Tobacco industry is one of the world’s most profitable and deadly industries in accordance with the global cigarette business with valued up to $559.9 billion USD. In Australia, this industry has contributes significantly to the economy (British American Tobacco [BAT], 2011). The five leading transnational tobacco companies (TTC) in the international tobacco market includes British American Tobacco (BAT). BAT is a London-based transnational tobacco company that ranks third among the leaders and operates in more than 180 countries. It is well represented in both developed and developing markets (BAT, 2011).
To increase its sales growth internationally, BAT use global branding strategy based on four Global Drive Brands (GDBs) which are Dunhill, Kent, Lucky Strike and Pall Mall. Besides, its marketing strategies in the emerging markets involve fraudulent campaign of “low-tar” tobacco products by using misleading terms and color-coding to signify products are less harmful. It induced the targeted market segments of youth, women and the poor aggressively using specially designed packaging according to their preferences. Furthermore, BAT involved in Corporate Social Responsibility (CSR) programs by engaging in “community investment” initiatives to enhance its image.
The main issues are the uses of misleading terms in advertisements, aggressive marketing strategies on targeted segments, tackle underage smoking through youth smoking prevention (YSP) programs, unpaid child labour and tobacco plantation cause health hazards in farmers. Generally, BAT misused the purpose and efforts for CSR. The stakeholder groups include the shareholders, suppliers, government, competitors, customers, employees, management, local communities, media, anti-smoking group and health organization.
Nestle’s case can be a good lesson for BAT. Its action to market infant formula product in third world countries has caused death and suffering of infants due to inappropriate marketing strategies. Besides, Nestle has overlooked these issues when they are concerned with only sales and profits (Post, 1995). World-wide boycott against Nestle Corporation occurred in 1977.
2.0 Main Ethical Issues
Today’s society is looking at not only if a company makes money but how it contributes to society. BAT has done just that and the subsequent addresses these changes. However, the engagement of BAT in the CSR activities is aimed to improve its image and weaken tobacco control efforts. In fact, those CSR activities do not make effort in addressing social problems but exploit the communities involved instead of improving their lives.
One of the ethical issues that arise is irresponsible marketing. Misleading terms such as “low-tar” and “light” and color-coding are used to indicate low-tar cigarettes. BAT continues to promote and falsely market that the “low-tar” cigarettes are less harmful to smokers even though they knew there were no health benefits.
Besides, different marketing strategies were created to encourage smoking in target consumer populations. BAT promoted smoking among women through introducing superslim cigarette brand and fashion-forward cigarette pack designs to attract them. Youths are also targeted and attempt to increase smoking among this population through attractive cigarette pack designs, frequently sponsoring concert and promoting cigarettes on Facebook. BAT also promotes sales of cigarettes in low income communities by giving away free gifts and prizes and promoting through brand messaging.
BAT voluntarily support youth smoking prevention programs. However, studies show that the tobacco companies so called ‘youth smoking prevention’ programs have little proven efficacy in reducing youth smoking but instead encourage them. It is revealed that tobacco companies support these smoking prevention programs for public relation purposes rather than for reducing youth smoking. Thus they do more harm...