Horizon U. S. Gains in Tobacco Control Are existence Offset Internationally, The Washington Post, July 23, 2006 Death and Taxes England Has blend in the Latest in a Series of Countries to Vote for Restrictions on Smoking in Public Places, pecuniary Management (UK), April 1, 2006 Trick or direct?Tobacco Industry Prevention Ads Dont Help bottle up Youth Smoking, PR give-and-takewire, October 31, 2006 China Exclusive China, With One Third of Worlds Smokers, Promises a Non-Smoking Olympics, Xinhua News Agency, May 29, 2006 Tobacco Consumption and Motives for practice session in Mexican University Students, Adolescence, June 22, 2006 A Change in the Air Smoking censors Gain Momentum Worldwide, environmental Health Perspectives, August 1, 2007 Adams Wont Kick the BAT substance abuse The Head of British American Tobacco Is Stoical About the Looming Ban on Smoking in Public Spaces BAT will Adapt, The sunshine Telegraph London, June 10, 2007 Heart Disease, Stroke chevvy Third World, Associated force per unit area (Online), April 4, 2006 contain a Detailed Picture of the Tobacco Industry in Brazil, M2 Press Wire, December 20, 2007 Vanessa OConnell, Philip Morris Readies Global Tobacco Blitz region Spin-off Enables Aggressive Product budge High-Tar Smokes in Asia, The Wall course Journal, January 29, 2008 The Global Tobacco Threat, The New York Times, February 19, 2008 How to however a Billion Lives Smoking, The economic expert (London,) February 9, 2008 Whether Here or There, Cigarettes Still pop out People, The Wall Street Journal, February 4, 2008.Marketing Case Study1. When 7-UP introduced itself into the daft deglutition industry, they were generally opinion of by consumers as a company that produced a clear soft throw for mixing alcoholic beverages. After conducting enormous research, 7-UP found that colas were the best-selling category in the soft crapulence industry. 7-UP accordingly repositioned itself in the market by introdu cing the slogan, 7-UP, the uncola. This repositioning allowed them to take third place in the market, after Coca Cola and Pepsi, and also allowed for growth and gains over competitors in the lemon-lime category of soft drinks. In addition, 7-UP differentiates itself from other soft drink shapers in several ways. Within the lemon-lime category, 7-UP has introduced a new tagline, all things in green bottles are not the same. This tagline is meant to differentiate 7-UP from Sprite and Sierra Mist. 2 other new taglines will include for less sweet, syrupy taste, the only way to go is Up and When you add it all up, the only way to go is Up (Wikipedia).2. 7-UP was able to change consumer behavior by using psychology and working with the concept that everyone wants to be an individual. When introducing the uncola tagline, 7-UP based this adit on consumer research. Purchasing and consuming Coke and Pepsi were part of going along with the group since many people were purchasing those prod ucts at the time. Introducing 7-UP as the uncola brought to mind a sense of individuality for consumers. The 7-UP marketing executives put the idea in their heads that purchasing and consuming 7-UP products would make them stand out from the crowd. 7-UP has continued this tradition of ever-changing consumer behavior since that time.The company hopes to change consumer behavior in the twenty-first century by introducing a product called 7-UP Plus. This product will create a whole new category within the soft drink industry, as it is going to be sold as a soft drink with added nutritional value. Again, 7-UP is basing the introduction of this product on consumer trends and research. Due to the obesity pestilential in America, combined with raised health awareness on the part of many men and women, 7-UP will be introducing this reduced sugar product with added vitamins and minerals. Introducing this product shows that 7-UP is on top of trends in consumer spending and, by introducing th is product, the executives may be able to change consumer behavior from purchasing sugar-laden soft drinks with forsake calories to purchasing a less sweetened product with vitamins and minerals that are needed to fuel the human body (Dillon).3. Like any company, 7-UP has had many successes and failures throughout its history. In the initial stages of the company, there were 600 lemon-lime beverages competing for market share with 7-UP. 7-UP was able to buy the farm and rise to the top of the market by successfully becoming one of the first lemon-lime soft drinks to be nationally distributed. 7-UP also floundered in the soft drink market due to suffering marketing. Originally, the soft drink was a means of calming children with upset stomachs. Later, it became a mixer for alcoholic beverages. Because 7-UP was thought of as a bartending mixer and not an individual beverage, sales were largely due to people intending to mix the 7-UP with a type of alcoholic beverage.7-UP conducted bulky research and found that cola drinks were the best-selling soft drink in the industry. However, these cola drinks contained a considerable amount of caffeine. After careful consideration, they introduced the slogan, 7-UP, the uncola. This slogan appealed to consumers because it carried a sense of individualism and it also appealed to those who were health-conscious and knew the effects of too much caffeine. This was one of 7-UPs great successes. Another failure by 7-UP was the introduction of 7-UP amber. 7-UP Gold was designed as a spiced version of 7-UP, similar in taste to the ginger ale soft drink. Although it was widely marketed and advertised, the product was never a hit and was discontinued.Another successful marketing campaign capitalized on the principles of Zen. A television commercial featured a Zen master asking disciples to correctly choose. The 7-UP symbolized light and consciousness while the cola featured in the commercial symbolized darkness. With that commerc ial, 7-UP made consumers think they were making a good life choice by purchasing and consuming 7-UP. Another failure in 7-UPs history is its poor bottling and distribution structure. When 7-UP was first introduced, it had little competition because Coca Cola and Pepsi did not manufacture lemon-lime soft drinks. This changed when Coca Cola introduced Sprite and Pepsi introduced Sierra Mist. Bottlers were then forced by these respective companies to discontinue bottling 7-UP and exclusively bottle their products. Unfortunately, this had led to an inability for 7-UP to be widely distributed to smaller stores. As a result, 7-UP can often only be found in large stores or chains (Wikipedia).4. 7-UPs marketing strategy has been successful in many ways. With the introduction of new taglines and slogans, 7-UP has been successful at positioning themselves in consumers minds and increasing market share in the soft drink industry. 7-UPs marketing strategy has also been successful because market ing executives have capitalized on consumer trends throughout the history of the company.In the 1970s, the company seized upon the fact that the popular cola drinks had high levels of caffeine and redesigned their advertising to ponder the healthier choice that 7-UP was. In addition, they appealed to the consumers sense of wanting to be an individual and introduced advertisements geared toward that concept. With the invention of new technology, 7-UP has also gained a presence on the World Wide Web with a well-designed web site that gives important information about the company and its products (Wikipedia).Marketing Case StudyCASE 4? 6 Making Socially Responsible and Ethical Strategic decisions move a company toward its stated goals and perceived success. Strategic decisions also re? ect the ? rms social responsibility and the ethical values on which such decisions are made. They re? ect what is considered important and what a company wants to achieve. Mark Pastin, writing on the fu nction of ethics in business decisions, observes There are fundamental principles, or ground rules, by which organizations act. Like the ground rules of individuals, organizational ground rules determine which actions are possible for the organization and what the actions mean.Buried beneath the charts of organizational responsibility, the arcane strategies, the crunched numbers, and the political intrigue of every ? rm are sound rules by which the game unfolds. The following situations re? ect different decisions made by multinational ? rms and governments and also re? ect the social responsibility and ethical values underpinning the decisions. Study the following situations in the global cigarette marketplace carefully and assess the ground rules that guided the decisions of ? rms and governments.Marketing Decisions Selling Tobacco to Third World Countries expanding market. As an example, Indonesias per capita cigarette consumption quadrupled in less than ten years. Increasingly, cigarette advertising on radio and television is being restricted in some countries, but other means of promotion, especially to young people, are not controlled. China, with more than 300 million smokers, produces and consumes about 1. 4 trillion cigarettes per year, more than any other country in the world. Estimates are that China has more smokers than the United States has people.Just 1 percent of that 1. 4 trillion cigarette market would increase a tobacco companys overseas sales by 15 percent and would be worth as much as $300 million in added revenue. American cigarette companies have received a warm welcome in Russia, where at least 50 percent of the people smoke. Consumers are hungry for most things Western, and tobacco taxes are low. Unlike in the United States and other countries that limit or ban cigarette advertising, there are few effective controls on tobacco products in Russia.Russia, the worlds fourth largest cigarette market, has proved to be an extremely pro? tabl e territory for British American Tobacco (BAT). BAT Russia, established in 1949, sold 65 billion cigarettes in Russia in 2005, giving it almost one? fth of market share. EXPORTING U. S. CIGARETTE CONSUMPTION In the United States, 600 billion cigarettes are sold annually, but sales are shrinking rapidly. Unit sales have been dropping about 1 to 2 percent a year, and sales have been down by almost 5 percent in the last six years. The U. S.Surgeon Generals campaign against smoking, higher cigarette taxes, non-smoking rules in public areas, and the concern Americans have about general health have led to the decline in tobacco consumption. Faced with various class-action lawsuits, the success of states in winning lawsuits, and pending federal legislation, tobacco companies have stepped up their international marketing activities to maintain pro? ts. Even though companies have agreed to sweeping restrictions in the United States on cigarette marketing and secondhand smoke and to bolder ca ncer-warning labels, they are ? hting as hard as ever in the Third World to convince the media, the public, and policymakers that similar changes are not needed. In seminars at luxury resorts worldwide, tobacco companies invite journalists, all expenses paid, to participate in programs that play down the health risks of smoking. It is hard to gauge the in? uence of such seminars, but in the Philippines, a government plan to reduce smoking by children was neutralized by a public relations campaign from cigarette companies to remove cancer awareness and prevention as a key concern. A slant in favor of the tobacco industrys point of view seemed to prevail. At a time when most industrialized countries are discouraging smoking, the tobacco industry is avidly courting consumers throughout the developing world using catchy slogans, obvious image campaigns, and single-cigarette sales that ? t a hard-pressed customers budget. The reason is clear The Third World is an ADVERTISING AND PROMOTIO N In Gambia, smokers send in cigarette box tops to qualify for a chance to win a new car. In Argentina, smoking commercials ? ll 20 percent of television advertising time.And in crowded African cities, billboards that link smoking to the good life tower above the sweltering shantytowns. Such things as baby clothes with cigarette logos, health warnings printed in foreign languages, and tobaccosponsored contests for children are often featured in tobacco ads in Third World countries. Latin American tobacco consumption rose by more than 24 percent over a ten-year period. Critics claim that sophisticated promotions in unsophisticated societies entice people who cannot afford the necessities of life to spend money on a luxuryand a dangerous one at that.The sophistication theme runs throughout the smoking ads. In Kinshasa, Zaire, billboards depict a man in a business suit stepping out of a black Mercedes as a chauffeur holds the door. In Nigeria, promotions for Graduate brand cigarettes s how a university student in his cap and gown. Those for Gold Leaf cigarettes have a barrister in a white wig and the slogan, A very important cigarette for very important people. In Kenya, a magazine ad for Embassy cigarettes shows an elegant executive of? cer with three young men and women equivalent to American yuppies.The most disturbing trend in developing countries is advertising that associates tobacco with American af? uence and culture. Some women in Africa, in their struggle for womens rights, de? antly smoke cigarettes as a symbol of freedom. Billboards all over Russia feature pictures of skyscrapers and white sandy beaches and slogans like Total Freedom or Rendezvous with America. They arent advertising foreign travel but American cigarette brands. Cases 4 Developing Global Marketing Strategies Every cigarette manufacturer is in the image business, and tobacco companies say their promotional slant is both reasonable and common.They point out that in the Third World a lo t of people cannot understand what is written in the ads anyway, so the ads zero in on the more understandable visual image. In most of the world, the Marlboro Man isnt just a symbol of the Wild West hes a symbol of the West. You cant convince people that all Americans dont smoke. In Africa, some of the most effective advertising includes images of af? uent white Americans with recognizable landmarks, such as the New York City skyline, in the background. In much of Africa, children as young as ? e are used to sell single cigarettes, affordable to other children, to support their own nicotine habits. Worldwide nearly one-fourth of all teenage smokers smoked their ? rst cigarette before they were 10 years old. The scope of promotional activity is enormous. In Kenya, a major tobacco company is the fourth-largest advertiser. Tobaccosponsored lotteries bolster sales in some countries by offering as prizes expensive goods that are beyond most peoples budgets. Gambia has a population of just 640,000, but a tobacco company lottery attracted 1. million entries (each sent in on a cigarette box top) when it raf? ed off a Renault car. Evidence is strong that the strategy of tobacco companies is to target young people as a means of expanding market demand. Report after report reveals that adolescents receive cigarettes free as a means of promoting the product. For example, in Buenos Aires, a Jeep decorated with the yellow Camel logo pulls up in front of a high school. The driver, a blond woman wearing khaki safari gear, begins handing out free cigarettes to 15- and 16-year-olds on lunch recess.Teens visiting MTVs Web sites in China, Germany, India, Poland, and Latin America were given the chance to click on a banner ad that led them to a questionnaire about their exposure to cigarette ads and other marketing tools in their countries. Some 10,000 teens responded to the banner ads. In the past week, more than 62 percent of teenagers in these countries have been exposed to tobacco advertising in some form, the 17-year-old SWAT (Students Working against Tobacco) chairman told Reuters. The tobacco companies learned that marketing to teens and kids worked in this country, but since they cant do it here anymore, theyve taken what they learned to other countries. At a video arcade in Taipei, free American cigarettes are strewn atop each game. As long as theyre here, I may as well try one, says a high school girl. In Malaysia, Gila-Gila, a comic book popular with elementary school students, carries a Lucky Strike ad. Attractive women in cowboy out? ts regularly meet teenagers going to rock concerts or discos in Budapest and hand them Marlboros.Those who accept a light on the spot also receive Marlboro sunglasses. According to the American Lung Association Tobacco Policy Trend Alert, the tobacco industry is offering candy-? avored cigarettes in an attempt to continue to target teens. 1 Advertising and promotion of these products uses hip-hop imagery, attrac tive women, and other imagery to appeal to youth in similar ways that Joe Camel did a decade ago. Marketing efforts for candy-? avored cigarettes came after the Master Settlement Agreement prohibited tobacco companies from using cartoon characters to sell cigarettes.Researchers recently released the results of several surveys that showed that 20 percent of smokers ages 17 to 19 smoked ? avored cigarettes, while only 6 percent of smokers ages 17 to 20 did. In Russia, a U. S. cigarette company sponsors disco parties where thousands of young people dance to booming music. Admission is the purchase of one pack of cigarettes. At other cigarettesponsored parties, attractive women give cigarettes away free. In many countries, foreign cigarettes have a status image that also encourages smoking.A 26-year-old Chinese man says he switched from a domestic brand to Marlboro because You feel a higher social position when you smoke foreign cigarettes. Smoking is a sign of luxury in the Czech Repub lica as well as in Russia and other Eastern countries, says an executive of a Czech tobacco ? rm that has a joint venture with a U. S. company. If I can smoke Marlboro, then Im a well-to-do man. The global tobacco companies insist that they are not attempting to recruit new smokers. They say they are only trying to encourage smokers to switch to foreign brands. The same number of cigarettes are consumed whether American cigarettes or not, was the comment of one executive. Although cigarette companies deny they sell higher tar and nicotine cigarettes in the Third World, one British tobacco company does concede that some of its brands sold in developing countries contain more tar and nicotine than those sold in the United States and Europe. A recent study found three major U. S. brands with ? lters had 17 milligrams of tar in the United States, 22. 3 in Kenya, 29. 7 in Malaysia, and 31. 1 in South Africa. Another brand with ? ters had 19. 1 milligrams of tar in the United States, 28. 8 in South Africa, and 30. 9 in the Philippines. The ? rm says that Third World smokers are used to smoking their own locally made product, which might have several times more tar and nicotine. Thus, the ? rm leaves the tar- and nicotine-level decisions to its foreign subsidiaries, who tailor their products to local tastes. C. Everett Koop, the retired U. S. Surgeon General, was quoted in a recent news conference as saying, Companies claims that science cannot say with certainty that tobacco causes cancer were ? t-footed lies and that sending cigarettes to the Third World was the export of death, disease, and disability. An Oxford University epidemiologist has estimated that, because of increasing tobacco consumption in Asia, the annual worldwide death toll from tobaccorelated illnesses will more than triple over the next two decades. Perhaps 100 million people died prematurely during the 20th century as a result of tobacco, making it the leading preventable cause of death and one of the top killers overall. According to the World Health Organization, ach year smoking causes 4 million deaths globally, and it expects the annual toll to rise to 10 million in 2030. GOVERNMENT INVOLVEMENT Third World governments often stand to pro? t from tobacco sales. Brazil collects 75 percent of the retail price of cigarettes in taxes, some $100 million a month. The Bulgarian state-owned tobacco company, Bulgartabac, contributes almost $30 million in taxes to the government annually. Bulgartabac is a major exporter of cigarettes to Russia, exporting 40,000 tons of cigarettes annually. Tobacco is Zimbabwes largest cash crop.One news report from a Zimbabwe newspaper reveals strong support for cigarette companies. Western anti-tobacco lobbies demonstrate unbelievable hypocrisy, notes one editorial. It is relatively easy to sit in Washington or London and prattle on about the so-called evils of smoking, but they are far removed from the day-to-day grind of earning a living in th e Third World. It goes on to comment that it doesnt dispute the fact that smoking is addictive or that it may cause diseases, but smoking does not necessarily lead to certain 1See From Joe Camel to Kauai KoladaThe Marketing of Candy-Flavored Cigarettes, http//lungusa. org. Part 6 Supplementary Material 350 million smokers, China has 50 million more cigarette buyers than the U. S. has people, according to Euromonitor. While smoking rates in developed countries have slowly declined, they have shot up dramatically in some developing counties where PMI is a major player. These include Pakistan (up 42 percent since 2001), Ukraine (up 36 percent), and Argentina (up 18 percent). death. Nor is it any more dangerous than other habits. Unfortunately, tobacco smoking has attracted the attention of a particularly sanctimonious, meddling sector of society. They would do better to keep their opinions to themselves. Generally, smoking is not a big concern of governments beset by debt, internal c on? ict, drought, or famine. It is truly tragic, but the worse famine becomes, the more people smokejust as with war, when people who are worried want to smoke. In any case, says one representative of an international tobacco company, People in developing countries dont have a long enough life expectancy to worry about smoking-related problems.You cant turn to a guy who is going to die at age 40 and tell him that he might not live up to 2 years extra at age 70. As for promoting cigarettes in the Third World, If there is no ban on TV advertising, then you arent going to be an idiot and impose restrictions on yourself, says the representative, and likewise, if you get an order and you know that theyve got money, no one is going to turn down the business. Cigarette companies ? gure Chinas self-interest will preserve its industry.Tobacco provides huge revenues for Beijing because all tobacco must be sold through the China National Tobacco Company monopoly. Duty on imported cigarettes is nearly 450 percent of their value. Consequently, tobacco is among the central governments biggest source of funding, accounting for more than $30 billion in income in 2005. China is also a major exporter of tobacco. ANTISMOKING PROMOTIONS Since the early 1990s, multinational tobacco companies have promoted youth smoking prevention programs as part of their Corporate Social Responsibility campaigns.The companies have partnered with third-party allies in Latin America, most notably nonpro? t educational organizations and education and health ministries to promote youth smoking prevention. Even though there is no evidence that these programs reduce smoking among youths, they have met the industrys goal of portraying the companies as concerned corporate citizens. In fact, a new study proves that youth smoking prevention ads created by the tobacco industry and aimed at parents actually increase the likelihood that teens will smoke.The study, Impact of Televised Tobacco Industry Smokin g Prevention Advertising on Youth Smoking-Related Beliefs, Intentions and Behavior, published in the December 2006 issue of the American Journal of Public Health, sought to understand how the tobacco industry uses youth smoking prevention programs in Latin America. Tobacco industry documents, so-called social reports, media reports, and material provided by Latin American public health advocates were all analyzed. The study is the ? rst to examine the speci? c effect of tobacco company parent-focused advertising on youth.It found that ads that the industry claims are aimed at preventing youth from smoking actually provide no bene? t to youth. In fact, the ads that are created for parental audiences but also are seen by teens are associated with stronger intentions by teens to smoke in the future. Brazil has the worlds strictest governmental laws against smoking, consisting of highly visible antismoking campaigns, severe controls on advertising, and very high tax rates on smoking pro ducts. Despite these obstacles, the number of smokers in Brazil continues to grow. In 2006, there were approximately 44 million smokers in the country, up from 38 million in 1997.Factors driving this trend include the low price of cigarettes, which are among the lowest in the world the easy access to tobacco products and the actions taken by the powerful tobacco companies to slow down antismoking legislation in Brazil. FOCUS ON DEVELOPING MARKETS Lawsuits, stringent legislation against advertising, laws restricting where people can smoke, and other antismoking efforts on the part of governments have caused tobacco companies to intensify their efforts in those markets where restrictions are fewer and governments more friendly.As part of a strategy to increase its sales in the developing world, Philip Morris International (PMI) was spun off from Philip Morris USA in 2008 to escape the threat of litigation and government regulation in the United States. The move frees the tobacco giant s international operations of the legal and public-relations headaches in the United States that have hindered its growth. Its practices are no longer constrained by American public opinion, paving the way for broad product experimentation. A new product, Marlboro Intense, is likely to be part of an aggressive blitz of new smoking products PMI will roll out around the globe.The Marlboro Intense cigarette has been shrunk down by about a half inch and offers smokers seven potent puffs apiece, versus the average of eight or so milder draws. The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but dont always ? nish a full-size cigarette. The CEO of PMI says there are possibly 50 markets that are interested in deploying Marlboro Intense. Other product innovations include sweet-smelling cigarettes that contain tobacco, cloves and ? voringwith twice the tar and nicotine levels of a conventional U. S. cigarette. M arlboro Mix 9, a high-nicotine, high-tar cigarette launched in Indonesia in 2007, and a clove-infused Mix 9 will be exported to other southeast Asian markets next. Another iteration of the Marlboro brand, the Marlboro Filter Plus, is being sold in South Korea, Russia, Kazakhstan, and Ukraine. It touts a special ? lter made of carbon, cellulose acetate, and a tobacco plug that the company claims lowers the tar level while giving smokers a smoother taste.One of PMIs immediate goals is to harness the huge potential of Chinas smoking population, as well as some of that countrys own brands, which it has agreed to market worldwide. With some ASSESSING THE ETHICS OF STRATEGIC DECISIONS Ethical decision making is not a simplistic right or wrong determination. Ethical ground rules are complex, tough to sort out and to prioritize, tough to articulate, and tough to use. The complexity of ethical decisions is compounded in the international setting, which comprises different cultures, different perspectives of right and wrong, different legal requirements, and different goals.Clearly, when U. S. companies conduct business in an international setting, the ground rules become further complicated by the values, customs, traditions, ethics, and goals of the host countries, which each have developed their own ground rules for conducting business. Three prominent American ethicists have developed a framework to view the ethical implications of strategic decisions by American Cases 4 Developing Global Marketing Strategies ? rms. They identify three ethical principles that can guide American managers in assessing the ethical implications of their decisions and the degree to which these decisions re? ct these ethical principles or ground rules. They suggest asking, Is the corporate strategy acceptable according to the following ethical ground rules? These questions can help uncover the ethical ground rules embedded in the tobacco consumption situation described in this case. Thes e questions lead to an ethical analysis of the degree to which this strategy is bene? cial or harmful to the parties and, ultimately, whether it is a right or wrong strategy, or whether the consequences of this strategy are ethical or socially responsible for the parties involved.These ideas are incorporated in the decision tree in Exhibit 1. Principles Utilitarian ethics (Bentham, Smith) Question Does the corporate strategy optimize the common good or bene? ts of all constituencies? Does the corporate strategy respect the rights of the individuals involved? Does the corporate strategy respect the canons of justice or fairness to all parties? Rights of the parties (Kant, Locke) Justice or fairness (Aristotle, Rawls) Exhibit 1 A Decision Tree for Incorporating Ethical and Social Responsibility Issues into Multinational Business DecisionsDoes the decision efficiently optimize the common good or benefits of THE BUSINESS FIRM? Stockholders Management Profits Growth Other SOCIETY? Cultur e Order Justice The good life Other THE ECONOMY? THE INDIVIDUAL? Economic growth Freedom Allocation of resources Health and welfare Production and distribution Self-realization of goods and services Human dignity Other Opportunity Other YES NO YES Are there critical factors that justify suboptimizing these goals and satisfactions? NO Does the decision respect the rights of individuals involved? YES NOReject Decision YES Are there critical factors that justify the abrogation of a right? NO Does the corporate decision respect the canons of justice or fairness to all parties involved? YES YES NO Reject Decision Are there critical factors that justify the violation of a canon of justice? NO Accept Decision Reject Decision Part 6 Supplementary Material See www. who. int, the World Health Organizations Web site, for more details regarding the current tobacco controversy. See also www. getswat. com for a worldwide student initiative against smoking.Laczniak and Naor discuss the complexity of international ethics or, more precisely, the ethical assumptions that underlie strategic decisions for multinationals. 2 They suggest that multinationals can develop consistency in their policies by using federal law as a baseline for appropriate behavior as well as respect for the host countrys general value structure. They conclude with four recommendations for multinationals 1. Expand codes of ethics to be worldwide in scope. 2. Expressly consider ethical issues when developing worldwide corporate strategies. . If the ? rm encounters major ethical dilemmas, consider withdrawal from the problem market. 4. Develop periodic ethics-impact statements, including impacts on host parties. 2 QUESTIONS 1. Use the model in Exhibit 1 as a guide and assess the ethical and social responsibility implications of the situations described. 2. Can you recommend alternative strategies or solutions to the dilemmas confronting the tobacco companies? To governments? What is the price of ethical beha vior? 3. Should the U. S. government support U. S. tobacco company interests abroad? . Should a company be forced to stop marketing a product that is not illegal, such as cigarettes? Gene R. Laczniak and Jacob Naor, Global Ethics Wrestling with the Corporate Conscience, Business, JulySeptember 1985. Sources Smoke Over the Horizon U. S. Gains in Tobacco Control Are Being Offset Internationally, The Washington Post, July 23, 2006 Death and Taxes England Has Become the Latest in a Series of Countries to Vote for Restrictions on Smoking in Public Places, Financial Management (UK), April 1, 2006 Trick or Treat?Tobacco Industry Prevention Ads Dont Help Curb Youth Smoking, PR Newswire, October 31, 2006 China Exclusive China, With One Third of Worlds Smokers, Promises a Non-Smoking Olympics, Xinhua News Agency, May 29, 2006 Tobacco Consumption and Motives for Use in Mexican University Students, Adolescence, June 22, 2006 A Change in the Air Smoking Bans Gain Momentum Worldwide, Environmenta l Health Perspectives, August 1, 2007 Adams Wont Kick the BAT Habit The Head of British American Tobacco Is Stoical About the Looming Ban on Smoking in Public Spaces BAT will Adapt, The Sunday Telegraph London, June 10, 2007 Heart Disease, Stroke Plague Third World, Associated Press (Online), April 4, 2006 Get a Detailed Picture of the Tobacco Industry in Brazil, M2 Press Wire, December 20, 2007 Vanessa OConnell, Philip Morris Readies Global Tobacco Blitz Division Spin-off Enables Aggressive Product Push High-Tar Smokes in Asia, The Wall Street Journal, January 29, 2008 The Global Tobacco Threat, The New York Times, February 19, 2008 How to Save a Billion Lives Smoking, The Economist (London,) February 9, 2008 Whether Here or There, Cigarettes Still Kill People, The Wall Street Journal, February 4, 2008.