ETHICAL ISSUES IN

MARKETING
PRESENTED BY: RAVI
VASANI
AKASH
GUPTA
PRESENTATION PLAN
 Definition And Meaning
 Factor Influencing Ethical Decision Making
Process
 Ethical Issues & The Marketing Mix

 Current Ethical Issues In Marketing

 Ethics Compliance Programs

 Social Responsibility Issues

DEFINITION
 Moral principle or values that generally
governs the conduct of an individual
or a group.
 Marketing ethics are principles that
defines acceptable conduct in
marketing which society expect.
 If ethics are not followed then public or
customers may strike back.



FACTOR INFLUENCING ETHICAL
DECISION MAKING PROCESS

Individual factor Organizational

Opportunity Relationships

Ethic al marke ting 

de c isio n 
Individual factors
 Individual make their decision on their own
concepts.
 They develop these concepts from social
groups.
 Ethical decision making can be enhanced by
identifying these personal concepts.
 Utilitarianism: judgment of decision by the
consequences upon all the people
affected(utilitarian's)
 Ethical formalism: develops specific
standard of behavior by determining
whether an action can be taken as general
rule without considering alternative results.

Opportunities
 It is a favorable set of condition that provide
reward and limit barriers.
 Ex: deceptive sales presentation and rewarded

 larger the rewards, more unethical behavior.


Organizational relationship
 Most marketing decision often made in
groups.
 Significant others: superiors, peers,
subordinates and outsiders affects ethical
decision making.
 Organizational culture: set of goals, norms
that employees of an organization shares.
 It suggests rules how to behave and deal with
problems in an organization.
Ethical Issues & the Marketing
Mix

Product Pricing
Issues Issues

Customers

Promotion Distribution
Issues Issues
Product issue
 Product that is harmful
 Ex: thalidomide disaster in Germany in 1958.
 Fail to disclose informations about product.
 Ex: Packard Bell
 Larger packages are more noticeable on the shelf.
 Ex: chips
 Product quality
 Adding of carcinogenic substances to make
preparation tasty.

 Planned obsolescence: purposely causing
existing product out of date by introducing
new product
 Type: Material Planned Obsolescence
 Style Planned Obsolescence


Material planned obsolescence: company

choose low grade material.
 Ex: manufacturers of lighter
 Style planned obsolescence: firms make
minor changes in product within a short
period, to attract style conscious people.
 Ex: fashion items and cars



Pricing issues
 Bait and switch: advertising one item at low
prize (bait)>>>>customers into
stores>>>>>>sale of different product at
higher price.(switch).
 Selling
higher priced product is legal but
advertising low priced item is unethical


 Price fixing: collaboration of two or more

firms in setting prices usually to keep prices
high.
 Two types:
 horizontal price fixing
 vertical price fixing
Pricing issues cont…..
 Horizontal price fixing: when competitors
making same product jointly determine the
price.
 Ex: in 1994 six major airlines fix the prices.
 Vertical price fixing: manufacturers force
retailers to charge high prices.
 Consumer goods pricing act 1966.


 Predatory pricing: company set low price to

eliminate competitors>>>>>>
monopoly>>>>>increase prices
 Ex: American airlines in 1990.
Pricing issues cont…..
 Price discrimination: charging different
prices to different customers based on their
assumed ability or willingness to pay
 Ex: amazon.com
Promotion issues
 Deceptive advertising: when the consumer
is led to believe something which is not true
 Ex:
gateway computers (1998), full refund and
on site service
 Puffery: exaggerated claims of a product’s
superiority statements that may not be
literally true
 Ex: movie(Tashan) and novel advertisements
 Cookies: small text files that automatically
download to a user’s computer whenever
that
 user visits a Web Site and that is capable of
 gathering information on the user

Distribution issues
 Slotting allowances: fee paid by
manufacturer to retailer in exchange of
keeping their product in their shelves.
 Grey market goods: foreign made products
imported into countries by distributors that
are not authorized.
 Ex: selling electronics items
 Exclusive territories: an area assigned by
company to distributer in which no other
distributer will work.
 To get good money from distributer & to
create elite image
 Cadillac motors



Current ethical issues in
marketing
 Tobacco advertising: advertising of tobacco is
not illegal in some country but it is
unethical
 Ex: promotion of ”CAMEL” with a cartoon
joycamel
 State Govt of Minnesota's billboard
 Alcohol advertising: advertisement in the
name of mineral water or club soda
 Ex: bagpiper
 Despite the decrease in sales of hard liquor,
there is an increase in alcoholic soft drinks.
 These taste like colas or fruit juices but may
contain more alcohol than beer does.
 Advertising Aimed at children
 Critics say continually bombarding towards
children can alter their motivation and
behavior
 Ex: selling of high calorie & fat containing food
like pasta with offers of free tattoo.
Ethics compliance programs
 Development of code of ethics: guidelines
developed by companies to help employees
to make ethical decisions
 Ex: Dow’s code of business conduct include
ethical principles and policies to deal with
various issues


 Consumerism: social movements that

protect consumers from harmful business
practices
 Establishment of various act and legislations
 ( cigarette labeling act 1966)
 Green marketing: marketing of products and
packages that are less toxic and recyclable.
 Ex:Aveda a skin care product manufacturer
developed products without animal contents
and synthetic materials and recyclable
packaging material.
 Corrective advertising: advertising that
clarifies previous deceptive claims
 Ex: Warner Lamberts corrective advertisement
for LISTERINE mouthwash “would not
prevent colds or sore throat”
 Corporate Social Responsibility
 Firms have become viewed as responsible for
more than generating profits.


 Social responsibility Marketing philosophies, policies,

procedures, and actions that have the enhancement of
society’s welfare as a primary objective.


 Provide future benefits in the form of

consumer approval and loyalty.
references
 Marketing by Solomon and Stuart 3rd edition
 Marketing by Pride and Ferrel 10th edition

 Marketing by Evans and Berman 8th edition

 Marketing by Lamb and Hair 6th edition

 Marketing Management by Kotler and Keller

13th edition


 THANK YOU