That is a question that has long vexed marketers who have learned from customers that they want to work with based businesses that are ethically -- defined as companies that produce products under conditions of advanced environmental practices, progressive stakeholder relationships and respect for human rights. Marketers had no reason to doubt that sentiment, but they have constantly wondered if consumers would be willing to pay a higher cost for ethically produced goods (since they are inclined to be more expensive to create.) But perhaps of equal interest is the fact that they will penalize (by demanding a lower price) companies that are not seen as ethical.
That relationship is not symmetrical. How ethical do you have to be? Maybe not as much as you might believe. The research demonstrates that a little degree of ethicalness "pays off" it is not essential for a business's merchandise to be "100% pure" in order to receive a cost premium. This study is the first to find that clients use cost to penalize unethical firms more than they use cost to reward ethical businesses, and that the ethicality of a business's behavior is, indeed, an important concern for consumers (as shown in their openness-to-pay decisions).
PUBLICATION DATE: January 01, 2009 PRODUCT #: SMR304-HCB-ENG
This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE
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