Ethics In Marketing – a snapshot

Promotion
– Sexual and shock appeals
– Inappropriate product
labelling
– Inappropriate and
comparative advertising
– Marketing to children and
the obesity debate

Price Place (distribution)

- Collusion
- Price discrimination - Abuse of monopoly status
- Price collusion - Supply chain exploitation
 Ethics In Marketing – a snapshot
1. Ethical Issues in Marketing Research

2. Comparative Advertising - Infringement of Trademark by Comparative

Advertising

3. Surrogate Advertising

4. Ethical Issues in Sales Promotion

 Ethical Issues in Marketing Research – case of L&H

 Management Pressure – An Ethical Issue?

 Budgetary Pressure – An Ethical Issue?
 Questionnaire Design, Field Research, Data
Analysis – Ethical Issues
 Client Confidentiality – An Ethical Issue
 Marketing Researchers – Personal Issues – An
Ethical Issue?
 Ethics in Sales Promotion

 Providing incomplete and misleading Information

 Hiding crucial details in fineprints
 Using vague or ambiguous terms
 Not delivering on promises
 Making sale products such as cigarettes or alcoholic drinks near
religious places or educational institutions constitute unethical
distribution practice.
.......Are some of the most commonly used unethical practices in sales
promotion.
 Ethics in Sales Promotion.......Contd....

 Sales Promotion activities refer to short-term incentives given to

customers to generate more sales.
.....The incentives could be
- Price discounts
- free gifts tied to purchases
- prizes through draws in contests
- coupons redeemable against purchase of some product
- more quantity at the same price
- BOGOF schemes
- cross promotion – purchase of one item brings price cut on another
item.
 Ethics in Sales Promotion.......Contd....

Providing Incomplete and Misleading Information

 Discretion comes into play when contests or coupons are involved.
'Become a credit card holder and fly to Singapore';
'Win 1 kg of gold on purchase of items worth Rs 2,000';
'Write a slogan and zip off to Disneyland'
......These slogans are to grab attention and ignorant customers get fooled
at face value.
......The riders attached are not known unless probed or fineprints
decoded.
 Ethics in Sales Promotion.......Contd....

Providing Incomplete and Misleading Information

1. The credit card membership does not automatically qualify a customer
to enjoy the proclaimed prize.
The terms and conditions wherein he has to redeem the card for certain
amount within a specified period ....
 Waiver of annual membership fee for the first year for new credit card
members.
Enquiries reveal that the fee waiver is linked to spending a fixed amount
within a given time.
 Ethics in Sales Promotion.......Contd....

Providing Incomplete and Misleading Information

2. 'Win 1 kg of gold on purchase of Rs. 2000'
 This usually links the reward to purchase of a select few brands and
not all products.
3. 'Discounts upto 60%'
 Different discount rates are available for different products and th
emaximum rate is announced as though it applies to all items.
4. Writing a slogan and gaining reward - slogan is deligently inserted
inside the packaging of a product. Thus unless one purchases the
product, one doesn't even get the form on which the slogan can be
written.
 Ethics in Sales Promotion.......Contd....

Details in Fineprint....
 Retailers and manufacturers are reaching to deal-oriented shoppers.
 Being value-conscious in their purchases, these shoppers are those
who buy when promotion is on.
They maximise their value proposition in almost all of their purchases
and are not loyal to brands.
 Operating in such situation offers no choice to marketers but to resort
to promotions.
 Ethics in Sales Promotion.......Contd....

Details in Fineprint.....
 Invariably the fineprint is very reader-unfriendly......
....The font size is so small that the reader i sput off after a few lines.
....In other cases it is too long and tests readers' patience.
....A combination of small font and long description is all the more
effective in ensuring that none will read the details.
 Ethics in Sales Promotion.......Contd....

Details in Fineprint.....
 Even short and clear fineprints are used for unethical sales
promotions..
....'Valid upto available stocks'
....'Limited period offer'
....'Product available without this offer'
....'At select outlets'
 All of the above specially the second statement – offer lasts when the
sale soent happen and even if sale response is overwhelming, the last
statement – offer is available in select outlets as well as in other
outlets.
 Ethics in Sales Promotion.......Contd....

Undelivered Promises
 As part of sales promotion, many promise to deliver rewards later on
....especially in...
....Coupons....Slogans....Lucky draws
 It is possible to remember many coupons-based promotions, but it is
difficult to recall announcements of the winning coupon numbers.
 Similarly ....rarely do firms propogate the winners of a slogan-writing
competition.
 Lucky draws may not be conducted at all.
 Sustainable Marketing
Define
 Meeting present needs of consumers & businesses & preserving ability of future
generations to meet their needs

Now
Marketing Strategic planning Eg. McDonald
Needs of concept concept
consumers

Societal Sustainable
Future marketing marketing
concept concept

Now Needs of Future

Business
 Social Criticisms of Marketing

Marketing's Impact on Individual Consumers

 High Prices
- High costs of distribution
- High advertising and promotion costs
- Excessive markups
 Deceptive practices
 High pressure selling
 Shoddy, harmful and unsafe products
 Planned obsolescence
 Poor service to disadvantaged consumers
 Some Morally difficult situations in Marketing

 You work for a cigarette company. Public policy debates over the past
many years leave no doubt in your mind that cigarette smoking and
cancer are closely linked.
Although your company currently runs an “If you don't smoke, don't
start” promotion campaign, you believe that other company
promotions might encourage young (although legal age) nonsmokers
to pick up the habit.
What would you do?
 Some Morally difficult situations in Marketing........Contd....

 Your R&D department has changed one of your products slightly.

It is not really “new and improved”, but you know that putting this
statement on the package and in advertising will increase sales.
What would you do?
 Some Morally difficult situations in Marketing......Contd....

 You are thinking of hiring a product manager who has just left a
competitor's company. She would be more than happy to tell you all
the competitors plans for the coming year.
What would you do?
 Some Morally difficult situations in Marketing......Contd....

 One of your top dealers in an important territory recently has had

family troubles, and his sales have slipped.
It looks like it will take him a while to straighten out his family trouble.
Meanwhile you are losing many sales.
Legally, on performance grounds, you can terminate the dealer's
franchise and replace him.
What would you do?
 Some Morally difficult situations in Marketing......Contd....

 You have heard that a competitor has a new product feature that will
make a big difference in sales.
The competitor will demonstrate the feature in a private dealer meeting at
the annual trade show.
You can easily send a snooper to this meeting to learn about the new
feature.
What would you do?
 Some Morally difficult situations in Marketing.......Contd...

 You have to choose between three ad campaigns outlined by oyur

agency. The first (a) is a soft-sell, honest, straight -information
campaign.
The second(b) uses sex-loaded emotional appeals and exaggerates the
product's benefits.
The third (c) involves a noisy, somewhat irritating commercial that is
sure to gain audience attention.
Pretests show that the campaigns are effective in the following order: c,b,
and a.
What would you do?
 Some Morally difficult situations in Marketing......Contd...

 You are interviewing a capable female applicant for a job as

salesperson.
She is better qualified than the men just interviewed.
Nevertheless, you know that in your industry some important customers
prefer dealing with men, and you will lose some sales if you hire her.
What would you do?
 EXAMPLES OF COMPARATIVE ADVERTISEMENTS

Jurisdiction Sl.No. Examples Status of the Concept

Court
INDIA 1 Reckitt & Colman v. KIWI Disparaging Advertisement campaign for
„KIWI‟ in comparison with
„Cherry Blossom‟
2 Reckitt & Colman v. Disparaging „Ujala‟ in comparison with
Ramachandran „Robin Blue‟ – pertaining to
price
3 New Pepsodent v. Colgate Disparaging „New Pepsodent‟ in
comparison with „Colgate‟ –
pertaining to the superiorit y of
the product.

4 Colgate Palmolive v. HLL Not Disparaging „New Pepsodent‟ v. Colgate –

case on „Suraksha Chakra‟.

5 Pepsi Co v. Hindustan Coca- Disparaging „Thumps-UP‟ v. „PEPSI‟ –

Cola pertaining to PAPPI

6 Dabur v. Colgate Palmolive Disparaging Pertaining to degrading qualit y

of the other

7 Britannia v Unibic Disparaging „Good Day‟ v. Great Day‟ –

use of tagline
8 Kingfisher v. Jet Airways Not entered the If entered wouldn‟t clearl y
Court of Law indicate the remedy based on
the existing statute.
 COMPARATIVE ADVERTISEMENTS

Indian Court Granted Injunction: Britannia v.Unibic Biscuits India (2007) Unibic India
launched a biscuit named “Great Day” along with its tag line – Why have a Good Day,
When you can have a Great Day!. This was a direct comparison to Britannia‟s Good Day
biscuits which states that consumers must not try any mere biscuit when Great Day
biscuit is available. The plaintiff alleged that the defendant has infringed their registered
TM “Good Day” and in turn has tried to emphasize on it through their tagline. Bangalore
City Civil Court on December 12 in 2007 led to the grant of an injunction to the
defendant for disparaging Good Day biscuits by exaggerating the facts and making an
impression that no other facts hold true.

Recent Example: Did not enter the Court of Law:

Kingfisher v. Jet Airways (2007)
In contrast to Unibic‟s Great Day case of injunction, Kingfisher
airlines came up with a similar advertising campaign without
being subject to any injunction. Jet Airways and Kingfisher
started flights to New York on a daily basis. To initiate their
campaign, Jet put up a hoarding this displayed the tag line
“We‟ve Changed” which was immediately competed by
Kingfisher airlines by putting up a hoarding just above Jet
Airways hoarding saying “We Made Them Change”. Although
there was no disparagement of the product nor there was any use
of Jet‟s TM on Kingfisher‟s hoarding, still Jet could file for
injunction as it was directly relating to them for exaggeration of
facts. But Jet immediately put off their hoarding which was a
good move as the present law doesn‟t have any law in place for
Jet or any other company in such situation to sue Kingfisher.
 Surrogate Advertising: Is it Ethical

 Surrogate means
– Is replacement & not removal
- substitute the brand name with another product
 Surrogate Advertising
- Adopted by companies whose products are banned
- Intention is to make sure the customers of the banned product don't
forget it.
- Concept highlightes “brand extension”
 Surrogate Advertising: Is it Ethical.......Contd....

 The Indian liquor industry was in the news during early 2000's for its
surrogate advertising practices – generated lot of criticism from
various quarters
 The industry was dominated by (SWC) Shaw Wallace & United
Breweries - 53% of the total market
 On an average liquor companies spent 10-12% of sales revenue on
advertising – consumer promotions pgms, sponsorships, print and
electronic media ads.
 Spent heavily on electronic media – due to its reach of satellite and
cable TV (cos spent 3-4% of sales revenue on TV alone).
 Surrogate Advertising: Is it Ethical.......Contd....

 The Advertising code of conduct banned the broadcasters from airing

advertisements that related to or promoted cigarettes and tobacco
products, liquor, wines and other intoxicants,......
However, the telecast of such advertisements continued blatantly over
the years.
-----
This was because the code was only a code a conduct, not a legally
enforcing code.
 Surrogate Advertising: Is it Ethical.......Contd....

 With pressure increasing from public to ban liquor ads, the

government made amendments to the Cable TV Act 1995. The cable
operators were punishable under Indian Law.
 Due to the ban – liquor companies focused on promotions for brand
building. They started sponsoring events that projected glamour of the
brands, like track racing, car rellies, corporate advertising by
distributing free gifts like caps and T-shirts with the brand name and
using glow-signs outside the retail outlets -
-----Thus began the concept of surrogate advertising
 Surrogate Advertising: Is it Ethical.......Contd....

 Liquor companies entered new segments under the liquor brand –

entered packaged water segment, such as Kingfisher Mineral Water,
McDowell's mineral water and soda brands etc.
 SWC marketed through its range of golf accessories under the liquor
brand Royal Challenge. It also launched golf sets, golf bags, caps,
gloves and also started quarterly golf publication.
SWC also entered packaged water market under its beer brands – Hi-
Five nad Lal Toofan.
 Surrogate Advertising: Is it Ethical.......Contd....

 In June 2002, The I&B Information & Broadcasting Ministry of

India ordered TV broadcasters to ban the telecast of two surrogate ads
of liquor brands – McDowell's No.1 and Gilbey's Green label.
----
The Ministry also put on 'watch list' brands – Smirnoff vodka, Hayward's
5000, Royal Challenge Whiskey and Kingfisher beer.
 -----------These developments led to heated debates over the issue of
surrogate advertising by liquor companies.
 Surrogate Advertising: Is it Ethical.......Contd....

 Example – According to an analyst....

“We see a brown liquid poured into a glass under a well-known brand
name, and we are told the man is drinking apple juice! The girl who is
avidly watching him immediately rewards him with a kiss.
........In this way water, soda and other harmless liquors stand in for hard
liquor and beat the ban”

 NOTE: According to broadcasters, the government should put inplace

a 'reasonable policy' which somehow struck a balance between social
and monetary aspects of the business of alcohol.