Ethical Issues in Marketing

Ethics are defined as the set of principles that guide a person’s conduct towards being morally
right. When a person is faced with some moral dilemma, the choice that the person makes largely
depends upon the values and ethical principles that person holds. It is over and above just being
legal. Due to being dependent upon the personal values and principles a person holds, an ethical
code of conduct cannot be described in absolute terms. Like in all the disciplines of life,
recognizing and quantifying what is ethical in marketing and what is not is difficult. In a broader
sense, ethics in marketing mean implementing standards of moral rights and wrongs and of
fairness in the marketing practices of an organization.

The main objective of any business is said to be shareholders wealth maximization. In order to
achieve this objective, the organization has to perform better than its competitors and create a
competitive advantage for itself. This competitive advantage is mainly dependent upon
the perception the customers hold of the products or services of the organization. An
organization can create a competitive advantage by means of its marketing decisions, behavior,
and practices. This includes aligning its marketing mix as per the customers’ requirements. The
organization will gain a competitive advantage only when the customer will perceive the
marketing mix i.e. product, price, place, and promotion to be of value.

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 Categorizing Ethical Issues in Marketing

Issue 1: Selling the product versus selling a solution.

Many marketers have been given the task of selling products that have been designed and/or
produced with a particular target market in mind, but in order to sell more, those products are
then marketed to an audience who does not want or need that product. Instead of taking the time
to truly understand the needs and conditions of the new market, many marketers merely “push
product” rather than find valued solutions. This results in unhappy customers, who in today’s
world of social media complaining, end up hurting the brand by publicizing their negative
experiences with what they were sold.

Issue 2: Telling the truth, but not the whole truth, and not “nothing but the
truth.”

To motivate demand, many marketers often tell half-truths by leaving out key information to
prospective buyers or by adding irrelevant information that might cause the buyers to view the
truth in a different light, which biases their perceptions of the product offering. Granted, the
entire truth may be difficult to portray, particularly for complicated product offerings, but ethical
marketers will at least make the attempt to provide full disclosure when possible. The result of
partial-truth communication is that customers end up feeling deceived while the marketers or
salespeople will claim innocence, saying that they never outright told a lie. This results in a
downward spiral of mistrust that will destroy both brand image and brand equity.

Issue 3: Blatant lying to the marketer’s own organization.

Marketing budgets are often fragile, first, due to the belief that they can be reduced without
immediate negative effects on sales, and second, because many marketing expenditures are not
clearly shown to be connected to sales volume, sales revenue, and profit margins. Although there
are many marketing expenditures that are difficult (but not impossible!) to justify quantitatively
(such as brand advertising, social media, and relationship building), informed and motivated
marketers can indeed provide the true quantitative links between their marketing activities and
how the organization benefits. However, because a great number of marketers do not understand
how to make these connections, many of these marketers mislead top management into thinking
that the organization’s marketing dollars are well spent, just so that they can retain their budgets
(and their jobs) for the following year. The result? Mediocre performance at best, and potentially
dismal performance at worst. Opportunities are lost; resources are wasted; valid feedback is
nonexistent.

There are a number of other ethical issues in marketing, but these are three that are commonplace
and that present significant challenges.

The solutions, however, are surprisingly simple. To solve the selling issue, train your teams to
focus on finding valid solutions for their prospects, even if it means not making a sale or even if
it means recommending a competing product. There’s little worse than destroying your brand’s
reputation by pushing a product that doesn’t fit.

Solving the half-truth problem is as simple as just plain telling the truth as you would want it told
to you.  Concentrate on communicating to your audiences rather than manipulating them. If you
have a solid product and there’s a fit with audience needs, you’ll make sales. If there’s not a fit,
then change the product or motivate your audience to consider changing their desires for what
you offer.

As for the deceptive internal communications issue, the solution is potentially difficult, but it’s
still simple. It involves learning -- learning how to measure performance and connect
performance measures to marketing actions. This is where a strong understanding of marketing
key performance indicators comes into play. This will take time and will be a challenge for many
marketers who have avoided serious analytics over the years. But it will pay off by helping to
make the connections between what you do as a marketer and how the organization truly
benefits.

To solve most ethical issues in marketing, marketers need a combination of technical

knowledge, a commitment to telling the truth, and a passion for finding solutions rather than
just making the sale.

Ethical Issues in Marketing to Vulnerable Customer Groups

The vulnerable customer groups include children, the elderly, certain minorities, and religious
groups. These customers may be influenced comparatively more easily as they have either less
knowledge about these practices or they are vulnerable in terms of their minority or religion.
Children have always been an important marketing targets for certain kinds of products.
However, in recent times more and more marketing efforts are being focused on children.
Children have great influencing power while making any purchase decision. But, generally, their
knowledge is less developed and limited about the products, media, advertisements, and the
selling strategies adopted by the firms. Due to these reasons, they are more likely to be attracted
to the strong images projected towards them and the psychological appeals directed towards
them.

Ethical questions arise in such an environment when children are exposed to questionable
practices e.g. advertisements attracting them towards products that are potentially harmful like
alcohol and tobacco. The advent of the Internet and direct marketing practices to market the
products to children has become a major ethical issue in today’s environment. There are very
few, almost negligible, controls that can supervise the content which goes over the websites. The
marketers can present objectionable and misleading material to minors without any regulation.
Due to all these issues, there is an increasing need to control the content being presented to
children. It requires higher levels of regulations for marketing to children.

Submitted by

Raunak Kumar

MBA- 2nd Semester

IBMR, Gurgaon