Professional Documents
Culture Documents
by
Natasha Lee
LENYC0901
Marketing Management
MKTG208
Stephen Burke
21 December 2010
As the world spins on, dramatic changes are occurring in the marketing arena. An
organisation’s bottom line is no longer just about earning big bucks, but also earning social
profit. Social profit is defined as the net benefit that both the organisation and society receive
from the organisation’s ethical practices and social responsible behaviour (Solomon, Marshall
and Stuart, 2009). The success of an organisation today is measured by the triple bottom line,
Over the past few years, many have seen images, reputations and marketing efforts of
large corporations being wrecked due to their unethical business practices. Some of the major
ones include Enron, WorldCom and HIH. The collapses of these large corporations raises the
issue of how damaging unethical practices can be to society at large. Marketers acknowledge
that the pressures to ethical behaviour today are part of the overall business environment in
which they operate. Many firms have developed their own codes of ethics – the standards of
Ethics is a subdivision of philosophy that deals with moral principles, with the
emphasis on the determination of right and wrong. Ferrel’s study (Stoll, 2002) indicates that
for marketers, ethics in the workplace refers to rules (standards, principles) governing the
personal and organizational marketing policies and actions that exhibit integrity as well as
fairness to consumers and other stakeholders (Fan, 2005). The purpose of this essay is to
describe and analyse the ways ethics in marketing management can assist organisations in
connecting with customers; explain how ethical marketing can build brands; and deliver and
communicate values.
Brands are the most fundamental and enduring assets of a firm that are used to
enhance the retailer’s reputation and add value to consumer goods by supplying meaning as
2
well as communicating competence and standards to the consumer (Fan, 2005). The
American Marketing Associated defines a brand as ‘a name, term, sign, symbol or design, or
a combination of them, intended to identify the goods or services of once seller or group of
sellers and differentiate them from those of competitors (Kotler, Keller and Burton, 2009).
David Aaker (Fan, 2006) defines a strong brand is formed through brand awareness,
perceived quality, brand loyalty, and brand associations. The conservative wisdom of
branding believes that the ultimate aim of branding is to command a favourable position in
generate its owner great financial value in terms of high revenue. The purpose of marketing is
to create competitive advantage over rivals and the ultimate objectives are to dominate the
market, increase customers’ loyalty and raise entry barriers. However, these branding
A brand may be amoral, but there are ethical issues relating to it. Ethical branding, as a
subset of ethical marketing, relates to certain moral principles that define right and wrong
behaviour in branding decisions (Fan, 2005). A brand needs to be evaluated not by just the
economic or financial criteria but also by the moral ones. Thus, an ethical brand should not
cause any harm to the public, rather it should contribute to or help promote public good.
When an organisation behaves ethically, customers tend to develop a more positive attitude
towards the company and its products or services. Customer relationship management (CRM)
is perhaps the most important concept in the modern marketing arena. CRM is the overall
customer value and satisfaction (Kotler, Keller, and Burton 2009). These relationships exist
because of mutual expectations built on trust, good faith, and fair dealing in their interaction.
Organisations must have a full understanding of how buyers buy in order to build the
3
As goods become more commodities, consumers become more socially conscious.
Some companies (e.g. The Body Shop, Timbaland) are increasing social responsibility as a
way to distinguish themselves from competitors, build consumer preference, and achieve
notable sales and profit gains (Kotler, Keller and Burton, 2009). The Body Shop does not only
does market itself as a company sensitive to the needs of people living in the third world
countries, but also an opposed to unnecessary animal testing, and opposed to preying upon
women’s insecurities, with respect to masculinise notions of beauty, it also opens itself up to
outside audits on a regular basis (Stoll, 2002). The value leading cosmetics company
promotes corporate transparency through campaigns by enforcing its five core values: support
community trade, defend human rights, against animal testing, activate self-esteem, and
protect our planet (The Body Shop International, 2010). Founder of The Body Shop, Dame
Anita Roddick once said, “The business of business should not just be about money, it should
According to Aaker (1991), brand identity is particularly important for building brand
equity (Fan, 2005). Ind (2004) emphasised the importance of “living” the brand – which
relates to “living up to” norms and values in various ways (Fan, 2005). It is important how
internal relationships of an organisation are conducted. For example, how employees interact
with customers, and how relationships with suppliers and partners are maintained (Hay,
2006). This communication-based value connects everyone to work together. Brand value is
affected by positive, as well as negative, perceptions. When marketing practices steer away
from standards that the society considers acceptable, the marketing process becomes less
efficient. Not engaging ethical marketing practices may lead to dissatisfied customers, bad
publicity, loss of trust, or, in severe cases, legal actions. Prior studies have revealed many
For example, commonly found unethical practices in marketing research include violation of
4
participants' anonymity, invasion of privacy, data falsification, and the use of research as a
The tobacco industry provides a classic setting to study the ethicality of marketing
practices in general. Philip Morris is well known for its unethical business practices. The
company has been repetitively accused and convicted for having knowingly deceived
customers concerning the health risks of smoking and of having targeted children who lack
adequate skills to make well-reasoned decisions concerning the purchase of the product (Stoll,
2002). In 2001, Philip Morris launched its so-called “corporate responsibility campaigns” to
neutralise the negative publicity associated with its deceptive and manipulative practices, but
with the means of emphasising the many positive things that it has achieved through its
spending USD 108 million on advertising these purported good deeds and only USD 60
million on corporate donations to these charitable organisations (Stoll, 2002). Due to the fact
that Philip Morris spends far more on advertising its good deeds, then on facilitating good
deeds, it is questionable whether or not the actions are truly morally praiseworthy and
whether or not this sort of advertising is unacceptably misleading. Action on Smoking and
Health (1967) reported that the intolerable deceptive ad campaigns were banned in France.
Marketing is about identifying and meeting consumers’ needs for goods and services.
The famous Four Ps of the marketing mix is used to communicate with customers. Marketing
managers are responsible for determining the most ethical way to price, package, promote and
distribute their products or services to reach profit and market-share objectives. Ethical
considerations include making products safe, pricing products fairly, promoting products
honestly, focusing on product quality, and making the product available to consumers
5
Product safety is customers’ main concern. Companies can be tempted to cut costs on
design, safety testing, and production to rush a new product to market. The recent engine
explosion on a Qantas A380 has put the Australian airline in jeopardy. “It went from people
not putting Qantas and air-safety concern in the same sentence to them asking, 'How safe is
Qantas?'” says Barry Urquhart, the managing director of Marketing Focus, a Perth-based
Research and BusinessDay conducted a survey of shareholders and the results showed that
90% of 2,000 investors agreed that the Qantas brand is at risk. The QF32 incident has put its
customers in fear with some vowing never to fly with Qantas again.
Price is the only element that generates revenue; the other elements generate costs.
Price communicates to the market the company’s intended value positioning of its product or
brand. Purchase decisions are based on how consumers perceive prices and how they consider
the price as reasonable. The potential for unethical pricing strategies is so great that many
shady pricing practices are illegal. Marketers in the United States face laws that prevent
greedy firms from hurting consumers or other business with pricing practices that are
deceptive, that are unfair, or that discriminate against some customers. Recent concerns about
attitudes and behaviour of buyers. The traditional form of marketing communications are
advertising, sales promotion, public relations, and sales presentations. Today’s marketers
have discovered newer types of communication tactics, such as buzz and viral marketing. The
integrated marketing communication (IMC) is a strategic business process that marketers use
communication programs over time to targeted audiences (Solomon, Marshall and Stuart,
2009). At a lower total communications cost, the IMC can produce stronger message
6
consistency and help to build brand equity and create greater sales impact (Kotler, Keller and
Burton, 2009)
Among the Four Ps of the marketing mix, promotion is more likely to receive the most
criticisms. Many critics think that advertising and marketing communications are socially
undesirable. The major complaints against advertising are that many ads are misleading or
untruthful and deceive consumers. According to the Advertising Standards Bureau (2010),
sexuality and nudity, social values, discrimination and vilification, language and health and
safety are issues, which concerned the community in this year’s most complained about
advertisements. Seven of the ads relate to sexuality and nudity. Marketers using sex appeal in
Consumers today are becoming more conscious about behaving and consuming in a
more responsible way. Consumers are opting for healthier food options; increasing physical
activities to manage health; balancing work and life, and a new appreciation for values. What
comes to mind first when people think of fast food? It would definitely be patty burgers
together with greasy fries (e.g. McDonald’s, KFC) that tend to be perceived as convenient but
unhealthy.
With more than 30,000 outlets around the globe and annual revenue of at least US$22
billion, McDonald’s donates part of its revenue to support medical fees of children with life
threatening illnesses. However, the diet provided by this corporation contributes to obesity,
heart disease, asthma, and possibly mad cow disease. What sort of message is McDonald’s
trying to relate to children when parents are actually promoting healthy eating? Study has
found that at least 59 of the nation's 250 children's hospitals have fast-food restaurants
Unlike a fresh ground beef patty at a local butcher shop, “a typical fast-food hamburger patty
contains meat from more than one thousand different cattle, raised in as many as five
7
countries (Gibison, 2008). This raises the possibility of a particular patty containing
contaminants of unknown origin. Instead of locally grown potatoes, the corporation uses their
own genetically modified potatoes to ensure that all fries have the same uniform taste. The
unethical practices of food production has put customers into fear, which had led some of
them into taking legal actions against McDonald’s. According to Los Angeles Times, a
claiming the toys given out with Happy Meals unfairly lure kids into eating unhealthy food
(Bernstein, 2010). Miss Parham said, “I am concerned about the health of my children and
feel that McDonald’s should be a very limited part of their diet and their childhood
experience.”
Holistic marketers are increasingly taking a value network view of their businesses.
Instead of focusing only at immediate suppliers, distributors and customers, marketers now
assess the whole supply chain that links raw materials, components, and manufactured goods
ands shows how they move towards the final consumers. Most companies today have
integrated the multi-channel marketing system, such as Flight Centre. Distribution channels
create efficiencies by reducing the number of processes necessary for goods are services to
flow to the customers. Companies are legally free to have their preferable channel
arrangements, but there are certain legal and ethical issues to be considered with the regard to
practices such as exclusive dealing or territories, tying agreements and dealer’s rights. Such
practices are not necessarily illegal, but they do breach the Australian Trade Practices Act if
they tend to lessen competition substantially (Kotler, Keller and Burton, 2009).
today are being called upon to take great accountability for the social and environmental
impact of the actions. Marketers are trying hard in reassessing their relationships with social
values and responsibilities with the very Earth that sustains us. Business ethics has become
8
the main concern for almost every business. Hence, many organisations have embraced the
ethical codes of conduct and rules of professional ethics to guide managers and employees.
In general, consumers do have ethical concerns but such concerns do not necessarily
become manifest in their actual purchasing behaviour. It is often asked if consumers do really
care about the ethicality of a product or service. Some surveys have shown that ethical
behaviour is an important consideration while some how shown that it is not necessary.
Despite the conflicting results, society today seems to be more concerned about ethical
marketing compared to 20 years ago. An ethical product or service may not guarantee a firm
with success in the marketplace but it secures the relationship with loyal customers.
9
References
Action on Smoking and Health, 1967, ‘Philip Morris Deceptive Ad Campaign Banned in
France’, Action on Smoking and Health 26 June, viewed 10 December 2010, <
http://ash.org/deceptive.html>
Advertising Standards Bureau, 2010, ‘Most Complained About Ads for 2010’, Advertising
Standards Bureau, viewed 13 December 2010, < http://post.cre8ive.com.au/t/ViewEmail
/r/CCB9053E36AFD998/C67FD2F38AC4859C/>
Belch, G., Belch, M., Kerr, G., Powell, I., 2008, Advertising and Promotion: An Integrated
Marketing Communication Perspective, 1st edn, Mc-Graw Hill, North Ryde, NSW
Bernstein, S., 2010, ‘McDonald’s sued over Happy Meals’, Los Angeles Times 16 December,
viewed 10 December 2010, < http://www.latimes.com/business/la-fi-happy-meal-
20101216,0,5468083.story>
Dorman, C., 2010, ‘I'll never fly Qantas again': death of an iconic brand?’, Sydney Morning
Herald, 29 November, viewed 9 December 2010, < http://www.smh.com.au/travel/blogs/
travellers-check/ill-never-fly-qantas-again-death-of-an-iconic-brand/20101129-18cq5.html?
comments=210#comments>
Kaur, J., ‘ETHICAL MARKETING: I Don't Believe You; Marketing is accused of misleading
and even lying, with consumers no longer trusting mainstream and multinational brands to
the level they have in the past.’ AllBusiness.com, Inc. 1 December 2007, viewed 10
December 2010, < http://www.allbusiness.com/food-beverage/restaurants-food-service-
restaurants-fast/8922482-1.html>
Kotler, P. & Keller, K. L., 2008, Framework for Marketing Management, Pearson Education
Australia, Frenchs Forest, NSW
Kotler, P., Keller, K. L. & Burton, S., 2009, Marketing Management, Pearson Education
Australia, Frenchs Forest, NSW
Fan, Y., 2005, ‘Ethical Branding and Corporation Reputation’, Corporate Communications:
An International Journal’, vol 4, no 4, viewed 9 December 2010,
<http://dspace.brunel.ac.uk/bitstream/2438/1283/3/Ethical%2Bbranding.pdf>
Gibison, A., 2008, ‘McDonald’s: A Good Image with Bad Ethics’, Neumann Univeristy,
viewed 10 December 2010, < http://www.neumann.edu/academics/divisions/business/
journal/review_08/Gibison.pdf>
Hay, M., 2006, ‘Values-based service brands: narratives from IKEA’, Managing Service
Quality, vol 16, no 3, viewed 9 December 2010, <www.emeraldinsight.com/journals.htm ?
articleid=1556614&show=pdf>
Kamenev, M., ‘Qantas: Airlines Safety’s Golden Child No More?’, Times 24 November,
viewed 13 December 2010, < http://www.time.com/time/world/article/0,8599,
2032492,00.html>
10
Hoeffler, S. & Keller, K. L., 2002, ‘Building Brand Equity Through Corporate Societal
Marketing’, Journal of Public Policy & Marketing, vol 21, no 1, viewed 9 December 2010,
< http://www.jstor.org/pss/30000710>
Douglas, J., ‘Fast Food Restaurants at Children’s Hospital Influence Parents to Feed Their
Families Unhealthy Meals’, NaturalNews.com 6 December 2006, viewed 13 December 2010,
<http://www.naturalnews.com/021250.html
Laczniak, G. R., 1983, ‘Framework for Analyzing Marketing Ethics’, Journal of Marketing,
viewed 9 December 2010< http://www.luc.edu/jmm_dev/pdfs/6lacz
niak1983frameworkforanalyzing.pdf>
Quester, P., McGuiggan, R., Perreault, W. D., McCarthy, E. J., 2006, Marketing: Creating
and Delivering Value, 5th edn, McGraw-Hill, North Ryde, NSW
Solomon, M. R., Marshal, G. W. & Stuart, E. W., 2008, Marketing: Real People, Real
Choices, 5thedn, Pearson Educational, Inc., Upper Saddle River, New Jersey
Stoll, M. L., 2002, ‘The Ethics of Marketing: Good Corporate Conduct’, Journal of Business
Ethics, vol 41, no 1-2, 121-129, viewed 9 December 2010, <
http://www.springerlink.com/content/r2t342n6384x5608/>
The Body Shop, 2010, ‘Values & Campaigns: Living Our Values’, The Body Shop, viewed
12 December 2010, <http://www.thebodyshop.com/_en/_ww/values-campaigns/index.aspx>
11