Marketing ethics

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Marketing ethics is an area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics (ethics of advertising and promotion) overlap with media and public relations ethics.

Contents

Two types of marketing ethics

Marketing ethics is known to have similarities with business ethics. Marketing ethics, however, can be divided into two categories:

  1. Positive marketing ethics.
  2. Normative marketing ethics.

Positive marketing ethics looks at the statement "what is" when it comes to examining marketing practices, an example would be to research fraudulent advertising and keep a record of the violations. Normative marketing ethics looks at theories that dictate how moral marketing should take place. The same theories and substructures used in business ethics to determine its level of morality are used to analyze whether moral marketing is taking place in normative marketing ethics. The three structures are known as duty-based theories, virtue ethics, and utilitarianism. [1]

Fundamental issues in the ethics of marketing

Frameworks of analysis for marketing: possible frameworks

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. [3]

Is marketing inherently evil?

A popularist anti-marketing stance commonly discussed in the blogosphere [4] and popular literature [5] 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:

Specific issues in marketing ethics

Market research

Market research is the collection and analysis of information about consumers, competitors and the effectiveness of marketing programs. [6] With market research, businesses can make decisions based on how the responses of the market, leading to a better understanding of how the business has to adapt to the changing market. It is used to establish which portion of the population will or does purchase a product, based on age, gender, location, income level, and many other variables. This research allows companies to learn more about past, current, and potential customers, including their specific likes and dislikes. [7] Meticulous codes of ethics have been devised by multiple professional institutions which aim to communicate conflicts that occur during the implementation of marketing research (The European Society of Marketing and Opinion Research, the Market Research Society, and the Council for Survey Research are a few examples). [8]

Ethical danger points in market research include:

Invasion of privacy

Without information from the public, it is difficult to do market research. As companies conduct research they also come into contact with confidential and personal information, which comes with a level of risk for both the business as well as the individual. At times this information can be sensitive and in the wrong hands, ethical abuse and misuse of sensitive data may happen. This is why the invasion of consumer privacy is still an issue in marketing research ethics. [1] Today's consumers are bombarded with mail after using their email address to enter in a competition, thus becoming part of a business's mailing list. Therefore, companies are provided with critical information which they must not take advantage of but use in an ethical manner.

Stereotyping:

Portraying an ideal body, weight or physical appearance can have potential harmful effects on the individual such as low self-esteem issues or anorexia. Good marketing is ethical marketing, it is about pleasing and developing a strong relationship with customers in a caring manner by not primarily only focusing on achieving results in order to generate profit.

People affected by unethical market research:

Approaches to privacy can, broadly, be divided into two categories: free market, and consumer protection.[31] In a free market approach, commercial entities are largely allowed to do what they wish, with the expectation that consumers will choose to do business with corporations that respect their privacy to a desired degree. If some companies are not sufficiently respectful of privacy, they will lose market share. In a consumer protection approach, in contrast, it is claimed that individuals may not have the time or knowledge to make informed choices, or may not have reasonable alternatives available. [9] 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"). [10]

Profit motive:

Manipulation of information and personal data can take place during market research conducted by for-profit organizations because they have a profit motive. This motive can affect the accuracy and objectivity of the marketing research and create an exaggerated positive image of the organization's products and services in order to attract clients to invest in their business. [1]

Market audience

Ethical danger points include:

Examples of unethical market exclusion [11] or selective marketing are past industry attitudes to the gay, ethnic minority and 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. [12] 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. [13] A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries from AIDS drugs. [14]

Examples of marketing which unethically targets the elderly include: living trusts, time share fraud, mass marketing fraud [15] and others. [16] The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation. [17]

In the case of children, the main products are unhealthy food, fashionware 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", [18] 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" [18] ). 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 grounds is also controversial (see marketing in schools). The following is a select list of online articles:

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. [24] The definition of vulnerability is also problematic: for example, when should endebtedness be seen as a vulnerability and when should "cheap" loan providers be seen as loan sharks, unethically exploiting the economically disadvantaged?

Targeting the Vulnerable

Marketing targeting strategies for products that may cause economic, physical and psychological harm has become an aspect of marketing which is criticized a considerable amount, especially in marketing literature with a particular focus on vulnerable consumers

Children, elderly consumers, and economically disadvantaged consumers are often categorized as being a part of the vulnerable group in marketing, in terms of ethics. “Ethics and social responsibility communities seem to agree that targeting a vulnerable group with marketing campaigns that take advantage of their vulnerability is unjust”. George G Brenkert was amongst the first to raise the issue about taking advantage of the vulnerability of a person, which therefore makes marketing practices immoral or unjust. Adolescents and children in the US are major market force in the food and beverage industry and as a result, food marketers are “attracted to the youth as consumers because of their spending power, purchasing influences and as future adult consumers”. It is ethically wrong to target children especially when it comes to unhealthy food and beverages, as children may not want anything else, which could lead to child obesity. Children have difficulty deciding between the purpose of advertising and other modes of communication; therefore it is morally unacceptable to target vulnerable children with such products. In Belgium, it is banned to show commercials during children's programs, similarly in Australia, such ads are not allowed during television programs for preschoolers. It is considered unethical to generate profits through marketing to vulnerable groups, such as children, the poor or the elderly.

The ethics of marketing practice, especially directed towards the vulnerable can be divided into two areas, product and process.

Process related ethical issues are often demonstrated through the use of deceptive or misleading advertising, where as product related issues is predominately focuses on marketing of certain “harmful” products such as tobacco, unhealthy food etc.

Excluding potential customers from the market:

There are certain high caution aspects of ethical marketing in terms of market audience. Using selective marketing to discourage demand from an unwanted market group or exclude them altogether. Examples of market exclusion or selective marketing are certain company's attitudes towards the gay, ethnic groups and overweight (plus size) market groups. Customers are treated like this because companies think that they are unprofitable so they try to deprive them or avoid them altogether. It is often debated amongst the business community that in order to be profitable, often businesses have to be unethical. However, this idea is seemingly outdated as most businesses nowadays follow an ethical business plan. In the United States, plus size apparel is thought to have generated $17.5 billion between May 2013 and April 2014, which is a 5% increase from the previous year, this is to be expected as 65% of American women are plus sized . Another example of exclusion from the market is some pharmaceutical industry's exclude developing countries from AIDS drugs

Pricing ethics

Pricing ethics:

Pricing along with product, place and promotion are the four functions of marketing. Retailers and producers must ensure that ethical pricing strategies are performed in order to earn profits without deceiving competitors or consumers .Issues in pricing ethics are related to fairness, specifically the fair treatment of buyers and sellers as well as fair competition. Ethical pricing practice happens when it allows the market to remain competitive and other players in the market are treated fairly. [25]

However buyers and sellers have different goals and perceived outcomes in the exchange process. Usually buyers are seeking to gain products and services at the best possible price whereas sellers are generally concentrated on generating maximum profit.

Price fixing:

Price fixing is maintaining a price at a certain level, which has been agreed upon between competing sellers and is illegal in most countries . When price fixing occurs and a price is set by an industry, customers are forced to pay the exorbitant price due to a lack of options.

Price fixing is thought to be unethical and socially irresponsible as it breaks laws that are specifically put into place to promote regular competition between companies . With competition between companies, business will be likely to keep costs low at affordable prices, in order to compete.

Horizontal price-fixing occurs when competitors in a market who are selling the same product or service come to decide on a mutual price that they will both set for their products or services. The anti-trust law in the United States as well as the competition law of the European Union state that horizontal-price fixing agreements are illegal because it creates a monopolistic market environment that can exploit consumers. [26]

Vertical price-fixing is also considered as illegal activity in the United States. This takes place when competitors in the same market enter into an agreement to set a mutual minimum or maximum resale price. [26]

Price wars:

Price wars, is when businesses constantly lower its prices in an attempt to demoralize its competition . Price wars can create emotionally devastating and psychologically devastating situations, which has an extraordinary impact on an individual, a company and industry profits . The intention of a price war is to drive competitors out of the market or to create an entry barrier into the market. Although it is beneficial for consumers, as they will get the product or service at a low price, however they are often deprived for quality. Also in the long term, it will force other competitors out of business and lower profits threaten business survival. If a company is involved in price war tactics, then it can be seen as unethical within the industry because they are starting a dangerous position and driving other companies to use similar tactics. A companies overall goal is to maximize its profits and revenue, however through engaging in a price war they are unable to do this and are more likely making less money as they would have had they taken part in normal business competition. If price wars can be avoided, it will prove to be vital success for any business.

Price Collusion:

Price Collusion is when several companies get together in order to hold the price of a good or service at a raised level in the hopes of achieving large profits or restricting the market. Price fixing is sometimes called price collusion in order to emphasize the agreement using secretive, to avoid fair competition.

Pricing practices that are considered unethical in most geographic markets include:

List of pricing practices which may be unethical in certain circumstances and should be used with caution:

Ethics in advertising and promotion

Advertising is mass and paid communication, with a fundamental purpose to deliver information, acquire attitudes and induce action beneficial to the advertiser – generally the sale of the product or service. Advertising and promotion have a significant influence on people, society in large, while shaping their attitudes, behaviors and priorities . Some scholars believe that advertising supports ethical issues. It is also considered unethical to shame a substitute or rivals product or services (Srivastava & Nandan, 2010). Other ethical issues include, mistreatment of women, advertising to children, misleading advertising and other issues, which lead to ethical decline of society. Mistreatment of women is evident immensely in advertisements. Often women are matched up with household products such as cleaning supplies and are shown as doing domestic work, which represents stereotyping of women. Women are also often used as sex symbols, to convey particular messages about products. Also men are often apparent in DIY (do it yourself) ads, which deliver the idea of them being a “

Ethical pitfalls in advertising and promotional content include:

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. [37]

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.

"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) [39]

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:

Controversial marketing strategies associated with the internet:

Further issues in marketing ethics

Marketing ethics overlaps with environmental ethics in respect of waste problems associated with the packaging of products. [40]

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. [41]

Ethical 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, suppliers, and business partners. Ethical behavior should be enforced throughout company culture and through company practices.

However, marketers have been known to market questionable products to the public. These tend to be controversial products in that they appeal to some while offending others. An example of such a product that is sold regularly today is a cheap handgun. America is a country in which its citizens have the right to bear arms, yet these weapons are criticized by the public because they are sold at a low price making it rather easy to purchase by members of less affluent communities. Critics have referred to these weapons as " Saturday Night Specials" referring to the negative connotation that they are purchased to commit crimes. In defense of the critics opinions, if in fact these guns are purchased with the intent to commit such crimes, than one must question the ethics behind marketing these products to criminals. Is the marketer facilitating the crime by appealing to this target market with a weapon that is easily accessible? While the argument in this case may seem unethical due to the questionable nature of these cheap handguns, this argument does not apply to the sale of all guns. That is because weapons that are legally sold to customers at an affordable rate for safety purposes, self-defense, hunting, and law enforcement are perfectly ethical due to the fact that they are safe product that is marketed to a responsible consumer. This comparison supports the fact that ethical marketing can be perceived differently by consumers depending on the nature of the product that is being sold.

Regulation and enforcement

Marketing ethics and marketing law are related subjects. Relevant areas of law include consumer law which protects consumers and antitrust law which protects competitors - in both cases, against unethical marketing practices. Regulation extends beyond the law to lobbies, watchdog bodies and self-regulatory industry bodies.

See also

Related Research Articles

Business ethics is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. These ethics originate from individuals, organizational statements or the legal system. These norms, values, ethical, and unethical practices are the principles that guide a business.

<span class="mw-page-title-main">Marketing</span> Study and process of exploring, creating, and delivering value to customers

Marketing is the act of satisfying and retaining customers. It is one of the primary components of business management and commerce.

<span class="mw-page-title-main">Pricing</span> Process of determining what a company will receive in exchange for its products

Pricing is the process whereby a business sets the price at which it will sell its products and services and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of the product.

In marketing, market segmentation or customer segmentation is the process of dividing a consumer or business market into meaningful sub-groups of current or potential customers known as segments. Its purpose is to identify profitable and growing segments that a company can target with distinct marketing strategies.

The marketing mix is the set of controllable elements or variables that a company uses to influence and meet the needs of its target customers in the most effective and efficient way possible. These variables are often grouped into four key components, often referred to as the "Four Ps of Marketing."

<span class="mw-page-title-main">Non-price competition</span> Marketing strategy

Non-price competition is a marketing strategy "in which one firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship". It often occurs in imperfectly competitive markets because it exists between two or more producers that sell goods and services at the same prices but compete to increase their respective market shares through non-price measures such as marketing schemes and greater quality. It is a form of competition that requires firms to focus on product differentiation instead of pricing strategies among competitors. Such differentiation measures allowing for firms to distinguish themselves, and their products from competitors, may include, offering superb quality of service, extensive distribution, customer focus, or any sustainable competitive advantage other than price. When price controls are not present, the set of competitive equilibria naturally correspond to the state of natural outcomes in Hatfield and Milgrom's two-sided matching with contracts model.

<span class="mw-page-title-main">Advertising campaign</span> Advertisements based on a theme

An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication (IMC). An IMC is a platform in which a group of people can group their ideas, beliefs, and concepts into one large media base. Advertising campaigns utilize diverse media channels over a particular time frame and target identified audiences.

In marketing and consumer behaviour, brand loyalty describes a consumer's persistent positive feelings towards a familiar brand and their dedication to purchasing the brand's products and/or services repeatedly regardless of deficiencies, a competitor's actions, or changes in the market environment. It can also be demonstrated with other behaviors such as positive word-of-mouth advocacy. Corporate brand loyalty is where an individual buys products from the same manufacturer repeatedly and without wavering, rather than from other suppliers. Loyalty implies dedication and should not be confused with habit, its less-than-emotional engagement and commitment. Businesses whose financial and ethical values rest in large part on their brand loyalty are said to use the loyalty business model.

Neuromarketing is a commercial marketing communication field that applies neuropsychology to market research, studying consumers' sensorimotor, cognitive, and affective responses to marketing stimuli. The potential benefits to marketers include more efficient and effective marketing campaigns and strategies, fewer product and campaign failures, and ultimately the manipulation of the real needs and wants of people to suit the needs and wants of marketing interests.

The target audience is the intended audience or readership of a publication, advertisement, or other message catered specifically to the previously intended audience. In marketing and advertising, the target audience is a particular group of consumer within the predetermined target market, identified as the targets or recipients for a particular advertisement or message.

<span class="mw-page-title-main">Advertainment</span>

Advertainment is a term used to reflect the intertwining relationships between advertising and entertainment. Typically it refers to media that combines various forms of entertainment with elements of advertising to promote products or brands. An example would be product placement in a film. The word is a portmanteau of advertising and entertainment.

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.

<span class="mw-page-title-main">Food marketing</span> Promotion of food for sale

Food marketing is the marketing of food products. It brings together the food producer and the consumer through a chain of marketing activities.

The following outline is provided as an overview of and topical guide to marketing:

In the marketing and advertising industry, youth marketing consists of activities to communicate with young people, typically in the age range of 11 to 35. More specifically, there is teen marketing, targeting people age 11 to 17; college marketing, targeting college-age consumers, typically ages 18 to 24; and young adult marketing, targeting ages 25 to 34.

Socially responsible marketing is a marketing philosophy that a company should take into consideration; "What is in the best interest of society in the present and long term?"

A target market, also known as serviceable obtainable market (SOM), is a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total market for a product or service.

<span class="mw-page-title-main">Social media marketing</span> Promotion of products or services on social media

Social media marketing is the use of social media platforms and websites to promote a product or service. Although the terms e-marketing and digital marketing are still dominant in academia, social media marketing is becoming more popular for both practitioners and researchers.

Emotional branding is a term used within marketing communication that refers to the practice of building brands that appeal directly to a consumer's emotional state, needs and aspirations. Emotional branding is successful when it triggers an emotional response in the consumer, that is, a desire for the advertised brand that cannot fully be rationalized. Emotional brands have a significant impact when the consumer experiences a strong and lasting attachment to the brand comparable to a feeling of bonding, companionship or love. Examples of emotional branding include the nostalgic attachment to the Kodak brand of film, bonding with the Jim Beam bourbon brand, and love for the McDonald's brand.

Predatory advertising, or predatory marketing, can be largely understood as the practice of manipulating vulnerable persons such as kids into unfavorable market transactions through the undisclosed exploitation of these vulnerabilities. The vulnerabilities of persons/populations can be hard to determine, especially as they are contextually dependent and may not exist across all circumstances. Commonly exploited vulnerabilities include physical, emotional, social, cognitive, and financial characteristics. Predatory marketing campaigns may also rely on false or misleading messaging to coerce individuals into asymmetrical transactions. The history of the practice has existed as long as general advertising, but particularly egregious forms have accompanied the explosive rise of information technology. Massive data analytics industries have allowed marketers to access previously sparse and inaccessible personal information, leveraging and optimizing it through the use of savvy algorithms. Some common examples today include for-profit college industries, "fringe" financial institutions, political micro-targeting, and elder/child exploitation. Many legal actions have been taken at different levels of government to mitigate the practice, with various levels of success.

References

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  2. ↑ American Marketing Association Code of Ethics(2020)
  3. ↑ Lizabeth England,Marketing With A Conscience: Sales and Ethics Archived 2006-10-12 at the Wayback Machine , US Dept. of State.
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  5. ↑ The vastness of the literature on this topic is perhaps best conveyed by D. Slaters 1999 bibliography of consumer culture Archived 2006-10-06 at the Wayback Machine with over 1500 items. W.R. Childs (Ohio State University) has posted a shorter bibliography of consumer culture Archived 2006-09-09 at the Wayback Machine .
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  26. 1 2 Latham, Stephen R (2012). "Price-Fixing". pp. 106–111. doi:10.4135/9781452243962.n13. ISBN   9781412995146.{{cite book}}: |journal= ignored (help); Missing or empty |title= (help)
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Bibliography


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