Module-3 subject:-BECG

Ethical Issues in Marketing

Ethical problems in marketing stem from conflicts and disagreements. Each party in a marketing
transaction brings a set of expectations regarding how the business relationship will exist and how
transactions should be conducted. Each facet of marketing has ethical danger points as discussed
below.

Market Research

Some ethical problems in market research are the invasion of privacy and stereotyping. The latter
occurs because any analysis of real populations needs to make approximations and place
individuals into groups. However, if conducted irresponsibly, stereotyping can lead to a variety of
ethically undesirable results.

Market Audience

Selective marketing is used to discourage demand from so-called undesirable market sectors or
disenfranchise them altogether. Examples of unethical market exclusion are past industry attitudes
to the gay, ethnic minority, and plus-size markets.

Another ethical issue relates to vulnerable audiences in emerging markets in developing countries,
as the public there may not be sufficiently aware of skilled marketing ploys.

Ethics in Advertising and Promotion

In the 1940s and 1950s, tobacco used to be advertised as promoting health. Today an advertiser
who fails to tell the truth offends against morality in addition to the law. However the law permits
puffery (a legal term). The difference between mere puffery and fraud is a slippery slope.

Sexual innuendo is a mainstay of advertising content, and yet is also regarded as a form of sexual
harassment. Violence is an issue especially for children’s advertising and advertising likely to be
seen by children.
The advertising of certain products may strongly offend some people while being of interest to
others. Examples include: feminine hygiene products as well as hemorrhoid and constipation
medication. The advertising of condoms has become acceptable in the interests of AIDS-
prevention, but are nevertheless seen by some as promoting promiscuity.

Through negative advertising techniques, the advertiser highlights the disadvantages of

competitor products rather than the advantages of their own. These methods are especially used in
politics.

Delivery Channels

Direct marketing is the most controversial of advertising channels, particularly when approaches
are unsolicited. TV commercials and direct mail are common examples. Electronic spam and
telemarketing push the borders of ethics and legality more strongly.

Deceptive Advertising and Ethics

Deceptive marketing is not specific to one target market, and can sometimes go unnoticed by the
public. There are several ways in which deceptive marketing can be presented to consumers; one
of these methods is accomplished through the use of humor. Humor provides an escape or relief
from some kind of human constraint, and some advertisers intend to take advantage of this by
deceptively advertising a product that can potentially alleviate that constraint through humor.

Anti-competitive Practices

Bait and switch is a form of fraud where customers are “baited” by advertising for a product or
service at a low price; second, the customers discover that the advertised good is not available and
are “switched” to a costlier product.

Planned obsolescence is a policy of designing a product with a limited useful life, so it will
become unfashionable or no longer functional after a certain period of time and put the consumer
under pressure to purchase again.

A pyramid scheme is a non-sustainable business model that involves promising participants

payment or services, primarily for enrolling other people into the scheme, rather than supplying
any real investment or sale of products or services to the public.

Pricing Ethics

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

Predatory pricing is the practice of selling a product or service at a very low price, intending to
drive competitors out of the market, or create barriers to entry for potential new competitors.
Using Ethics as a Marketing Tactic

Major corporations fear the damage to their image associated with press revelations of unethical
practices. Marketers have been quick to perceive the market’s preference for ethical companies,
often moving faster to take advantage of this shift in consumer taste. This results in the
propagation of ethics itself as a selling point or a component of a corporate image.

Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for
which good marketing is practiced. To market ethically and effectively one should be reminded
that all marketing decisions and efforts are necessary to meet and suit the needs of customers,
suppliers, and business partners. The mindset of many companies is that they are concerned for
the population and the environment in which they due business. They feel that they have a social
responsibility to people, places and things in their sphere of influence.

10 principles of ethical marketing:-

One of the most effective ways to improve your marketing strategy is to consistently abide by
certain ethical principles. Some marketing strategies may be able to draw in customers by using
shady practices (such as spamming, which no one appreciates) – but the cost here is serious.

By using shady marketing tactics, you damage the long-term reputation of the company. Brand
image is not something to be taken lightly, as it drives loyal customers.

If you focus on ethical marketing instead, you will be able to maximise customer satisfaction and
maintain consumer trust and brand credibility.

Ethical marketing should always aim to be honest and fair. Unethical practices will not guarantee
you more sales or necessarily cut costs in the long-term. What it does do, though, is put your
company’s viability at risk.

Ethical marketing, on the other hand, is always the wisest route to success.

Here are 10 principles of ethical marketing (five dos and don’ts) that will help you devise an
ethical and fruitful marketing strategy.

The Five Dos Of Ethical Marketing

Be Transparent 

Whenever you are marketing a product or service to customers, ensure that you are fully
transparent about it, including key information about its safety and effective use.
Protect Consumer Data And Privacy

Consumers are becoming increasingly concerned about entrusting their personal data with
companies. For this reason, it’s important to emphasise the company’s commitment to consumer
privacy.

Commit To Sustainability And Human Rights 

Ethical consumerism is becoming a bigger priority for many customers. People want to feel
assured that what they are purchasing is sustainable and ethically produced. Be honest about your
ingredients, product components, and your supply chain.

Respond Meaningfully To Consumer Concerns

If customers have safety concerns about a product or service, then this should be seen as a
company’s top priority. Always seek to protect consumer rights and immediately investigate any
complaint.

Maximise Benefits And Minimise Risks

Every ethical marketing strategy should try to benefit as many people as possible while creating
as little harm or cost as possible. Making an overall and lasting positive impact should always be
the aim.

The Five Don’ts Of Ethical Marketing

Don’t Exaggerate

When you exaggerate the benefits of a product or service, you are making a false claim. You are
promising a customer a level of quality that cannot be delivered.

Don’t Make False Comparisons

This is an unscrupulous tactic that involves making false, inaccurate, or misleading statements
about a competitor’s products.

Don’t Make Unverified Claims

This involves promising to deliver results (e.g. improved skin) without providing any scientific
evidence to back this up.

Don’t Stereotype

This involves the promotion of stereotypes (e.g. portraying women as sex objects) in order to sell
a product. The harm here is that this sort of marketing helps to maintain a sexist culture.
Don’t Exploit Emotions

Getting an emotional reaction from consumers is one of the most effective ways to generate
interest. However, if you evoke negative emotions such as rage, fear, sadness in a tasteless way,
this could be seen as exploitative. Customers want their emotions to be sympathised with, not
manipulated.

Examine your current marketing strategy and see how it could be altered in line with these 10
ethical principles. If you change the planning, implementation, and monitoring of your strategy
with ethics in mind, you will be able to drive success while maintaining a solid reputation.

Ethics means a set of moral principles which govern a person’s behavior or how the activity is
conducted. And advertising means a mode of communication between a seller and a buyer.

Thus ethics in advertising means a set of well defined principles which govern the ways of
communication taking place between the seller and the buyer. Ethics is the most important
feature of the advertising industry. Though there are many benefits of advertising but then there
are some points which don’t match the ethical norms of advertising.

An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in the
limit of decency.

Nowadays, ads are more exaggerated and a lot of puffing is used. It seems like the advertisers
lack knowledge of ethical norms and principles. They just don’t understand and are unable to
decide what is correct and what is wrong.

The main area of interest for advertisers is to increase their sales, gain more and more customers,
and increase the demand for the product by presenting a well decorated, puffed and colorful ad.
They claim that their product is the best, having unique qualities than the competitors, more cost
effective, and more beneficial. But most of these ads are found to be false, misleading customers
and unethical. The best example of these types of ads is the one which shows evening snacks for
the kids, they use coloring and gluing to make the product look glossy and attractive to the
consumers who are watching the ads on television and convince them to buy the product without
giving a second thought.

Ethics in Advertising is directly related to the purpose of advertising and the nature of
advertising. Sometimes exaggerating the ad becomes necessary to prove the benefit of the
product. For e.g. a sanitary napkin ad which shows that when the napkin was dropped in a river
by some girls, the napkin soaked whole water of the river. Thus, the purpose of advertising was
only to inform women about the product quality. Obviously, every woman knows that this cannot
practically happen but the ad was accepted. This doesn’t show that the ad was unethical.

Ethics also depends on what we believe. If the advertisers make the ads on the belief that the
customers will understand, persuade them to think, and then act on their ads, then this will lead to
positive results and the ad may not be called unethical. But at the same time, if advertisers believe
that they can fool their customers by showing any impractical things like just clicking fingers will
make your home or office fully furnished or just buying a lottery ticket will make you a
millionaire, then this is not going to work out for them and will be called as unethical.

Recently, the Vetican issued an article which says ads should follow three moral principles -
Truthfulness, Social Responsibility and Upholding Human Dignity.

Generally, big companies never lie as they have to prove their points to various ad regulating
bodies. Truth is always said but not completely. Sometimes its better not to reveal the whole truth
in the ad but at times truth has to be shown for betterment.

Pharmaceutical Advertising - they help creating awareness, but one catchy point here is that the
advertisers show what the medicine can cure but never talk about the side effects of that same
thing or the risks involved in intake of it.

Children - children are the major sellers of the ads and the product. They have the power to
convince the buyers. But when advertisers are using children in their ad, they should remember
not to show them alone doing there work on their own like brushing teeth, playing with toys, or
infants holding their own milk bottles as everyone knows that no one will leave their kids
unattended while doing all these activities. So showing parents also involved in all activities or
things being advertised will be more logical.

Alcohol - till today, there hasn’t come any liquor ad which shows anyone drinking the original
liquor. They use mineral water and sodas in their advertisements with their brand name. These
types of ads are called surrogate ads. These type of ads are totally unethical when liquor ads are
totally banned. Even if there are no advertisements for alcohol, people will continue drinking.

Cigarettes and Tobacco - these products should be never advertised as consumption of these
things is directly and badly responsible for cancer and other severe health issues. These as are
already banned in countries like India, Norway, Thailand, Finland and Singapore.

Ads for social causes - these types of ads are ethical and are accepted by the people. But ads like
condoms and contraceptive pills should be limited, as these are sometimes unethical, and are more
likely to loose morality and decency at places where there is no educational knowledge about all
these products.

Looking at all these above mentioned points, advertisers should start taking responsibility of self
regulating their ads by:

 design self regulatory codes in their companies including ethical norms, truth, decency,
and legal points
 keep tracking the activities and remove ads which don’t fulfill the codes.
 Inform the consumers about the self regulatory codes of the company
 Pay attention on the complaints coming from consumers about the product ads.
 Maintain transparency throughout the company and system.

When all the above points are implemented, they will result in:

 making the company answerable for all its activities

  will reduce the chances of getting pointed out by the critics or any regulatory body.
 will help gain confidence of the customers, make them trust the company and their
products.

What Is Ethical Sales and Marketing?

Ethical sales and marketing, or simply ethical marketing practice s, isn’t really a marketing
strategy. It’s more a school of thought that guides marketing efforts. Through sales ethics and
ethical marketing, responsibility, fairness, and honesty are promoted. Of course, this is a
difficult subject to tackle because it is highly subjective and everyone has slightly different
ideas of what constitutes right and wrong. Because of that, ethical marketing isn’t so much a
rule system as it is a system of guidelines.

There Are Eight Principles of Ethical Marketing

1.  The common standard of truth will be observed in all forms of marketing communication.
2.  Personal ethics will guide the actions of marketing professionals.
3.  Advertising is set apart from entertainment and news and the line is clear.
4.  Marketers will be transparent about who is paid to endorse their products.
5.  Consumers will be treated fairly, depending on who the consumer is and what the product is.
6. Consumer privacy will be respected and upheld at all times.
7. Marketers will comply with standards and regulations set by professional organizations and the
government
8. Ethics should be discussed in all marketing decisions in an open and honest way.

What Kind of Company Does Ethical Marketing?

Every type of company can do ethical marketing if it so chooses to. Whether it’s a mom and
pop store or a huge international company, it is possible to be fair and honest when marketing
your products to the consumer. When you do it in a thoughtful way, you can save a lot of
money by doing ethical advertising. It can also be quite effective. Moreover, advertising
unethically doesn’t always mean your advertising costs are going to be cheap, or that you’re
going to reap huge profits from it.

Some companies have the highest ethical principles and stick to them in everything they do. For
such companies, ethical advertising comes rather naturally and is more an extension of their
character than some sticker they slapped on to their brand. They apply ethics in functional areas
of business. In fact, such character can be an important selling point for a company when it tries
marketing to consumers who care more about the quality and price of the product. Companies
that are known for sourcing their raw materials in a sustainable fashion, treating their
employees fairly, donating to charitable organizations, and campaigning for the protection of
the environment naturally have to be ethical in their marketing to match this.
What Are the Types of Unethical Advertising?

There are at least seven identifiable types of unethical advertising and, just like the seven deadly
sins, they rear their ugly heads everywhere you look:

Surrogate Advertising

In certain jurisdictions, the law prohibits the open advertising of such things as alcohol or
cigarettes. This doesn’t stop the companies that produce these products from advertising
anyway. They do it by finding roundabout ways to remind customers that these products exist
without referring to them directly.

Exaggeration

Some advertisers will blatantly lie about how popular a product is or its quality. A good
example is when telecommunication companies claim that you can get coverage no matter
where you are with their service, or when internet service providers claim you will get upload
and download speeds that they cannot possibly deliver.

Subjectivity

This is when an advertiser makes subjective claims about their products, as opposed to objective
ones that can be readily tested. For example “the best tasting pizza” isn’t something you can
readily verify.

Lack of Verification

This is when an advertisement claims to deliver results without any scientific proof to back up
their claims. When a company claims that their product gets rid of all the acne on your face
without explaining how that works, they are resorting to unverified claims.

Sexist Stereotypes

When an advertisement portrays woman as domestic servants or sex objects, then it is

promoting negative stereotypes and is encouraging an already deeply sexist culture.

False Comparisons between Brands

Whenever a company makes misleading or blatantly false claims about competing brands, they
are being unethical.

Exploitation of Children

Children watch a lot of marketing ads and mostly aren’t able to be objective in their evaluation
of it. When a company seeks to exploit the innocence of children to its own profit, it is being
unethical.
In order to set yourself apart as a company that practices ethical sales and marketing, you have
to make sure every aspect of your company is ethical, from the way you source your materials
to the way you treat your workers to the way you advertise. It is possible to be profitable
without being unethical. You just have to commit to it.

Ethical target marketing of sales:-

Targeted marketing is designed to help businesses gain more customers by directing advertising at
consumers whose past purchases or other demographics suggest that they may be interested in the
product or service offered. Explore ethical and unethical target marketing strategies and how to
discern when companies are exploiting vulnerable populations in their marketing. Updated:
10/30/2021

Target Marketing
Companies use advertising and marketing to gain attention and target their customers
appropriately to sell products. Not all companies abide by ethical means to reach their consumers.
Sadly, many businesses use manipulation and deception to achieve their sales goals. Ironically,
most consumers trust that businesses look out for their interests. In this lesson, you will learn how
to distinguish ethical from unethical target marketing, using marketing to vulnerable populations
as an example.
Companies are desperate to acquire customers, and some will use inappropriate ways to gain their
attention. Ethical target marketing occurs when businesses analyze and research consumers to
see what predisposed ways might make an individual purchase a product. Predisposed ways can
be numerous factors that make consumers purchase a specific way, such as personal preferences,
cultural norms, or habitual purchasing.
Other companies use unethical target marketing by focusing on target markets that can be
easily influenced and manipulated. Let's take a look at how companies use ethical and unethical
target marketing through some case studies.

Ethical Target Marketing

Target marketing is when a company targets a specific group of customers for their product or
service through advertising. The groups are organized together because they have similar beliefs
and values, which leads to common purchasing patterns. Among the ethical ways companies can
influence consumers are through persuading, asking, informing, and advising.
Let's take a look at some examples. Ripple Wrap targets women age 25-65 with the promise of
keeping perishable items fresh. In their ads and on their website, consumers are persuaded,
informed, and advised about how using their product will keep their food items fresh. Ripple's
target market wants to be able to keep perishable items fresh and will pay more for a product that
will support this need. Consumers view purchasing Ripple as a good investment in their
household. Ripple uses persuasion, advising, and informing to educate their customers about the
benefits of their products without using deceptive, manipulative target marketing.
 Unethical Target Marketing
Most consumers are unaware of the standard of caveat emptor ('let the buyer beware') is part of all
purchase transactions. Under this idea, businesses' only responsibility is to provide a product or
service at a fair price. It is up to the consumer to research products and look out for their own
interests. Companies are skilled at researching the psychological makeup of their consumers, and
by understanding their customer's motivations, interests, desires, and beliefs, the easier it is to
manipulate their emotions.
When companies purposely target vulnerable populations, they are participating in unethical
target marketing. These types of populations or target markets consist of consumers that have
psychological problems or lack maturity and intelligence to make informed purchases. Examples
of this type of target market include the elderly, children, and poorly educated consumers. Target
marketing strategies that are considered unethical would include lying, deception, manipulation,
and threats. Sadly, these unethical ways of marketing are used against vulnerable populations.
Let's look at some specific examples.
Ethics in product placement:-
While advertisers can capture a viewer's attention by using product placement, various
ethical issues arise.
 Transparency. The public may not be aware that an advertiser has paid for a product placement. ...
 Endorsement. ...
 Integrity and Creativity. ...
 Impact on Children.

Example:-

Product placement in television refers to embedding a commercial product in a TV program.

The practice has become more common with the prevalence of digital video recorders that allow
viewers to skip traditional forms of advertisement and a drop in the number of people who
watch TV commercials. While advertisers can capture a viewer’s attention by using product
placement, various ethical issues arise.

Transparency
The public may not be aware that an advertiser has paid for a product placement. Commercials
are typically stitched in before, after and between programming segments and are clearly
delineated from content. Product placement blurs the line between promotion and content. In
this way, audiences can be manipulated into viewing a commercial. While some television
producers append a list of product placements to the credits at the end of shows, viewers have
already watched the embedded advertising without prior warning.
Endorsement
Even if the show is fictional, audiences may perceive the use of products by actors as implicit
endorsement. They may also believe that the claims about the product made in fictional
programming are true. As the use of product placement grows, certain brands dominate the
airwaves. This trend may result in a skewed perception by viewers of a brand’s popularity,
according to Larry Percy’s 2008 “Strategic Integrated Marketing Communications.”
Integrity and Creativity
When product placement was first introduced as a marketing tactic, products were used as props
and didn’t affect story lines. As the use of product placement increased, writers have come
under pressure to weave products into the content. An entire episode may revolve around a
particular brand, according to Shay Sayre’s 2010 “Entertainment and Society: Influences,
Impacts, and Innovations.” In response to product placement requests by Mattel, a toy
manufacturer, the writers of the sitcom “Will & Grace” created a story line in which the
character Jack grew preoccupied with a Cher doll. If marketing goals take priority over
creativity, the editorial integrity of television programming may be compromised.
Impact on Children
The food and beverage industry uses product placements to target children with messages about
junk food. For example, sweetened soft drinks regularly appear in prime time programming.
Sarah Speers’ report on “Child and Adolescent Exposure to Food and Beverage Brand
Appearances During Prime-Time Television Programming” noted that children consume about
200 calories from soft drinks daily, and soft drinks are known to contribute to child obesity.
Because children may be more vulnerable to disguised promotion in content, product
placements of nutrient-poor foods raise public health concerns.

The Effect of Celebrities in Advertisements

If you want people to notice your business, there's a simple solution: get a celebrity to endorse
it. Right? Not necessarily. Plenty of research has been done on this topic because, let's face it,
celebrities usually don’t come cheap. If you want to get as much bang for your advertising buck
as possible, it helps to understand the effect celebrities have on advertisements.

The Results
Branding experts Derrick Daye and Brad VanAuken studied the effectiveness of celebrities on
advertisements and wrote about it on their blog, Branding Strategy Insider. They discovered that
celebrity endorsements are largely ineffective, rarely producing the sought-after effects
businesses want. They studied nationally televised ads for the first 11 months of 2010 and found
that almost 90 percent of ads with celebrities didn’t "lift," or increase, the marketing objective
higher than 10 percent. One-fifth of ads with celebrities had a negative effect, meaning they
turned viewers away from the products. Ads are determined to be effective when they have a
certain “brand lift.” This is the percentage increase of a marketing objective. For comparison
sake, good brand lift can increase consumer awareness, attitudes and purchase intent by more
than 100 percent.
The Reason
People are influenced more by what their social media connections have to say about a business
or a product than they are by what some celebrity says, according to Daye and VanAuken. Plus,
most celebrity ads studied were weak on information and relevance, which are key factors
required in ads for people to act. When celebrities are featured in advertisements, the message
sometimes is more about the celebrity than about the product or service.
Unlikeable Celebrity
Daye and VanAuken found that the celebrity ad with the the most negative outcome in 2010
was a Nike ad featuring Tiger Woods called, “Did You Learn Anything?” The ad showed
Woods wearing a Nike cap and vest and staring into the camera as he listened to his father
asking whether he learned anything. It ended with the Nike logo flashed across the screen.
Using an ad with an unpopular or unlikeable celebrity confuses and turns off viewers. Even
popular, likeable celebrities aren’t guaranteed to create desired advertising results.
When Celebrities Might Work
If a celebrity is knowledgeable and qualified to talk about the product, the ad has a better
chance of being successful, according to a study by Mohan K. Menon, professor at the Mitchell
College of Business at the University of South Alabama, and colleagues. Consumers are more
likely to view the ad in a positive way if they trust that the celebrity has knowledge about the
product. This goes back to the message, however. If consumers are learning valuable
information about a product or service, the ad should do well, with or without a celebrity.