BUSINESS ETHICS IN

MARKETING
A set of traits help to ascertain ethical impact on any marketing
activity. It can be measured by analyzing the presence of these traits
in those activities. Marketing activities involves ethical practices
which are not unambiguous actions and behaviors.
Ethical behaviour is mainly dependent on the individual who is
involved in the marketing business and prospective sales.
IMPACT OF ETHICS IN MARKETING

• (1) Accuracy- a precise representation of product information is

necessary in advertisement, materials used for promotions and sales
presentations. Including inaccurate or deceptive information about
their product which may cause some sort of intended or unintended
damage or harm which is completely unethical.
• (2) Customer Focus- maintaining ethical standards in marketing and
sales activities require major focus on customer needs and wants. The
sales team should try and find out, understand the needs of the
consumers and avoid selling products which are beneficial for the sales
representatives or the company. One should refrain from pressure
tactics or any methods of threats.
(3) PRICING

• One of the major ethical concern is pricing. Supplier monopoly or

dependence should not be the factors forced onto the customers.
The factors to be considered while deciding prices are quality,
function, consumer value of the product and not only the
marketing aspects. Other costs like manufacturing, distribution
also requires adequate considerations.
• But charging high prices for products where there is less
availability of alternatives should not be accepted.
(4) Distribution

• Manufacturers who adopt fair and ethical practices must select low cost
distributions techniques. Channels which provide optimum service and
value to the end users should not be selected as the distribution
channel of the organizations.
• (5) Competition- an external factor like competitions is one of the
major hurdles while practicing ethical behaviors. The Business
Marketing Associations (BMA) insists that members should avoid any
kind of derogatory or unfair attacks on the competitors. Ethical
comparison between two similar products can be achieved by
demonstrating how one product or the company is a better option for
consumers.
UNETHICAL PRACTICES IN FINANCE

• (1) TAX EVASION

• When a person reduces his total income by making false claims or
by withholding the information regarding his real income, so that
his tax liability is reduced, is known as tax evasion. Tax evasion is
not only illegal but it is also immoral, anti-social and anti-national
practice. Therefore under the direct tax laws provisions have been
made for impositions of heavy penalty and institutions of
prosecutions proceedings against tax evaders.
• The tax evaders reduces his taxable income by one or more of the
following steps:
• (1) unrecorded sales
CONTD….

• (2) claiming bogus expenses, bad debts and losses.

• (3) charging personal expenses as business expenses for examples- car
expenses, telephone expenses incurred for self or family may be
shown in the account, books as business expenses.
• (4) Submission of bogus receipts for charitable donations for
deductions.
• (5) Non-disclosure of capital gains on sale of shares or any other
assets.
• (6) non-disclosure of income from “Benami transactions”.
• In brief to evade tax evaders “suppresses or omits receipts, inflates
expenses and claims bogus deductions.”
LACK OF TRANSPARENCY

• Embrace the values of accountability and transparency as a matter

of ethical leadership, as well as legal compliance.
• Leaders know that financial transparency will help to preserve the
very- important trust each stakeholders places in the organizations.
• Earning the public’s trust each stakeholders places in the
organizations. Earning the trust requires transparency and
accountability goes beyond what law requires.
• Strong disclosure system that promotes transparency is pivotal part
of market-based monitoring of most companies and is central to
shareholders ability to exercise their ownership rights on informed
basis.
CONTD….

• Disclosure is a powerful tool for influencing corporate behaviour and

for protecting investors. It attracts capital and maintains confidence
in the capital markets.
• Weal disclosure leads to weak-transparency and contribute to
unethical behavior and to loss of market integrity at a great costs, not
only to the company and its shareholders but lasso to the economy.
• Adoption of internationally recognized accounting, audit and
disclosure standards and practices facilitates transparency, as well as
compatibility, of information across jurisdictions for improving
corporate governance –practices.
PREAPARING FALSE FINANCIAL STATEMENTS

• An adjustments is made to create false appearances is known as

window dressing
• Where company’s accounts in a manner which enhances the
financial positions of the company. It is a form of creative
accounting involving the manipulation of figures to flatter the
financial positions of the business. Focus is on:-
• (1) liquidity
• (2) profitability
SPECUALTIONS

• Involves trading of financial instruments involving high-risks in

expectations of significant returns to take maximum advantages of
market fluctuations.
• It has a special meaning when talking about money. A speculator
does not buy goods to own them, but to sell them later. The
reason is that he wants to make profits from the change of market
prices.
• Involves holding and selling of stocks, commodities, currencies,
collectibles, real estates or any valuable things to profit from
fluctuations in its price as opposed to buying it for use or for
income- dividends, rents, etc.
CONTD….

• Speculations is one of three market roles in western financial markets,

distinct from hedging and arbitrage.
• Bears part of the uncertainty about future random changes of investment
periods and increases the investor’s independence on the time horizon of the
other investors, of their time schedule for investment or disinvestment of
stock.
• The profits from speculations are the price that the non- speculative
investors must pay to the speculators for their provisions of additional
trading of stocks.
• According to the Oxford Dictionary, speculations is defined as, “ A message
expressing an opinion based on incomplete evidence”