Marketing Ethics &

Consumer
Protection
Mery Citra.S,SE.,MSi
Business Ethics #4
Social Criticisms of Marketing
• Marketing’s impact on individual
consumers has been criticized in terms
of:
– High prices
– Deceptive practices
– High-pressure selling
– Shoddy, harmful, or unsafe products
– Planned obsolescence
– Poor service to disadvantaged consumers
 Social Criticisms of Marketing : High
Prices

• Three factors are cited as

leading to high prices:
– High costs of distribution
– High advertising and
promotion costs
– Excessive markups
Social Criticisms of Marketing : Deceptive
Practices

• Marketers are often accused of deceptive

practices such as:
– Deceptive Pricing: Falsely advertising
“factory” or “wholesale” prices or large
reductions from phony high retail list prices.
– Deceptive Promotion: Overstating a
product’s features or performance, running
rigged contests.
– Deceptive Packaging: Exaggerating package
contents through subtle design, using
misleading labeling, etc.
 Social Criticisms of Marketing : High-
pressure selling
• Salespeople are often accused of using
high-pressure selling tactics:
– To persuade people to buy goods they had
no intention of buying.
– Because prizes are
often given to top
sellers.
Social Criticisms of Marketing : Shoddy or
unsafe product

• Shoddy or unsafe product criticisms

include complaints that:
– Products are not made well or services are not
performed well.
– Products deliver little benefit or that they may
even be harmful.
– Products are unsafe due to manufacturer
indifference, increased production complexity,
poorly trained labor, and poor quality control.
 Social Criticisms of Marketing : Planned
obsolence
• Planned obsolescence refers to:
– Products needing replacement before they
should because they are obsolete.
• Criticisms include:
– Use of materials and components that will
break, wear, rust, or rot sooner then they
should.
– Continually changing consumer concepts
of acceptable styles.
– Intentionally holding back attractive
functional features, then introducing them
later to make older models obsolete.
Social Criticisms of Marketing : Poor
service to disadvantaged consumers

• Marketers are also accused of serving

disadvantaged consumers poorly as:
– The poor are forced to shop in smaller
stores where they pay more for inferior
goods.
– “Redlining” occurs in disadvantaged
neighborhoods by national chain stores,
insurers, banks, and health care providers.
– The poor are targeted for “rapid refunds.”

16-8
 Marketing’s Impact on
Society as a Whole
• Creating false wants and
encouraging too much
materialism.
• Overselling private goods at
the expense of public
(social) goods.
• Creating cultural pollution,
stemming from constant
exposure to marketing
messages
 Marketing’s Impact on
Other Businesses
• Critics charge that a firm’s
marketing practices can
harm other companies and
reduce competition via:
– Acquisitions of competitors.
– Marketing practices that
create barriers to entry.
– Unfair competitive
marketing practices.
 Citizen and Public Actions to
Regulate Marketing
• Two major movements include:
– Consumerism
– Environmentalism
Consumerism:
– An organized movement of
citizens and government
agencies to improve the rights
and power of buyers in relation to
sellers.
Principles of consumer protection
In a 1962 speech, President John F. Kennedy proposed
that consumers had four basic rights:
• a right to safety
• a right to be informed
• a right to choose
• a right to be heard
Positive Business Responses to
Consumerism
Four main positive responses from business:
• Quality management

• Voluntary industry codes of conduct

• Consumer Affairs departments

• Product recalls
 Citizen and Public Actions to
Regulate Marketing

• Environmentalism:
– An organized movement of concerned citizens
and government agencies to protect and
improve people’s living environment.
• First wave was driven in the 1960s and 1970s by
environmental groups and concerned consumers.
• Second wave was driven by the government in the
1970s and 1980s, resulting in environmental laws.
• Third wave is happening now. Firms are accepting
more responsibility and many have adopted a policy
of environmental sustainability.
 Citizen and Public Actions to
Regulate Marketing

• Environmental sustainability:
– A management approach that involves
developing strategies that both sustain the
environment and produce profits for the
company.
• Levels of environmental sustainability:
– Pollution prevention
– Product stewardship
– New clean technologies
– Sustainability vision
 Business Actions Toward
Socially Responsible Marketing

• Enlightened marketing:
– A marketing philosophy holding that a
company’s marketing should support the
best long-run performance of the marketing
system.
• Customer-oriented marketing
• Customer-value marketing
• Innovative marketing
• Sense-of-mission marketing
• Societal marketing
 Business Actions Toward
Socially Responsible Marketing

• Consumer-oriented marketing:
– The philosophy of enlightened marketing
that holds that the company should view
and organize its marketing activities from
the consumer’s point of view.
 Business Actions Toward
Socially Responsible Marketing

• Customer-value marketing:
– A principle of enlightened marketing that
holds that a company should put most of
its resources into value-building marketing
investments.
 Business Actions Toward
Socially Responsible Marketing

• Innovative marketing:
– A principle of enlightened marketing that
requires that a company seek real product
and marketing improvements.
 Business Actions Toward
Socially Responsible Marketing

• Sense-of-mission marketing:
– A principle of enlightened marketing that
holds that a company should define its
mission in broad social terms rather than
narrow product terms.
 Business Actions Toward
Socially Responsible Marketing
• Societal marketing:
– A principle of enlightened marketing that
holds that a company makes marketing
decisions by considering consumers’ wants
and interests, the company’s requirements,
consumers’ long-run interests, and society’s
long-run interests.
• Seeks to introduce desirable products, rather than
those that are deficient or salutary.
Social Responsibility Issues in
Marketing

• Green Marketing
• Cause Marketing
 Ethical Issues in Marketing

• An identifiable problem, situation, or

opportunity requiring a choice
among several actions that
must be evaluated as right
or wrong, ethical or
unethical
 Major Ethical Issues in Marketing: 4 Ps Model

Product Promotion (marketing

• Product Safety. communications)
• “Me-toos.” • Deceptive/misleading advertising (e.g.,
• Product positioning and market sex/race stereotypes).
segmentation • Questionable sales techniques and conflicts
• Ethics in the delivery of service products of interest in selling.
• Environmental impacts of product and • Bribery.
packaging. • Direct marketing and privacy issues.

Price Place (channels of distribution)

• Horizontal/vertical price fixing. • Exclusivity and other forms of discrimination
• Price discrimination. in distribution (e.g., red-lining).
• Predatory pricing. • Channel control (including franchising
relationships).
• Price gouging
• Gray marketing
• Misleading pricing (e.g., non-unit pricing,
bait and switch, inflating prices to allow sale • Anti-competitive trade promotions (e.g.,
markdowns). slotting allowances).
• Lower standards in export markets.
 Marketing Ethics Framework: An Ethics
Continuum
•Producer •Producer
interest interest less
favored. favored.
•Consumer •Consumer
interest less interests
favored. favored.

Caveat emptor Industry practice Ethics codes: Consumer Caveat venditor

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subject to Of professional Choice.
legal bodies (e.g.,
constraints. AMA).