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Ethics of Marketing to Schools in America Essay Public schools across America are struggling with their budgets and looking to outside corporations for help. Conveniently, private corporations realize the potential buying power of students and have decided that elementary schools are the best channel to reach them. It has become routine for corporations to market there products in schools, and in exchange these schools receive various financial benefits. This new partnership has become the focus of much controversy as 80% of Americans feel that corporations should have no place in schools (). The two most cited concerns are the health of children and the growing commercialization of schools. This paper looks at this issue in detail by answering the following two questions. Is it ethical for corporations to market products in schools? What is the most socially responsible course of action for corporations to take? This paper will use a utilitarian and distributive justice framework to prove that marketing in schools is unethical and propose that the most ethical arrangement is to make schools commercial-free zones. This paper will also discuss the issue of corporate social responsibility through shareholder and stakeholder lenses to prove that there is a strong business case for corporations to? Children in schools are marketed to in a variety of ways. Schools can participate in incentive programs where a school receives funds to take part in a specific activity such as collecting box tops (). Some corporations offer free educational materials to schools that promote their corporate message. Pepsi encourages a thirst for knowledge on a popular textbook cover(). Each year over half of the students in schools in the United States receive free textbook covers(). McDonalds, Burger King and Dominos sponsor reading projects in schools with free meals(). Other schools receive free electronic equipment like computers and satellites for participating in programs like channel one. This is an arrangement where school receive free electronic equipment for having their students watch a 10 minute broadcast of which 2 minutes are corporate sponsored commercials (). All of these marketing techniques pose there own unique ethical dilemmas, however the most controversial type of marketing in schools today is the use of exclusive agreements. This is when corporations give schools a percentage of their profits in exchange for the right to be the sole provider of a product or a service(). The most prominent example of this is the soft drink company, Coca-Cola and their exclusive distribution rights with schools. As a result, Coca-Cola advertisements have become the most visible types of advertisements in schools today (). A US National School Health Policies study found that students could purchase soft drinks in 60% of elementary schools and 83% of middle schools (). Of these schools over 85% were under an exclusive contract with the Coca-Cola company (). For the aforementioned reasons the remainder of this paper will use the soft drink giant Coca Cola as a symbol to make it easier to understand the larger debate of marketing in elementary schools. A deontological framework can not determine whether this issue is ethical or unethical. In 1990 under $100 million was spent on advertising targeted at kids, just a decade later that number was up more than twenty times to over $2 billion (). This large increase in spending indicates that there is a strong motivation for corporations to market to youth. One way to determine if marketing in schools is ethical is to deconstruct these motivations through a deontological framework. The motivation for companies to market in schools could be a philanthropic opportunity to contribute to education. However, I do not believe this because companies like Coca-Cola make schools sign exclusive agreements, which means that they block competition and are profitable. I believe the main motive for companies to market to youth is to make money. Marketing to students in schools is an effective strategy as it reaps both short and long term rewards. Children in elementary schools have a lot of spending power. Kids ages 4-12 spend $40 billion each year (). Furthermore, these same kids influence $600 billion of household spending (). It is wise for companies to try to earn a share of this large market. Surprisingly, the sales of sodas in schools account for a miniscule slice of soda sales worldwide, less than 1 percent of sodas 66billion dollar industry (). Clearly profit in the short run is not the main motivating factor for companies like Coca-Cola. Marketing in public elementary school promises long run benefits. Soft drink companies can create brand loyalty with their consumers at an early age. In other words, they foster and retain a captive audience for its products. If you consider the cutthroat competition among soft drink makers for customers, this brand loyalty becomes a vital business pursuit. A deontological framework can better help us deconstruct the ehics of marketing to youth purely for financial reasons. Specifically, this paper will employ some of W. D. Ross duties. It can be argued that marketing in schools violates the duty of non-malefiicence (to do no harm). Some children will substitute a nutritious meal for a sugar laden soda. That is harmful to their health. Marketing in schools also violates the duty of gratitude. It does not thank customers for their business by protecting their health. Instead, companies like Coca-Cola continue to aggressively market their unhealthy product to vulnerable youth. On the other hand, if one considers a corporation a person, then a corporation fulfils Rosss duty of self-improvement by marketing in schools. It improves its own condition by increasing its profits in the short and the long run. Additionally, if a company honestly abides by the contract it signs with a school then it is upholding Rosss duty of fidelity. The framework of deontology is inadequate to determine the ethics of marketing in schools because it presents us with conflicting duties and no hierarchy to put them into. There is an incompatible difference between the various duties. However, this situation did not become controversial simply because some believe that a corporation might have bad ethics, instead people are worried about the consequences of marketing in schools. A utilitarian framework shows us that marketing in schools is unethical. Marketing in elementary school is controversial because it offers many direct benefits to schools, but negatively impact students. Through a utilitarian framework this paper will deconstruct the pros and cons of the scenario to determine whether marketing in schools is ethical. This paper will conduct a cost-benefit analysis to determine what results in the greatest good for the greatest number of people. The main players that benefit in this scenario are schools, shareholders of the Coca-Cola company, and employees. All of these players benefit in financial terms. Vending machines are a valuable source of revenue for schools. They support programs that might otherwise go unfunded. Elementary schools have reason to be concerned about their finances, the state of California cut the elementary school budget by $10 billion dollars in 2003 (). If a school district signs an exclusive contract with a soft-drink company it can generate an additional $3 million per year (). School districts receive all of this money for virtually no additional work on there part. This is why the cliche that: one day our schools will have all the money they need, and the Air Force will have to hold a bake sale to buy a bomber could become true (). Company shareholders benefit in the long run if we assume that marketing in schools create brand loyalty among consumers. Company employees also benefit from the sales of sodas in schools, simply because their company is continuing to be competitive in the marketplace and provide work for them. However, the positive impact of selling sodas in schools impacts company employees considerably less than other players in this scenario, because these employees will not be receiving a pay raise as a result of this practice. While there are some positive effects of marketing in schools, I feel that the cons greatly outweigh the benefits. Students bear the burden of the negative effects of marketing in schools. Marketing to youth perpetrates problems of childhood obesity, materialism, eating disorders, violence, and family stress (). This is especially problematic because children are more cognitively immature and prone to believe that products marketed in school carry their schools endorsement. For instance, if a school sells soda it signifies that it is acceptable to consume drinks that are high in sugar and have poor nutritional quality. A childs health is not an acceptable trade-off for increased revenues. Childhood obesity is an epidemic in America. One-quarter of children in the United States are overweight which means they are at risk for lifelong health problems such as diabetes, high blood pressure, and cavities (). Competitors also suffer in this scenario because ? exclusive agreements create a monopoly on a school and therefore promote unfair competition and can charge whatever price they want. The difficulty of examining ethics from a utilitarian perspective is that is impossible to predict the future. It is not clear how much the financial revenue schools gain from executive agreements helps them to fulfill their purpose of teaching. It is also not clear how high the correlation is between marketing in schools and negative outcomes like obesity. What is known is that most of the negative consequences (and there are a lot of them) fall on the shoulders of the students. Having the burden of this issue fall on the shoulders of millions of students nationwide is bad for society as a whole. Children need to be educated in a healthy atmosphere so that they can become productive members of society one day. It is detrimental to the future if children are not provided with the best learning environment possible. The best learning environment possible is one that is free from commercial influences. The Distributive Justice framework shows that monopolies are unethical. According to John Rawls we should determine ethical dilemmas like whether marketing in schools is ethical by making the decision from behind a veil of ignorance. The distributive justice framework tries to ensure that the interests of the worst off in society are considered. According to this theory, students well-being should be put before business interests because students are the most vulnerable group in this scenario. However, there is an inherent conflict of interest within this framework. Corporations believe that marketing in schools is ethical because they are exercising their 1st amendment right to free speech. Everybody has this right, thus they are utilizing the equal liberty principle: equal rights to liberties as long as all may be provided such liberties. The problem is that not even all corporations are being provided the liberty of free speech. As previously mentioned Coca Cola has an exclusive agreement with 85% of elementary schools in America, this is just a nice way to say that Coca Cola has a monopoly on the elementary school market (). Companies that engage in exclusive distributive contracts are trying to block competitors. They can not justify this action on the ground that they need to do this to spur innovation, they want a monopoly so they can control the school market. Thus the difference principle comes into play because the inequality that these companies are creating in the market place needs to be addressed. The most ethical thing to do is to make schools commercial free zones. Marketing in schools is unethical. The most ethical thing to do is to make elementary schools commercial-free zones. Students should be able to pursue learning free of commercial influences and pressures. Eighty percent of adults in the United States agree that schools should be commercial-free zones as well (). While this may be the most ethical course of action, it seems highly unlikely as marketing in schools has become entrenched. Schools continually need more money and the government is unable to provide it. If marketing in schools must continue at the very least it should be regulated. It does not seem probable that the industry will regulate itself, so it should be subject to more government oversight. Right now there is very little the government has done to restrict marketing in schools. Laws forbidding it are perceived to be a breach of the 1st amendment. A study found that only nineteen states currently have statues or regulations that address school-related commercial activities (). This number includes states that have statues that encourage commercial activities. The government should establish an independent commission to regulate marketing in public schools. This agency should make regulations that encourage schools to provide a healthy learning environment for students. The agency could regulate the sale of foods high in fat, sodium, and sugars. For example, it could decide that vending machines can not be stocked with sodas; however juices (100%) and water could still be sold. There would be greater social acceptance of this issue if it were implemented more appropriately. The business case for CSR prevails. This paper has established that the most ethical thing for corporations to do is to stop marketing to students in schools, or at the very least to regulate what they market to children. If a company were to stop marketing to children for the aforementioned ethical considerations it would be following a normative line of reasoning. The company would be interested in doing the right thing for society with little regard for how the proposition would effect its own bottom line. While I would applaud its efforts on a moral basis, this would be a very poor reason to engage in Corporate Social Responsibility. There needs to be a business incentive for corporations to engage in Corporate Social Responsibility. A company has to be successful financially if it is going to survive in the long run. However, there is always a business case for corporate social responsibility with respect to companies that sell consumer products. In the long run the closer a company aligns with the values of society the more successful it will be. Good ethics and good business are mutually reinforcing. In this case 80% of society wants commercial-free schools or at least commercialism that is regulated. It is socially responsible for a company to accommodate the wishes of society because it is in their long run interest to build a good reputation. A company like Coca-cola may be more successful at recruiting, retaining, and engaging with its employees and customers if it demonstrates that it is socially responsible. Critics might argue that this is just mere window dressing. However, a good reputation leads to higher sales in the long run. Both shareholder and stakeholder frameworks would support the business case for corporate social responsibility in this scenario. Milton Freidman is an advocate of the shareholder theory which maintains that a companies corporate social responsibility is to maximize profits without breaking the law or violating basic rules of society. Coca-Cola is not breaking any laws by marketing in schools, it is merely exercising its first amendment right to free speech. It is also not violating any social norms, children get to choose whether they want to buy unhealthy products. On one hand it may seem that Freidman would say that corporations should continue to market in schools because they are making a profit and therefore helping society. However Freidman would agree that companies need to balance there short term gains against their long-term interest. In this case, Freidman would advocate for the restriction of marketing in schools because it is in the long run self-interest of the company because companies like Coca-Cola needs to reassure their customers that they care about them. . An alternative approach to corporate social responsibility is the stakeholder theory. This theory maintains that companies should balance the interests of all stakeholders involved. In this scenario the stakeholders would be the students (customers), parents, teachers, corporations, suppliers, employees, shareholders, and society. Students are harmed by marketing in schools because marketing is correlated with problems like obesity and materialism. On the other hand these same students benefit because their schools are receiving additional funding for programs. Parents suffer because they have less control over what their children are exposed to, and it could undermine their values. Shareholders may benefit in the short run from marketing in schools, but in the long run the values of the company must be aligned with society if it is going to succeed. Therefore, the stakeholder theory would advocate a business case for Corporate Social Responsibility as well: to limit marketing in schools. Marketing in schools is a complex issue with many players. In this case, students are the most important players because schools are public institutions and schools are supposed to make students a top priority. Marketing in schools can not stop on its own, it needs to be either strictly prohibited or at the very least limited by the government.