In 1989, R.J. Reynolds announced to introduce a plan for Uptown, the cigarettes designed to target at black smokers. However, Uptown never reached the shelves because the opposition of some interest groups. In 1990, R.J. Reynolds begun to sell Dakota, which were a new cigarette brand targeted primarily at 18 to 24 years old female. In 1990, the alcohol producer Heileman Brewing Company launched a new high-alcohol drink PowerMaster, in order to targeted at black customers. R.J. Reynolds Tobacco Co. and G. Heileman Brewing Co. targeted the minority and ethnic groups. The segmentation marketing strategy of the cigarette and alcohol company induced some controversy marketing problems (Smith, 1995).
II. Ethical Issues of the Company
The ethical issue of R.J. Reynolds and G. Heileman Brewing was the same: they targeted the consumer segments viewed as “vulnerable” with the unhealthy products. Although marketing segmentation is an important marketing strategy for the company, the introduction of Uptown, Dakota and PowerMaster have resulted in controversy and even criticized as unethical because the products targeted at those people who are in lower income and with fewer education experience.
2.1 Ethical Issues Related Uptown and Dakota
With sales amount declining, R.J. Reynolds announced to introduce Uptown to seek new customers. Uptown is designed according to the black customers’ performance with lighter menthol and upside down filter. Uptown was charged for its misleading advertisement message brought more disease to a group with high smoking illness and mortality (Richard J, 1998). Although the plan of Uptown was cancelled because of the strong against of the social interest groups, the company’s segmentation strategy was implemented via other brands such as Dakota. Dakota targeted young female through the use of younger slim models and the advertisement slogan to mislead the young women smokers. Most of the targeted customers of Dakota were white female with high school degrees or blue-collar workers. They were so young to have good self-control awareness or the ability to judge true or false from the advertisement. And the company advocated Dakota as slim cigarettes and appealed the young female customers with misleading message.
2.2 Ethical Issues Related to PowerMaster
PowerMaster is a malt liquor that drawn criticism from health organizations, which charged the company promoted the products to poor blacks and inner-city neighborhoods. According to the investigation of these organizations, alcohol was connected to many serious social problems, such as suicide and family violence. And the black men had a 40 percentage higher death of liver cancer than the white people (Bureau of National Affairs, 1991).
(Source: http://www.google.com.au/search?q=powermaster&hl) III. Relevant Interactions and Connections of the Stakeholders There are eleven stakeholders involved in this case study. In the following part, I will use the stakeholder interaction model to identify the specific stakeholders and the relevant interactions and connections among them. And find how they think and value the ethical issues and their decision.
The stakeholder interaction model
(Source: Maignan, Ferrell and Ferrell, 2003)
3.1 Company (Management)
Company: R.J. Reynolds Tobacco Co. (RJR); G. Heileman Brewing Co. Senior administrator: RJR’s CEO; RJR’s Marketing VP: Peter Hoult; Spokesperson; Marketing VP of Philip Morris Co. Both of the companies were under the heavy pressure to improve the marketing share of their products and create more profits to both the shareholders and employees. The business performance of the company will influence relationship with local government, community and suppliers. The senior administrators introduced the mew brand to customers, and explain the controversy from the perspective of the company. They provided and applied the segmentation marketing strategy and targeted at the vulnerable customers. They believed that the targeted customers have right to buy the products that fit their preference, the introduction of new products won’t change the whether they buy or not. Targeting at some special groups is just a tactic of marketing choice.
They want the products that better need their needs, and the products are available in the right places with the right prices. The choice of customers will decide the company’s operating condition and employee’s welfare. And the employees produce the products and sell them to customers. Interest groups were looking forward to protecting the health of them. Customers pay tax to government; therefore, the government should make efforts to protect their legal interests. Customers have rights to buy alcohol and cigarettes, but some customers may mislead by the unethical strategy of the company and bring bad effect to themselves.
Senate; National Coalition;
The government should be responsible for the citizen’s health, when the company introduce the harmful products to the customers and bring bad social impacts, the government can regulate and administrate the company through tax or laws.
In this case, the community leaders charged the promotion of alcoholic products of G. Heileman Brewing Company which are targeted at the black and Latino neighborhoods resulted in a series of social problems (Folt,1991). The Community provides the company with physical and social infrastructure that allows the company to do business.
The suppliers are business partners of the companies, they want to maintain long-term and trusted relationships with the company.
In this case, the shareholders were the people who bought the stocks of the R.J. Reynolds Company and G. Heileman Brewing Company. They were granted to get the profits of the enterprises in the form of dividends and they wanted to maximum their return on the investment. Shareholders also wanted the company to behavior ethically and gain good reputation, however; in some instance the stockholders’ strong desire to get profits may push the company conduct unethical marketing strategy in order to meet the commitments to the shareholders.
The employees and shareholders mutually influenced each other, employees wanted to get reward consistent with their performance in the company. They brought economic profits to the stockholders, and they hoped their welfare could be improved as a return. Although employees of R.J. Reynolds and G. Heileman Brewing were not the direct business decision makers, they produced and sold the “unethical” cigarettes and alcohol to the vulnerable customers. And as a member of company, their welfare is related to whether the customers choose their products or not. When they loss the trust of customers they will also lose their own interests.
3.8 Special Interest Groups
Public Health Organizations：Health and Human Services Secretary; The Women’s Tennis Association; Center for Science in the Public Interest (CSPI). Public Health officials (Louis W. Sullivan; Reed Tuckson; Surgeon; General Koop) They have activities against the company and give information to the customers via the mess media. They criticized the Tabaco and alcohol company giving misleading information to the venerable customers and exploited profit from the poor, young, black and Hispanics groups. The special interest groups try to stop the unethical business strategies of the companies through boycotts and giving public censure to the government agency in order to protect he customers from unhealthy habits and behavior.
3.9 Trade Associations
The Beer Institute; Bureau of Alcohol, Tobacco and Firearms (BATF); The trade organization is an organization in the same trade formed to further their collative interests. The relative Trade Associations has the power of giving approval of using the label and also has the rights to use the related policies and regulations within their industry to control the behavior of the enterprises. In this case, BATF pushed G. Heileman Brewing Company to drop the word “power”.
Philip Morris Co.; BAT Industries; Black Sunday; Crazy Horse; St Ides. The marketing shortage of the company’s competitors may give the decision maker some enlightenment. And the company may imitate competitors’ profitable products and transfer its attention to the new area, do research on the new products in order to compete with others. In the case, Philip Morris is the leading cigarette company provides young female smokers with the brand Marlboro. The strategy of Phillip Morris pushed R.J. Reynolds into targeting at young female customers.
3.11 Mess Media:
The black oriented newspapers and magazines such as Jet and Ebony; Other media; Commentator of the media; New York Times; Beverage World; Fortune. The target marketing oriented media published alcoholic drinks and Tabaco advertisements to the customers, which may induce the prevalence of smoking. Other media reported on the protest against targeting at vulnerable customers. The Commentator of the media offered the customers with insightful analysis of the target marketing products and give suggestions to officials in the health organizations.
IV: Rank the Stakeholder
It is necessary to understand the relationships of all the stakeholders involved in the activity of the company or the interest groups. Having a good management of the relationships with each kind of stakeholder will be beneficial to the performance of that organization. The following two lists showing a rank of the stakeholders involved in the business activities of R.J. Reynolds Tobacco Company and G. Heileman Brewing Company from the perspectives of the two companies and interest groups respectively.
The shareholders hold the stocks of the company, in other words they can decide the company’s fate, and it’s the company’s obligation to maximize the stakeholders’ benefits, So R.J. Reynolds Tobacco Company and G. Heileman Brewing Company ranked their own shareholders in the most important place. Employees can provide research, manufacturing and sales services to the customers, their satisfaction of working conditions and welfares will influence their performance during the working period and then directly influence the company’s operating performance. Customers are usually regarded as the most important stakeholders. No company will operate well if it cannot persuade customers to buy its products. Therefore, both R.J. Reynolds and G. Heileman designed new brand products to the customers in order to increase their marketing share and get more profits. But they used wrong marketing segmentation strategies, and brought bad effects to the vulnerable groups that they are targeted at.
4.2 From the interest group’s perspective
3| Mass Media|
6| Trade Association|
In this case, all the interest groups involved in are the noneconomic public health organizations such as Health and Human Services Secretary; The Women’s Tennis Association; Center for Science in the Public Interest (CSPI) and so on. These noneconomic interest groups seek the solutions of the public concerns and issues. They against the tobacco and alcohol companies targeted at some vulnerable customers, and sold harmful products to these customers with unethical ways. Therefore, from the interest group’s perspective, the interests of the customers should be ranked in the fist place.
“The basic meaning of Community is a group of people living in the same locality and the same government ” (Wikipedia). The ultimate objective of the interest groups is solving the social issues that they concerned and about and then improve the total living standards of the community. And the Community provides the company with physical and social infrastructure that allows the company to do business. Therefore, when a company was failed to exercise its obligations, the Community has the duty to interdict its unethical behavior (Patrick 2004). In the case, the boycott and other against activities of the interest groups are under the support and assistance of the mess media. The media not only gave the pressure to the unethical companies, but also showed right guidance of public opinion.
V: Alternative Courses of Action and Recommendation
5.1 Alternative Courses of Action & Recommendations for Company For R.J. Reynolds Tobacco Company and G. Heileman Brewing Company, they should rank the customers in the first order rather than their own interests. Although marketing segmentation is an useful strategy in some conditions, the marketers of the alcoholic and tobacco industry should not target at the groups who are vulnerable due to their disadvantages in income, knowledge, age, life circumstance and so on. The alcoholic makers should provide the obvious marks with the information of the content, serving size the macronutrients, and the hazard of over drinking. The companies should participate more in the charitable activities, help and sponsor the people who suffer from the bad disease may caused by their products in order to have a better implementation of social responsibility.
5.2 Alternative Courses of Action & Recommendations for Interest Groups For the interest groups, they should help and training these vulnerable citizens directly with informative knowledge and cooperate with government rather than only criticizing the cigarettes and alcohol company. Cooperating with the government in order to better restrict unethical business strategies in alcoholic and tobacco industry. The government could use more methods to regulate and administrate the enterprise behavior through tax and law. Providing tobacco-use prevention courses in the school. The general awareness of the smoking harms health should be introduced since the primary school and reinforced in the high school in order to increase the successful rate of preventing tobacco for the young people. Encouraging the family members of the smoker or alcoholic drinker to persuade them giving up the unhealthy products or reduce the quantity of consumption.
Smith, N 1995, ‘Case Study: Uptown, Dakota, and PowerMaster’, Communication in Business: Internal and External, P54-58. Patrick, E, Gene, R, Norman, E & Thomas, A 2004, Ethical marketing, Pearson Education, New Jersey. Grace, D & Coken, S 2005, Business ethics: problems and cases, Oxford, New York. Fisher, C & Lovell, A 2006, Business ethics and values: individual, corporate and international perspective ,Pearson Education, Harlow. Warner, K, Goldenhar, L1992, ‘Targeting of cigarette advertising in US markets’, Tobacco Control, vol.25, P30. http://www.naaapi.org/documents/uptown.asp
Richard, J 1998, Life in a Business oriented society, Allyn and Bacon, Boston. Smith, C & Martin, E 1997, ‘Ethics and target marketing: the role of product harm and consumer vulnerability’, Journal of Marketing,
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