BADM 3003

Business Environment &

Ethics
Lecture 13: Marketing & Advertising
Instructor: Ahmed Hassanein
Hassanein 2018©

Marketing
The four P’s of marketing
• Product
• Price
• Promotion
• Placement

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Marketing
Product ethical issues:
• Product safety
• Social impact of some products
Price ethical issues:
• Price gouging
• Predatory pricing
• Price discrimination
• Misleading prices
• Price fixing
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 Marketing
Promotion ethical issues:
• Questionable sales techniques
• Deception/manipulation in advertising
• Intrusiveness of direct marketing
• Social harm of advertisements
Placement ethical issues:
• Anti-competitive practices such as controlling
channels of distribution, paying slotting
allowances for shelf space & gray marketing
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Ethical Framework
• Fairness – Justice
The requirement of acting freely bans exchanges
where coercion or deception are involved
(absence of force & fraud)

So the question becomes “how much information

is the seller obliged to reveal?”

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Marketing Doctrines
Caveat Emptor
Responsibility on buyer to discover all relevant
information about product
Caveat Venditor
Responsibility on seller to disclose all relevant
information about product

•Who can provide the info at a lower cost? (typically assumed

to be seller)
•Harm to consumers should be avoided (seller must provide
info about potential harm caused by product)

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 Ethical Framework
• Fairness – Justice
The requirement of acting freely bans exchanges
where coercion or deception are involved
(absence of force & fraud)

So the question becomes “how much information

is the seller obliged to reveal?”
• Freedom
vulnerable populations, deception, manipulation
• Well-being
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JFK’s 1962 Consumer Rights

1. The right to be protected from harmful
products (well-being)
2. The right to be provided with adequate
info about products (fairness)
3. The right to be offered a choice that
includes the products that consumers truly
want (well-being & Freedom)
4. The right to have a voice in the making of
major marketing decisions (freedom)*
* Not there yet
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Sales Practices
Sales people under pressure to sell by such
means as commissions, quotas might result in
pressure to:
• lie to customers,
• conceal information,
• make unrealistic promises,
• Ridicule &/or discredit competition,
• oversell, &
• offer bribes, kickbacks & other perks
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 Sales Practices
Since much of sales people’s work is away
from the office, there is little supervision,
which can result in:
• Mispresenting work
• Padding expense accounts
• Misusing company resources
• Cheating employer

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Labeling
• Label should enable consumers to make
rational value comparisons.
• Labels on packaged food products should
contain info about certain ingredients, total
number of calories…
• How would a food manufacturer protect
secret recipes in such cases?

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Sales Practices & Labeling

• Fair Packaging & Labeling Act (1966)
Rationale is that certain info is crucial for making
an informed consumer choice & consumers cannot
secure this info if not provided by seller
• Consumer Product Safety Act (1972)
• Nutrition Labeling & Education Act (1990)
Contents & defines “low fat”, “light” & other
such terms

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 Sellers’ Arguments
• The need to balance against practical
constraints
• Changing labels whenever ingredients
slightly changed & associated costs
• Providing a detailed listing of food
ingredients jeopardizes secret recipes.

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Pricing
• Use of prices to engage in anticompetitive behaviour
– Monopolies &/or oligopolies
– Price fixing
Parallel pricing; price leadership; market allocation;
– Resale price maintenance
– Price discrimination
– Predatory pricing
• Unfair pricing – price gouging
• Reducing size/wt for same price (customary pricing)
• Hidden costs

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Distribution
• Abuse of power in channeling relations
– Reciprocal dealing
– Exclusive dealing
– Tying arrangements
• Slotting allowances to gain access to shelf
space
• Gray markets (diverting & parallel importing)
• Direct marketing (violation of privacy?)

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 Distribution
• Reciprocal dealing
Seller required to buy something in return
• Exclusive dealing
Buyer cannot use another brand
• Tying arrangement
Product sold on the condition that buyer also
buys another product, also full-line forcing

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Distribution
• Abuse of power in channeling relations
– Reciprocal dealing
– Exclusive dealing
– Tying arrangements
• Slotting allowances to gain access to shelf
space (better than advertising?)
• Gray markets (diverting & parallel importing)
• Direct marketing (violation of privacy?)

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Advertising
A paid nonpersonal communication about an
organization & its products that is transmitted
to a target audience through a mass medium

Advertising used to sell ideas, attitudes &

behaviour to benefit individuals &/or society in
general

Advertising vs social marketing

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Manipulation & Deception
• Manipulation does not include false
statements or misleading claims, but makes
use of consumer’s psychology to make a sale
• Deception is lying
• Examples of Manipulation
– Bait & switch
– Big Sale Ends Today!
– “False” sales

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Manipulation & Deception

The questions remain:
• How much information is a seller obligated to
provide?
• Selling involves the use of persuasive
techniques, so when does it become
manipulation?

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Advertising
• Deceptive advertising
• Irrational persuasion
• Impact of advertising

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Deceptive Advertising
Morally objectionable because it hinders consumers’
ability to make rational choices, which need to be
based on adequate information
• E.g. Anacin “Contains unique & superior painkilling
formula”

1. Deception due to ad or person (how many people

can ad realistically deceive?)
2. Taking advantage of people’s ignorance
(“Natural”; “Cholesterol-free”)

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Deceptive Advertising
• Substaintially interferes with consumer ability
to make rational choices. Depends on:
1. Ability of consumers to protect themselves &
make rational choices despite advertising
2. Seriousness of choice

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Pepsi vs. Campbell’s

Deception?

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Irrational Persuasion
• Advertising playing on natural human desires
for security, acceptance, self-esteem to
influence consumer choices
• Subliminal communication acts on people
without their knowing it, hence no consent
• Product placement (in movies)
• Buzz marketing (how do you know it is one?)
• Dependence effect – creating the need
“Consumerism”?
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Impact of Advertising
• Impact on persons
• Impact on society
• Social marketing

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Impact on Persons
• Increased consumerism work to spend
• Life is simple in ads Solution to your misery is Pepsi!
• Image advertising e.g. ideal female beauty,
image of masculinity
• Marketing orientation Objectification of the self

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 Impact on Society
• Creating stereotypes about women or racial groups

• Targeting the poor who have fewer choices & less

education (e.g. cigs, hair gel)

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Social Marketing
“The application of commercial marketing
technologies to the analysis, planning,
execution, & evaluation of programs designed
to influence the voluntary behaviour or target
audiences in order to improve their personal
welfare & that of their society”

e.g.: Birth control, anti-drugs, vocational edu

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Social Marketing - Challenges
1. Evaluating the desirability of changes
2. Replacing public discussions & debates
(someone watches 1 one-min ad & suddenly
considers themselves an expert)
3. Could change individuals’ behaviour, but not
necessarily eliminate root causes of problems
4. Could potentially be manipulative – gov-
sponsored propaganda, political campaigns

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CSR

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