Chapter 5

Business Ethics in Marketing

5.1. Introduction
In today’s corporate world, ethical marketing is playing a larger role
in marketing strategy.
An increasing number of consumers are buying products/services
because they feel that the products, services or organizations
responsible for those are ethical.
In response to this consumer demand organizations have increased
their focus on ethical marketing.
When companies are reviewing marketing strategies they need to
consider whether their marketing decisions are ethical and reflect
consumer and market expectations
Marketing ethics addresses principles and standards that define
acceptable conduct in the market place.
Ethical Marketing is an honest and factual representation of
products/services delivered in a framework of cultural and social
values for the consumer. 1
5.2. The Major Ethical Issues in Marketing Decisions
Ethical issues in marketing arise from the conflicts and lack of
agreement on particular issues.
Parties involved in marketing transactions have a set of expectations
about how the business relationships will take shape and how
transactions need to be conducted
Each marketing concept has its own ethical issues. In this section we
will see the major areas in marketing arise ethical issues
1. Ethical Problems in Market Research
Market research has experienced a resurgence with the widespread
use of the Internet and the popularity of social networking.
The way a company conducts its market research these days can
have serious ethical repercussions. Some of the ethical issues in
marketing research include:
Invalid or unreliable research studies
Invasion of consumer privacy, not respecting confidentiality
Failure to secure voluntary and informed participation
Competitive intelligence gathering 2
2. Ethics in Advertising and Promotion
In the early days of existence of corporations, especially during
1940s and 1950s, tobacco was advertised as a substance that promotes
health.
This days the most common ethical concern in promotion include:
Deception: The American Federal Trade Commission (FTC)
defines deception as “a misrepresentation, omission, or practice that
is likely to mislead the consumer acting reasonably in the
circumstances, to the consumer’s detriment”. Examples:
Overstating a product’s feature or performance.
Deception in advertising can be either an exaggeration of products’ attributes (for
example, a shampoo that helps fighting dandruff in 2 weeks whereas results are
significant only after one month) or
a unrealistic statement about products’ performance (
Sexuality is a major point of discussion when ethical issues in advertising content
are considered.
Violence is also an important ethical issue in advertising, especially where 3
children should not be affected by the content.
Ethics in Advertising and Promotion…….Cont’d
Some select types of advertising may strongly offend some groups
of people even when they are of strong interest to others.
Female hygiene products as well as hemorrhoids and constipation
medication are good examples.
The advertisements of condoms are important in the interest of
AIDS-prevention, but are sometimes seen undesirable and strongly
condemned in various societies.
A negative advertising policy lets the advertiser highlight various
disadvantages of the competitors’ products rather than showing the
inherent advantages of their own products or services.

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3. Ethics in Delivery or distribution Channels
Ethical concerns are sometimes linked with the segmenting,
targeting and positioning process.
Efforts to target consumer populations can be subject to unethical
attitudes particularly vulnerable consumer populations, such as
children, the poorest minorities, and the uneducated.
Marketing to children also raises ethical concerns. children cannot
really make fully-informed choices or they can be flooded with
marketing material that is going to alter their behavior.
Direct marketing is one of the most controversial methods of
advertising channels, especially when the approaches included are
unsolicited. Some common examples include TV and Telephonic
commercials and the direct mail.
Electronic spam and telemarketing also push the limits of ethical
standards and legality in a strong manner.

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6. Pricing Ethics
Marketers should be allowed to charge any price they want provided
there is no price discrimination among consumers and that prices are
all inclusive.
However, too high prices are not ethical, when they do not reflect
the existing cost structure but are a means to take advantage of
consumers.
This is especially true in the case of monopolies, oligopolies or
cartels. Besides, advertised prices should always be realistic prices
that consumers will find in stores.
The odd-pricing and partitioned prices practices can also be
questionable on ethical grounds.
The major areas of pricing considered unethical and illegal include:
Deceptive Pricing: Where a salesperson tries to influence customers to buy a
higher-priced item.
Price Discrimination: if similar buyers are charged different prices for the
same based on their ability to pay.
Price fixing: It is an agreement among firms in an industry to set up prices6 at
certain levels.
7. Ethics in product/package strategy
Marketers are supposed to identify and satisfy needs of consumers.
Products/services design and performance related ethical concerns
include:
When Products offered do not always contribute to satisfying
existing needs but sometimes create new needs through the promotion
of materialism.
It appears not to be ethical from marketers to forget the first role of
marketing at the benefit of mercantilism.
Products not made well or products delivering little benefit or less
benefit than promised are commonplace criticism made to marketers.
More questionable is the case of harmful products due to poor
design or lack of quality.
Packaging can also be a source of ethical concerns. For Example:
Exaggerating packaging (for example through design) or misleading
labels
Excessive or environmentally-unfriendly packaging
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3.3. Marketing Ethics and Consumer Rights (Protection)
Another core aspect of market ethics is the evaluation made with
regard to the place market structures provide for the interest of
consumers or clients.
Generally four approaches exist: market approach, contractual
approach, due care approach and social cost approach.
1. Market approach- consumer safety is seen as a good that is most
efficiently provided through the mechanism of free market.
Such is carried out by making producers and sellers respond to
consumer demand.
Critics claim the ineffectiveness of such approach by pointing the
complexity of products to be understood by consumers because of:
failure of markets in providing consumers with full product
information either from negligence or business secrete.
As profit oriented entities businesses will obviously prioritize gain
than consumer interest.
Hence one cannot expect corporations to respond to consumer safety
issues by their own initiative at all times 8
Marketing Ethics and Consumer Rights…….Cont’d
2. Contract approach- The relationship between a firm and a
consumer is essentially a contractual one.
A firm’s moral duty emanate from the terms of the contract. Usually
contractual terms are expected to incorporate issues in connection to:
a)Duty to comply to contract terms- contract terms will create moral
obligation on the business to guarantee:
the reliability of product sold,
issues in connection to maintainability,
the duration of service life of the good and
safety of the product under transaction.
a)Duty to disclose product nature- moral obligation on the side of
producer or seller to explain in explicit terms the nature and
characteristic of the product.
b)Duty to avoid misrepresentation- the moral obligation not to fraud
or lie to the consumer on subject matter of contract.
c)Duty to avoid duress and undue influence- moral obligation not to use
force, threat of force or any related power in connection to the contract 9
Marketing Ethics and Consumer Rights…….Cont’d
3. Due care approach- manufacturers and sellers of a product have a
moral obligation to ensure consumers are not harmed as a result of the
product they put to market much stronger.
The due care theory expects a moral obligation from the business
person in areas of product design, production and information.
4.Social cost view- claims a business should pay the cost of any
injuries sustained from any defect of a product even when they have
taken all due care.
By widening the scope of responsibility it acts as a precautionary
call for businesses to take the utmost possible care regarding their
product so that a high level of consumer protection is achieved.
The issue of consumer protection is not only an academic
phenomena.
There are laws and regulations generally designed to protect the
consumers from unethical practices by businesses.
These laws and regulations recognize that consumers have certain
basic rights in the market place. 10
Marketing Ethics and Consumer Rights…….Cont’d
Political-legal environment component of the marketing
environment consisting of laws that require firms to operate under
competitive conditions
The UN has developed a consumer protection guideline to be
followed by its members by addressing the following points:
a)The right to safety: to be protected against products, production
processes, and services which are hazardous to health or life.
b)The right to be informed: To be given facts needed to make an
informed choice, and to be protected against dishonest or misleading
advertising and labeling.
c)The right to choose:
d)The right to be heard: The right to satisfaction of basic needs:
e)The right to redress: The right to consumer education:
f)The right to a healthy environment:

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Marketing Ethics and Consumer Rights…….Cont’d
Ethiopian consumer protection law has also recognized the need to
protect the consumers from harmful acts of the business.
It has explicitly stated the following as rights of the consumer:
a)The right to get sufficient and accurate The right to purchase
goods and services on the basis of personal choice
b)The right not to be forced to purchase
c)The right to be received humbly and respectfully by any
business person and to be protected from such acts as insult, threat,
frustration and defamation
d)The right to claim compensation or related rights thereof from
manufacturers, importers, wholesalers or retailers for damages
suffered because of purchase or use of goods and services.
When a consumer faces a defective good or service within 15 days
of purchase, he/she is entitled to report to a government organ
enabling good replacement, service redelivery free of charge or refund
of purchase price from the business.
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3.4. The 10 Principles for Ethical Marketing Practices
1. Be truthful and never knowingly relay false information
2. Full disclosure — including employment and affiliations.
3. Respect all community guidelines [set by bloggers and
community managers].
4. Never ask a blogger to lie.
5. Take extra care when dealing with bloggers that appeal to
minors.
6. No manipulation of advertising or affiliate programs to impact
blogger income.
7. Refrain from using automated systems for distributing
messages.
8. Full disclosure of incentives and payments given.
9. Sending a product to a blogger does not guarantee coverage.
10. Request that bloggers reveal the source of products they
review.

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