Marketing ethics
Encyclopedia
Marketing ethics is the area of applied ethics
which deals with the moral principles behind the operation and regulation of marketing
. Some areas of marketing ethics (ethics of advertising
and promotion
) overlap with media ethics
.
None of these frameworks allows, by itself, a convenient and complete categorization of the great variety of issues in marketing ethics.
. If the marketing situation is adversarial, another dimension of difference emerges, describing the power balance
between producer/consumer or buyer/seller. Power may be concentrated with the producer (caveat emptor),
but factors such as over-supply or legislation can shift the power towards the consumer (caveat vendor). Identifying where the power in the relationship lies and whether the power balance is relevant at all are important to understanding the background to an ethical dilemma in marketing ethics.
Stereotyping occurs because any analysis of real populations needs to make approximations and place individuals into groups. However if conducted irresponsibly, stereotyping can lead to a variety of ethically undesirable results. In the American Marketing Association
Statement of Ethics, stereotyping is countered by the obligation to show respect ("acknowledge the basic human dignity of all stakeholders").
Examples of unethical market exclusion or selective marketing are past industry attitudes to the gay, ethnic minority and
obese ("plus-size
") markets. Contrary to the popular myth that ethics and profits do not mix,
the tapping of these markets has proved highly profitable. For example, 20% of US clothing sales are now plus-size. Another example is the selective marketing of health care, so that unprofitable sectors (i.e. the elderly) will not
attempt to take benefits to which they are entitled.
A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries
from AIDS drugs.
Examples of marketing which unethically targets the elderly include: living trusts, time share fraud, mass marketing fraud and others.
The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation.
In the case of children, the main products are unhealthy food, fashionware and entertainment goods. Children are a lucrative market: "...children 12 and under spend more than $11 billion of their own money and influence family spending decisions worth another $165 billion", but are not capable of resisting or understanding marketing tactics at younger ages ("children don't understand persuasive intent until they are eight or nine years old"). At older ages competitive feelings towards other children are stronger than financial sense. The practice of extending children's marketing from television to the schoolground is also controversial (see marketing in schools
). The following is a select list of online articles:
Other vulnerable audiences include emerging markets in developing countries, where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries, and where, conversely, marketers may not be aware how excessively powerful their tactics may be. See Nestle infant milk formula scandal
. Another vulnerable group are mentally unstable consumers. The definition of vulnerability is also problematic: for example, when should endebtedness
be seen as a vulnerability and when should "cheap" loan providers be seen as loan sharks, unethically exploiting the economically disadvantaged?
Chris Akabusi is the leading academic author of Marketing Ethics and his theories are widely debated.
It is important to understand that humor is not the only method that is used to deter consumer’s minds from what a product actually offers. Before making important purchases, one should always conduct their own research in order to gain a better understanding of what it is they are investing in. ]
In a truly free market, any participant can make or change the rules. However when new rules
are invented which shift power too suddenly or too far, other participants may respond with
accusations of unethical behaviour, rather than modifying their own behaviour to suit (which they
might not be able to anyway). Most markets are not fully free: the real debate is as to the
appropriate extent of regulation.
Case: California electricity crisis
, which demonstrates how constant innovation of
new marketing strategies by companies such as Enron
outwitted the regulatory bodies
and caused substantial harm to consumers and competitors.
A list of known unethical or controversial marketing strategies:
Controversial marketing strategies associated with the internet:
Some, such as members of the advocacy group No Free Lunch
, have argued that marketing by pharmaceutical companies
is negatively impacting physicians' prescribing practices, influencing them to prescribe the marketed drugs rather than others which may be cheaper or better for the patient.
Ethically thinking is responding to situations that deal with principles concerning human behavior in respect to the appropriateness and inappropriateness of certain communication and to the decency and indecency of the intention and results of such actions. In other words, ethics are distinctions between right and wrong. Businesses are confronted with ethical decision making every day, and whether employees decide to use ethics as a guiding force when conducting business is something that business leaders, such as managers, need to instill. Marketers are ethically responsible for what is marketed and the image that a product portrays. With that said, marketers need to understand what good ethics are and how to incorporate good ethics in various marketing campaigns to better reach a targeted audience and to gain trust from customers.
Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for which good marketing is practiced. When companies create high ethical standards upon which to approach marketing they are participating in ethical marketing. To market ethically and effectively one should be reminded that all marketing decisions and efforts are necessary to meet and suit the needs of customers, suppliers, and business partners. Ethical behavior should be enforced throughout company culture and through company practices.
which protects competitors - in both cases, against unethical marketing practices. Regulation extends beyond the law to lobbies, watchdog bodies and self-regulatory industry bodies.
Applied ethics
Applied ethics is, in the words of Brenda Almond, co-founder of the Society for Applied Philosophy, "the philosophical examination, from a moral standpoint, of particular issues in private and public life that are matters of moral judgment"...
which deals with the moral principles behind the operation and regulation of marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
. Some areas of marketing ethics (ethics of advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
and promotion
Promotion (marketing)
Promotion is one of the four elements of marketing mix . It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision....
) overlap with media ethics
Media ethics
Media ethics is the subdivision of applied ethics dealing with the specific ethical principles and standards of media, including broadcast media, film, theatre, the arts, print media and the internet...
.
Frameworks of analysis for marketing ethically
Possible frameworks:- ValueValue theoryValue theory encompasses a range of approaches to understanding how, why and to what degree people should value things; whether the thing is a person, idea, object, or anything else. This investigation began in ancient philosophy, where it is called axiology or ethics. Early philosophical...
-oriented framework, analyzing ethical problems on the basis of the values which they infringe (e.g. honestyHonestyHonesty refers to a facet of moral character and denotes positive, virtuous attributes such as integrity, truthfulness, and straightforwardness along with the absence of lying, cheating, or theft....
, autonomyAutonomyAutonomy is a concept found in moral, political and bioethical philosophy. Within these contexts, it is the capacity of a rational individual to make an informed, un-coerced decision...
, privacyPrivacyPrivacy is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively...
, transparencyTransparency (market)In economics, a market is transparent if much is known by many about:* What products, services or capital assets are available.* What price.* Where....
). An example of such an approach is the AMA Statement of Ethics. - Stakeholder-oriented framework, analysing ethical problems on the basis of whom they affect (e.g. consumers, competitors, society as a whole).
- Process-oriented framework, analysing ethical problems in terms of the categories used by marketing specialists (e.g. research, price, promotion, placement).
None of these frameworks allows, by itself, a convenient and complete categorization of the great variety of issues in marketing ethics.
Power-based analysis
Contrary to popular impressions, not all marketing is adversarial, and not all marketing is stacked in favour of the marketer. In marketing, the relationship between producer/consumer or buyer/seller can be adversarial or cooperative. For an example of cooperative marketing, see relationship marketingRelationship marketing
Relationship marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions....
. If the marketing situation is adversarial, another dimension of difference emerges, describing the power balance
between producer/consumer or buyer/seller. Power may be concentrated with the producer (caveat emptor),
but factors such as over-supply or legislation can shift the power towards the consumer (caveat vendor). Identifying where the power in the relationship lies and whether the power balance is relevant at all are important to understanding the background to an ethical dilemma in marketing ethics.
Is marketing inherently evil?
A popularist anti-marketing stance commonly discussed on the blogosphere and popular literature is that any kind of marketing is inherently evil. The position is based on the argument that marketing necessarily commits at least one of three wrongs:- Damaging personal autonomyAutonomyAutonomy is a concept found in moral, political and bioethical philosophy. Within these contexts, it is the capacity of a rational individual to make an informed, un-coerced decision...
. The victim of marketing in this case is the intended buyer whose right to self-determination is infringed. - Causing harm to competitors. Excessively fierce competition and unethical marketing tactics are especially associated with saturated marketsMarket saturationIn economics, "market saturation" is a term used to describe a situation in which a product has become diffused within a market; the actual level of saturation can depend on consumer purchasing power; as well as competition, prices, and technology....
. - Manipulating social values. The victim in this case is society as a whole, or the environment as well. The argument is that marketing promotes consumerismConsumerismConsumerism is a social and economic order that is based on the systematic creation and fostering of a desire to purchase goods and services in ever greater amounts. The term is often associated with criticisms of consumption starting with Thorstein Veblen...
and waste. See also: affluenzaAffluenzaAffluenza, from affluence and influenza, is a term used by critics of capitalism and consumerism. Sources define it as follows:Proponents of the term consider that the prizing of endless increases in material wealth may lead to feelings of worthlessness and dissatisfaction rather than experiences...
, ethical consumerismEthical consumerismEthical consumerism is the intentional purchase of products and services that the customer considers to be made ethically. This may mean with minimal harm to or exploitation of humans, animals and/or the natural environment...
, anti-consumerismAnti-consumerismAnti-consumerism refers to the socio-political movement against the equating of personal happiness with consumption and the purchase of material possessions...
. - Marketing has a major impact on our self-images, our ability to relate to one another, and it ruins any knowledge and action that might help to change that climate.
- Marketing/Advertising creates artificiality and influences sexual attitudes.
Market research
Ethical danger points in market research include:- Invasion of privacyPrivacyPrivacy is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively...
. - Stereotyping.
Stereotyping occurs because any analysis of real populations needs to make approximations and place individuals into groups. However if conducted irresponsibly, stereotyping can lead to a variety of ethically undesirable results. In the American Marketing Association
American Marketing Association
The American Marketing Association is a professional association for marketers. As of 2008 it had approximately 40,000 members. There are 76 professional chapters and 250 collegiate chapters across the United States....
Statement of Ethics, stereotyping is countered by the obligation to show respect ("acknowledge the basic human dignity of all stakeholders").
Market audience
Ethical danger points include:- Excluding potential customers from the market: selective marketing is used to discourage demand from undesirable market sectors or disenfranchise them altogether.
- Targeting the vulnerable (e.g. children, the elderly).
Examples of unethical market exclusion or selective marketing are past industry attitudes to the gay, ethnic minority and
obese ("plus-size
Plus size clothing
Plus size clothing is a general term given to clothing proportioned specifically for overweight people. Also called Outsize in some countries , this term has been losing favour since the 1990s...
") markets. Contrary to the popular myth that ethics and profits do not mix,
the tapping of these markets has proved highly profitable. For example, 20% of US clothing sales are now plus-size. Another example is the selective marketing of health care, so that unprofitable sectors (i.e. the elderly) will not
attempt to take benefits to which they are entitled.
A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries
from AIDS drugs.
Examples of marketing which unethically targets the elderly include: living trusts, time share fraud, mass marketing fraud and others.
The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation.
In the case of children, the main products are unhealthy food, fashionware and entertainment goods. Children are a lucrative market: "...children 12 and under spend more than $11 billion of their own money and influence family spending decisions worth another $165 billion", but are not capable of resisting or understanding marketing tactics at younger ages ("children don't understand persuasive intent until they are eight or nine years old"). At older ages competitive feelings towards other children are stronger than financial sense. The practice of extending children's marketing from television to the schoolground is also controversial (see marketing in schools
Marketing in schools
Marketing in schools is a widespread phenomenon in which schools sign contracts allowing certain businesses to conduct marketing activities in school facilities — primarily advertising...
). The following is a select list of online articles:
- Sharon Beder, Marketing to Children (University of WollongongUniversity of WollongongThe University of Wollongong is a public university located in the coastal city of Wollongong, New South Wales, Australia, approximately 80 kilometres south of Sydney...
, 1998). - Miriam H. Zoll, Psychologists Challenge Ethics of Marketing to Children, (2000).
- Donnell Alexander and Aliza Dichter, Ads and Kids: How young is too young?
- Rebecca Clay, Advertising to children: Is it ethical? (Monitor on Psychology, Volume 31, No. 8 September 2000), American Psychological AssociationAmerican Psychological AssociationThe American Psychological Association is the largest scientific and professional organization of psychologists in the United States. It is the world's largest association of psychologists with around 154,000 members including scientists, educators, clinicians, consultants and students. The APA...
- Media Awareness Network. How marketers target kids.
Other vulnerable audiences include emerging markets in developing countries, where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries, and where, conversely, marketers may not be aware how excessively powerful their tactics may be. See Nestle infant milk formula scandal
Nestlé boycott
The Nestlé boycott is a boycott launched on July 7, 1977, in the United States against the Swiss-based Nestlé corporation. It spread quickly throughout the United States, and expanded into Europe in the early 1980s. In Canada, the controversy lasted from 1978 to 1984...
. Another vulnerable group are mentally unstable consumers. The definition of vulnerability is also problematic: for example, when should endebtedness
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
be seen as a vulnerability and when should "cheap" loan providers be seen as loan sharks, unethically exploiting the economically disadvantaged?
Chris Akabusi is the leading academic author of Marketing Ethics and his theories are widely debated.
Pricing ethics
List of unethical pricing practices.- Bid riggingBid riggingBid rigging is a form of fraud in which a commercial contract is promised to one party even though for the sake of appearance several other parties also present a bid. This form of collusion is illegal in most countries...
- Dumping (pricing policy)Dumping (pricing policy)In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market...
- Predatory pricingPredatory pricingIn business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices...
- Price discriminationPrice discriminationPrice discrimination or price differentiation exists when sales of identical goods or services are transacted at different prices from the same provider...
- Price fixingPrice fixingPrice fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand...
- Price skimmingPrice skimmingPrice skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination/yield management...
- Price warPrice warPrice war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction. One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of...
- Supra competitive pricingSupra competitive pricingSupracompetitive pricing is pricing above what can be sustained in a competitive market. This may be indicative of a business that has a unique legal or competitive advantage, or possibly of anti-competitive behavior that has driven competition from the market....
- Variable pricingVariable pricingMost firms use a fixed price policy. That is, they examine the situation, determine an appropriate price, and leave the price fixed at that amount until the situation changes, at which point they go through the process again...
Content
Ethical pitfalls in advertising and promotional content include:- Issues over truth and honesty. In the 1940s and 1950s, tobaccoTobaccoTobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
used to be advertised as promoting health. Today an advertiser who fails to tell the truth not only offends against morality but also against the law. However the law permits "pufferyPufferyPuffery as a legal term refers to promotional statements and claims that express subjective rather than objective views, which no "reasonable person" would take literally...
" (a legal term). The difference between mere pufferyPufferyPuffery as a legal term refers to promotional statements and claims that express subjective rather than objective views, which no "reasonable person" would take literally...
and fraudFraudIn criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
is a slippery slopeSlippery slopeIn debate or rhetoric, a slippery slope is a classic form of argument, arguably an informal fallacy...
: "The problem... is the slippery slope by which variations on puffery can descend fairly quickly to lies." See main article: false advertisingFalse advertisingFalse advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
. - Issues with violence, sex and profanity. Sexual innuendo is a mainstay of advertising content (see sex in advertisingSex in advertisingSex in advertising or sex sells is the use of sexual or erotic imagery in advertising to draw interest to a particular product, for purpose of sale. A feature of sex in advertising is that the imagery used, such as that of a pretty woman, typically has no connection to the product being advertised...
), and yet is also regarded as a form of sexual harassmentSexual harassmentSexual harassment, is intimidation, bullying or coercion of a sexual nature, or the unwelcome or inappropriate promise of rewards in exchange for sexual favors. In some contexts or circumstances, sexual harassment is illegal. It includes a range of behavior from seemingly mild transgressions and...
. Violence is an issue especially for children's advertising and advertising likely to be seen by children. - Taste and controversy. The advertising of certain products may strongly offend some people while being in the interests of others. Examples include: feminine hygieneFeminine hygieneFeminine hygiene is a general euphemism used to describe personal care products used by women during menstruation, vaginal discharge, and other bodily functions related to the vulva...
products, hemorrhoidHemorrhoidHemorrhoids or haemorrhoids , are vascular structures in the anal canal which help with stool control. They become pathological or piles when swollen or inflamed. In their physiological state they act as a cushion composed of arterio-venous channels and connective tissue that aid the passage of...
and constipationConstipationConstipation refers to bowel movements that are infrequent or hard to pass. Constipation is a common cause of painful defecation...
medication. The advertising of condoms has become acceptable in the interests of AIDSAIDSAcquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...
-prevention, but are nevertheless seen by some as promoting promiscuityPromiscuityIn humans, promiscuity refers to less discriminating casual sex with many sexual partners. The term carries a moral or religious judgement and is viewed in the context of the mainstream social ideal for sexual activity to take place within exclusive committed relationships...
. Some companies have actually marketed themselves on the basis of controversial advertising - see BenettonBenetton GroupBenetton Group S.p.A. is a global luxury fashion brand, based in Treviso, Italy. The name comes from the Benetton family who founded the company in 1965. Benetton Group is listed in Milan....
. SonySony, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....
has also frequently attracted criticism for unethical content (portrayals of Jesus which infuriated religious groups; racial innuendo in marketing black and white versions of its PSP product; graffiti adverts in major US cities). - Negative advertising techniques, such as attack adAttack adIn political campaigns, an attack ad is an advertisement whose message is meant as a personal attack against another candidate or political party...
s. In negative advertising, the advertiser highlights the disadvantages of competitor products rather than the advantages of their own. The methods are most familiar from the political sphere: see negative campaigningNegative campaigningNegative campaigning, also known more colloquially as "mudslinging", is trying to win an advantage by referring to negative aspects of an opponent or of a policy rather than emphasizing one's own positive attributes or preferred policies...
.
Delivery channels
- Direct marketingDirect marketingDirect marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional...
is the most controversial of advertising channels, particularly when approaches are unsolicited. TV commercials and direct mail are common examples. Electronic spamSpam (electronic)Spam is the use of electronic messaging systems to send unsolicited bulk messages indiscriminately...
and telemarketingTelemarketingTelemarketing is a method of direct marketing in which a salesperson solicits prospective customers to buy products or services, either over the phone or through a subsequent face to face or Web conferencing appointment scheduled during the call.Telemarketing can also include recorded sales pitches...
push the borders of ethics and legality more strongly. - ShillShillA shill, plant or stooge is a person who helps a person or organization without disclosing that he or she has a close relationship with that person or organization...
s and astroturfersAstroturfingAstroturfing is a form of advocacy in support of a political, organizational, or corporate agenda, designed to give the appearance of a "grassroots" movement. The goal of such campaigns is to disguise the efforts of a political and/or commercial entity as an independent public reaction to some...
are examples of ways for delivering a marketing message under the guise of independent product reviews and endorsements, or creating supposedly independent watchdog or review organisations. For example, fake reviews can be published on Amazon. Shills are primarily for message-delivery, but they can also be used to drive up prices in auctions, such as EbayEBayeBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...
auctions.
Deceptive Advertising and Ethics
Another breach of marketing ethics has to do with the use of deceptive advertising. This form of advertising is not specific to one target market, and can sometimes go unnoticed by the public. There are a number of different ways in which deceptive marketing can be presented to consumers; one of these methods is accomplished through the use of humor. In a study conducted by Hassib Shabbir and Des Thwaites, 238 advertisements were assessed and 73.5% of them were found to have used deceptive marketing practices. Of those advertisements that were conducted deceptively, 74.5% of them used humor as a masking device in order to mislead potential customers. Part of what drives this study is the idea that humor provides an escape or relief from some kind of human constraint, and that some advertisers intend to take advantage of this by deceptively advertising a product that can potentially alleviate that constraint through humor. Through the study it was also found that all types of humor are used to deceive consumers, and that there are certain types of humor that are used when making certain deceptive claims.It is important to understand that humor is not the only method that is used to deter consumer’s minds from what a product actually offers. Before making important purchases, one should always conduct their own research in order to gain a better understanding of what it is they are investing in. ]
The use of ethics as a marketing tactic
Business ethics has been an increasing concern among larger companies, at least since the 1990s. Major corporations increasingly fear the damage to their image associated with press revelations of unethical practices. Marketers have been among the fastest to perceive the market's preference for ethical companies, often moving faster to take advantage of this shift in consumer taste. This results in the expropriation of ethics itself as a selling point or a component of a corporate image.- The Body ShopThe Body ShopThe Body Shop International plc, known as The Body Shop, has 2,400 stores in 61 countries, and is the second largest cosmetic franchise in the world, following O Boticario, a Brazilian company...
is an example of a company which marketed itself and its entire product range solely on an ethical message. - GreenwashGreenwashGreenwashing , or "green sheen", is a form of spin in which green PR or green marketing is deceptively used to promote the perception that a company's policies or products are environmentally friendly.-Usage:...
is an example of a strategy used to make a company appear ethical when its unethical practices continue. - Liberation marketing is another strategy whereby a product can masquerade behind an image that appeals to a range of values, including ethical values related to lifestyle and anti-consumerism.
"Liberation marketing takes the old mass culture critique — consumerism as conformity — fully into account, acknowledges it, addresses it, and solves it. Liberation marketing imagines consumers breaking free from the old enforcers of order, tearing loose from the shackles with which capitalism has bound us, escaping the routine of bureaucracy and hierarchy, getting in touch with our true selves, and finally, finding authenticity, that holiest of consumer grails." (Thomas FrankThomas FrankThomas Frank is an American author, journalist and columnist for Harper's Magazine. He is a former columnist for the Wall Street Journal, authoring "The Tilting Yard" from 2008 to 2010....
)
Marketing strategy
The main theoretical issue here is the debate between free markets and regulated markets.In a truly free market, any participant can make or change the rules. However when new rules
are invented which shift power too suddenly or too far, other participants may respond with
accusations of unethical behaviour, rather than modifying their own behaviour to suit (which they
might not be able to anyway). Most markets are not fully free: the real debate is as to the
appropriate extent of regulation.
Case: California electricity crisis
California electricity crisis
The California electricity crisis, also known as the Western U.S. Energy Crisis of 2000 and 2001 was a situation in which California had a shortage of electricity caused by market manipulations and illegal shutdowns of pipelines by Texas energy consortiums...
, which demonstrates how constant innovation of
new marketing strategies by companies such as Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
outwitted the regulatory bodies
and caused substantial harm to consumers and competitors.
A list of known unethical or controversial marketing strategies:
- Anti-competitive practicesAnti-competitive practicesAnti-competitive practices are business or government practices that prevent or reduce competition in a market .- Anti-competitive practices :These can include:...
- Bait and switchBait and switchBait-and-switch is a form of fraud, most commonly used in retail sales but also applicable to other contexts. First, customers are "baited" by advertising for a product or service at a low price; second, the customers discover that the advertised good is not available and are "switched" to a...
- Planned obsolescencePlanned obsolescencePlanned obsolescence or built-in obsolescence in industrial design is a policy of deliberately planning or designing a product with a limited useful life, so it will become obsolete or nonfunctional after a certain period of time...
- Pyramid schemePyramid schemeA pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public...
- Vendor lock-inVendor lock-inIn economics, vendor lock-in, also known as proprietary lock-in or customer lock-in, makes a customer dependent on a vendor for products and services, unable to use another vendor without substantial switching costs...
/ Vendor lock-out - Viral marketingViral marketingViral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses...
/ guerilla marketing
Controversial marketing strategies associated with the internet:
- Embrace, extend and extinguishEmbrace, extend and extinguish"Embrace, extend and extinguish," also known as "Embrace, extend and exterminate," is a phrase that the U.S. Department of Justice found was used internally by Microsoft to describe its strategy for entering product categories involving widely used standards, extending those standards with...
- Search engine optimisation
- SpamdexingSpamdexingIn computing, spamdexing is the deliberate manipulation of search engine indexes...
- SpywareSpywareSpyware is a type of malware that can be installed on computers, and which collects small pieces of information about users without their knowledge. The presence of spyware is typically hidden from the user, and can be difficult to detect. Typically, spyware is secretly installed on the user's...
/ AdwareAdwareAdware, or advertising-supported software, is any software package which automatically plays, displays, or downloads advertisements to a computer. These advertisements can be in the form of a pop-up. They may also be in the user interface of the software or on a screen presented to the user during...
Further issues in marketing ethics
Marketing ethics overlaps with environmental ethics in respect of waste problems associated with the packaging of products.Some, such as members of the advocacy group No Free Lunch
No Free Lunch (organization)
No Free Lunch is a US-based advocacy organization that holds that marketing methods employed by drug companies influence the way doctors and other healthcare providers prescribe medications...
, have argued that marketing by pharmaceutical companies
Pharmaceutical company
The pharmaceutical industry develops, produces, and markets drugs licensed for use as medications. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices...
is negatively impacting physicians' prescribing practices, influencing them to prescribe the marketed drugs rather than others which may be cheaper or better for the patient.
Ethically thinking is responding to situations that deal with principles concerning human behavior in respect to the appropriateness and inappropriateness of certain communication and to the decency and indecency of the intention and results of such actions. In other words, ethics are distinctions between right and wrong. Businesses are confronted with ethical decision making every day, and whether employees decide to use ethics as a guiding force when conducting business is something that business leaders, such as managers, need to instill. Marketers are ethically responsible for what is marketed and the image that a product portrays. With that said, marketers need to understand what good ethics are and how to incorporate good ethics in various marketing campaigns to better reach a targeted audience and to gain trust from customers.
Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for which good marketing is practiced. When companies create high ethical standards upon which to approach marketing they are participating in ethical marketing. To market ethically and effectively one should be reminded that all marketing decisions and efforts are necessary to meet and suit the needs of customers, suppliers, and business partners. Ethical behavior should be enforced throughout company culture and through company practices.
Regulation and enforcement
Marketing ethics and marketing law are related subjects. Relevant areas of law include consumer law which protects consumers and antitrust lawAntitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
which protects competitors - in both cases, against unethical marketing practices. Regulation extends beyond the law to lobbies, watchdog bodies and self-regulatory industry bodies.
- Advertising regulationAdvertising regulationAdvertising regulation refers to the laws and rules defining the ways in which products can be advertised in a particular region. Rules can define a wide number of different aspects, such as placement, timing, and content. In the United States, false advertising and health-related ads are regulated...
- Consumer protectionConsumer protectionConsumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...
See also
- ConsumerismConsumerismConsumerism is a social and economic order that is based on the systematic creation and fostering of a desire to purchase goods and services in ever greater amounts. The term is often associated with criticisms of consumption starting with Thorstein Veblen...
- Customer relationship managementCustomer relationship managementCustomer relationship management is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing,...
- Ethical marketingEthical marketingEthical marketing refers to the application of marketing ethics into the marketing process. Briefly, marketing ethics refers to the philosophical examination, from a moral standpoint, of particular marketing issues that are matters of moral judgment. Ethical marketing generally results in a more...
- False advertisingFalse advertisingFalse advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
- List of business ethics, political economy, and philosophy of business topics
- MarketingMarketingMarketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
- Marketing warfare strategiesMarketing warfare strategiesMarketing warfare strategies are a type of strategies, used in business and marketing, that try to draw parallels between business and warfare, and then apply the principles of military strategy to business situations, with competing firms considered as analogous to sides in a military conflict,...
- Media ethicsMedia ethicsMedia ethics is the subdivision of applied ethics dealing with the specific ethical principles and standards of media, including broadcast media, film, theatre, the arts, print media and the internet...
- PropagandaPropagandaPropaganda is a form of communication that is aimed at influencing the attitude of a community toward some cause or position so as to benefit oneself or one's group....
External links
- American Marketing Association Statement of Ethics (2004)
- "Ethics in Marketing." Encyclopedia of Business and Finance. Mohandeep Singh. Thomson Gale, 2001. eNotesENoteseNotes is a student and teacher educational online website founded in 1998.Based in Seattle, Washington in the United States, eNotes specializes in lesson plans, study guides and literary criticisms and is widely cited across the web...
. 2006. 16 Oct, 2006 - Marketing Ethics Resources from the Center for the Study of Ethics in the ProfessionsCenter for the Study of Ethics in the ProfessionsThe Center for the Study of Ethics in the Professions at the Illinois Institute of Technology was established in 1976 to promote research and teaching on practical moral problems in the professions. The first interdisciplinary center for ethics to focus on the professions, CSEP continues to be one...
, Illinois Institute of TechnologyIllinois Institute of TechnologyIllinois Institute of Technology, commonly called Illinois Tech or IIT, is a private Ph.D.-granting university located in Chicago, Illinois, with programs in engineering, science, psychology, architecture, business, communications, industrial technology, information technology, design, and law...
. - Direct Marketing AssociationDirect Marketing AssociationDirect Marketing Associations are national trade organizations that seek to advance all forms of direct marketing.- International Federation of Direct Marketing Associations :...
, Guidelines for Ethical Business Practice (September 2006) - The Catholic Church's Handbook on Ethics in Advertising
- Federal Trade CommissionFederal Trade CommissionThe Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
, FTC Guidelines on Advertising