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Marketing ethics - lecture notes
Principles of Marketing (MKT1705X)
National University of Singapore
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Marketing Ethics
Marketing with a Conscience
Making Ethical Choices
WHEN YOU WANT TO BUY SOMETHING, do you consider how sustainable it is before you make a pur- chase? According to the National Retail Federation (NRF), almost 50 percent of Gen Zers (those born in the mid-1990s and on) choose brands that they believe to be eco-friendly and socially responsible. 1 In addition to being socially responsible, modern consumers want firms to behave in an ethical manner and to adhere to basic ethical standards. Ethical standards are therefore a critical component of a successful marketing strat- egy. Making ethical choices not only makes good business sense, it can also generate profits, enhance customer loyalty, and foster better relationships with stakeholders. The following examples show a range of ethical issues a firm might encounter.
Scenario 1:
The COVID-19 pandemic changed many industries. However, few were affected as much as the restau- rant industry. With delayed government assistance, many restaurants struggled to stay afloat as in-person dining shut down and supply chain constraints caused delays in food shipments. Consumers were encour- aged to order takeout from their favorite restaurants to boost sales and help them stay afloat. Unfortunately, many consumers used third-party delivery apps like Uber Eats and Grubhub, which charge restaurants transaction fees, commission fees, delivery fees, and subscription fees. In fact, in many cases, an order through a delivery app can cost a restaurant up to
30 percent of the price of the order. And to appear as if they have a wider variety of options, some delivery apps list restaurants on their apps without the restau- rants’ permission. Are these apps behaving in a pred- atory way? Should consumers use them?
Scenario 2:
Critics of fast-food restaurants often lament the inclu- sion of toys with the purchase of kids’ meals. In fact, in 2018, parents in Canada sued McDonald’s over the inclusion of toys in its Happy Meals, saying that the service violated provincial laws designed to protect children from advertising. The case cited that not only were the toys linked to popular films, they were also displayed at eye level for children, making them more irresistible. Other critics also suggest that the inclu- sion of toys or other incentives in kids’ meals rewards bad eating behavior and contributes to childhood obesity. What do you think is the fast-food industry’s responsibility?
Scenario 3:
A brand is interested in building its client portfolio. In order to reach a new set of customers, the company buys a list of e-mail addresses from a service company. While these people did not give their consent to be contacted, the Federal Trade Commission (FTC) says that the company is legally allowed to e-mail people without their consent. This could potentially hurt the brand’s image, but it could also help the company
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reach new customers. If you worked for the brand, what would you do?
Scenario 4:
In 2002, Sony Ericsson launched a campaign in seven U. cities to promote one of its cell phones. The firm hired 120 actors to pretend to be tourists. These “tour- ists” then asked passers-by to take their picture with the camera included in the cell phone (a new technol- ogy at the time). The actors would then talk up the features of the phone and camera. Passers-by were basically given a sales demonstration without know- ing it. Many critics of this guerrilla marketing tactic suggested that there were more transparent ways customers could try a product in a natural setting without the underlying deceit. 2
Scenario 5:
In 2011, Walmart introduced a line of cosmetics called GeoGirl. The target market for this product was girls as young as 9 years old. Walmart tried to reach this
audience, as well as their parents, by promoting the environmentally friendly production of the cosmetics. This product and campaign were criticized by audi- ences for (1) emphasizing the appearance of young girls and (2) greenwashing the marketing efforts (claiming to be green when they actually were not). The products have since been discontinued. What do you think of Walmart’s tactics?
Scenario 6:
In 2011, Patagonia launched the “Don’t Buy This Jacket” campaign to highlight the amount of pollution caused by apparel and fashion production. The ad suggested to customers that they shouldn’t buy clothes if they don’t need them. However, sales of the jacket soared. Some critics of Patagonia claim that it was a marketing plan designed to drive sales. What do you think?
- nrf/sites/default/files/2018-10/Uniquely-Gen-Z_Jan2017.pdf.
- “Camera Campaign Uses Actors Posing as Tourists,” Los Angeles Times, August 5, 2002, articles.latimes/2002/aug/05/business/ fi-techbrfs5.1.
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Ethical Issues in Marketing
Ethical decision making should be a key component of all successful businesses. Ethics are moral stan- dards expected by society. Marketers should clearly understand the norms and values expected of them and act in a way that reflects their company, their profession, and themselves in a positive, ethical manner. Not only do unethical marketing practices hurt customers, but they also hurt employees and society as a whole.
Common ethical questions that marketers may face affect each element within the marketing mix: product, price, place, and promotion.
ETHICAl VAlUES IN MARKETING 23
Ethical Values in Marketing
The American Marketing Association (AMA) is the leading organization for promoting and advancing marketing thought. The AMA has a Code of Ethics to promote the highest standard of ethics for its community members and the marketing discipline as a whole.
The six core ethical values are: ■ Honesty: Marketers are expected “to be forthright in dealings with customers and stakeholders.” ■ Responsibility: Ethical marketers “accept the consequences of our marketing decisions and strategies.” ■ Fairness: Marketers are expected “to balance justly the needs of the buyer with the interests of the seller.” ■ Respect: Ethical marketers “acknowledge the basic human dignity of all stakeholders.” ■ Transparency: Ethical marketers “create a spirit of openness in marketing operations.” ■ Citizenship: Marketers are expected “to fulfill the economic, legal, philanthropic and societal responsibilities that serve stakeholders.”
To view the complete Codes of Conduct | AMA Statement of Ethics, visit the American Marketing Association online at ama/codes-of-conduct/.
CORPORATE SOCIAl RESPONSIBIlITY 25
Corporate Social Responsibility
Consumers are increasingly making purchase decisions in part because of a firm’s reputation for cor- porate social responsibility. Corporate social responsibility (CSR) refers to an organization’s obligation to maximize its positive impact and minimize its negative impact on society. Today’s firms must accept responsibility for balancing profitability with social well-being when determining their success.
CSR has been shown to benefit companies in many ways, including employee retention, brand image, and overall success.
As with ethical decision making, CSR should consider multiple stakeholders. For firms to reach all of the people affected by their business practices, they should consider four dimensions of CSR: economic, legal, ethical, and philanthropic.
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Understanding Sustainable Marketing
Today more than ever, marketers recognize that, beyond the moral and ethical implications, adopting sustainable strategies has become an essential element of a firm’s CSR efforts and one that contributes to long-term competitive advantage. Sustainable marketing is the process of creating, communicating, and delivering value to customers through the preservation and protection of the natural systems that provide the natural resources upon which our society and economy depend.
In addition to having sustainable initiatives, many companies have sustainability engrained in their ethos. Often sustainability and CSR are aligned because most firms believe that protecting the environ- ment is a big component of CSR.
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STRATEGY 5: SUSTAINABLE VALUE INNOVATION
A final strategy firms can pursue is sustainable value innovation. This strategy entails reshaping the industry through the creation of differential value for consumers and through making contributions to society in the form of both reduced costs and reduced environmental impact.
The benefits of an environmental marketing strategy extend to virtually all of a firm’s stakeholders when the strategy is effectively integrated with the firm’s general marketing plan.
SOCIAl CRITICISMS OF MARKETING 29
Social Criticisms of Marketing
Consumers may have concerns about how firms serve their interests. The following are some of the major criticisms of marketing that are voiced: ■ High prices: Critics suggest that marketers price items higher than they need to be. ■ Deceptive prices: Marketers are often accused of deceptive pricing that encourages customers to believe they are getting a better value than they actually are. ■ Deceptive packaging: Some marketers might use packaging to exaggerate the contents of the package, making consumers think they are getting more than they actually are. ■ Deceptive promotion: Perhaps one of the biggest criticisms of marketing is deceptive promotion. Firms try to amplify a product’s features and performance. ■ High-pressure selling: Sometimes a salesperson’s compensation might be tied directly to how much he or she sells. ■ Shoddy or unsafe products: For many consumers, quality control is a major concern. Firms that aim to cut costs by reducing quality can damage their brand irreparably. ■ Planned obsolescence: In order to create a feeling of excitement and exclusivity, marketers might purposely cause their products to run out before demand is satisfied, referred to as planned obsolescence. It can also involve limiting the lifespan of a product rather than its availability. ■ Marketing to children: Children are a vulnerable audience and susceptible to manipulation. ■ Materialism: Materialism encourages consumers to focus on the acquisition and possession of objects and things that they may not need.
Marketing ethics - lecture notes
Course: Principles of Marketing (MKT1705X)
University: National University of Singapore
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