A PROJECT REPORT ON

"BUSINESS ETHICS”

SUBMITTED TO
St. Mira’s College for Girls, Pune
Autonomous (Affiliated to Savitribai Phule Pune University)

UNDER THE GUIDANCE OF

PROF. KAJAL JAISINGHANI

FOR THE PARTIAL FULFILLMENT OF BACHELOR

OF BUSINESS ADMINISTRATION
(T.Y.B.B.A 2023-24) SEMESTER - V
BY:
LAKSHITA TANWANI (22157 / B211038)
Business Ethics
Business ethics studies appropriate business policies and practices regarding potentially
controversial subjects, including corporate governance, insider trading, bribery,
discrimination, corporate social responsibility, fiduciary responsibilities, and much more.
The law often guides business ethics, but at other times business ethics provide a basic
guideline that businesses can follow to gain public approval.

 Business ethics refers to implementing appropriate business policies and

practices with regard to arguably controversial subjects.
 Some issues that come up in a discussion of ethics include corporate governance,
insider trading, bribery, discrimination, social responsibility, and fiduciary
responsibilities.
 The law usually sets the tone for business ethics, providing a basic guideline that
businesses can choose to follow to gain public approval.

Why Is Business Ethics Important?

There are several reasons business ethics are essential for success in modern business. Most
importantly, defined ethics programs establish a code of conduct that drives employee
behavior—from executives to middle management to the newest and youngest employees.
When all employees make ethical decisions, the company establishes a reputation for ethical
behavior. Its reputation grows, and it begins to experience the benefits a moral establishment
reaps:

 Brand recognition and growth

 Increased ability to negotiate
 Increased trust in products and services
 Customer retention and growth
 Attracts talent
 Attracts investors

When combined, all these factors affect a business' revenues. Those that fail set ethical
standards and enforce them are doomed to eventually find themselves alongside Enron,
Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie Madoff, and many others.

Ethical Marketing
Ethical marketing is a philosophy and a strategy that seeks to promote honesty,
trustworthiness, fairness, values, and responsibility in all marketing projects and actions.
Ethical marketing includes marketing research, customer segmentation, and the management
of all marketing campaigns.
Ethical (e.g. truthful) marketing is critical as 58% of consumers buy and advocate for
businesses based on their values. That's why any company caught using exaggerated or
manipulative claims in marketing campaigns would probably can out of business very
quickly.
All ethical marketing examples are based on five important principles: empathy, honesty,
sustainability, transparency, and promise-keeping.
Ethical marketing might seem like a contradictory concept at first. Yet, there are plenty of
ethical marketing examples around.
Indeed, many bright minds have studied the relationship between “doing the right thing” and
making profits, often with a little consensus reached.
But it’s the opinion of consumers that really matters here.
More and more customers are choosing businesses dedicated to helping environmental and
social causes. Companies that apply ethics to their marketing as well are winning customer
trust. And, importantly, those who only pretend to be ethical may lose that trust forever.
In this article, you’ll learn about 11 businesses doing ethical marketing the right way.
Example of Marketing Ethics
PATAGONIA
Talk to any environmental activist, and they’ll tell you one thing: the fashion industry is one
of the largest contributors to climate change. It generates 2.1 billion metric tons of
greenhouse gas emissions annually—more than Germany, France, and the UK combined.
But businesses like Patagonia are changing the industry.
The brand’s philosophy is all about being green, so ethical marketing is a natural part of the
strategy. Besides sharing awareness of environment-friendly practices, Patagonia also
promotes anti-consumerism.
The “Don’t Buy This Jacket” campaign is a great example of ethical marketing.
Instead of encouraging consumers to buy more on Black Friday, Patagonia asked them to
take a pledge to reduce consumption (see below). The campaign raised the awareness of the
environmental impacts of consumerism in the industry and encouraged many to consider the
effect of their purchases.
Patagonia’s ethical marketing strategy
extends to all their content.
The company’s blog is a treasure trove of inspiring social activism stories, clothing repair
tips, and video stories of people protecting the environment.
This amazing illustrated guide from the Patagonia blog teaches people to “donate with
dignity” by outlining tips for donating clothes. It’s a part of the brand’s mission to protect the
environment and encourage recycling of fashion.
But there’s one more huge aspect that makes Patagonia’s
ethical marketing strategy brilliant: its own initiatives. With its
“1% For The Planet” project, the brand has donated 1% of
sales to the preservation and restoration of natural
environments—over $140 million so far.
The bottom line here?
Thanks to the focus on ethical marketing, Patagonia is now a
thought leader in social activism, environmental protection,
and eco-friendly practices. Plus, it generates an
impressive $19.8 million in annual revenue.
The basic framework of ethical marketing
These essential ethics perspectives should inform businesses committed to ethical marketing:
 Ethical marketing puts people above profits
 Marketers are responsible for the outcome of the campaigns and advertisements they
use
 Marketers should embrace the essential ethical principles
 Adoption of marketing ethics principles by the top management is crucial to creating
ethical marketing campaigns
 Businesses need to have a good understanding and implementation of ethical decision
making when it comes to marketing

Business Ethics
Business ethics concerns ethical dilemmas or controversial issues faced by a company. Often,
business ethics involve a system of practices and procedures that help build trust with the
consumer. On one level, some business ethics are embedded in the law, such as minimum
wages, insider trading restrictions, and environmental regulations. On another, business ethics
can be influenced by management behaviour, with wide-ranging effects across the company.
Business ethics ensure that a certain basic level of trust exists between consumers and various
forms of market participants with businesses. For example, a portfolio manager must give the
same consideration to the portfolios of family members and small individual investors as they
do to wealthier clients. These kinds of practices ensure the public receives fair treatment.
The concept of business ethics began in the 1960s as corporations became more aware of a
rising consumer-based society that showed concerns regarding the environment, social
causes, and corporate responsibility. The increased focus on "social issues" was a hallmark of
the decade.
Since that time, the concept of business ethics has evolved. Business ethics goes beyond just
a moral code of right and wrong; it attempts to reconcile what companies must do legally vs.
maintaining a competitive advantage over other businesses. Firms display business ethics in
several ways.

Why Is Business Ethics Important?

There are several reasons business ethics are essential for success in modern business. Most
importantly, defined ethics programs establish a code of conduct that drives employee
behaviour—from executives to middle management to the newest and youngest employees.
When all employees make ethical decisions, the company establishes a reputation for ethical
behaviour. Its reputation grows, and it begins to experience the benefits a moral
establishment reaps:
 Brand recognition and growth
 Increased ability to negotiate
 Increased trust in products and services
 Customer retention and growth
 Attracts talent
 Attracts investors
When combined, all these factors affect a business' revenues. Those that fail set ethical
standards and enforce them are doomed to eventually find themselves alongside Enron,
Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie Madoff, and many others.

What Business Ethics contributes to the business ?

Enhanced Reputation and Brand Image

Reputation is a valuable asset for any business, and ethical behaviour is crucial in building
and maintaining a positive reputation. Businesses prioritizing ethics are perceived as
trustworthy and reliable, enhancing their brand image. Customers, employees, investors, and
other stakeholders are more likely to engage and do business with companies known for their
ethical practices. A good reputation and brand image also provide a competitive advantage in
the market, as customers are more likely to choose a company with a strong ethical track
record over its competitors. A good business reputation is vital to potential customers since it
reflects dependability and honesty. Customers are willing to spend more when doing business
with organizations with a solid reputation.
Increased Customer Loyalty
Ethical business practices foster customer loyalty. Today's consumers are more conscious of
businesses' social and environmental impact, and they prefer to support companies that align
with their values. Businesses that demonstrate social responsibility, fair labour practices, and
environmental sustainability are more likely to attract and retain loyal
customers. Customers are more likely to purchase from ethical businesses repeatedly,
improving the company's earnings over time. Customers are also more likely to recommend
ethical businesses to others, leading to positive word-of-mouth marketing and increased
customer referrals.
 National Case Study on Marketing Ethics.
About the Company
Xiaomi Corporation, commonly referred to as Xiaomi, is a Chinese multinational electronics
company headquartered in Beijing, China. Established in April 2010 by entrepreneur Lei Jun,
Xiaomi quickly gained prominence for its innovative approach to consumer electronics,
particularly smartphones and related smart devices. The company's name "Xiaomi" translates
to "millet" or "millet technology," symbolizing the company's mission to provide high-quality
technology accessible to everyone.
Company Mission and Philosophy:
Xiaomi's mission is to relentlessly build amazing products with honest prices to let everyone
in the world enjoy a better life through innovative technology. The company's philosophy
revolves around the principle of "innovation for everyone," which underscores its
commitment to providing cutting-edge technology at affordable prices.
Business Model:
Xiaomi's unique business model involves selling its hardware products at cost or a low
margin, relying on the sale of software services and ecosystem products to generate revenue.
This approach aligns with its mission of providing high-quality technology at honest prices.
The company's Mi Ecosystem model, also known as the "Xiaomi IoT (Internet of Things)
Platform," encourages third-party companies to develop products that can be seamlessly
integrated into Xiaomi's ecosystem.
Global Expansion:
While Xiaomi initially gained prominence in China, it rapidly expanded its presence to
international markets. The company's expansion strategy often involves entering markets
with a localized approach, catering to the specific needs and preferences of each region.
Xiaomi has established itself in various countries, including India, Southeast Asia, Europe,
and other parts of the world.
Innovation and Research:
Innovation is a core tenet of Xiaomi's identity. The company invests heavily in research and
development to create products that push technological boundaries. Xiaomi's focus on user
feedback and iteration allows it to continuously refine its offerings based on customer needs.
Community Engagement:
Xiaomi has cultivated an engaged and passionate user community, which has become a
significant part of its success. The company leverages social media, online forums, and other
digital platforms to interact with users, gather feedback, and incorporate suggestions into its
product development and improvement processes.
Concept
With the intense development and growth of China's mobile communication and technology
industry, many manufacturers have come up to take the advantage of growing market of
mobile phone users. Approximately 1 billion people own a smartphone. This has led to birth
of many of the world’s famous mobile phone brands. One of the major brand, emerged in
2010 was Xiaomi. In this paper, background of Xiaomi’s, its marketing strategies, business
models have been presented. Also, comparative analysis of marketing strategy of Xiaomi and
other manufacturers has been done to understand the reasons for the market success and the
exponential growth exhibited by the company. The current state of information available
through various platforms has been used to perform the study. It has been inferred that, the
primary reason for this exceptional growth has been the product quality at cheaper rate with a
focus on customer feedback and requirements. The testimony to this fact is its ever expanding
portfolio into various domains such as smart TVs, Speakers, home appliances, personal
computers to name a few.
Introduction
In the last 5 years it has been observed that the smartphone industry has grown exponentially.
Long gone is the time when the consumers needed to carry 2-3 kg laptops for their daily
requirements. Nowadays big brands like Xiaomi have been adopting the strategies of hunger
marketing where the availability of the product is intentionally restricted by the manufacturer
to create surplus demand in the market. A major change has been identified in the usage
pattern of consumers which has been strategically tapped by companies. Xiaomi’s first
android based firmware MiUi was launched on 16th August 2010 and a year later it launched
is first smartphone Mi1 in China. The product became successful and further new models
were launched namely M2, M3 and Redmi phones on the domestic front. Xiaomi hired Hugo
Barra (ex. Google Android Executive) who paved the way for its expansion in the offshore
markets. After successfully capturing significant market shares in the rest of Asia, Xiaomi
entered Indian markets in July 2014. Initially Xiaomi made an exclusive partnership with
ecommerce giant Flipkart to sell its smartphones but later on 7th April 2015 they changed
their distribution strategy and announced partnership with Amazon and Snapdeal. They first
started productions in Sricity (A.P.) at that time 200 million people owned a smartphone out
of 1.2 billion people. By the end same year, they captured 1.5% of Indian market share which
doubled in 2015 competing along with homegrown brands like Micromax, Lava and other
international brands like Samsung.77% of the smartphones were locally made that benefited
them in reducing the operational costs. By the same time Xiaomi had overtook Samsung and
Apple by the end of 2015 in China. Xiaomi.inc which was ranked 2nd amongst 50 other
reviewed reputed companies (viz. Apple, Google, Microsoft etc.) by MIT technology review
(2015). This happened just within a year Xiaomi stepped in the Indian markets.
RESEARCH OBJECTIVES :
The objective of this paper is to analyze the marketing strategies of Xiaomi and to find out its
secret of success of in India.
MARKETING STRATEGIES :
3.1 Introduction to marketing strategy Penetration into any foreign markets requires various
mix of marketing strategies which will impact success of any firm. It can be achieved in 2
ways. They can either use traditional marketing mix or can customize their existing mix
according to the requirement of the country. If same marketing mix is used in the export
country to attract customers, standardization strategy is normally used by the firm as it
requires less investment as compared to adaptation strategy but the trends observed in the
present scenario reveals that companies are customizing products according to consumer
needs rather than providing a single product throughout its worldwide market . Creating
brand loyal customers is an important step to ensure future expansion and it can be done by
exceeding their expectations. Companies need to face competition in order to survive in the
market. As smartphone manufacturing has gained momentum the primary way of having a
competitive advantage and ensure survival it is important that firms maintain their profit
margins while simultaneously expanding the customer base.
3.2 Marketing Strategies adopted by Xiaomi Xiaomi has expanded and established itself as a
valued startup and it has a chance of becoming the world's top most smartphone company.
There are two basic competitive strategies followed by Xiaomi that are manufacturing
products with superior qualities and features and produced at a lesser cost. In addition, there
are certain extra features that are present in Xiaomi phones that drive the attention of the
customers towards it. Before launching its phone, the company had surveyed the market
aggressively and analyzed the competitive strategies of smartphone giants like Apple and
Samsung. Those were having strong customer loyalty having a robust operating system that is
Android. Android was chosen as the operating system and Xiaomi designed MI UI its own
customized operating system based on Android with added cloud services, security, apps,

music, video player, browser and many more common items. The core competitive
strategies adopted by Xiaomi competitive cost, quick expansion in the offshore markets, less
margins and selling products online exclusively. Indian market is very diverse and large and
it is difficult to penetrate it in one go hence Xiaomi chose a narrow segment to cater initially
which aspired to produce a great product but at the same time at lower costs for the cost
conscious customers. These are the following market strategies adopted by Xiaomi.
3.3 Innovating the products Xiaomi always believed in a system in which there is continuous
innovation not only for their operating system but also for their marketing strategies and
programs. The products mainly smartphones manufactured by the company are of superior
quality and their aimed to provide value for money proposition to their customers its sub
brands known as MI and Redmi have been delivering great value for money smartphone
models. Some of its famous mobile phones were 4S, MI 4 and Redmi Note 3. These mobile
phones had rocked the market with huge sales and continue to do so with their latest
upgraded models being released regularly by the company. Redmi Note 3 as per IDC was the
highest shipped device in the history of online smartphone industry with more than 2.4
million within 6 months.
3.4 Focusing on aggressive pricing and maintaining high quality standards
Initially, the markets were dominated by
the smartphone giants like Samsung and
Apple, and local players of the specific
market and Xiaomi had realized that it is
very difficult to compete with them and
hence had to focus on expanding its
customer base by providing high quality
products and charging low premium for
them. Xiaomi did this by offering limited
number of products toward targeted
customer base of range 10000 -15000
rupees in Indian market by reducing its
advertisement cost by adopting the online
advertisement strategies. Another way of
reducing the price was exclusive
partnership with online retailers like Flipkart and Amazon that reduced the logistic costs.
These online retailers also had history of consumer satisfaction and trust which was also
utilized buy Xiaomi. 3.5 Minimum investment on conventional advertising Xiaomi was one
of the few brands which promoted a unique marketing approach to appeal the market it was
the brainchild of CEO of the company Lei Gen. Word of mouth publicity was used as it was
believed by the company that satisfied customers create positive vibes in the market and it is
also a cost effective way to penetrate into the other international markets. Minimum
expenditure was made on traditional advertising and instead social media; online forums were
used to connect with the
target audience. The
engineers of Xiaomi had
direct contact with the
consumers and hence helped
them to gather useful
information to overcome the
difficulties and modify the
software according to the
consumer needs. Another plus
point with Xiaomi was that it
advertised itself as a
consumer friendly brand with
establishment of customer
care centers which catered the
problems and continuously
improve upon them. 3.6 Loyal
fan base Xiaomi had created a
huge fan following who were
the early adopters and the first
ones to buy MI UI smartphones they were known as MI- fans these were the people mainly
consisting of bloggers, patrons who constantly created buzz on the internet about the
company, its products and services it provided. China had a micro blogging platform with
more than 400 million subscribers known as Sina Weibo and it was used as a medium for
promotion. The company saw the potential of the app and decided to sell phones directly
from it. Now a days Xiaomi uses online channels like Flipkart, Snapdeal and Amazon for
advertisement and selling of products to its target customers. Customers being the most
important aspect also involve themselves completely in designing and development process
where their inputs are taken through the online mediums such as social media sites, micro
blogging platforms and are incorporated suggesting changes in the new products.
3.7 Earning revenue from the software This strategy used by Xiaomi was one of its most
effective strategies executed. Xiaomi, having excellent software based on Android having a
customer base of more than 50 million users, Xiaomi developed its own themes, games and
apps which work pre-installed on MI UI and helped contribute more than 6 million sales
revenue on a monthly basis. Just like Amazon and other e-commerce Xiaomi worked and
aspired to earn profits via its ecosystems and marketing various goodies. In recent times
Xiaomi has allowed advertisement into sum of its apps installed on MI UI that further help
generate revenue and has received mixed response from the consumers as well as critics.

3.8 The method of flash sales

Older and more established brands
like HTC, Samsung, Apple and
many more local players make
their products available in the
market through third party retailers
and stores but on the other hand
Xiaomi does not follow this
method and sells its products via
online flash sales. In these flash
sales a limited quantity of product
is available for sale at a particular
time, and the sale continues till the
stock lasts with an intention to
encourage customers to go for
impulse buying. The limited
quantity also motivates the
customers to buy the product on
spot this method increases the
profits of the company, prevent the
hoarding of stock and over
production. The main advantage of flash sales is that it aids in inventory management avoid
the over production and create scarcity. For example, a flash sale of company in which
Xiaomi launched MI 4. It went on sale via Flipkart in 2015 and in the first flash sale the
demand of the mobile exceeded it supply by at least 10 times.
4. ENTRY INTO THE INDIAN MARKET : After its successful market domination in
China Xiaomi's major move was to establish itself in India the company had to go neck to
neck with domestic as well as international players already existing in the Indian smartphone
markets. The new Indian customers were also apprehensive that their data would be directly
accessed by the Chinese government India has a very diverse and competitive smartphone
market and to be successful and survive and constantly evolve. Xiaomi had to focus on
different strategies and product mixes to effectively target different segments. The
segmentation was done mainly on the basis of four factors that were the Purchase power, the
required functionality, the technology technological familiarity, and the intended use. Hence
three broad customer segments for defined-
(1) Entry level: This consumer base of Xiaomi consists of people who belong to low
socioeconomic classes and these people usually spend a very minor portion of their income
on technology based products but they have a high level of curiosity in owning them. Pricing
is always an important factor for this people and they always look out for cheaper substitute,
they respond highly to advertising and the better the advertising the better is the chance of
making them by the intended smartphone product.
(2) The mid-range consumers: This group mainly comprises of the middle class people
who are moving from the lower sections of the society towards the higher sections. They look
for a reasonably priced product which has lot of value added features these people are ready
to spend their earnings into new technological products provided they get the features they
expect.
(3) High end consumers: These consumers mainly comprise of the people coming from
business backgrounds with high source of income and they mostly willingly invest in new
and upcoming technologies dominated by big brands like Apple, Samsung etc. Xiaomi knew
that these customers are not a big fish for them so it did not focus these customers initially
but now after establishing itself in the lower and the middle segments it has started focusing
this segment.
(4) Current scenario of Xiaomi in India: People
in India are very particular about some things
when they purchase any product and quality is
one of the major factors while choosing between
different products. When we look into
smartphones the main factor that decides the
quality of a smartphone is its build quality. The
build quality is all about the durability of the
phone. The smartphone market is divided in to
two categories in terms of build quality- metal
and

plastic. There is a mental block that

keeps running in the minds of people
which is, if a phone is priced low then
the parts used in its manufacturing were
not of the prime quality. This is not the
case with Xiaomi’s products. Xiaomi is
among the brands which will give you a
quality product at a very low rate and this is exactly how it captures most of its
market. Now the question arises how it does that? There are many aspects which come
into play when it comes to increasing the sales and this can be done with the help of
marketing. Usually company spends a lot when it comes to marketing and the most
they spend on is advertisements. This is exactly where Xiaomi takes the lead, it does
not spend a lot on advertisements instead it directs most of its money flow into the
R&D and the manufacturing sectors and this is how it manages to keep a remarkable
quality with such a price. There has been little or no signs of slowing down of Xiaomi
in India. This Chinese brand has registered and impressive 155% annual shipment
growth. Xiaomi has shipped around 9 million and has grabbed the market share of
above 31% and this is the highest ever for a vendor since the quarter 1 of 2014 when
Samsung had a share of 33%. It has also been observed that the gap between Xiaomi
and Samsung has increased. Samsung shipped 7.5 million smartphones, whereas Oppo
took the third place with 2.8 million and Vivo the fourth place with 2.1 million units.
In total, the smartphone market in India grew at 8 % to 29.5 Million units for the first
quarter of 2018.
Interpretation of the Case Study :
"A Case Study on Marketing Strategy of Xiaomi", No wonder that XIAOMI has
acquired the Gigantic market, which is considering and catering Middle Class people.
Xiaomi's acquisition of a significant market share can be attributed to a combination
of innovative marketing strategies, customer-centric approach, localized market entry,
and strategic decision-making. The case study on Xiaomi's marketing strategy
provides insights into how the company has successfully acquired a gigantic market
share, particularly in markets like India. Here's a breakdown of how Xiaomi achieved
this feat:
Innovative Product Offerings: Xiaomi entered the smartphone market with a unique
proposition – offering high-quality smartphones at affordable prices. This disruptive
strategy immediately captured the attention of consumers who were looking for value
for their money. By delivering feature-rich devices at competitive prices, Xiaomi
carved a niche for itself, appealing to a wide range of consumers.
Market Growth and Opportunity: The case highlights the rapid growth of the
smartphone industry, driven by the increasing number of smartphone users. It
underscores the immense opportunity that manufacturers like Xiaomi have in
capturing a significant share of the market.
Localized Market Approach: Xiaomi's success is not limited to a one-size-fits-all
approach. The case study highlights Xiaomi's practice of tailoring its products and
marketing strategies to the specific needs and preferences of each market. This
localized approach enables Xiaomi to resonate with consumers on a personal level and
cater to their diverse requirements.
Continuous Innovation: Xiaomi's commitment to innovation ensures that its product
offerings remain fresh and appealing. The introduction of new features,
functionalities, and product variations keeps consumers intrigued and eager to explore
Xiaomi's latest offerings. This approach sustains consumer interest and contributes to
the company's market share growth.
Flash Sales and Demand Generation: Xiaomi's unique sales strategy, characterized
by flash sales with limited availability, creates a sense of urgency and excitement
among consumers. By effectively managing inventory and driving demand, Xiaomi
maintains a strong market presence.
Word-of-Mouth Marketing: Xiaomi's focus on customer satisfaction and
engagement has led to positive word-of-mouth marketing. Satisfied customers become
advocates, spreading the word about the brand's value proposition and driving organic
growth. Outspreading the effectives of any product builds perspective prior to operate
the thing, which somehow contributes to overall growth.
Affordable Premium Perception: Xiaomi's strategy of delivering high-quality
products at affordable prices creates a perception of "affordable premium." This
perception positions Xiaomi as a brand that offers products of comparable quality to
premium brands but at a fraction of the cost.
In essence, Xiaomi's acquisition of a significant market share can be attributed to its
holistic approach that combines product innovation, customer engagement,
localization, and strategic diversification. By challenging industry norms, focusing on
consumer needs, and fostering brand loyalty, Xiaomi has effectively positioned itself
as a giant in the global smartphone market.
At the core of Xiaomi's success lies its innovative marketing strategies that challenge
conventional norms. Unlike established players, Xiaomi employs a localized approach
that resonates deeply with diverse markets. By offering high-quality smartphones at
competitive prices, Xiaomi effectively disrupts the status quo and captures the
attention of cost-conscious consumers. This approach defies traditional global
marketing practices and illustrates Xiaomi's commitment to catering to local
preferences and needs.
Moreover, Xiaomi's strategy encompasses more than just offering affordable products.
The company's emphasis on continuous innovation and differentiation sets it apart
from the competition. By introducing novel features, functionalities, and product
variations, Xiaomi keeps its offerings fresh and appealing to consumers, creating a
strong competitive edge.

Outcomes :
The case study also underscores Xiaomi's unique customer engagement approach.
Through direct interaction via social media, forums, and online platforms, the
company fosters a loyal and engaged customer base. By actively listening to customer
feedback and integrating suggestions into product development, Xiaomi cultivates a
sense of community, resonating with consumers on a personal level and fostering
brand loyalty.
One of the most notable aspects of Xiaomi's business model is its ecosystem strategy.
Xiaomi generates revenue not only from hardware sales but also from software
services and a network of ecosystem products. This diversification mitigates reliance
on a single revenue stream and aligns with the company's philosophy of providing
value to customers through various touchpoints.
Xiaomi's strategic entry into the Indian market exemplifies its adaptability.
Recognizing the intricacies of the Indian market and consumer preferences, Xiaomi
tailored its offerings to specific segments, focusing on cost-effective products. This
approach enabled Xiaomi to quickly gain traction in India, positioning it as a major
contender in a diverse and competitive market.
Furthermore, Xiaomi's flash sales strategy showcases its ingenuity in inventory
management and creating demand. By limiting product availability during flash sales,
Xiaomi generates a sense of urgency among consumers, effectively managing
inventory and stimulating sales.

Xiaomi's innovative marketing strategies and commitment to customer engagement

have contributed to strong brand recognition and a positive reputation. The company's
reputation for delivering value-for-money products has helped build trust and loyalty
among consumers. It’s ecosystem strategy, which involves generating revenue from
software services and ecosystem products, has led to a diversified revenue stream.
This approach reduces dependence on hardware sales alone and ensures a stable
financial foundation for the company. Also, ecosystem strategy, which involves
generating revenue from software services and ecosystem products, has led to a
diversified revenue stream. This approach reduces dependence on hardware sales
alone and ensures a stable financial foundation for the company.
In conclusion, the Xiaomi case study paints a vivid picture of a company that
challenges norms, prioritizes innovation, and establishes connections with its
customers. Xiaomi's success is not merely a result of affordability but is driven by a
multifaceted approach encompassing innovation, differentiation, engagement, and
adaptability. As the smartphone industry continues to evolve, the case study serves as
a testament to the power of disruptive marketing strategies and customer-centric
business models that redefine how technology companies thrive in the global market.
International Case Study on Marketing Ethics.

Fingerhut is a well-known American online retailer that specializes in offering a wide

variety of products, primarily through its website and catalogs. The company was
founded in 1948 by William Fingerhut and his brother Manny Fingerhut, initially
focusing on selling automobile seat covers. Over the years, Fingerhut evolved into a
general merchandise retailer, expanding its product range to include clothing,
electronics, home goods, toys, and more.
What sets Fingerhut apart is its unique approach to credit. Fingerhut often targets
consumers with limited credit history or poor credit scores who may have difficulty
obtaining credit from traditional sources. The
company offers a credit line to customers that
allows them to make purchases from Fingerhut's
extensive catalog and online store. This credit can
be used to buy a wide range of products, which
can then be paid for over time through monthly
installment payments.
Fingerhut's credit-based model provides an
opportunity for individuals to access products they
might not otherwise be able to afford upfront,
while also helping them build or rebuild their
credit history through responsible payment
behavior. Additionally, Fingerhut reports customer
payment history to credit bureaus, which can
contribute to improving their credit scores over
time.
It's important to note that while Fingerhut can be beneficial for some consumers, its
credit terms and interest rates can be higher compared to traditional credit options. As
with any financial decision, potential customers should carefully review the terms and
consider whether Fingerhut's offerings align with their financial needs and goals.
Marketing Ethics and Vulnerable Populations: Retailer Fingerhut case
study

In Donaldson and Werhane’s text, Ethical Issues in Business (2008), chapter 13

focuses on marketing ethics. One case study presented is based on Fingerhut’s
targeted marketing approach, pricing strategies, and advertising methods (pp. 491 –
503). Conceptually, the case study presents ethical concerns, perceptions, and
dilemmas for companies marketing to populations which may be perceived as
socially, economically, or otherwise disadvantaged. Several authors deal with these
ethical issues and the inherent risks of marketing to disadvantaged populations
(Caplovitz, 1967; Hunt & Vitell, 2006; Martin & Huckins, 1997; Palmer & Hedberg,
2013; Stanton & Guion, 2013; Wilkie & Moore, 2006). Disadvantaged populations
can be found within any one country, such as in the Fingerhut case in America, or in
foreign populations such as third world populations targeted by multi-national
companies (MNCs). Many of the issues often revolve around the definition of a
vulnerable population and the associated social perceptions.

Although one may typically think of unscrupulous and deceptive marketing

techniques as the boundary for unethical marketing, unethical marketing to
disadvantaged populations may be based on the context of the target population
(Palmer & Hedberg, 2013; Martin & Huckins, 1997). Stanton and Guion (2013)
conclude that a disadvantaged population may not even be readily apparent. They
make the case that marketing to new parents may be considered unethical when
companies use emotional advertising techniques. This paper will explore the
Fingerhut case in context with the concepts of marketing to disadvantaged
populations.

Case Study Background

Fingerhut is a Minneapolis based direct marketing company with revenues of $1.8

billion as of 1996. It sells a broad line of consumer goods including clothing,
housewares, electronics, appliances and furniture (Donaldson & Werhane, 2008). The
company used data bases and data mining techniques to target households with
household income in the bottom third of American families and customized their
marketing messages accordingly. Most of the target families were generally
underserved by the market including brick-and-mortar companies such as Wal-Mart,
Sears, K-Mart, or Target. Few of these families could qualify for credit cards or store
credit. Fingerhut specialized in installment payment plan financing with low monthly
payments for these families who normally could not afford such products. Fingerhut’s
net finance charge was 24.9% APR while companies such as Sears were typically
around 22% APR. Fingerhut could not compete on the basis of low prices against
larger competitors, so competed on its bundled sales and high-risk credit payment
strategy.
In 1996 Fingerhut laid off 570 Minnesota workers moving many operations to Florida.
That same year, four Minnesota women customers sued the company alleging that
Fingerhut charged usurious interest rates (Donaldson & Werhane, 2008). The suit was
highlighted in the Minneapolis Star Tribune suggesting that Fingerhut was profiting
by exploiting the vulnerable poor and using misleading advertising. The article came
to the attention of the Minneapolis Urban League, the NAACP, and several other
organizations. These organizations documented their support for the women’s suit in a
brief submitted to the court. Of even more concern to the company, the plaintiffs’’
attorneys had filed to certify the case as a class action suit which would spread it
across Fingerhut’s entire U.S market, further damaging the company’s image.
Discussion
The concept of a vulnerable population is complex and can be defined in many
different ways. Most authors agree that all consumers will be vulnerable at some point
in their lives (Mansfield & Pinto, 2008). This may be only a temporary condition
based on the situation (such as when a loved one dies) or may be a permanent
condition due to a lack of education, coping mechanisms, or other conditions that
preclude the individual from making informed purchase decisions. Society does have
some commonly held definitions for vulnerable populations such as children, the
illiterate, the uneducated, the physically or mentally disabled, people in emerging
markets, and the like, but the definition of a vulnerable population can be variable
(Palmer & Hedberg, 2013). Fingerhut employed traditional marketing techniques
including custom tailored marketing messages, bundled pricing, and pricing theory
concepts. It has long been – and continues to be – a typical marketing strategy to
reduce large purchases into smaller monthly payments and to package credit plans
with such purchases (Mansfield & Pinto, 2008). Admittedly, Fingerhut’s advertising
focused on low monthly payments with the total purchase price in small print;
however, many other companies such as the Chevrolet used similar techniques. One
Chevrolet advertisement used the slogan that one of its models cost less per day than a
burger, fries, and shake (Donaldson & Werhane, 2008). The central concern in these
arguments then is perhaps not the methods Fingerhut employed, but rather that they
were inappropriate for the target market population which was less able to read and
understand Fingerhut’s financing offer (Palmer & Hedberg, 2013; Martin & Huckins,
1997). Although Fingerhut’s approach may have been legal, stakeholders and
customers were asking whether it was predatory and moral.
One might conclude that Fingerhut’s company culture led the company to unethical
marketing to vulnerable customers. Studies have shown that leadership attitudes can
significantly affect ethical corporate behaviour (Johnson, 2014). The general culture
and management within the company at all levels, however, demonstrated a high level
of social consciousness (Donaldson & Werhane, 2008). The CEO was well known for
both his philanthropy and environmental concern. The central point, then, does not
appear to be intentionally unethical behaviour; it appears to be the social perception of
Fingerhut’s marketing to potentially vulnerable customers. In concert with the Kant school of
strict moral thought, Roger Crisp argues that all forms of persuasive advertising somehow
violates consumers’ autonomy in decision making, creating unfounded desire (Donaldson &
Werhane, 2008). Palmer and Hedberg (2013) suggest that some authors “have improperly
categorized certain morally permissible marketing practices as being immoral” (p.403). This
may have been the unfortunate situation for the customers and involved parties in the
Fingerhut case. Many of the issues then revolved around the definition of vulnerable and
morally acceptable advertising. In the end, the Fingerhut lawsuit was dismissed in court in
March 1997. What long term damage may have occurred to the company’s image is not
known; however, the company continues to operate profitably with over 4 million active
customers (Infocentricity, 2005). The point, therefore, is not the legal ramifications, but
rather, the public perception of the company’s moral practices. Today, the business trend is
toward sustainable business practices with customer centric and socially responsible
marketing (Wilkie & Moore, 2006). In 1996, however, these issues were only then coming to
the forefront of social concerns (Donaldson & Werhane, 2008). In 2006 Hunt and Vitell
proposed a framework for recognizing potential ethical issues, their deontological and
teleological components, and a company’s review of anticipated outcomes and potential
unanticipated outcomes of their decisions. Later, Lindgreen, Swaen, and Johnston (2009)
studied the corporate social responsibility (CSR) of 523 American businesses. They
concluded that companies must attempt to understand their social responsibilities through the
“eyes of the
stakeholders which
requires an ability
to comprehend how
stakeholders
perceive the
business” (p.136).
They provide a
framework for
thinking through
that process (Figure
1) and conclude
that, although
imperfect,
companies must be
open to recognizing
the need for change
and improvements, and then align their marketing with that perception.
 Figure 1. Conceptual framework for thinking through socially responsible marketing.
Lindgreen, A., Swaen, V. & Johnston, W. (2009). The Supporting Function of Marketing in
Corporate Social Responsibility. Corporate Reputation Review, 12(2), p. 126. Reproduced
for educational purposes only.

Conclusion & Recommendations

Companies need an approach to align corporate ethical values with their marketing and
marketing messages, especially when potentially vulnerable populations are involved
(Donaldson & Werhane, 2008; Mansfield & Pinto, 2008; Palmer & Hedberg, 2013). This is
true even when the company is operating within legal regulations. The public and company
stakeholders may have a very different viewpoint or lens through which they judge the
company’s actions. The company’s original intent may be misinterpreted and appear
unethical. This appearance may be more important than the factual case as demonstrated in
the Fingerhut case study. Hunt and Vitell (2006) and Lindgreen et al (2009) are but two of the
frameworks available for analyzing ethical marketing and company issues. Either model can
move a company further on the path to socially conscious marketing. Both studies concur that
the key issues for ethical marketing include scanning the environment for awareness of
potential ethical issues; analyzing those issues; and understanding the anticipated
consequences and potentially unintended consequences. The Fingerhut case study, although
now nearly 20 years old, provides a good foil to examine these issues.