Ethics in Marketing

Issues in Marketing

A company must have ethical marketing policies to guide their pricing, advertising, research, and competitive strategies.

Learning Objectives

Identify the common ethical issues associated with products, pricing, promotion and placement within the marketing mix

Key Takeaways

Key Points

  • Each party in a marketing transaction brings expectations regarding how the business relationship will exist. For example, if a consumer wishes to make a purchase from a retailer, their expectations include wanting to be treated fairly by the salesperson and wanting to pay a reasonable price.
  • Ethical marketing decisions and efforts should meet and suit the needs of customers, suppliers, and business partners. Unethical behavior such as price wars, selective advertising, and deceptive marketing can negatively impact a company’s relationships.
  • Recent trends show that consumers prefer ethical companies. As a result ethics itself is a selling point or a component of a corporate image.

Key Terms

  • propagation: The dissemination of something to a larger area or greater number.
  • puffery: A legal term that refers to promotional statements and claims that express subjective rather than objective views, which no “reasonable person” would take literally. An example would be “Red Bull Gives You Wings. “

Ethical Issues in Marketing

Ethical problems in marketing stem from conflicts and disagreements. Each party in a marketing transaction brings a set of expectations regarding how the business relationship will exist and how transactions should be conducted. Each facet of marketing has ethical danger points as discussed below.

Market Research

Some ethical problems in market research are the invasion of privacy and stereotyping. The latter 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.

Market Audience

Selective marketing is used to discourage demand from so-called undesirable market sectors or disenfranchise them altogether. Examples of unethical market exclusion are past industry attitudes to the gay, ethnic minority, and plus-size markets.

Another ethical issue relates to vulnerable audiences in emerging markets in developing countries, as the public there may not be sufficiently aware of skilled marketing ploys.

Ethics in Advertising and Promotion

In the 1940s and 1950s, tobacco used to be advertised as promoting health. Today an advertiser who fails to tell the truth offends against morality in addition to the law. However the law permits puffery (a legal term). The difference between mere puffery and fraud is a slippery slope.

Sexual innuendo is a mainstay of advertising content, and yet is also regarded as a form of sexual harassment. Violence is an issue especially for children’s advertising and advertising likely to be seen by children.

The advertising of certain products may strongly offend some people while being of interest to others. Examples include: feminine hygiene products as well as hemorrhoid and constipation medication. The advertising of condoms has become acceptable in the interests of AIDS-prevention, but are nevertheless seen by some as promoting promiscuity.

Through negative advertising techniques, the advertiser highlights the disadvantages of competitor products rather than the advantages of their own. These methods are especially used in politics.

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.

Deceptive Advertising and Ethics

Deceptive marketing is not specific to one target market, and can sometimes go unnoticed by the public. There are several ways in which deceptive marketing can be presented to consumers; one of these methods is accomplished through the use of humor. Humor provides an escape or relief from some kind of human constraint, and some advertisers intend to take advantage of this by deceptively advertising a product that can potentially alleviate that constraint through humor.

Anti-competitive Practices

Bait and switch is a form of fraud where customers are “baited” by advertising for a product or service at a low price; second, the customers discover that the advertised good is not available and are “switched” to a costlier product.

Planned obsolescence is a policy of designing a product with a limited useful life, so it will become unfashionable or no longer functional after a certain period of time and put the consumer under pressure to purchase again.

A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.

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Pyramid Scheme: This business practice relies on getting the initial investor or “captain” to enroll others for a fee to them who in turn will also enroll others in order to get paid.

Pricing Ethics

Bid rigging is a form of fraud in which a commercial contract is promised to one party, although for the sake of appearance several other parties also present a bid.

Predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.

Using Ethics as a Marketing Tactic

Major corporations fear the damage to their image associated with press revelations of unethical practices. Marketers have been quick 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 propagation of ethics itself as a selling point or a component of a corporate image.

Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for which good marketing is practiced. 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. The mindset of many companies is that they are concerned for the population and the environment in which they due business. They feel that they have a social responsibility to people, places and things in their sphere of influence.