QUESTION:

DISCUSS MARKETING ETHICAL ISSUES THAT NEED TO BE ADDRESSED TODAY:

Key areas of concentration:

1. 2. 3. 4.

Defining Marketing ethics: Areas in marketing that involve ethical decisions: Advantages of ethical behaviors in marketing environment: Disadvantages involved with ethical behaviors in marketing environment: 5. REFERENCES:

QUESTION 4: DISCUSS MARKETING ETHICAL ISSUES THAT NEED TO BE ADDRESSED TODAY: Defining Marketing ethics: 1. 2. 3. Marketing ethics refers to the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. The standards or moral principles governing the marketing profession. Practices that emphasize transparent, trustworthy, and responsible personal and organizational marketing policies and actions that exhibit integrity as well as fairness to consumers and other stakeholders. Marketing ethics focuses on principles and standards that define acceptable marketing conduct, as determined by

various stakeholders and the organization responsible for marketing activities. While many of the basic principles have been codified as laws and regulations to require marketers to conform to societys expectations of conduct, marketing ethics goes beyond legal and regulatory issues. Ethical marketing practices and principles are core building blocks in establishing trust, which help build longterm marketing relationships. Areas in marketing that involve ethical decisions: A) PRICING ISSUES 1. Predatory pricing - Definition: Predatory pricing is the practice of selling a product at low prices in order to drive competitors out, discipline them, weaken them for possible mergers, and/or to prevent firms from entering the market. It is an expensive strategy. Vertical price fixing An illegal agreement between producers and retailers to maintain the producers' recommended retail price; vertical price fixing is resale price maintenance Horizontal price fixing - An illegal practice by which two competitors agree to a fixed price of a certain item. This is illegal because it restricts capitalism and keeps prices at an artificial level. Bait-and-switch - A dishonest marketing tactic in which a marketer advertises a very attractive price/rate/term that is really a teaser rate meant to attract customers. Once the customer comes into the store/office to inquire about the advertised price/rate (the "bait"), the advertiser will attempt to sell the customer a more expensive product (the "switch"). Price discrimination - The action of selling the same product at different prices to different buyers, in order to maximize sales and profits Business to consumer price discrimination - Second degree price discrimination (charging different prices based on the nature of the offering) Business to consumer price discrimination - First degree price discrimination (charging more to those who will pay it) B) PROMOTIONAL ISSUES: 1. 2. 3. False and misleading advertising Creating demand for vice or unwholesome products Intrusive promotions C) CHANNEL ISSUES:

2. 3.

4.

5. 6. 7.

1. 2. 3. 4. 5. 6. 7.

Slotting allowances - A fee paid by a manufacturer to a retailer to provide shelf space in stores Buyback / stocklift / lift-out - The repurchase of something previously sold, especially of stock by the company that issued it Gray market merchandise - Diverted merchandise Exclusive geographic territories Exclusive dealing agreements Tying contracts Refusal to deal D) PRODUCT ISSUES:

1. 2. 3. 4.

Products that create harm - Targeted at disadvantaged groups (e.g. cheap wine targeted to alcoholics and homeless people) Quality deterioration as a result of a harvesting strategy Planned obsolescence Counterfeit merchandise E) ETHICAL FRAMEWORK:

1. 2. 3.

Moral idealism universal rights and obligations Utilitarianism the greatest good for the greatest number Social justice emphasis on fairness and equality for all individuals

Advantages of ethical behaviors in marketing environment: 1. 2. 3. 4. Higher revenues demand from positive consumer support Improved brand and business awareness and recognition Better employee motivation and recruitment New sources of finance e.g. from ethical investors

Disadvantages involved with ethical behaviors in marketing environment: 1. 2. 3. Higher costs e.g. sourcing from Fair trade suppliers rather than lowest price Higher overheads e.g. training & communication of ethical policy A danger of building up false expectations REFERENCES: 1. 2. Essential of Marketing Fourth Edition, JIM BLYTHE Basic Marketing JEROME Mc CARTHY & WILLIAM PERRTAULT

3. 4.

Boeing - PRO-70, Procurement Integrity and Restrictions on Proposal Team Assignments The marketing Imagination LEVITT,T (New York, free press 1986)