Transcript
ETHICAL ISSUES IN MARKETING
Introduction:
Marketing, in contemporary times, has seen a tumultuous change in the way it's
conducted in developing countries. The oft cited dictum that only change is constant
in the marketing genre is an apposite one. Just as the media of social communication
themselves have enormous influence everywhere, so advertising and marketing, using
media as their vehicles, are pervasive, powerful forces shaping attitudes and behavior
in today's world. Four reasons are attributed to the fugacious nature of the way
marketing practices are being carried out in developing countries 1. The role of
Information and Communication technologies: As ICTs evolve so do marketing
practices. If yesterday it was television that revolutionized the way advertisements
could create a lasting impact on the consumer, then today the internet and phone text
messages are doing just that. 2. The world today is an increasingly global village:
Social and ethnic boundaries are fast falling in the wake of cable television and the
like. 3. Rapid economic expansions in countries like China and India have meant that
marketers have to quickly respond to the changing socio-economic scenarios.
Millions of people have entered the middle class and millions more are poised to do
so. For marketers, the consequences can be mind boggling-as incomes and spending
powers rise, marketers have to respond to increasing demands from consumers. 4.
Better and improved marketing research has meant that the entire populace is not seen
in totality but rather as a congeries of different types of consumers.
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THE UPSHOT:
But the outcome of such developments is that a number of ethical issues have arisen.
While the globe is indeed becoming a smaller place, marketers have to bear in mind
national, local and cultural sensitivities. Very often, in the hope of tapping a larger
consumer base, marketers jump headlong in new markets without keeping in mind
ethnic and social issues typical to certain areas. While marketers do have to act with
celerity in gaining footholds in emerging markets such as China and India, care has to
be taken in ensuring that the mores, etiquettes of the land are not encroached upon.
The incorporation of newer technologies has meant that a number of issues such as
invasion of privacy and credibility have arisen. Ergo, in these rapidly changing
circumstances, marketers and consumers alike face a nimiety of ethical issues that
have to be addressed. This paper looks at some of the ethical issues in the developing
countries context.
EXPLOITING SOCIAL PARADIGMS
In the hopes of making a fast buck, marketers often resort to exploiting social
paradigms typical to certain areas. In India, for example, a large multinational
corporation ran an ad campaign that depicted a young woman who because of her
dark facial complexion was unable to find jobs. But as the ad showed, as soon as the
woman started using the facial whiteness cream manufactured by the corporation, she
got the job of her choice. Needless to say, there was a big backlash against it and the
ad campaign had to be scrapped. On an ethical standpoint, marketers have to exercise
restraint in exploiting such social paradigms to their commercial advantage.
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SURROGATE ADVERTISEMENTS
In India alcohol and cigarette advertisements were banned outright some years back.
However, alcohol and cigarette companies alike are using the avenue of surrogate
advertisements to press forward their case. For the viewer though, the 'subtle' pointer
towards the real deal is enough as the surrogate advertisements leave no ambiguity in
their minds.
SUBLIMINAL ADVERTISEMENTS
One of the most controversial and ethical issues in advertising is regarding subliminal
advertisements. Inserting subliminal messages in an advertisement is an inherently
misleading action. It is an attempt to manipulate a person's thinking without the
person realizing that any such manipulation is occurring. The west has had its fair
share of subliminal advertisements related hullabaloos primarily because the
advertisement, marketing and regulating media themselves have been quite active in
raising such issues. During the US Presidential elections of 2000, it came to light that
a political advertisement for George W. Bush subliminally flashed the word 'RATS'
when criticizing Al Gore's prescription medicine plan. While the ad maker denied that
the quickly flashed word was a subliminal message designed to surreptitiously sling
mud at Gore, many others, however, concluded that 'RATS' was indeed inserted with
the intention of secretly causing viewers' to associate vermin with Al Gore. In line
with the techniques of subliminal messaging, the questionable word appeared on the
screen for only a microsecond (1/30th of a second), passing by so fast that it was
almost unrecognizable to the conscious mind-especially when passively lulled by
television. According to the theory of subliminal advertising the image would, indeed,
register in a viewer's subconscious mind, thereby causing the viewer to negatively
associate Al Gore with a rodent. The effects of subliminal advertisements are real and
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financially significant. Each year, consumers spend roughly $US50 million for self-
help tapes embedded with subliminal messages that are supposed to teach a person a
foreign language while they sleep, or help them lose weight, or quit smoking.
Additionally, some stores embed subliminal messages in their background music in an
effort to discourage shoplifting. Time magazine reported in 1979 that messages such
as 'I am an honest person' and 'Stealing is dishonest' were being utilized in over fifty
department stores. One department store utilizing the hidden messages reported a
savings of $US600, 000 by reducing theft 37 percent during a nine month period. So,
if subliminal messages evidently work in self-help tapes and embedded in department
store music, it certainly seams reasonable that they would also work and perhaps even
work better in a visual medium such as television. In developing countries the
regulating watchdogs and related establishments are still in stages of latency so that
the possibility that viewers who would be subject to such measures would probably
never ever know that they were the focus of such procedures. The Ethical Issue of
'Creating Demand' In the words of Pope John Paul II, advertising also can be, and
often is, a tool of the phenomenon of consumerism. Sometimes advertisers speak of it
as part of their task to 'create' needs for products and services - that is, to cause people
to feel and act upon desires for items and services they would ordinarily not need. A
piquant issue arises when consumerist attitudes and values are transmitted by
communications media and advertising to developing countries, where they
exacerbate socio-economic problems and harm the poor. While a judicious use of
advertising can stimulate developing countries to improve their standard of living,
serious harm can be done to them if advertising and commercial pressure become so
irresponsible that communities seeking to rise from poverty to a reasonable standard
of living are persuaded to seek this progress by satisfying wants that have been
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artificially created. The result of this is that they waste their resources and neglect
their real needs, and genuine development falls behind.
PREDATORY PRICING
In developing nations where the bulk of the populace is still employed in small and
medium enterprises, the use of predatory pricing by large multinational corporations
in order to wipe out competition is an ethical issue. While proponents of no holds
barred pricing would attribute this to an unfettered free market, the fact remains that
the larger issue is the threat of wiping out the livelihood of a large number of people.
In India, a related issue is the entry of western discount stores that might eventually
threaten the existence of millions of people employed in traditional mom-and-pop
stores. Wal-Mart's 'takeover of small towns' in the U.S.A. is also a related concern.
Countries like India need to take a leaf out of the China book-China opened its market
to these stores in 1991 and only recently allowed 100% foreign direct investment
(FDI) in such ventures.
FALSE AND MISLEADING ADVERTISEMENTS
Then there is the issue of false and downright disingenuous advertisements. While in
itself this is an important ethical issue, an extension of this is the question of
credibility. Nowadays, newspaper columns are rife with advertisements which
blatantly compare features of brands with those of their competitors. Citing the
opinion of 'experts', these advertisements claim their brands to be quantitatively and
qualitatively better than those of their rivals. In India a leading car manufacturer had
to recall its ad campaign when it incorrectly stated that one of its car models was
superior to that of its competitor's.
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Post Purchase Dissonance
What you see is not often what you get Since very often what companies claim their
products or services deliver is not what the consumers actually get, the issue of post
purchase dissonance arises. There are two more non-contrasting viewpoints on this
issue. One states the typical examples of Tele-Shopping Networks (TSN) and the
internet. Since there is no element of tangibility, the consumer would typically end up
getting an end product which he/she didn't literally ask for. The other viewpoint states
that such establishments would be punished by market forces since in today's world
the consumer is undoubtedly the king. But in associating such concerns to the game
play of market forces, the larger ethical issue is unfortunately trivialized. Depicting
groups in stereotyped roles All too often, marketing contributes to the invidious
stereotyping of particular groups that places them at a disadvantage in relation to
others. Women and children unfortunately end up being cast as stereotypes in ad
campaigns the world over. Often, the role of women in business or professional life is
depicted as a masculine caricature, a denial of the specific gifts of feminine insight,
compassion, and understanding. In India, which has traditionally been a patriarchal
society, tremendous cultural changes have been brought in with the advent of cable
television and the exposure to western content. Urban women are enjoying more
freedom than they've had before. Yet, promotional campaigns of certain firms still
show the Indian woman of yore-a fallback to a time when women did not enjoy the
freedoms they have today. The Über kid In India, objections have been raised against
advertisements that showed mothers benchmarking their children to the so called
'super-kid'- one who excels in studies and sports alike simply because he consumes a
particular health drink.
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Promotions of Alcohol, Tobacco
Creating Demand for Vice Cigarettes are one of the most heavily marketed products
in China and other developing nations. An increasing percentage of those marketing
dollars is dedicated to what are probably the most sophisticated consumer marketing
databases in the business world. Tobacco advertising is no longer just the province of
multi-million dollar ad budgets pushing the Marlboro Man, Joe Camel's phallic face
or the women in the Virginia Slims' ads who have 'come a long way.' It is equally the
province of direct marketers, pushing free packs to targeted prospects and mailing
slick magazines-published by tobacco companies-to influence the behavior and retain
the loyalty of tens of millions of smokers And the problem is pandemic-is is prevalent
in both developing as well as developed countries alike. In the US for example,
cigarette smoking is responsible for the deaths of almost half a million people a year.
Tobacco use is responsible for more than one in six deaths in the United States.
Smoking accounts for 30% of all cancer deaths. It is a major cause of heart disease,
and it is associated with conditions ranging from colds and gastric ulcers to chronic
bronchitis, emphysema and vascular disease. Smoking caused an estimated 264,087
male and 178, 311 female deaths in the United States each year from 1995 to 1999.
The U.S. Congress Office of Technology Assessment estimates the cost of smoking
(direct and indirect) to the economy at $150 billion a year. Each day more than 3,000
teenagers in the U.S. become addicted to cigarettes. The tobacco industry argues that
its advertising is not aimed at recruiting these young new smokers. Its representatives
say, disingenuously, that advertising by individual tobacco companies' targets adults
only and serve only to encourage regular smokers to switch brands or to retain brand
loyalty. However it has been seen that perception of cigarette brand advertising
actually is higher among young smokers and that changes in market share resulting
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from advertising occur mainly in this segment. Cigarette advertising thus undoubtedly
encourages youth to smoke. In a survey conducted by the Journal of the American
Medical Association, it was stated that the success of the tobacco industry is
dependent on recruiting people who don't believe that tobacco kills-thus enticing
children, developing nations populations, and disadvantaged members of society to
smoke is the only way for tobacco companies to make up for the number of smokers
who quit or die.
INTRUSIVE PROMOTIONS
A number of companies offer a plethora of freebies in terms of services and add-ons,
however all these come with the proverbial strings attached. These are particularly
true for telecom and internet services related companies. Mobile network providers in
India for example are notorious for literally bombarding the users with promotional
text messages. Many a times these companies share customer data with other
companies without the explicit permission of the customers themselves. The issue at
hand is such measures compromise the confidentiality of company-client relationships
and trivialize the privacy concerns of the customers.
Copyright, trademark violations Copyright and trademark violations are ubiquitous
throughout the developing world. One of the major grouses of multinational
corporations in countries like China and India is the lack of a robust legal framework
that harshly penalizes violators. Data piracy is a major concern in South East nations
and millions of illegal compact discs are made in such countries which cost software,
music and movie companies billions of dollars.
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ADVERTISEMENTS AS MIRRORS OF PREVAILING NORMS
Marketers claim that advertising simply mirrors the attitudes and values of the
surrounding culture. No doubt advertising, like the media of social communications in
general, does act as a mirror. But, also like media in general, it is a mirror that helps
shape the reality it reflects, and sometimes it presents a distorted image of reality.
Advertisers are selective about the values and attitudes to be fostered and encouraged,
promoting some while ignoring others. This selectivity does not impart credence to
the notion that advertising does no more than reflect the surrounding culture. For
example, the absence from advertising of certain racial and ethnic groups in some
multi-racial or multi-ethnic societies can help to create problems of image and
identity, especially among those neglected, and the almost inevitable impression in
commercial advertising that an abundance of possessions leads to happiness and
fulfillment can be both misleading and frustrating. Advertising also has an indirect but
powerful impact on society through its influence on media. Many publications and
broadcasting operations depend on advertising revenue for survival. This often is true
of religious media as well as commercial media. For their part, advertisers naturally
seek to reach audiences; and the media, striving to deliver audiences to advertisers,
must shape their content so to attract audiences of the size and demographic
composition sought. This economic dependency of media and the power it confers
upon advertisers carries with it serious responsibilities for both.
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THE ETHICAL ISSUE OF POLITICAL MARKETING
Political advertising can support and assist the working of the democratic process, but
it also can obstruct it. This happens when, for example, the costs of advertising limit
political competition to wealthy candidates or groups, or require that office-seekers
compromise their integrity and independence by over-dependence on special interests
for funds. Such obstruction of the democratic process also happens when, instead of
being a vehicle for honest expositions of candidates' views and records, political
advertising seeks to distort the views and records of opponents and unjustly attacks
their reputations. It happens when advertising appeals more to people's emotions and
base instincts-to selfishness, bias and hostility toward others, to racial and ethnic
prejudice and the like- rather than to a reasoned sense of justice and the good of all.
Ethical Issues in Internet, e-commerce The Internet is quickly becoming a major
conduit for business. On-line business has raised a host of new issues such as honesty
and responsibility, accountability, privacy and confidentiality, protection of data (i.e.
credit card numbers), freedom from invasiveness (i.e. so-called sticky websites that
automatically track and retain customer contact and information), quality of the goods
delivered, disclosure and reliability of information, sources of goods, Internet
economics vs. traditional economics, impacts of global Internet business, employment
through the net (local and global telecommuting), web advertising, competition on the
Internet (hacking into data, falsification of data), public information and financial
disclosure (investor relations on the Internet), and others.
1. The Small Print
The major ethical issues facing business over the internet are the ones regarding the
small print i.e. the policy notices or practices on websites. These issues include: A)
Usage of obfuscating and vague language B) The policy may be hard to find or
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difficult to read and understand. C) It may not contain all the disclosures D) May fail
to provide a contact address or procedures for dealing with complaints, corrections, or
conflict resolution E) It may not have clear access requirements or procedures for
verifying a valid requester before granting access. F) May not be linked to or
displayed on every page where information is collected
2. World Wide Web versus the Wild Wild Web:
To many, the utopian concept of the internet is that of a valueless zone-a free network
that is outside the purview of human control and restrain. But we feel that line of
reasoning is flawed. The internet is the progeny of civil society. This means that the
World Wide Web is not the wild wild Web, but instead a place where values in the
broadest sense should take a part in shaping content and services. This is recognition
that the Internet is not something apart from civil society, but increasingly a
fundamental component of it.
3. Ownership and Responsibility:
The internet is largely a boundary less network. The involvement in content of
companies hosting information is highly debatable. There are two sides to the
proverbial coin: The Internet as a medium supports all kind of contents. By espousing
the principle of allowing anyone to post any material on the net as a means of
furthering information exchange is extended by many as the raison d’être of absolving
the hosts of complicity of posting the material. In India, a major debate between the
erudite arose when the CEO of the Indian chapter (bazee) of ebay.com was arrested
over charges of allowing the exchange of video clips showing explicit scenes. The
sympathizers of the site owners cited the fact that the websites are merely enabling
people to exchange data over a common platform. What information is exchanged
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does not fall under the purview of the responsibilities of the website managers. The
opposing view was the hosts cannot turn a blind eye to the activities being carried out
through the medium of their site. We feel that although, given the nature of the
Internet, they cannot possibly be expected to pre-check content, once they receive a
notification or a complaint about something they are carrying or hosting, they have to
take a view. Thus if one is attempting to bring a sense of ethics to the Internet in any
particular instance, it is essential to know who has the control and the responsibility.
Increasingly the debate about
the content of the Internet is not national but global, not by specialists but by the
general populace. There is a real need for this debate to be stimulated and structured
and for it to lead to 'solutions' which are focused, practical and urgent.
Good Marketing Citizens All in all, it can be seen that ethical issues in marketing in
the context of developing countries is highly sensitive to cultural, social and ethnical
issues. The larger issue is thus not merely an occidental versus an oriental one. For the
marketing fraternity to be a good ethical citizen, the onus lie on themselves-for
indeed, marketers have to stop indulging in unethical practices and start respecting
local mores and values.
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ETHICAL MARKETING
Ethical marketing refers to the application of marketing ethics into
the marketing process. Briefly, marketing ethics refers to the philosophical
examination, from a moral standpoint, of particular marketing issues that are matters
of moral judgment. Ethical marketing generally results in a more socially responsible
and culturally sensitive business community. The establishment of marketing ethics
has the potential to benefit society as a whole, both in the short- and long-term.
Ethical marketing should be part of business ethics in the sense that marketing forms a
significant part of any business model. Study of Ethical marketing should be included
in applied ethics and involves examination of whether or not
an honest and factual representation of a product or service has been delivered in a
framework of cultural and social values.
It promotes qualitative benefits to its customers, which other similar companies,
products or services fail to recognize. The concern with ethical issues, such as child
labor, working conditions, relationships with third world countries and environmental
problems, has changed the attitude of the Western World towards a more socially
responsible way of thinking. This has influenced companies and their response is to
market their products in a more socially responsible way.
The increasing trend of fair trade is an example of the impact of ethical marketing. In
the 'Ethical Shoppers Price Index Survey' (2009) fair trade was the most popular
ethical badge products could have. It also revealed that many consumers distrusted
green claims. (The idea of fair trade is that consumers pay a guaranteed commodity
price to a small group of producers, the producers agree to pay fair labor prices and
conserve the environment - a fair deal for everyone.)
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The philosophy of marketing is not lost with this newfound ethical slant, but rather
hopes to win customer loyalty by reinforcing the positive values of the brand, creating
a strong citizen brand. However, this new way of thinking does create new challenges
for the marketer of the 21st century, in terms of invention and development of
products to add long-term benefits without reducing the product’s desirable qualities.
Many brands have tried to use ethics to make themselves look responsible, often
spinning environmental claims which has led to the term green wash (In research
consumers have shown to have even less trust of ethical claims in ads than ordinary
ads. media attention on ethics has resulted in many top brands suffering consumer
boycotts. Although many brands have tried to use green issues, it has been noted that
in research 2/3 of consumers responded more to ethical claims that relate to people
rather than to than environment.
Ethical marketing should not be confused with government regulations brought into
force to improve consumer welfare, such as reducing sulfur dioxide emissions to
improve the quality of the air. A government regulation is a legal remedy intended to
mitigate or correct an ethical issue, such as pollution of the air that we all share.
Enlightened ethical marketing is at work when the company and marketer recognize
further improvements for humankind unrelated to those enforced by governments or
public opinion. By way of example, the Coop Group refuses to invest money in
tobacco, fur and any countries with oppressive regimes.
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ETHICS IN MARKETING
Ethics are a collection of principles of right conduct that shape the decisions people or
organizations make. Practicing ethics in marketing means deliberately applying
standards of fairness, or moral rights and wrongs, to marketing decision making,
behavior, and practice in the organization.
In a market economy, a business may be expected to act in what it believes to be its
own best interest. The purpose of marketing is to create a competitive advantage. An
organization achieves an advantage when it does a better job than its competitors at
satisfying the product and service requirements of its target markets. Those
organizations that develop a competitive advantage are able to satisfy the needs of
both customers and the organization.
As our economic system has become more successful at providing for needs and
wants, there has been greater focus on organizations' adhering to ethical values rather
than simply providing products. This focus has come about for two reasons. First,
when an organization behaves ethically, customers develop more positive attitudes
about the firm, its products, and its services. When marketing practices depart from
standards that society considers acceptable, the market process becomes less efficient
sometimes it is even interrupted. Not employing ethical marketing practices may lead
to dissatisfied customers, bad publicity, a lack of trust, lost business, or, sometimes,
legal action. Thus, most organizations are very sensitive to the needs and opinions of
their customers and look for ways to protect their long-term interests.
Second, ethical abuses frequently lead to pressure (social or government) for
institutions to assume greater responsibility for their actions. Since abuses do occur,
some people believe that questionable business practices abound. As a result,
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consumer interest groups, professional associations, and self-regulatory groups exert
considerable influence on marketing. Calls for social responsibility have also
subjected marketing practices to a wide range of federal and state regulations
designed to either protect consumer rights or to stimulate trade.
The Federal Trade Commission (FTC) and other federal and state government
agencies are charged both with enforcing the laws and creating policies to limit unfair
marketing practices. Because regulation cannot be developed to cover every possible
abuse, organizations and industry groups often develop codes of ethical conduct or
rules for behavior to serve as a guide in decision making. The American Marketing
Association, for example, has developed a code of ethics (which can be viewed on its
Web site at www.ama.org). Self-regulation not only helps a firm avoid extensive
government intervention; it also permits it to better respond to changes in market
conditions. An organization's long-term success and profitability depends on this
ability to respond.
Several areas of concern in marketing ethics are explored in the remainder of the
article.
UNFAIR OR DECEPTIVE MARKETING PRACTICES
Marketing practices are deceptive if customers believe they will get more value from
a product or service than they actually receive. Deception, which can take the form of
a misrepresentation, omission, or misleading practice, can occur when working with
any element of the marketing mix. Because consumers are exposed to great quantities
of information about products and firms, they often become skeptical of marketing
claims and selling messages and act to protect themselves from being deceived. Thus,
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when a product or service does not provide expected value, customers will often seek
a different source.
Deceptive pricing practices cause customers to believe that the price they pay for
some unit of value in a product or service is lower than it really is. The deception
might take the form of making false price comparisons, providing misleading
suggested selling prices, omitting important conditions of the sale, or making very
low price offers available only when other items are purchased as well. Promotion
practices are deceptive when the seller intentionally misstates how a product is
constructed or performs, fails to disclose information regarding pyramid sales (a sales
technique in which a person is recruited into a plan and then expects to make money
by recruiting other people), or employs bait-and-switch selling techniques (a
technique in which a business offers to sell a product or service, often at a lower price,
in order to attract customers who are then encouraged to purchase a more expensive
item). False or greatly exaggerated product or service claims are also deceptive. When
packages are intentionally mislabeled as to contents, size, weight, or use information,
that constitutes deceptive packaging. Selling hazardous or defective products without
disclosing the dangers, failing to perform promised services, and not honoring
warranty obligations are also considered deception.
OFFENSIVE MATERIALS AND OBJECTIONABLE MARKETING
PRACTICES
Marketers control what they say to customers as well as and how and where they say
it. When events, television or radio programming, or publications sponsored by a
marketer, in addition to products or promotional materials, are perceived as offensive,
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they often create strong negative reactions. For example, some people find advertising
for all products promoting sexual potency to be offensive. Others may be offended
when a promotion employs stereotypical images or uses sex as an appeal. This is
particularly true when a product is being marketed in other countries, where words
and images may carry different meanings than they do in the host country.
When people feel that products or appeals are offensive, they may pressure vendors to
stop carrying the product. Thus, all promotional messages must be carefully screened
and tested, and communication media, programming, and editorial content selected to
match the tastes and interests of targeted customers. Beyond the target audience,
however, marketers should understand that there are others who are not customers
who might receive their appeals and see their images and be offended.
Direct marketing is also undergoing closer examination. Objectionable practices range
from minor irritants, such as the timing and frequency of sales letters or commercials,
to those that are offensive or even illegal. Among examples of practices that may raise
ethical questions are persistent and high-pressure selling, annoying telemarketing
calls, and television commercials that are too long or run too frequently. Marketing
appeals created to take advantage of young or inexperienced consumers or senior
citizens’ including advertisements, sales appeals disguised as contests, junk mail
(including electronic mail), and the use and exchange of mailing listsâmay also pose
ethical questions. In addition to being subject to consumer-protection laws and
regulations, the Direct Marketing Association provides a list of voluntary ethical
guidelines for companies engaged in direct marketing (available at their
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ETHICAL PRODUCT AND DISTRIBUTION PRACTICES
Several product-related issues raise questions about ethics in marketing, most often
concerning the quality of products and services provided. Among the most frequently
voiced complaints are ones about products that are unsafe, that are of poor quality in
construction or content, that do not contain what is promoted, or that go out of style or
become obsolete before they actually need replacing. An organization that markets
poor-quality or unsafe products is taking the chance that it will develop a reputation
for poor products or service. In addition, it may be putting itself in jeopardy for
product claims or legal action. Sometimes, however, frequent changes in product
features or performance, such as those that often occur in the computer industry, make
previous models of products obsolete. Such changes can be misinterpreted as planned
obsolescence.
Ethical questions may also arise in the distribution process. Because sales
performance is the most common way in which marketing representatives and sales
personnel are evaluated, performance pressures exist that may lead to ethical
dilemmas. For example, pressuring vendors to buy more than they need and pushing
items that will result in higher commissions are temptations. Exerting influence to
cause vendors to reduce display space for competitors' products, promising shipment
when knowing delivery is not possible by the promised date, or paying vendors to
carry a firm's product rather than one of its competitors are also unethical.
Research is another area in which ethical is sues may arise. Information gathered from
research can be important to the successful marketing of products or services.
Consumers, however, may view organizations' efforts to gather data from them as
invading their privacy. They are resistant to give out personal information that might
cause them to become a marketing target or to receive product or sales information.
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When data about products or consumers are exaggerated to make a selling point, or
research questions are written to obtain a specific result, consumers are misled.
Without self-imposed ethical standards in the research process, management will
likely make decisions based on inaccurate information.
DOES MARKETING OVER FOCUS ON MATERIALISM?
Consumers develop an identity in the market place that is shaped both by who they
are and by what they see themselves as becoming. There is evidence that the way
consumers view themselves influences their purchasing behavior. This identity is
often reflected in the brands or products they consume or the way in which they lead
their lives.
The proliferation of information about products and services complicates decision
making. Sometimes consumer desires to achieve or maintain a certain lifestyle or
image results in their purchasing more than they need or can afford. Does marketing
create these wants? Clearly, appeals exist that are designed to cause people to
purchase more than they need or can afford. Unsolicited offers of credit cards with
high limits or high interest rates, advertising appeals touting the psychological
benefits of conspicuous consumption, and promotions that seek to stimulate
unrecognized needs are often cited as examples of these excesses.
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SPECIAL ETHICAL ISSUES IN MARKETING TO CHILDREN
Children are an important marketing target for certain products. Because their
knowledge about products, the media, and selling strategies is usually not as well
developed as that of adults, children are likely to be more vulnerable to psychological
appeals and strong images. Thus, ethical questions sometimes arise when they are
exposed to questionable marketing tactics and messages. For example, studies linking
relationships between tobacco and alcohol marketing with youth consumption
resulted in increased public pressure directly leading to the regulation of marketing
for those products.
The proliferation of direct marketing and use of the Internet to market to children also
raises ethical issues. Sometimes a few unscrupulous marketers design sites so that
children are able to bypass adult supervision or control; sometimes they present
objectionable materials to underage consumers or pressure them to buy items or
provide credit card numbers. When this happens, it is likely that social pressure and
subsequent regulation will result. Likewise, programming for children and youth in
the mass media has been under scrutiny for many years.
In the United States, marketing to children is closely controlled. Federal regulations
place limits on the types of marketing that can be directed to children, and marketing
activities are monitored by the Better Business Bureau, the Federal Trade
Commission, consumer and parental groups, and the broadcast networks. These
guidelines provide clear direction to marketers.
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ETHICAL ISSUES IN MARKETING TO MINORITIES
The United States is a society of ever-increasing diversity. Markets are broken into
segments in which people share some similar characteristics. Ethical issues arise when
marketing tactics are designed specifically to exploit or manipulate a minority market
segment. Offensive practices may take the form of negative or stereotypical
representations of minorities, associating the consumption of harmful or questionable
products with a particular minority segment, and demeaning portrayals of a race or
group. Ethical questions may also arise when high-pressure selling is directed at a
group, when higher prices are charged for products sold to minorities, or even when
stores provide poorer service in neighborhoods with a high population of minority
customers. Such practices will likely result in a bad public image and lost sales for the
marketer.
Unlike the legal protections in place to protect children from harmful practices, there
have been few efforts to protect minority customers. When targeting minorities, firms
must evaluate whether the targeted population is susceptible to appeals because of
their minority status. The firm must assess marketing efforts to determine whether
ethical behavior would cause them to change their marketing practices.
ETHICAL ISSUES SURROUNDING THE PORTRAYAL OF WOMEN IN
MARKETING EFFORTS
As society changes, so do the images of and roles assumed by people, regardless of
race, sex, or occupation. Women have been portrayed in a variety of ways over the
years. When marketers present those images as overly conventional, formulaic, or
oversimplified, people may view them as stereotypical and offensive.
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Examples of demeaning stereotypes include those in which women are presented as
less intelligent, submissive to or obsessed with men, unable to assume leadership roles
or make decisions, or skimpily dressed in order to appeal to the sexual interests of
males. Harmful stereotypes include those portraying women as obsessed with their
appearance or conforming to some ideal of size, weight, or beauty. When images are
considered demeaning or harmful, they will work to the detriment of the organization.
Advertisements, in particular, should be evaluated to be sure that the images projected
are not offensive.
Because marketing decisions often require specialized knowledge, ethical issues are
often more complicated than those faced in personal lifeâ and effective decision
making requires consistency. Because each business situation is different, and not all
decisions are simple, many organizations have embraced ethical codes of conduct and
rules of professional ethics to guide managers and employees. However, sometimes
self-regulation proves insufficient to protect the interest of customers, organizations,
or society. At that point, pressures for regulation and enactment of legislation to
protect the interests of all parties in the exchange process will likely occur.
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FRAMEWORKS OF ANALYSIS FOR MARKETING ETHICALLY
Possible frameworks:
Value-oriented framework, analyzing ethical problems on the basis of the values
which they infringe (e.g. honesty, autonomy, privacy, transparency). An example
of such an approach is the AMA Statement of Ethics.
Stakeholder-oriented framework, analyzing ethical problems on the basis of
which they affect (e.g. consumers, competitors, society as a whole).
Process-oriented framework, analyzing ethical problems in terms of the categories
used by marketing specialists (e.g. research, price, promotion, placement).
None of these frameworks allows, by itself, a convenient and complete categorization
of the great variety of issues in marketing ethics.
Power-based analysis
Contrary to popular impressions, not all marketing is adversarial, and not all
marketing is stacked in favour of the marketer. In marketing, the relationship between
producer/consumer or buyer/seller can be adversarial or cooperative. For an example
of cooperative marketing, see relationship marketing. If the marketing situation is
adversarial, another dimension of difference emerges, describing the power balance
between producer/consumer or buyer/seller. Power may be concentrated with the
producer (caveat emptor), but factors such as over-supply or legislation can shift the
power towards the consumer (caveat vendor). Identifying where the power in the
relationship lies and whether the power balance is relevant at all are important to
understanding the background to an ethical dilemma in marketing ethics.[2]
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Is marketing inherently evil?
A popularist anti-marketing stance commonly discussed on the blogosphere[3] and
popular literature is that any kind of marketing is inherently evil. The position is
based on the argument that marketing necessarily commits at least one of three
wrongs:
Damaging personal autonomy. The victim of marketing in this case is the
intended buyer whose right to self-determination is infringed.
Causing harm to competitors. Excessively fierce competition and unethical
marketing tactics are especially associated with saturated markets.
Manipulating social values. The victim in this case is society as a whole, or the
environment as well. The argument is that marketing promotes consumerism and
waste. See also: influenza, ethical consumerism, anti-consumerism.
Marketing has a major impact on our self-images, our ability to relate to one
another, and it ruins any knowledge and action that might help to change that
climate.
Marketing/Advertising creates artificiality and influences sexual attitudes.
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ETHICAL DANGER POINTS IN MARKET RESEARCH INCLUDE:
Invasion of privacy.
Stereotyping.
Stereotyping occurs because any analysis of real populations needs to make
approximations and place individuals into groups. However if conducted
irresponsibly, stereotyping can lead to a variety of ethically undesirable results. In
the American Marketing Association Statement of Ethics, stereotyping is countered
by the obligation to show respect ("acknowledge the basic human dignity of all
stakeholders"
Market audience
Ethical danger points include:
Excluding potential customers from the market: selective marketing is used to
discourage demand from undesirable market sectors or disenfranchise them
altogether.
Targeting the vulnerable (e.g. children, the elderly).
Examples of unethical market exclusion or selective marketing are past industry
attitudes to the gay, ethnic minority and obese ("plus-size") markets. Contrary to the
popular myth that ethics and profits do not mix, the tapping of these markets has
proved highly profitable. For example, 20% of US clothing sales are now plus-
size. Another example is the selective marketing of health care, so that unprofitable
sectors (i.e. the elderly) will not attempt to take benefits to which they are entitled. A
further example of market exclusion is the pharmaceutical industry's exclusion of
developing countries from AIDS drugs.
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Examples of marketing which unethically targets the elderly include: living
trusts, time share fraud, mass marketing fraud] and others. The elderly hold a
disproportionate amount of the world's wealth and are therefore the target of financial
exploitation.
In the case of children, the main products are unhealthy food, fashion ware and
entertainment goods. Children are a lucrative market: "...children 12 and under spend
more than $11 billion of their own money and influence family spending decisions
worth another $165 billion", but are not capable of resisting or understanding
marketing tactics at younger ages ("children don't understand persuasive intent until
they are eight or nine years old". At older ages competitive feelings towards other
children are stronger than financial sense. The practice of extending children's
marketing from television to the school ground is also controversial (see marketing in
schools).
Other vulnerable audiences include emerging markets in developing countries, where
the public may not be sufficiently aware of skilled marketing ploys transferred from
developed countries, and where, conversely, marketers may not be aware how
excessively powerful their tactics may be. See Nestle infant milk formula scandal.
Another vulnerable group are mentally unstable consumers. The definition of
vulnerability is also problematic: for example, when should endebtedness be seen as
vulnerability and when should "cheap" loan providers be seen as loan sharks,
unethically exploiting the economically disadvantaged?
Chris Akabusi is the leading academic author of Marketing Ethics and his theories are
widely debated.
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Pricing ethics
List of unethical pricing practices.
Bid rigging
Dumping (pricing policy)
Predatory pricing
Price discrimination
Price fixing
Price skimming
Price war
Supra competitive pricing
Variable pricing
Ethics in advertising and promotion
Ethical pitfalls in advertising and promotional content include:
Issues over truth and honesty. In the 1940s and 1950s, tobacco used to be
advertised as promoting health. Today an advertiser who fails to tell the truth not
only offends against morality but also against the law. However the law permits
"puffery" (a legal term). The difference between mere puffery and fraud is
a slippery slope: "The problem... is the slippery slope by which variations on
puffery can descend fairly quickly to lies." See main article: false advertising.
Issues with violence, sex and profanity. Sexual innuendo is a mainstay of
advertising content (see sex in advertising), and yet is also regarded as a form
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of sexual harassment. Violence is an issue especially for children's advertising and
advertising likely to be seen by children.
Taste and controversy. The advertising of certain products may strongly offend
some people while being in the interests of others. Examples include: feminine
hygiene products, hemorrhoid andconstipation medication.
The advertising of condoms has become acceptable in the interests of AIDS-
prevention, but are nevertheless seen by some as promoting promiscuity. Some
companies have actually marketed themselves on the basis of controversial
advertising - see Benetton. Sony has also frequently attracted criticism for
unethical content (portrayals of Jesus which infuriated religious groups; racial
innuendo in marketing black and white versions of its PSP product; graffiti
adverts in major US cities).
Negative advertising techniques, such as attack ads. In negative advertising, the
advertiser highlights the disadvantages of competitor products rather than the
advantages of their own. The methods are most familiar from the political sphere:
see negative campaigning.
Delivery channels
Direct marketing is the most controversial of advertising channels, particularly
when approaches are unsolicited. TV commercials and direct mail are common
examples. Electronic spam and telemarketing push the borders of ethics and
legality more strongly.
Shills and astroturfers are examples of ways for delivering a marketing message
under the guise of independent product reviews and endorsements, or creating
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supposedly independent watchdog or review organizations. For example, fake
reviews can be published on Amazon. Shills are primarily for message-delivery,
but they can also be used to drive up prices in auctions, such as EBay auctions.
Deceptive Advertising and Ethics
Another breach of marketing ethics has to do with the use of deceptive advertising.
This form of advertising is not specific to one target market, and can sometimes go
unnoticed by the public. There are a number of different ways in which deceptive
marketing can be presented to consumers; one of these methods is accomplished
through the use of humor. In a study conducted by Hassib Shabbir and Des Thwaites,
238 advertisements were assessed and 73.5% of them were found to have used
deceptive marketing practices. Of those advertisements that were conducted
deceptively, 74.5% of them used humor as a masking device in order to mislead
potential customers. Part of what drives this study is the idea that humor provides an
escape or relief from some kind of human constraint, and that some advertisers intend
to take advantage of this by deceptively advertising a product that can potentially
alleviate that constraint through humor. Through the study it was also found that all
types of humor are used to deceive consumers, and that there are certain types of
humor that are used when making certain deceptive claims.
It is important to understand that humor is not the only method that is used to deter
consumer’s minds from what a product actually offers. Before making important
purchases, one should always conduct their own research in order to gain a better
understanding of what it is they are investing in. ]
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The use of ethics as a marketing tactic
Business ethics has been an increasing concern among larger companies, at least since
the 1990s. Major corporations increasingly fear the damage to their image associated
with press revelations of unethical practices. Marketers have been among the fastest
to perceive the market's preference for ethical companies, often moving faster to take
advantage of this shift in consumer taste. This results in the expropriation of ethics
itself as a selling point or a component of a corporate image.
The Body Shop is an example of a company which marketed itself and its entire
product range solely on an ethical message.
Green wash is an example of a strategy used to make a company appear ethical
when its unethical practices continue.
Liberation marketing is another strategy whereby a product can masquerade
behind an image that appeals to a range of values, including ethical values related
to lifestyle and anti-consumerism.
"Liberation marketing takes the old mass culture critique — consumerism as
conformity — fully into account, acknowledges it, addresses it, and solves it.
Liberation marketing imagines consumers breaking free from the old enforcers of
order, tearing loose from the shackles with which capitalism has bound us, escaping
the routine of bureaucracy and hierarchy, getting in touch with our true selves, and
finally, finding authenticity, that holiest of consumer grails." (Thomas Frank)
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Marketing strategy
The main theoretical issue here is the debate between free markets and regulated
markets. In a truly free market, any participant can make or change the rules.
However when new rules are invented which shift power too suddenly or too far,
other participants may respond with accusations of unethical behaviour, rather than
modifying their own behaviour to suit (which they might not be able to anyway).
Most markets are not fully free: the real debate is as to the appropriate extent of
regulation.
Case: California electricity crisis, which demonstrates how constant innovation of
new marketing strategies by companies such as Enron outwitted the regulatory bodies
and caused substantial harm to consumers and competitors.
A list of known unethical or controversial marketing strategies:
Anti-competitive practices
Bait and switch
Planned obsolescence
Pyramid scheme
Vendor lock-in / Vendor lock-out
Viral marketing / guerilla marketing
Controversial marketing strategies associated with the internet:
Embrace, extend and extinguish
Search engine optimization
Spamdexing
Spyware / Adware
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Further issues in marketing ethics
Marketing ethics overlaps with environmental ethics in respect of waste problems
associated with the packaging of products.[31]
Some, such as members of the advocacy group No Free Lunch, have argued that
marketing by pharmaceutical companies is negatively impacting physicians'
prescribing practices, influencing them to prescribe the marketed drugs rather than
others which may be cheaper or better for the patient.[32]
Ethically thinking is responding to situations that deal with principles concerning
human behavior in respect to the appropriateness and inappropriateness of certain
communication and to the decency and indecency of the intention and results of such
actions. In other words, ethics are distinctions between right and wrong. Businesses
are confronted with ethical decision making every day, and whether employees decide
to use ethics as a guiding force when conducting business is something that business
leaders, such as managers, need to instill. Marketers are ethically responsible for what
is marketed and the image that a product portrays. With that said, marketers need to
understand what good ethics are and how to incorporate good ethics in various
marketing campaigns to better reach a targeted audience and to gain trust from
customers.
Marketing ethics, regardless of the product offered or the market targeted, sets the
guidelines for which good marketing is practiced. When companies create high ethical
standards upon which to approach marketing they are participating in ethical
marketing. To market ethically and effectively one should be reminded that all
marketing decisions and efforts are necessary to meet and suit the needs of customers,
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suppliers, and business partners. Ethical behavior should be enforced throughout
company culture and through company practices.
The concepts of Corporate Social Responsibility (CSR)
CSR is viewed as a comprehensive set of policies, practices and programs that are
integrated into business operations, supply chains, and decision-making processes
throughout the company – wherever the company does business – and includes
responsibility for current and past actions as well as future impacts. The issues that
represent a company’s CSR focus vary by business, by size, by sector and even by
geographic region. In its broadest categories, CSR typically includes issues related
to : business ethics, community investment, environment, governances, human rights,
market place and workplace .CSR goes beyond charity and requires that a responsible
company take into full account of the impact on all stakeholders and on the
environment when making decisions. This requires them to balance the needs of all
stake holders with their need to make a profit and reward their shareholders
adequately.
For the new generation of corporate leaders, optimization of profits is the key, rather
than the maximization of profit. Hence, there is a shift from accountability to share
holders to social responsibility to customers and other stake holders.
In today’s competitive global marketing, ethics play a vital role, because we are
dealing with human values and beliefs. Business spreads beyond boundaries. The
marketer has to deal with cross country culture. Many MNC’S like Mc Donald and
Nestle had faced lot of problems because of neglecting ethical issues in their
marketing practices. They have incurred billions of dollars in monetary values and
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above all losing thousands of valuable hybrid customers due to the adaptation of
unethical advertising & promotional strategies.
According to experts, marketing is viewed as human conduct and is subject to
academic analysis and public scrutiny. Ethics is the study of the moral principles that
guide the conduct.
Historically, there have been two points of view on the study on ethics in marketing.
The first is “Let the buyer beware”. From these points of view, the rights of the seller
are central. A company has little regard for customer’s needs and wants. The other
point of view is “let the seller beware”. Here, customer satisfaction is taken to an
extreme. No matter what the customer does, it is ok. Which position is correct? How
do we resolve the inevitable conflicts brought by these competing viewpoints?
Corporate Social Responsibility (CSR) and Ethics in Marketing:
Kotler and Levy, in their book, Corporate Social Responsibility define corporate
social responsibility as “a commitment to improve community well-being through
discretionary business practices and contributions of corporate resources”.
Some of the benefits of being socially responsible include (a) enhanced company and
brand image (b) easier to attract and retain employees (c) increased market share (d)
lower operating costs and (e) easier to attract investors. A socially – responsible firm
will care about customers, employees, suppliers, the local community, society, and the
environment. CSR can be described as an approach by which a company (a)
recognizes that its activities have a wide impact on the society and that development
in society, in turn supports the company to pursue its business successfully and (b)
actively manages the economic, social, environmental and human rights. This
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approach is derived from the principles of sustainable development and good
corporate governance.
Marketing managers within different firms will see some social issues as more
relevant than others. The relevance of a given social issue is determined by the
company’s products, promotional efforts, and pricing and distribution policies but
also by its philosophy of social responsibility.
Focus entirely in profits (and profitable firms typically serve society well)
Explicitly incorporate social responsibility into its day-today marketing
decisions to minimize negative effects on society and enhance positive effects
Go even further and engage in social projects that are unrelated to the
corporate mission and even detrimental to profits ( which could net out to be
socially undesirable)
The Success strategies of a Business formed out of abundance and grounded in
ethics and cooperation are powerful and long-lasting and they help you feel
good about yourself even while bringing in profits ( Shel Horowitz)
Management must decide which of these three levels of social responsibility to adopt
and which social issues are relevant to its business.
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Ethical Conflict faced by the Marketers:
Marketers must be aware of ethical standards and acceptable behavior. This
awareness means that marketers must recognize the viewpoints of three key players:
the company, the industry, and society. Since these three groups almost always have
different needs and wants, ethical conflicts are likely to arise. Ethical conflicts in
marketing arise in two contexts : First, when there is a difference between the needs
of the three aforementioned groups ( the company, the industry, and society) a
conflict may arise. Second and ethical conflict may arise when one’s personal values
conflict with the organization. In either case, a conflict of interest is a possible
outcome.
An example of the first type of conflict is the tobacco industry. Cigarettes have for
many decades been a lucrative business. So, cigarette and tobacco marketing have
been for companies and good for the tobacco industry. Many thousands of people
around the world are employed in the tobacco industry. So, the world economy has
been somewhat dependent on cigarettes and tobacco. However, cigarettes are harmful
to society. There is documented proof that cigarette smoking is harmful to health.
This is an ethical conflict for cigarette marketers. An example of the second type of
conflict, when one’s personal values conflict with the organizations occurs when a
leader in the company seeks personal gain (usually financial profit) from false
advertising. “Cures” for fatal diseases are one type of product that falls into this
category of ethical conflict: In their greed to make a profit, a marketer convinces
those who may be dying from an incurable disease to buy a product that may not be a
cure, but which a desperately ill person (or members of his or her family) may choose
to purchase in an effort to save the dying family member suffering. Promoting and
marketing such products violates rules of marketing ethics.
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Ethical dilemmas facing marketing professionals today fall into one of three
categories: tobacco and alcohol promoting, consumer privacy, and green marketing.
Standards for ethical marketing guide business in efforts to do the right thing. Such
standards have four functions: to help identify acceptable practices, foster internal
control, avoid confusion, and facilitate a basis for discussion.
Consumerism
Consumerism is concerned with broadening the rights of consumers. The concepts of
social responsibility and consumerism go hand-in-hand. If every organization
practiced a high level of social responsibility the consumer movement might never
have begun. Consumerism is a struggle for power between buyers and sellers;
specifically, it is a social movement seeking to increase the rights and powers of
buyers in relation to sellers.
Seller’s rights and powers are presented in the following list:
To introduce any product in any size and style they wish into the marketplace,
so long as it is not hazardous to personal health or safety or if it is hazardous,
to introduce it with the proper warnings and controls
To price the product at any level they wish, provided there is no discrimination
among similar classes of buyers
To spend any amount of money they wish to promote the product, so long as
the promotion is not defined as unfair competition
To formulate any message they wish about the product provided that it is
misleading or dishonest in content or execution
To introduce any buying – incentive schemes they wish
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In contrast, here are buyers’ rights and power:
To refuse to buy a product that is offered to them
To except the product to be safe
To expect the product to essentially match how the seller represented it
To receive adequate information about the product
It is in the best interest of marketers to understand the level of consumer standards
and the nature of consumer perceptions, as well as what is required to foster realism
and accuracy among consumers.
Marketing and the Natural Environment
Another significant area of social concern is the environment. Marketing is ultimately
dependent on the use of scarce resources to fulfill human needs, without harming or
unnecessarily using scare resources.
Marketing managers should help to determine which products are produced, and
which products are indirectly affecting the environment:
The natural resources and materials used
The amount of energy required in the production process
The residuals (e.g., waste water) that result from production
The consumption of resources and energy that is required to use products
( cars, air conditioners)
The generation of pollutants (e.g., exhaust fumes) in using products
The amount of packaging material that may have to be discarded. (packaging
comprises less than 14 percent of collectible solid waste, but consumers often
estimate its share of that waste at 40 to 80 percent)
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Relationship Marketing and Ethics
Nowadays, most ethicists believe that Relationship Marketing is a reasonable practice
leading to positive relationships between buyers and sellers. Relationship marketing
requires that rules are not necessarily contractual..
Relationship marketing allows buyers and sellers to work together. However, there
are disadvantages to this approach- relationship marketing requires time to develop a
list of expected conduct or “rules of behavior.” According to a recently published
book on this subject, a shift in emphasis in marketing ethics – towards buyers interests
and away from seller’s interests – characterizes the new country.
If this is true, new challenges are presented for marketing ethics and professionals in
the field of marketing who want to conduct business in an ethical way.
Green Marketing and Ethical Issues
The next important areas the marketer need to know about what is the relevance of
Social Marketing in order to protect the environment and to improve the quality of life
and are concerned with issues that include conservation of natural resources, reducing
environmental pollution, protecting endangered species, and control of land use. The
three Rs of environmentalism are Reduce, Reuse, and Recycle. Many companies are
finding that consumers are willing to pay more for a green product. Toyota has
become quite successful with their hybrid cars.
Green marketing refers to the development and distribution of ecologically-safe
products.
It refers to products and packages that have one or more of the following
characteristics: (1) are less toxic, (2) are more durable, (3) contain reusable materials,
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or (4) are made of recyclable material. In short, these are products considered
“environmentally responsible”.
To sight an example One Canadian Executive stated that “Any marketing executive
who does not put a ‘green’ filter on their strategies is looking at losing market share.
The whole idea of disposal is going to become unacceptable”. In West Germany and
Canada, Procter & Gamble has found high consumer acceptance of pouches of liquid
detergents and fabric softeners so consumers can refill rather than discard large plastic
bottles.
Cause – Related Marketing and Ethics
Cause-related marketing should not be confused with social marketing. A key
difference is that a major purpose of cause-related marketing is to help a business. It
might be used to improve the image of the firm or to increase market share. The
technique involves associating a business with a cause. Social marketing, on the other
hand, is generally not associated with any company and issued solely to help society
by dealing with a social problem.
Cause-related marketing has to be done correctly or it can hurt a company. A firm
may look like it is exploiting a charity. It is important for the firm to be transparent
and honest about what it is doing. There should also be a fit between the company
and the cause. A good fit would be, for example, might be a bottled water company
and a cause, it deals with providing clean water for poor people in Asia and Africa.
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Social Marketing and Ethics
Social Marketing is defined as the use of marketing principles and techniques to
influence a target audience to voluntarily accept, reject, modify, or abandon a
behaviour for the benefit of individuals, groups or society as a whole.
Social marketing is usually done by a non-profit organization, government, or quasi-
government agency. The goal is either to steer the public away from products that are
harmful to them and / or society (e.g., illegal drugs, tobacco, alcohol, etc.) or to direct
them towards behaviors or products that are helpful to them and / or society (e.g.,
having family meals, praying together, etc.).
Ethnic Marketing and Ethics
Another aspect the marketer has to know about Ethnic Issues while going for global
marketing and still take care of Ethics. Culture plays an important role in defining
ethical standards because dissimilar cultures socialize their people differently,
according to what is acceptable behavior.
The potential significance of ethnic groups for marketing justifies inquiry into the
moral judgments, standards, and rules of conduct exercised in marketing decisions
and situations arising from decisions whether or not to focus on individual ethnic
groups within an economy.
Identifying and targeting ethnic groups for marketing purposes are tasks fraught with
many ethical difficulties. In a multicultural society consisting of a dominant group
and many diverse, minority groups defined by ethnicity, these problems can be
expected to increase substantially.
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Consequently, marketers may include minority ethnic consumers in their mainstream
marketing programs. In itself, this has ethical consequences. Alternatively, if
marketers seek to target individual minority ethnic groups within the same economy a
further set of ethical consequences needs to be considered.
The international environment is recognized as attracting more difficulties for
marketers (Kotler et sl., 1998, p. 833) because their “ethics” parameters may not
match the notion of “good” in the foreign country where they wish to operate. This is
a problem because it may compromise successful international market penetration,
that is, a firm’s ability to compete in the international market. To the extent that
international operations are part of an overall competitive strategy (either because of a
firm’s need to have a presence where its main customers operate, or because the firm
must/needs to follow its competitors) this also can influence a firm’s ultimate survival
in its domestic market. Ethical concerns are thus clearly important both in the parent
country and also in the host country..
One possible approach to ethnic marketing ethics within one country, understood as
ethics applied to marketing practice targeting minority ethnic groups, is to apply the
same procedures that firms use to deal with ethics problems in the international
context (Kotler et al., 1998).
Ethnic minority consumers, particularly in their first time of settlement in a new
country, may be inexperienced in relation to what is available, where, and for how
much, as well as being unaware of market dos and don’ts. This justifies their possible
reliance on referral or recommendation by others they trust, eventually their minority
ethnic group of affiliation, particularly when communication difficulties limit the
number and range of accessible secondary sources. Within such a scenario, ethnic
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minority consumers may be perceived as disadvantaged because they are arguably
more vulnerable to be taken advantage of through deceptive practices (Kotler et al.,
1998).
Targeting of minority ethnic consumers with ethically unsound strategies may lead to
alienation of the ethnic markets. Careful consideration needs to be exercised before
ethnic marketing strategies are developed and implemented.
Ethical Norms and Values for Marketers
Professional associations and accrediting bodies have identified guidelines for ethics
in marketing. According to one of those associations, the American Marketing
Association, the following rules guide marketing behavior. The American Marketing
Association commits itself to promoting the highest standard of professional ethical
norms and values for its members. Norms are established standards of conduct that
are expected and maintained by society and / or professional organizations. Values
represent the collective conception of what people find desirable, important and
morally proper. Values serve as the criteria for evaluating the actions of others.
Marketing practitioners must recognize that they not only serve their enterprises but
also act as stewards of society in creating, facilitating and executing the efficient and
effective transactions that are part of the greater economy. In this role Marketers
should embrace the highest ethical norms of practicing professionals and the ethical
values implied by their responsibility toward stakeholders (e.g., customers,
employees, investors, channel members, regulators and the host community).
Responsibility of the marketer. Marketers must accept responsibility for the
consequences of their activities and make every effort to ensure that their
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decisions, recommendations, and actions function to identify, serve, and
satisfy all relevant publics: customers, organizations and society
Honesty, Integrity and Quality are far more important than quick profits (Shel
Horowitz)
Rights and duties in the marketing exchange process: - Participants should be
able to expect that products and services are safe and fit for intended uses; that
communications about offered products and services are not deceptive; that all
parties intend to discharge their obligations, financial and otherwise, in good
faith; and that appropriate internal methods exist for equitable adjustment
and / or redress of grievances concerning purchases
Organizational relationships: - Marketers should be aware of how their
behavior influences the behavior of others in organizational relationships.
They should not demand, encourage, or apply coercion to encourage unethical
behavior in their relationships with others.
Conduct your business so as to build long term loyalty. When you get a
customer, you want to keep that customer and build a sales relationship that
can not only last years, but also create a stream of referral business. (Shel
Horowitz)
Marketers must do no harm. This means doing work for which they are
appropriately trained or experienced so that they can actively add value to
their organizations and customers. It also means adhering to all applicable
laws and regulations and embodying high ethical standards in the choices they
make.
Marketers must foster trust in the marketing system. This means that products
are appropriate for their intended and promoted uses. It requires that
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marketing communications about goods and services are not intentionally
deceptive or misleading. It suggests building relationships that provide for the
equitable adjustment and / or redress of customer grievances. It implies
striving for good faith and fair dealing so as to contribute toward the efficacy
of the exchange process.
Marketers must embrace, communicate and practice the fundamental ethical
values that will improve consumer confidence in the integrity of the marketing
exchange system. These basic values are intentionally aspiration and include
honesty, responsibility, fairness, respect, openness and citizenship.
SOCIAL RESPONSIBILITY OF BUSINESS BY MULTINATIONAL
COMPANIES IN INDIA
In the last twenty years, MNCs have played a key role in defining markets and
influencing the behavior of a large number of consumers. Globalization and
liberalization have provided a great opportunity for corporations to be globally
competitive by expanding their production base and market share.
Recent years have seen many progressive organizations in our country keenly playing
a social role. In some of these organizations the approach has been to take up only
business-centric activities, i.e., Which are directly relevant to their business. The
guiding philosophy in these organizations is that social reasonability is good only if it
pays.
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This approach benefits both the organization and the stake-holder. Thus, ITC has
been afforesting private degraded land to augment the supply of raw material for its
paper factory.
Similarly, Hindustan Lever which requires good quality water for the manufacture of
its food products has been improving the quality of water in many communities.
Companies like Cadbury
India, Glaxo and Richardson Hindustan are helping farmers to grow crops which
serve as raw materials for them. Lipton in Eath district of Uttar Pradesh has started
veterinary hospitals in the region from where it buys milk. British Gas (which sells
compressed natural gas to India) has recently started teaching unemployed youngsters
how to become mechanics for gas-based auto rickshaws in Delhi. In some other
organizations the approach has been to take up such philanthropic activities in which
they can make a difference.
Coca – Cola
As one of the largest and most global companies in the world, Coca – Cola took
seriously its ability and responsibility to positively affect the communities in which it
operated. The company’s mission statement, called the Coca-Cola Promise, stated:
“The Coca-Cola Company exists to benefit and refresh everyone who is touched by
our business.” The Company has made efforts towards good citizenship in the areas
of community, by improving the quality of life in the communities in which they
operate, and the environment, by addressing water, climate change and waste
management initiatives. Their activities also included The Coca – Cola Africa
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Foundation created to combat the spread of HIV / AIDS through partnership with
governments,
UNAIDS, and other NGOs, and The Coca – Cola Foundation, focused on higher
education as a vehicle to build strong communities and enhance individual
opportunity
Coca – Cola`s footprint in India was significant as well. The Company employed
7000 citizens and believed that for every direct job, 30 – 40 more were created in the
supply chain. Like its parent, Coke India’s Corporate Social Responsibility (CSR)
initiatives were both community and environment – focused. Priorities included
education, where primary education projects had been set up to benefit children in
slums and villages, water conservation, where the Company supported community –
based rainwater harvesting projects to restore water levels and promote conservation
education, and health..
PepsiCo
Pepsi Cola is also helping in rural areas in their economic development. It further
offered to transfer food-processing, packaging, and water-treatment technology to
India. Pepsi’s bundle of benefits won four Ps for entering a market, Pepsi added two
additional Ps, namely, politics and public opinion. Similarly almost all MNCs like
Microsoft, Mc Donald, Nokia, Unilever, ITC are also adopting social responsibility of
business in order to have sustainable market development and growth not only in
their countries but also in the host countries.
Several forces are driving companies to practice a higher level of corporate social
responsibility: rising customer expectations, changing employee expectations,
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government legislation and pressure, the inclusion of social criteria by investors, and
changing business procurement practices. Companies need to evaluate whether they
are truly practicing ethical and socially responsible marketing. Business success and
continually satisfying the customer and other stakeholders are closely tied to adoption
and implementation of high standards of business and marketing conduct. The most
admired companies in the world abide by a code of serving people’s interests, not
only their own. The following are the suggestions that the society must use the law to
define, as clearly as possible, those practices that are illegal, anti-social, or
anticompetitive. Next, companies must adopt and disseminate a written code of
ethics, build a company tradition of ethical behavior, and hold its people fully
responsible for observing ethical and legal guidelines. And, individual marketers
must practice a “social conscience” in their specific dealings with customers and
various stakeholders.
The future holds a wealth of opportunities for companies. Technological advances in
solar energy, online networks, cable and satellite television, biotechnology, and
telecommunications promise to change the world as we know it. As the same time,
forces in the socioeconomic, cultural, and natural environments will impose new
limits on marketing and business practices.
Companies that are able to innovate new solutions and values in a socially responsible
way are the most likely to succeed.
It is my belief that good marketing is ethical marketing. Good marketing is about
satisfying and developing a long-term relationship with our customers. Caring about
your customers not only results in profits (or achieving your organization’s objectives
if an organization is not-for-profit), it is the ethical thing to do. Deceiving customers
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may help a firm’s profits in the short-run, but is not the way to build a successful
business. The same goes for social responsibility. A firm has to care about all
stakeholders: customers, employees, suppliers and distributors, local communities in
which they do business, society, and the environment.
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Conclusion
Ethical marketing refers to the application of marketing ethics into
the marketing process. Briefly, marketing ethics refers to the philosophical
examination, from a moral standpoint, of particular marketing issues that are matters
of moral judgment. Ethical marketing generally results in a more socially responsible
and culturally sensitive business community. It promotes qualitative benefits to its
customers, which other similar companies, products or services fail to recognize. The
concern with ethical issues, such as child labor, working conditions, relationships with
third world countries and environmental problems, has changed the attitude of the
Western World towards a more socially responsible way of thinking. This has
influenced companies and their response is to market their products in a more socially
responsible way.
Many brands have tried to use ethics to make themselves look responsible, often
spinning environmental claims which has led to the term green wash (see green
washing) In research consumers have shown to have even less trust of ethical claims
in ads than ordinary ads. Media attention on ethics has resulted in many top brands
suffering consumer boycotts. Although many brands have tried to use green issues, it
has been noted that in research 2/3 of consumers responded more to ethical claims
that relate to people rather than to than environment.
Ethical marketing should not be confused with government regulations brought into
force to improve consumer welfare, such as reducing sulfur dioxide emissions to
improve the quality of the air. A government regulation is a legal remedy intended to
mitigate or correct an ethical issue, such as pollution of the air that we all share.
Enlightened ethical marketing is at work when the company and marketer recognize
further improvements for humankind unrelated to those enforced by governments or
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public opinion. By way of example, the Coop Group refuses to invest money in
tobacco, fur and any countries with oppressive regimes.
Points to be taken into consideration
1. The most often mentioned ethical problem faced by marketers is bribery. Five other
issues (fairness, honesty, pricing strategy, product strategy, and personnel decisions)
were also frequently cited as difficult ethical problems.
2. The primary ethical conflict reported by marketing managers involved balancing
demands of the corporation against customer needs.
3. Marketing managers perceive many opportunities in their firms and industries to
engage in unethical behavior. However, they reported that few managers engaged in
such behaviors.
4. Marketing managers do not believe that unethical behaviors in general lead to
success. However, many believe that successful marketing managers do engage in
certain specific unethical behaviors.
5. When top management reprimands unethical behavior, the ethical problems
perceived by marketing managers seem to be reduced.
6. The existence of corporate or industry codes of ethics seems to be unrelated to the
extent of unethical problems in marketing management.
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