Ethical and Unethical issues in Marketing

Ethical issues in Marketing

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 various transactions need to be conducted. Each marketing concept has its own ethical issues.

Emerging Ethical Problems in Market Research

Market research has experienced a resurgence with the widespread use of the Internet and the popularity of social networking. It is easier than ever before for companies to connect directly with customers and collect individual information that goes into a computer database to be matched with other pieces of data collected during unrelated transactions.
The way a company conducts its market research these days can have serious ethical repercussions, affecting the lives of consumers in ways that have yet to be fully understood. Further, companies can be faced with a public backlash if their market research practices are perceived as unethical.

Grouping the Market Audience

Unethical practices in marketing can result in grouping the audience into various segments. Selective marketing may be used to discourage the demand arising from these so-called undesirable market segments or to disenfranchise them totally.
Examples of unethical market exclusion may include the industry attitudes towards the gay, ethnic minority, and plus-size groups.

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. Of late, an advertiser who does not meet the ethical standards is considered an offender against morality by the law.

• 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 children should not be affected by the content.
• 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 haemorrhoid and constipation medication are good examples. The advertisements of condoms are important in the interest of AIDS-prevention, but are sometimes seen by some as a method of promoting promiscuity that is 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. Such policies are rampant in political advertising.

Delivery Channels

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.

Deceptive Marketing Policies and Ethics

Deceptive marketing policies are not contained in a specific limit or to one target market, and it can sometimes go unseen by the public. There are numerous methods of deceptive marketing. It can be presented to consumers in various forms; one of the methods is one that is accomplished via the use of humor. Humor offers an escape or relief from various types of human constraints, and some advertisers may take the advantage of this by applying deceptive advertising methods for a product that can potentially harm or alleviate the constraints using humor.

Anti-Competitive Practices

There are various methods that are anti-competitive. For example, bait and switch is a type of fraud where customers are "baited" through the advertisements for some products or services that have a low price; however, the customers find in reality that the advertised good is unavailable and they are "switched" towards a product that is costlier and was not intended in the advertisements.

Another type of anti-competitive policy is planned obsolescence. It is a method of designing a particular product having a limited useful life. It will become non-functional or out of fashion after a certain period and thereby lets the consumer to purchase another product again.

A pyramid scheme is also an anti-competitive process. It is a non-sustainable business model that promises the participants payment or services, mainly for enrolling other people into the scheme; it does not supply any real investment or sell products or services to the public.

This business practice demands the initial investor or the "captain" to enroll other people for a fee to them who again will further enroll more people in order to be paid by the company.

Pricing Ethics

There are various forms of unethical business practices related to pricing the products and services.

Bid rigging is a type of fraud in which a commercial contract is promised to one party, however, for the sake of appearance several other parties also present a bid.

Predatory pricing is the practice of sale of a product or service at a negligible price, intending to throw competitors out of the market, or to create barriers to entry.

Unethical Activities in the Field of Marketing

unethical behavior can helpfully define the gray areas, especially when it comes to unethical practices in marketing. When you're a small business owner, chances are good that at least one of two events will darken your doorstep over the lifespan of your business: a shady marketer will try to lure you into participating in unethical sales practices or you will be rendered apoplectic by a competitor who engages in them to undercut your business. For these reasons, it's wise to deepen your understanding of both ethical and unethical practices in marketing and cement this information by learning some common unethical marketing examples. You owe it to yourself and your small business to elevate ethics above the helpful notion that many instructors plant in the minds of their students on the first day of class – that ethics is sometimes best defined by the behavior people would engage in only if their mother were looking over their shoulder.

The AMA's Unethical Marketing Definition

The American Marketing Association is more than a steward and advocate of marketing ethics in society; right from its preamble, you might assume that the people who outlined the association's ethics had some discerning mothers.

The AMA plunges into the ethics definition pool by invoking values, which it says “serve as the criteria for evaluating our own personal actions and the actions of others...”

“As marketers, we recognize that we not only serve our organizations but also act as stewards of society in creating, facilitating and executing the transactions that are part of the greater economy. In this role, marketers are expected to embrace the highest professional ethical norms and the ethical values implied by our responsibility toward multiple stakeholders (e.g., customers, employees, investors, peers, channel members, regulators and the host community).”

The AMA identifies the core values as honesty, responsibility, fairness, respect, transparency and citizenship. It's worth learning how the AMA explains how to achieve these ends. But in broad brushstrokes, it sets the stage for these values by defining them as:

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• Honesty, or being forthright in dealings with customers and stakeholders. Responsibility, or accepting the consequences of marketing decisions and strategies. Fairness, or balancing justly the needs of the buyer with the interests of the seller.* Respect, or acknowledging the basic human dignity of all stakeholders.

• Transparency, or creating a spirit of openness in marketing operations.

• Citizenship, or fulfilling the economic, legal, philanthropic and societal responsibilities that serve stakeholders.

Profitable Venture compares the pursuit of these values to unethical practices in marketing, and weighs the consequences by saying that:

• “Ethical marketing entails making honest claims and satisfying the needs of potential and existing customers. It boosts credibility and trust, develops brand loyalty, increases customer retention and prompts customers to spread the word about the products or services you’re marketing.”* “Unethical marketing, on the other hand, can send wrong signals about your products and services, destroy your brand’s reputation and possibly lead to legal problems. This explains why you should avoid them like a plague.”

Unethical Practices in Marketing

Avoiding unethical marketing practices can also help a business avoid other consequences, such as losing the good faith and loyalty of customers, and jeopardizing profitability. The worst practices of the bunch are:

• *Misleading statements, which can land a business in legal trouble with the Federal Trade Commission and its truth in advertising provision. The FTC expects advertising claims to be supported by evidence, which proved to be a tough standard for some cigarette manufacturers when they originally promoted their products as being “healthy.” Of course, not all claims are provable, and this is where some marketers deliberately try to blur the line with exaggerated claims and puffery, which are other forms of unethical marketing. Consumers may turn a deaf ear to a product that claims to be “the best,” and they're known to disdain marketing that promises to “transform their life” or “make them the envy of all their friends.” Distorting facts to intentionally confuse or mislead consumers. A classic example: stamping a product as sugar- or calorie-free when it does in fact contain some sugar and calories, or touting a product as “healthy” when it is loaded with carbohydrates and sodium.

• Making false or deceptive comparisons about a rival product. Much more prevalent 20 years ago among general consumer products, you still might see this crop up in the tech sector. (Think smartphones.) Competition tends to be fierce when rivals resort to side-by-side comparisons. And consumers may find such a technique helpful, as long as the information is accurate and truthful.

• *Inciting* fear or applying unnecessary pressure. “Limited time offers” are notorious for the latter, which is fine if a deadline really exists and the tone doesn't sound threatening.

• Exploiting emotions or a news event. Such instances pop up every once in a while, then make a quick exit when consumers complain about feeling manipulated. Such was the case after the September 11 terrorist attacks, when some advertisers tried to evoke sympathy – for New Yorkers, firefighters and survivors – while also selling their products.

• Stereotyping or depicting women as sex symbols merely to draw attention to a product. "While it might be intuitive to use models in adverts for beauty products and cosmetics, having half-naked models in adverts for generators, heavy machinery, smartphones and other products not strongly related to women is both nonsensical and unethical,” says Profitable Venture.

*Disparaging references to age, gender, race or religion. Many professional comics have learned the hard way that the line between humor and bad taste can be painfully thin. It might be easier to see if the humor packs an insult or a put-down that makes you grimace. *Doctoring photos or using photos that are not authentic representations. Most people expect professional photographers and videographers to make the most of lighting and close-ups. But the finished products should be accurate depictions that are free of touch-ups and other enhancement techniques that are designed to mislead. *Plagiarizing* a competitor. For a small-business owner, discovering that a competitor has copied or impinged on a tagline, blog post or promotion can be painful –or infuriating. The reality is, plagiarism probably happens more often than most businesspeople will ever know, because of the internet. *Spamming, or sending unsolicited emails to potential customers. The FTC allows a business one such opportunity. After that, a business violates the CAN-SPAM act. In effect since 1993, the act also prohibits false or misleading header information and deceptive subject lines.

References (7)

• American Marketing Association: About AMA

Marketing Schools.org: Ethical Marketing

• Profitable Venture: 10 Examples of Unethical Marketing Practices That Ruin Reputation

• Forbes: 5 Common Unethical Marketing Practices: Are You Guilty?

• Ethical Marketing News: 4 Unethical Marketing Practices You Need To Avoid

• Federal Trade Commission: CAN-SPAM Act: A Compliance Guide for Business

• Cone Communications: 2015 Cone Communications/Ebiquity Global CSR Study

Resources (1)

• Sumo: 7 Hidden Unethical Email Marketing Cliches Destroying Your Sales

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