CSR PROJECT REPORT

UNETHICAL MARKETING PRACTICES AND ITS

IMPACT ON THE SHAREHOLDERS

SUBMITTED TO:
Prof. Vineeta Dutta Roy
Birla Institute of Management Technology
Plot No. 5, Knowledge Park II
Greater NOIDA, UP - 201306

SUBMITTED BY:
S.No.
1.
2.
3.
4.
5.
6.

Name
Dhruv Singh Chauhan
Denny Varghese
Humam Khalis
Ishan Biswari
Jitender Kumar
Karan Vithlani

Roll Number
14DM074
14DM069
14DM095
14DM096
14DM105
14DM109

Email address
dhruv.chauhan16@bimtech.ac.in
Denny.varghese16@bimtech.ac.in
Humam.khalis16@bimtech.ac.in
ishan.biswari16@bimtech.ac.in
jitender.kumar16@bimtech.ac.in
karan.vithlani16@bimtech.ac.in

INTRODUCTION
Marketing strategy is a method of focusing an organizations resources on a course of action
that can lead to increase in sales and dominance of a targeted market. A marketing strategy
combines product development, promotion, distribution, pricing, relationship management and
other elements; identifies the firm's marketing goals, and explains how they will be achieved,
ideally within a stated timeframe. Marketing strategy determines the choice of target market
segments, positioning, marketing mix, and allocation of resources.
Ethical marketing is the application of marketing ethics into the marketing process, it does with
philosophical examination, from a moral standpoint, of particular marketing issue that are
matters of moral judgment, ethical marketing is an honest and factional representation of
product and service, delivering a framework of culture and social values to consumers.
Unethical marketing is the act of lying, cheating, stealing, deception, which involves ethics that
are ethical standard which pertains to marketing. Unethical marketing is promoting misleading
or false claims about a product and also misleading of consumers to buy a product that are not
of standard or genuine (Gershon & Buerstatte, 2003).
In marketing sometime, ethics takes the backseat in the need to please. Every
marketers/companies are looking for the same thing Profit. There are many blatant and
international forms of ethical violation that is becoming common today.
Now days, marketers in India (and across the world) are targeting children for marketing their
products, kids represent an important demographic to marketers. It is hard to find some ethical
advertisement today because we are surrounded by a lot of unethical and illegal advertising in
newspapers, television, billboards and on the radio. Young children and early aged teenagers
are persuaded by false advertisement today and become trapped by these products because
everybody else has them.
Today many soft drink companies such as Coco-Cola and Pepsi try to cover up the fact that their
soft drink is extremely unhealthy, by creating new, no sugar soft drink to promote that fact that
there is no sugar in their drinks. Instead of putting sugar into their drink, they use artificial
sweeteners to make it make have that the same taste as the original drink, thereby misleading
people, which is unethical.
For example, McDonalds is a major franchise restaurant worldwide that have lured millions of
children into eating at their restaurant, by supplying a free venue for birthday parties and an
outdoor area with a childrens playground. This can create an image of if you want a happy
time, go to McDonalds. They also have their name on some of the educational products such
as stationery and programs on computers used in primary schools. This encourages young
children to want to eat McDonalds which is a very unhealthy fast food, and as it is a part of the
schooling environment, children think that this has the approval of the education department.
This could lead to poor food choices in later life.

Ethical Marketing
Ethical marketing is less of a marketing strategy and more of a philosophy that informs all
marketing efforts. It seeks to promote honesty, fairness, and responsibility in all advertising.
Ethics is a notoriously difficult subject because everyone has subjective judgments about what
is right and what is wrong. For this reason, ethical marketing is not a hard and fast list of
rules, but a general set of guidelines to assist companies as they evaluate new marketing
strategies.
Many people buy diet pills even though they are rarely, if ever, effective. This is because some
diet pill companies use exaggerated and manipulative claims to essentially trick customers into
buying these products. If that same company committed to using ethical advertising they would
probably go out of business. However sneaky their business model may be, it is not illegal and it
is keeping their doors open.
For companies looking to improve the image of a brand and develop long-term relationships
with customers, this kind of unethical behavior can quickly lead to failure. Customers do not
want to feel manipulated by the brands they like. Companies can use ethical marketing as a
way to develop a sense of trust among their customers. If a product lives up to the claims made
in its advertising, it reflects positively on the entire company. It can make the consumer feel like
the company is invested in the quality of the products and the value they provide customers.
It is impossible to claim that any company is completely ethical or unethical. Ethics resides in a
gray area with many fine lines and shifting boundaries. Many companies behave ethically in one
aspect of their advertising and unethically in another

Principles of Ethical Marketing

All marketing communications share the common standard of truth.

Marketing professionals abide by the highest standard of personal ethics.
Advertising is clearly distinguished from news and entertainment content.
Marketers should be transparent about who they pay to endorse their products.
Consumers should be treated fairly based on the nature of the product and the nature
of the consumer (e.g. marketing to children).
The privacy of the consumer should never be compromised.
Marketers must comply with regulations and standards established by governmental
and professional organizations.
Ethics should be discussed openly and honestly during all marketing decisions.

UNETHICAL MARKETING
Considering all of the management fields, marketing has taken the most criticism and carried
the most doubt concerning moral and social responsibility issues (Kennedy and Lawton, 1993).
Marketing critics point to false or misleading advertisements, extravagant pressure on
consumers, and pricing tactics that deviate from morality and honesty limits (Nantel and
Weeks, 1996). Malliaris (2001) summarized the basic points of criticism against marketing as
follows:
(1) It encourages materialism, hedonism, and eudemonism;
(2) It generates stress on consumers for the acquisition of goods;
(3) It pollutes the natural environment;
(4) It contributes to the exhaustion of natural resources;
(5) It creates an increase in the products final price due to the high production cost, which
must be paid by the consumer;
(6) It deceives consumers by projecting imaginary or no quality differences on the products
(7) It allures consumers into buying products that they might not really need;
(8) Advertising is many times of bad taste and offends the masses;
(9) The involvement of too many intercessors during product distribution raises product prices
(10) Personal sales sometimes become too pushy and oppressive, thereby compelling the
consumer to make buying decisions under pressure.

TYPES OF UNETHICAL ADVERTISING

Surrogate Advertising
In certain places there are laws against advertising products like cigarettes or alcohol. Surrogate
advertising finds ways to remind consumers of these products without referencing them
directly. Advertisement for products like cigarettes or alcohol which are injurious to heath are
prohibited by law in several countries and hence these companies have to come up with several
other products that might have the same brand name and indirectly remind people of the
cigarettes or beer bottles of the same brand Common examples. Example: Fosters and
Kingfisher beer brands.

Exaggeration

Some advertisers use false claims about a product's quality or popularity. A Slogan like get
coverage everywhere on earth advertises features that cannot be delivered and Using false
claims in the advertisements about the product. Example: Vodafone Wherever you go our
network follows.

Puffery
When an advertiser relies on subjective rather than objective claims, they are puffing up their
products. Statements like the best tasting coffee cannot be confirmed objectively. A two-year
old might believe that polar bears enjoy sipping Coca-Cola, but we know better.

Unverified Claims
Many products promise to deliver results without providing any scientific evidence. Shampoo
commercials that promise stronger, shinier hair do so without telling consumers why or how.
It includes advertisements of energy drinks which tells us about the number of vitamins and
how they help children to grow strong and tall. There is no way of verifying these false claims.
Example: Horlicks, Maltova, Tiger biscuits.

False brand comparisons

Any time a company makes false or misleading claims about their competitors they are
spreading misinformation.

Children in advertising
Children consume huge amounts of advertising without being able to evaluate it objectively.
Exploiting this innocence is one of the most common unethical marketing practices.

Examples of Unethical Marketing Practices

1. Making false, exaggerated, or unverified claims
In a desperate bid to compel potential and existing customers to buy their products or services,
some marketers use false statements, exaggerated benefits, or make unverifiable claims about
their offers. This is common in the weight loss industry, where marketers convince potential
buyers that a particular product can help them shed so-and-so pounds within two weeks
without exercise or dieting!
2. Distortion of facts to mislead or confuse potential buyers

This is another common unethical marketing practice. A typical example is when a food
processing company claims that its products are sugar-free or calorie-free when indeed they
contain sugar or calories. Such a company is only trying to mislead potential buyers, since they
are unlikely to buy the products if it is made known that they contain sugar or calories.
3. Concealing dark sides or side effects of products or services
This unethical marketing practice is rife in the natural remedies industry, where most
manufacturers deceive potential buyers that their products have no side effects because they
are made from natural products. But in reality, most of these products have been found to
have side effects, especially when used over a long period. In fact, theres no product without
side effectsits just that the side effects might be unknown. Its better to say, There are no
known side effects than to say there are no side effects.
4. Bad-mouthing rival products
Emphasizing the dark sides of your rivals products in a bid to turn potential customers towards
your own products is another common but unethical marketing practice. Rather than resort to
this bad strategy, you should emphasize on those aspects that make your offer stand out from
the rest of the pack. Thats professional and ethical.
5. Using women as sex symbols for advertising
The rate at which even reputable brands are resorting to this unethical marketing practice is
quite alarming. If you observe TV, billboard, and magazine adverts, theres something common
to most of them; a half-naked lady is used to attract attention to the product or service being
advertised. 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.
5. Using fear tactics
This is another common unethical marketing practice among snake oil salespersons. You will
hear them saying something like: This price is a limited-time offer. If you dont buy now, you
might have to pay much more to buy it later because the offer will end up in two days time, and
the price will go up. The only motive behind those statements is to prompt the potential buyer
to make a decision on the spot. And thats wrong. Why subject someone to undue pressure
because you want to make money off him or her?
7. Plagiarism of marketing messages
Though uncommon, some business owners and salespersons engage in using the exact
marketing messages of their competitors to market their own products or services. Creativity is

a huge part of marketing, and using other businesses marketing messages just passes you off
as being creatively bankrupt and fraudulent.
8. Exploitation
This is charging for much more than the actual value of a product or service. For marketing
efforts to remain with ethical limits; the prices of your offers must be equal to or less than the
value they give the buyer. If the value is less than the cost, its unethical.
9. Demeaning references to races, age, sex, or religion
Ethical marketing must be devoid of all forms of discrimination. If your marketing messages
contain lines that place people of certain age range, sex, religion, nationality, or race at a higher
level than others, then you are crossing the bounds of ethical marketing.

10. Spamming
Spamming is when you send unsolicited emails to potential customers, encouraging them to
buy your products or services. This is the commonest unethical marketing practice done online.
The number of time you send such emails doesnt matter. Whether you send them once, or on
occasions, or frequently, you remain a spammer.

Unethical Practices Relating To Products

Selling goods abroad which are banned at home

Omitting to provide information on side effects
Unsafe products
Built in obsolescence
Wasteful and unnecessary packaging
Deception on size and content
Inaccurate and incomplete testing of products
Treatment of animals in product testing

Concepts of Social Responsibility

Although certain ethical beliefs are nearly universal, much of the concept of ethics is subjective.
Theft has been considered unethical in virtually every society since the dawn of civilization, for
example, while certain forestry practices are perpetually debated. Although businesses operate
within a wide range of regulations aimed at enforcing ethical standards, the subjective nature

of ethics means that even perfectly legal business practices can come under scrutiny as
unethical behavior. Businesses must take extra care to respect the ethical perspectives of all of
their stakeholder groups.
Ethical behavior foretells performance in general, enhances productivity, and helps companies
avoid trust- and equity-destroying scandal. "Superior human capital practices are not only
correlated with financial returns. They are, in fact, a leading indicator of increased shareholder
value," say the consulting firm Watson Wyatt Worldwide, based on its own research.
Ethical behavior also lessens the risks from scandal. Like a smoke detector, an ethics program
helps identify and halt misconduct before serious damage occurs. The risks include:
Criminal charges with the possibility of fines over $500 million and jail time for
executives. If a firm has an ethics program, however, a judge can slash the fines by up to
95 percent.
Civil charges with the likelihood of large awards and permanent public taint.
Bankruptcy - Enron, WorldCom, and Adelphia are only the best known of the firms that
went bankrupt morally before financially.

The main three concepts

1. Profit Responsibility
Companies have a duty to maximize profits for their owners or stockholders.
2. Stakeholder Responsibility
Focuses on the obligations an organization has to those who can affect achievement of its
objectives.
These constituencies include customers, employees, suppliers and distributors.
3. Societal Responsibility
Societal responsibility refers to obligations that organizations have to the preservation of the
ecological environment and general public.

Companies have responded to this concern with two marketing practices that
reflect socially responsible behavior

Green marketing
Marketing efforts to produce, promote, and reclaim environmentally sensitive products.
ISO 14000 consists of worldwide standards for environmental quality and green
marketing practices. These standards are embraced by 84 countries.

Cause-related marketing
Charitable contributions of a firm are tied directly to the customer revenues produced
through the promotion of one of its products.

EFFECTS
ON
STAKEHOLDERS

UNETHICAL

MARKETING

ON

APPLE PAYS OFF BECAUSE OF MISLEADING ADVERTISING

Apple, which is the worlds biggest smartphone marker, was recently fined a total of $2.29
million for intentionally misleading consumers in Australia regarding the capability of 4G on the
local network while launching the new iPad.
4G Wireless Capability Error
The smartphone maker was also required to meet the cost of the suit which totaled to around
Aus$300,000.00. The case was designed to send out a warning signal to international
companies about the penalties of breaking the law. Mordy Bromberg, who was the judge that
presided over the case found that the company was guilty of misleading the public by claiming
in its advert that the 4G wireless capability was compatible with the 4 th generation mobile
network in Australia, whereas in actual sense it was unable to.
In the ruling, the judge stated that the Apple intentionally mislead consumers and in the
process violated laws pertaining to consumer laws in Australia. The ruling when on to state that
the company exposed a considerable number of tablet consumers in the Australian market
through misleading adverts.
The lawsuit was brought by the Australian Competition and Consumer Commission ACCC. In
its statement, the governing body said that it was delighted by the ruling. The spokesperson
stated that the $2.29 million dollar fine was a reflection of the gravity of a corporation the
magnitude of Apple declining to alter its adverts even after being notified well in advance that
its advertisements were intentionally misleading the public. The spokesperson went further to
declare that the ruling of the case ought to act as a repeated warning that the consumer body
will not relent in making traders accountable when they resort to misleading tactics in spite of
their magnitude.
GlaxoSmithKline Guilty of Illegal Marketing and Withholding Hazard Info

When GSK began targeting children, Paxil became a top 10 selling drug with annual sales in
excess of $1.8 billion in 2001 and 2002 alone. This is particularly grievous as, according to the
Justice Department's complaint5, several clinical studies on Paxil involving children and
adolescents, performed in the mid- to late-90's, had ALL FAILED to demonstrate efficacy on this
age group! Every single one of them!
According to the US Justice Department6, GlaxoSmithKline:
1. Unlawfully marketed the antidepressant Paxil to children and adolescents.
The drug is FDA approved for the treatment of depression in adults only.The complaint
details how GSK manipulated the findings of one of these studies to reach the false
conclusion that Paxil was effective against depression in adolescents. A GSK employee
also recommended revising a section of the study relating to side effects, removing the
finding that serious side effects like worsening depression and hostility (suffered by 11
children in the study) were considered related to the treatment, and replacing it with a
statement that headache (suffered by one participant) was the only side effect
considered to be treatment-related.
The complaint calls the study, published in July 2001 in The Journal of American Academy
of Child and Adolescent Psychiatry, "false and misleading." This fraudulent and misleading
study was subsequently used by GSK to illegally promote Paxil for children and teens...
2. Unlawfully marketed the antidepressant Wellbutrin for weight loss and sexual
dysfunction.
In a recent NPR radio interview7, Carmen Ortiz, U.S. Attorney for the District of
Massachusetts, stated that "GSK hired a public relations firm to create a buzz about
getting skinny and how you could have more sex simply by using this drug...using every
imaginable form of high-priced entertainment, from Hawaiian vacations to paying doctors
millions of dollars to go on speaking tours, to a European pheasant hunt, to tickets for
Madonna concerts."
3. From 2001 through September 2007, failed to report safety data relating to clinical
experience and other information as required by law to the FDA for the diabetes drug
Avandia.
As previously reported, Avandia has been found to be profoundly dangerousa fact hid
by GSK for over 10 years, as they knew it would adversely affect sales. This was revealed
in a Senate Finance Committee report, released by Max Baucus and Charles E. Grassley in
February 2010. The report also asked why the FDA allowed a clinical trial of Avandia to
continue even after the agency estimated the drug had caused an estimated 83,000 heart
attacks between 1999 and 2007.
Avandia hit the market in 1999 and quickly became a blockbuster drug. By 2006 its annual
revenue was $3.2 billion. A year later, a damning study published in the New England
Journal of Medicine (NEJM) linked it to a 43 percent increased risk of heart attack and
a 64 percent higher risk of cardiovascular death than patients treated with other
methods.
This is a steep price, to say the least, for a disease that does not require drugs to begin
with, and Avandia has become a poster child for the lethal paradigm of faux science.

REFERENCES