Marketing Ethics: Various Concepts

Ethics in marketing promotes transparency, honesty, fairness in marketing.

Marketing ethics is what guide companies to do “the right thing” – be it implementing acceptable practices, dealing fairly with customers, complying with law, or be it caring for the community and environment. Companies are free to either develop their own ethical standards or they have the option of following the guidelines suggested by their professional or industry associations.

Importance of Ethical Marketing

Consumers are today more socially and environmentally aware and they expect the brands that they consume to also be conscious towards those aspects. Lot of businesses now engage in CSR activities to show that they are not in the business only to make money and actually care about the local community as well as the environment. It also helps a company build a better image in public.

Many companies consider ethical and social responsibilities as part of their marketing’s strategic planning process. Ethical marketing is not really a marketing strategy but and more of a philosophy that suggests how marketing efforts should be planned, keeping in mind certain ethical and social aspects.

Every company needs a CSR strategy in place (Kash Rangan, 2012) that will guide its actions in this area. Deontological concern for the individual & utilitarian concern for the society form the core values for businesses. Lot of companies try to establish a culture at the workplace that is similar to the values established in most nuclear families.

Ethical marketing is increasingly becoming important and businesses that ignore it cannot hope to succeed in the long run. Businesses that ignore ethics are seen as greedy, using doubtful practices, having doubtful product quality and having no concern for the community. And when majority of the public sees a business lacking ethics, it becomes very difficult for the company to regain consumer trust and to survive.

American company Enron was involved in corporate corruption and accounting fraud (Paul M. Healy, 2003), and went on to become bankrupt.
While Ethics is definitely the way to go, for many companies, things like CSR is still a superfluous thing, and in some cases a compulsion, that interferes with the growth of a company.

Few companies have even cheated to show that they care.

The best example is that of Volkswagen (leading automaker) who went on to become the world’s largest car maker, flaunting their environment friendly cars, but in reality they cheated the testing systems and were actually poisoning the environment.

Volkswagen did everything possible within its control to conceal the fact that its diesel engines were highly contaminating. And when it was eventually discovered, the head of CSR said he didn’t have any idea about it. The Volkswagen case represents above all an absolute failure in terms of Corporate Social Responsibility (CSR).

In this case, CSR was only a marketing exercise for Volkswagen and the case reveals there is a pressing need to reinvent CSR (Enrique Dans, 2015). Probably in this case, the company managed to survive because we all (citizens of the world) are not yet really concerned about the environment; had the fraud resulted in lots of investors losing their money, may be it would have been a different scenario. Stricter punishment for failing to adhere to CSR standards is a must to ensure more companies sincerely adhere to ethical standards.

Ethical problems arise in in marketing as well, and in most cases, it stems from conflicts and disagreements as each party brings in a different set of expectations. Advertising of products, such as fairness cream, can strongly offend some people, while being of interest to others.

Companies spend lot of money on advertising in order to make potential consumers buy their various products, and also for branding of the company. Advertising are usually designed to achieve specific goals – for boosting sales of existing products, to inspire people to complete buy an expensive product, to create awareness about a new product, to promote brand awareness, and so on. Depending on the goal to be achieved, the advertising campaign may use a different strategy.

Because companies use different communication mediums – print ads, television, radio, digital ads, to communicate with consumers, people tend to start believing the claims made in the advertisements. And that’s the goal of these companies; they want people to believe in them and their products.

The problem with this is that there are smaller companies and marketers out there who try to trick people through deceptive advertisements. Because people tend to believe advertisements in general, they often end up buying the product/s, only to be disappointed if it’s not from a genuine company.

In certain cases, these advertisements could be feed the wrong notion to consumers, which could be harmful for the society. The best example is that of fairness creams; the advertisements of which seem to suggest that those with fair screen have an advantage over dark-skinned people.

Because the British ruled India for centuries, it was natural for Indians to believe that white denotes supremacy. However, that thought no longer applies in modern India, and in a civilised society. But because fairness creams are popular products, both among women as well as men, companies continue to come up with advertisements with “white-is-better” theme.

The same applies to all nature-based products, the advertisements of which claim that everything herbal has medicinal benefits.

However, thanks to regulatory bodies and with companies adopting ethical marketing practices, offensive or misleading advertisements are taken out if there is enough criticism for the advertisements.

But because facts are irrelevant for consumers and most of them tend to believe such advertisements, it is important for industry watch-dogs, regulators to ascertain the claims made by such advertisements, get them corrected, and provide appropriate guidelines. Government agencies should also come out with advertisements that educate the audience on how to report offensive and misleading ads.

Do Marketers Manipulate?

Do marketers manipulate consumers?

In the past, marketing and PR techniques that were used raise serious questions around ethics and has led to the industry facing accusations of manipulation. In fact, marketers are still criticised as “companies convince consumers they ‘need’ many material things, and that they will be unhappy and inferior people if they do not have these ‘necessities'” (Solomon, 2021, p.51).

There is an ongoing debate on this subject and students show evaluate this issue critically, looking at both the sides.

Trailer of the film thank you for smoking.

Do marketers create artificial needs?

The objective of Marketing should be to create awareness that needs exist, not to create needs (Solomon, 2021).

• Need = a basic biological motive
• Want = one way that the need can be satisfied (taught by society)

Why is marketing necessary?

Some critics argue that marketers persuade people to buy products by convincing them that it will improve them in someway or improve their situation in some way, and that this in turn drives a materialist society.

So does advertising foster materialism?

The fact is that products are designed to meet existing needs and advertising only helps to communicate their availability (Solomon, 2021).

One of the responses to the criticism of the marketing industry is that marketers are presenting information to consumers and engaging in a two-way relationship which benefits both parties. Marketing is simply about communicating.

Responsibilities of firms towards Consumers

What are the responsibilities of firms to the consumer, with special reference to product, price and promotion and a look at packaging. What are the ethical issues involved. Learn about codes of practice and regulatory bodies.

Consumer as Stakeholder: A stakeholder of a corporation is an individual or a group which either: is harmed by, or benefits from, the corporation; or whose rights can be violated, or have to be respected, by the corporation.
(Crane and Matten, p.58).

UN Guidelines on Consumer Protection

Here are the guidelines by the United Nations for offering Consumer Protection (United Nations, 2015).

• National policies for consumer protection
• Physical safety
• Promotion and protection of the economic interests of consumers
• Standards for the safety and quality of consumer goods and services
• Distribution facilities for essential consumer goods and services
• Dispute resolution and redress
• Education and information programmes
• Promotion of sustainable consumption
• Electronic commerce
• Financial services
• Measures relating to specific areas such as food, water, pharmaceuticals, energy, public utilities, tourism

Consumer Rights

“Consumer rights rest upon the assumption that consumer dignity should be respected, and that producers have a duty to treat consumers as ends in themselves, and not only as means to the end of the producer. Thus, consumer rights are inalienable entitlement to fair treatment when into exchanges with other parties.” (Crane and Matten 2007, p.314).

Marketing

The 7 Ps of Marketing: Product, Price, Promotion, Packaging, Place, Positioning, People.

In the beginning, the responsibility of a purchase was on the buyer, known as Caveat emptor or “Let the buyer beware!”

Product:

In 1965 Ralf Nader wrote “Unsafe at Any Speed” about the US automotive industry and its reluctance to consider safety as part of car design. The automotive industry still has issues: Volkswagen and the emissions scandals, Product recalls for Toyota and Nissan over airbags, Software issues for Ford and Fiat Chrysler, Ferrari and possible odometer tampering.

Other industries also have their own problems.

Just Googling “industries lying to consumers” provided links to articles on contact lenses, eggs, chemically treated food, banks, utilities and many more.

Consumer Protection (Bodies & Legislation)

Protective Bodies:

• 1936 – Consumers’ Union (US)
• 1939 – Citizens’ Advice
• 1957 – Consumers’ Association Which? magazine
• 1962 – Advertising Standards Authority (ASA)
• 1973 – Office of Fair Trading

Legislation:

• 1889 – Indecent Advertisements Act
• 1968 – Trades Descriptions Act (1972, 1987)
• 1973- Fair Trading Act
• 1979 – Sale of Goods Act
• 1998 – Competition Act
• 2002 – Enterprise Act
• 2008 – (EU): Consumer Protection from Unfair Trading

UK Protective Bodies:

• Advertising Standards Authority
• Chartered Trading Standards Institute
• Competition and Markets Authority
• Telephone Preference Service and Mail Preference Service

Price

What is a fair or just price?

Based on Aristotle’s views and developed by St Thomas Aquinas.

The price of something should be proportionate to the cost and items.

Adam Smith talked of market price, whereby value is determined by the worth another puts on it: So even if X costs firm a lot to make, if no one needs X, then that firm cannot get a high price for X.

Marx talks of labour or labour-time invested in an item.

Can / should price vary according to time, place and situation? How do we identify what is a fair price for an item?

http://www.bbc.co.uk/news/business-1189

A Price can be considered to be Unfair if:

• Not disclosing the full price
• Taking advantage of buyers’ ignorance of the value
• Artificial monopolies (e.g. motorway services, airports?)
• Price fixing
• Exploiting a situation of need
• Assumed prestige of a brand?

Promotion

How customers are informed about products is an important part of the marketing mix.

It can be open to different interpretations.

Information or Persuasion?

In his 1957 book The Hidden Persuaders, Vance Packard discusses how marketing uses psychology and our subconscious wants and needs.

And advertisers know and use this – not always honestly!

This has had a significant impact on what consumers buy. It has led to the rise in consumerism and inbuilt obsolescence – a particular issue if you wish to be an ethical consumer.

Common Objections to Advertising

Common Objections to Advertising

• It is Intrusive
• Wasteful of resources
• Encourages debt
• Barrier to market entry
• Reinforces capitalist values
• Stereotyping
• Gender in Advertising

However, advertising can also raise awareness of issues and provide support to worthy causes, and increase ethical awareness.

Packaging

Since the rise of the internet and online shopping, the role of packaging has changed – it isn’t just about looking pretty so you can get it back from the shops!

This has ethical implications even if the packaging is recyclable.

Amazon are just one organisation to come under criticism for using excessive packaging for their items.

Other Consumer Related Issues

Fortune identify 10 of the biggest scandals in 2017 and half of them involved consumer related issues.

One of them involved aggression towards the customer (United Airlines)

Selling unnecessary insurance (Wells Fargo)

Slowing down phones to get consumers to replace them (Apple)

Two of them involved significant data breaches (Uber and Equifax)

Consideration of how consumer data is managed is a significant issue

To sum it up, consumers are important stakeholders in business activity. The principle of caveat emptor has given way to consumer legislation and regulation. While problems of consumer legislation remain, consumers have options of redressal. It is important for consumer and other stakeholder interests to be balanced.

Sustainable Marketing

Environmentalism is an organized movement of concerned citizens, businesses and government agencies to protect and improve people’s living environment. Those who subscribe to environmentalism believe that a marketing system’s goal should be to maximize quality of life.

It is concerned with damage to the ecosystem caused by global warming, resource depletion, toxic and solid wastes, litter, availability of fresh water and other problems.

It also includes loss of recreational areas and increase in health problems.

As a result, Firms are accepting more responsibility and many have adopted a policy of environmental sustainability.

Environmental sustainability

Environmental sustainability is a management approach that involves developing strategies that both sustain the environment and produce profits for the company.

Environmental sustainability portfolio includes Pollution prevention, Product stewardship, New clean technologies, Sustainability vision.

• Pollution prevention involves not just cleaning up waste but also eliminating or minimizing waste before it is created.
• Product stewardship involves minimizing the pollution from production and all environmental impact throughout the full product life cycle
• Design for environment (DFE) involves thinking ahead to design products that are easier to recover, reuse, or recycle.
• New clean technologies involve looking ahead and planning new technologies for competitive advantage
• Sustainability vision is a guide to the future that shows the company that the company’s products, process, and policies must evolve and what is needed to get there.

Sustainable Marketing Principles

Consumer-oriented marketing: The philosophy of sustainable marketing that holds that the company should view and organize its marketing activities from the consumer’s point of view.

Customer-value marketing: A principle of sustainable marketing that holds that a company should put most of its resources into customer-value-building marketing investments.

Innovative marketing: A principle of sustainable marketing that requires that a company seek real product and marketing improvements. Sense-of-mission marketing: A principle of sustainable marketing that holds that a company should define its mission in broad social terms rather than narrow product terms.

Societal marketing: A principle of sustainable marketing that holds that a company makes marketing decisions by considering consumers’ wants and interests, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Seeks to introduce desirable products, rather than those that are deficient, salutary, or simply pleasing.

Firms must adopt Holistic Marketing: Marketing, while important, is not perfect and the negative impact of marketing needs to be understood and addressed. Marketing can and should contribute to corporate social responsibility and sustainability. Companies must practice social responsibility through their legal, ethical, and social words and actions ass marketing can be a means for companies to productively link social responsibility to consumer marketing programs. Social marketing is done by a nonprofit or government organization to directly address a social problem or cause.