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Chapter 4: Ethics and Marketing

Main purpose: Introduce some of the concepts and issues in marketing ethics through case
studies

1. Fundamentals of Marketing Ethics

Normative Marketing Ethics

Values, principles, and ideals → marketing professionals should hold

Question raised:

If these values, principles, and ideals are context dependent

Whether they refer to individual marketing decision makers or to organizations?

Brenkert (1999):

little agreement among marketers on what kinds of justification can be offered for
normative moral judgments made regarding marketing

considerable disagreement on whether marketing ethics is (or should be) separate

from the rest of business ethics – or, indeed, from the ethics of (non-business)
society

Ethical Marketing

Refers to the application of marketing ethics → into the marketing process

Has a potential to benefit society as a whole (both in short and long term)

Study of ethical marketing should:

be included in applied ethics

involves examination to identify an honest or factual representation

Has influenced companies + their response

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 → market their products in a more socially responsible way

Example of ethical marketing impact: the increasing trend of fair trade

Importance of Marketing Ethics

Organization behaves ethically

→ customers have more positive attitudes about the firm & its products/services

Create values & trust with key stakeholders

Build good image about the organization in the minds of customers, employees,
shareholders and society

2. The Ethical Problems in Marketing

When making marketing decision, company needs to make consideration in 4 major areas -
4P that may involve ethical consideration

product

price

promotion

place

Ethical theory applied

Teleology - considers the overall wellness of both parties and of the society after the
transaction

Deontology - examines the parties willingness, respect and complete knowledge

Justice theory - examines fairness of how resources and opportunities should be

distributed

2.1. Ethics in marketing practices (Consumer-related issues)

Perspective of social contract theory or deontology:

Companies have responsibility to protect consumer’s right

Contractual obligation to treat consumer fairly

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 Company should not treat consumers as a source of profit → but actively protect their
rights

Ethical issues related to consumers’ rights

Related marketing
Consumers’ rights Ethical consideration
areas

• Is the product safe?

1. Obtain safe and effective • Are the qualities and functions
product policy
products in accordance with the description on the
label?

• Do the advertisement deceive, mislead or

2. Obtain honest and truthful threaten consumers?
promotion policy
information • Do the advertisement involve any
discrimination and any undue stereotyping?

3. Respecting personal
privacy
promotion policy Does the promotion invade privacy ？
• Is there any price manipulation when
enterprises set the price?
• Do the enterprises gain
4. Paying fair and reasonable excessive profit?
pricing policy
price • Concern the
ability of the less advantage?
• Are there any
unfair treaties when setting the price?

5. Obtain the rights to buy Do enterprises hinder consumers of

place policy
products purchasing products with unjust means?

According to stakeholder theory, company has 3 courses of action toward customers:

Immoral/Illegal

Treats the customer as a target for exploitation

Often deliberately tricks or misleads customers

All marketing decisions are made in order to take greatest advantage of the
customers.

Unethical but legal

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 only make decisions based on the principle of “making a profit while staying within
the law”

has no concern for the principle of fairness that values the customers

→ only focuses on the interests of the management

no consideration of the ethical issues involved in the exchange with customers

Ethical

Treats customers as equal partners in the transaction

The customer specifies the needs and expectations of the transaction → is treated
fairly

Concerns the provision of fair prices, full access to information, reasonable

protection and satisfaction to customers

Fairly interprets and respects the rights of the consumer

Actively compensates the losses of customers

2.2. Ethical considerations when deciding advertising strategies

Definition of Advertisement

the broadcast of messages through a suitable media to a target through paid means by an
organization or an individual

→ aiming at reaching intended effects

effects may include:

conveying of messages

elicitation of action (for example: consumption)

image-building

Type of Advertisement

Commercial advertisements

aim at selling products

mainly provide consumers with information on commercial products

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 Cultural advertisements

→ aim at conveying information about science, culture, education, and news and
publishing

Social advertisements

provide social services

example:

social welfare

medicine and health

social security

seeking of marriage partners

lost persons, lost items

new employees

Government announcements

made by Government departments

example: public information released by public departments

Aims of Advertisements

Aim at achieving three levels of purposes including:

communication of information

convincing the consumer to make purchases

constructing certain values

Code of Conduct for Marketing Ethics

Intentions

Protect consumers from fraudulent mobile content

Help mobile companies operate within an ethical framework

Help insulate the mobile industry from regulators

Provide the mobile companies with some legal protection

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 Responsibilities of the marketer to all relevant publics (consumers, organizations, and
society)

Honesty and fairness, uphold integrity, honor, and dignity of the marketing profession

Rights and duties of participants in the marketing exchange process (including 4ps and
marketing research)

Ethical behavior in organizational relationships

2.3. Analyzing advertisement using applied ethics

Ethical Issues in Advertising

Concealment of Facts

When consumers are deprived of comprehensive information about a product

→ their choices are limited and distorted

Concealing facts misleads people and undermines truth

Example

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 A juice made from “natural ingredients” → which is sugar, not the fruit juice we are
expecting

Subliminal Advertising

pieces of information which occur so quickly, or are so small or unnoticeable

tends to carry inappropriate content to attract viewers

we do not actually perceive them consciously—but our SUB-conscious mind notices

everything, and DOES perceive it

example:

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 Puffery

a lot of unnecessary positive adjectives into ads

exaggerate the quality of the product

example: “best”, “finest”, “ultimate”, “most”, or even words like “courage” and “trust”

Surrogate Advertising

Banned products mask under another product under same brand name

Example

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 In India, liquor and tobacco advertisement are banned

Seagram, an alcohol company, has taken advantage of a movie’s ads to advertise

their product

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