7 OBJECTIVE

Along väth product safety, adwrtising is a secolkl aræa of nurketing tllit has received significant legal and philosophical attention by tmse
study business ethics. goal of all nurketing is tlw• sale, tlk* ew•ntual exchange between seller and buyer. A nujor elenent ofnurketing is sales
pronxjtion, tle attenpt to influence tle buyer to convlete purchase. (See Lhcision Point "Adw•rtising Drugs.') Target nnrketing nuketing research
are two invortant elenents of product placenent, seeking to determine which audience is most Ikely to buy and which audience is nxjstly IWvely to
be infltenced by product promjtion
Tlhere are, of course, ethically good and bad ways of influencing others. Anong the ethically connendable ways to influence another are
persuading asking, informing, and advising Uhethical neans ofinfluence would ixlude threats, coercion, deception, nunipulation, page 301

and lying. UnK)1tunately, all too sales and adwrtising practices enploy deceptive or nunipulative nears ofinfluence, or are ainvd at audiences tlut
are susceptible to nunipulation or deception. The concept of nunipulation (and one of the key ways of nunipuhting people, nanel'y' deception) is
central to tle ethical Ksws expkjred in chapter can help organiie tlr following sections.
To nunipulate sont•thing is to guide or dh•eet its behavior. Manipulation need not involve total control, and in fact it likely suggests a process
of subtle direction or Manipulating people inplies working behind tlw• scenes, guiding tlr•ir behavior witlx»ut their explicit consent
or conscious understanding. In this way, nunipulation is contrasted with persuasion other of ratioml influence. When I nmmipulate soneone, I
explicitly do mt rely on that individual's own reasoned judgnent to direct ler or his behavior. Instead, I seek to bypass ililiülual's autonony
(alth0L@1 successfill nunipulation can be reinf»rced when tle person nunq•ulated believes she acted ofher oun accord).

nunipulate you We can nunipulate sonvone without decepticn as when a parent gets lwr teenager to tlv lawn by nuking tlw• teen feel guilty about
not canying his slure of fanil'y' responsibilities. Or a professor might nmnipulate students studying nxjre diligently by hinting that tlWIC? be a quiz
during tle next chss. These exanples raise a wry cncial point becalE;e tlry suggest that tlk: nxn-e one person kmws about another person's
psychologv—his or IV' mjtivations, interests, desWes, beließ, dispositions, so forth—the better able tlk* first person be to tnanipulate other's
behavior. Guilt, pity, a desi-e to please, anxiety, fear, low self-esteem prile, conformity can all be pouerful tmtiv•ators.
Knowing such things about another person provides effective took for rmnipulating IV or his behavior.
We can see how this is relevant to nurketing ethics. Critics charge tlut nuny nurketing practices nunipulate consumers. Clearly, nuny
advertisenvnts are deceptive, and sone are outri@lt lies. We can also see how nurketing research plays into this. The nxjre one leams about
custoner psychology', tlr• better able one will be to satisfy consuners' desi-es, but tlw• better able one will also be to nunipulate tleir behavior.
Consider tle cases of digital nurketing described in tle chapter's opening scenario exanples ofhow consuner inKjmution mi$lt be used to nunipulate
people. Critics also charge tlut sone nurketing practices target populations tlut are particularly susceptible to nunipukition alid deception.

Ethical Issues in Advertising

8 OBJECTIVE

The general ethical d&nse of adwrtising reflects both utilitarian and Kantian ethical standards. Advettising proGdes infjmution fjr nurket exclunges
therefore contributes to nurket efficiency and to oxerall luppiness. Advertising ilfimution also contl+utes to tlw• infomution necessary autononxjtcs
ildi'åduaLs to nuke inf»rned choices. But note tlut each ofthese rationales provides an ethical justification page 302 only ifthe inK»nmtion is
accurate and relevant.

According to Pew Research, pharmaceutical companies spent $27 billion in 2012 promoting their drugs. All but one of the largest 10 firms spent
more on marketing than they did on research and development. From 2012 to 2015, direct-to-consumer (DTC) marketing of drugs increased
from $3.2 billion to almost $6 billion annually.
Advertisements promoting prescription drugs have increased significantly within the United States since the Food and Drug Administration
(FDA) changed regulations in 1997 to allow DTC advertising—most countries still forbid such advertising. Among the most widely marketed
drugs have been Lipitor, Zocor, Prilosec, Prevacid, Nexium, Celebrex, Vioxx, Zoloft, Paxil, Prozac, Viagra, Cialis, Levitra, Propecia, and Zyban.
These drug names, literally household names today, were unheard of before the turn of the century; yet, together they accounted for over $20
billion in annual sales.
The medications mentioned here treat the following conditions: ulcers and acid reflux (Prilosec, Prevacid, fréxium); high
cholesterol (Lipitor, Zocor); arthritic pain (Celebrex, Vioxx); depression, panic attacks, and anxiety (Zoloft, Paxil, Prozac);
"erectile dysfunction" (Viagra, Cialis, Levitra); hair loss (Propecia); and cigarette and nicotine Wthdrawal (Zyban). Ads for these
drugs often appeal to such emotional considerations as embarrassment; fear; shame; social, sexual, and romantic inferiority;
helplessness; vulnerability; and vanity. Many of these drugs are heavily advertised in women's magazines or during televised
sporting events and evening network news shows.

1. Would you favor a ban on direct-to-consumer advertising for prescription drugs?

2. What facts v.ould you went to know before making a judgment about these ads?
3. Which ads, if any, raise ethical questions?
Who Arp fhp AfAkphnlHprq in Hr. lfl Advprfiqinr10 What arp fhp nnfpnfial hpnpfitq And nnfpnfial of AHvprfiqinaO
5. Are customers for prescription drugs particularly vulnerable to manipulation?
 6. What ethical principles have you used in making your judgments?

The principle-based tradition in ethics would Inve the strongest objections to nunipulation. Worn I nunipulate sonvone, I trvat him or her as a
nuns to ny oum ends, as an object to be tsed ratlrr than as an autonomus person in his or ler right. Manipulation is a clear exanple of
disrespect for persons because it bypasses tlrir oun rational decision nuking. Because tlw cnil rests v•äth tle intention to Itse amther as a neans,
even LilNecessfül nmipulations are guilty ethical 'Mong
As might expect, tle utilitarim tradition would a mjre conditioml critique goodness or badness ofnunipulation would
depend on tle consequences. For exanple, tlere surely can be cases of well-neaning paternalistic nunipulation in which soneone is nmmipulated för
his or her own good. But even in such cases, unf»reseen hanns can occur. Manipukition tends to erode bonds oftrust and respect bet',wen persons.
It can erode self-confidence and hinder tlw• dewlopnent of responsible choice anx»ng those nunipulated. In page 303

general, because nx»st nunipulation is done to fin-ther nunipulator's own el%ls at tlw• expense of tle nunipulated, utilitarians would be ixlined to
think that nunipulation lessens owrall luppiness. A general practice ofnunipulation, as critics claim often occurs in nuny• sales prutices, can
undemine tlw very social practices (e.g , sales) tlut it is tlxou$lt to pmnvte as tie reputation of sales is
A palticularw egregious förm ofnunipulation occurs when vuherable people are targeted for abuse. Cigarette adveltising ained at children is
exanple that has histori•ally received nujor criticism years. Marketing pmetiees targeted at older populations for sueh goods and services as
imurance (panicularly Medicare supplenental instu-ance), casinos and gan%ling, nursing hones, and funerals have been subjected to sinilar
criticisnw
We can suggest tlk* following general guidelines. Marketing practices tlut seek to discover which consunvrs might already and ililependently
be predisposed to purchasing a product are ethically legitinMte. So, exanple, contextual digital ads in which a banner ad a Montreal hotel appears
on your Imbile screen innediately after you search an airline flight to Montreal would seem legitinute. After all, such an ad nerely responds to your
own expressed interest in 'visiting Montn•al.
Marketing practices tlut seek to identify tlut can be easily influemed nunipulated, on tlw other hand, are ethically questionable.
Sales and nurketing that appeal to fear, anxiety, or other mnrational mtivations are ethically inproper. For exanple, an automjbile dealer who knows
tlüt an elderly wontin is anxious about purchase who LßCS this anxiety as a way to sell extended warranty insurance, disability insu-ance, tlr:fi
protection products, and tle Ike is unethical. nunner in whL:h this or other infornution collected is also SLbject to ethical concerns. (To explore if
consuner privacy might linit lwvv infomution is collected, see tle Reality Check 'Does Digital Marketing Raise New Ethical Issues?")
Marketing research seeks to leam sonething about psychologv ofpotential custonu-s. But not all psychological categories are Sone are nvre
cogniti',e and rational than others. Targeting tlw considered alid rational desi:æs of consuners is one thing; their anxk•ty, and whim is amtlu. (To
explore amther way in 'v',hich ewn truthfUl ads might nislead consuners, see tle Reality Check 'GMC) Labeling Can Tillthfül InKjmution Be
Misleading?')

Marketing Ethics and Consumer Autonomy

9 OBJECTIVE

D&nders of advertising argue that despite cases of decepti',e practices, 0',erall ad',ertising contributes nuc•h to tle ecommy. "The 11Mjority of
advertisenvnts provide infon-mtion to consuners, infonmtion tlut contributes to an efficient fünction ofecommic nurkets. These d&nders arge that
over tine, nurket fjrces will weed out deceptive ads and practices. They point out tlut tle mjst effective counter to a deceptive ad is a convetitor's ad
calling attention to tlw deception. And increasingly, social nedia gives aggriew•d consuners an effective way of voicing their dissatisfäction with
tleir purchases.

page 304

Deception and manipulation are two ethical concerns that seem as relevant to digital marketing techniques as they do to traditional
marketing. But digital marketing has the potential to raise concerns of consumer privacy that did not exist for traditional marketing techniques.
Tracking cookies are one common means by Mhich digital businesses can collect information about consumers. In some cases, the use of
cookies is explicitly detailed for consumers, and they are allowed to opt out of their use. In some cases, consumers are Marned that by opting
out, they risk losing functionality on the site they are visiting. In other cases, known as stealth tracking, consumers are unavvare that their
behavior is being tracked and recorded. Internet service providers (ISPs) and cell phone providers, for example, have the ability to track every
online action and phone call. This information uniquely identifies the user and cannot be controlled by the user by deleting cookies or
browsing history.
tracking information is used raises other ethical questions. This information is regularly sold to third parties, most often companies
interested in marketing to that user. But others might be interested as vell. Already, potential employers have shown an interest in the social
network sites of job applicants. Might they be as interested in browsing history?
For eyample, the dating site OKcupid allowed all registered users to access the personal information provided by users,
including not only name, religion, and political sympathies, but also information about personal habits, alcohol and drug use,
and sexual interests. All one needed to do to have access to this information vas to register on the site and agree to OKcupid's
terms of service agreement. This did not prove a deterrent to some Dutch researchers who collected data from the site for a
research project and made the data publicly
Another example involved the legal case Valentine u NebuAd, Inc. This case involved a digital marketing company, NEbuAd, that contracted
with ISPs to install devices on their networks that monitored ISP subscribers' internet activity and transmitted those data to NEbuAd's California
headquarters for analysis. The data were used to sell advertising tailored to subscribers' interests, which appeared in place of more generic
advertisements on pages visited by subscribers. In effect, NEbuAd stepped into the communication betv,een individuals and the browser they
 were using to substitute their client's ads for more generic ads that muld otherwise have appeared. The advertising profits generated from this
activity were split by NebuAd and its ISP partners.
ISP customers filed a class-action lawsuit against both B&buAd and their ISPs alleging that this practice violated their federal and state
privacy rights. The case was finally resolved after NebuAd entered bankruptcy and agreed to pay more than $2 million to settle the case.
1. Identify as many ethical issues involved in these cases as you can. Are any of these issues unique to digital marketing?
2. Who are the stakeholders in the OKcupid and NebuAd cases? Who was harmed by NebuAd?
3. Who should om and control personal information collected by cookies? Are there any limits that should be placed on how that information is
used and who has access to it?
4. Does an individual relinquish all claims to privacy by posting personal information on a social network site?
*804 F. supp. 2d 1022 (N.D. Cal. 2011).

in general do to people. People nuy well benefit from business's nurketing of its products. People leam about products tlvy nwy need or want; they
infomution helps tlV11 nuke responsible choices; they even sonetines ate entertained. But nnrketing also helps shape culture the ilklividua[s are
socialized %vGthin that culture, sone ',voukl say dranutically so. Marketing can IVive direct ilXlirect influence on tlw very persons we becone.
How it does that; tlr' kilul ofpeople becone as a result, is offiuxlanental ethical involtaæe. Critics page 305 ofsuch claims either deny tlut nurketing
can haw such influence or nuintain tlut nurketing is only a min-or ofthe culture ofwhich it is a part.

Free and informed consent is one of the fundamental ethical conditions on any exchange. Parties to the exchange must understand and give
their voluntary consent in order for the exchange to be ethically responsible. By meeting this standard, the exchange WII both respect the
autonomy of the parties involved and meet utilitarian goals of providing mutual benefit. Product labeling for ingredients and nutritional value
are tm ways that food labeling serves this ethical goal by providing consumers with the information needed to make a fully informed decision.
Should food that contains genetically modified organisms (GMOs) be required to carry a label that Identifies them as GVIO?
A number of reasons are offered to require GMO labeling. First, and perhaps most importantly, supporters cite a general consumer right to
know what they are purchasing. Labels provide consumers with the information they require to make truly informed decisions about food
products. This information is particularly important for vegetarians and others uho have health or religious reasons to avoid food containing
animal products. Thus, labeling serves the ethical goals of mutual benefit and respect for autonomy. Second, label requirements WII provide a
disincentive for the use of GMO technology and thus reduce the use of herbicides and other chemicals in food production. Third, labeling
provides a paper trail of information that can be used to track any potential problems that arise from the use of GMO foods. Finally, GMO
labeling is thought to provide a check on the power of large agricultural and chemical corporations that own and control much of the GMO
technology and products.
Those who oppose GMO labeling requirements argue that this would mislead and unduly alarm consumers. It is likely that
consumers WII perceive this as a warning label rather than simply an ingredient label, and this WII mislead consumers and
discourage them from purchasing the product. Critics argue that there is no evidence that GMO foods are unsafe and that, in
fact, they add significantly to agricultural productivity. Thus, anything that discourages GMO foods will reduce the amount of
food available for no health or nutritional reason. Critics also point out that they oppose only mandatory labeling, not voluntary
labeling. Food producers are always free to label food as GMO-free, as organic food producers already do; thus, consumers Wno
desire 3v•10-free food already have a way to make informed food choices. Voluntary labeling allows the market to function as
the means of meeting this consumer demand. If consumers demand GMO labeling, producers WII have a financial incentive to
provide it; if they are not demanding GMO labels, then requirements WII unnecessarily raise the price of food products.
1. Would you support mandatory labeling for all GMO food products?
2. Besides the sellers and consumers, what other stakeholders should be considered in making this decision?
3. I-bwvwuld you respond to the reasons offered by the side that disagrees with your views?
4. Is it reasonable to expect that some consumers WII interpret the label as a warning that GMO foods are unhealthy?
The initial proposal in this debate was offered by ecommist John Kenneth Galbraith in his 1958 book The Affluent Society. Galbraith clained
that advertising and nurketing veere creating velY consuner delmnd tlut production tlen aii1Vd to satisfy. Dubbed tlw• 'dependence effect," this
assenion held tlMt consuner dentilki depelxled on what producers had to sell. This mct had three nujor and unwelcone inplicati01N.
First, by creating wants, adve:tising was standing tie 'law' of supply and denund on its head. Rather tlun supply being a fünction ofdenund,
dermxl tum out to be a fimction of stmly. Second, adveltising alit nurketing tend to create ilTdtional am] trivial consunvr wants, and dist01ts
tm: entire economy. The '€dfllwnt" society ofcomsuner products and creature comforts is in nuny ways worse offthan so- page 306 called
undeveloped economies because resotn-ces denoted to contrived, private consunrr goods are therefire denied to nu-e invortant public goods
eonsuner needs. Taxpayers deny school dÉt1iets snull tax im•reases to provile essential fünding while parems drop their children Off at school in
$70,000 SUVs. A society that canmt guarantee vaccinations and mininul K•alth care to poor children spends millions annually for cosnetic surgery
to keep its youthful appearance. Fimlb', by creating consuner wants, advertising other nurketing practices violate consuner autonomy. Consuners
who consider free because tley are able to purcluse whit they want are not in fict free if those wants are created by nurketingu In slW1t,
consuners are being rmnipulated by advertising (To explore another neans by which consuner behavior numt be influenced, see tlw Reality Cleck
'New Clullenges to Old Problems: From Redlining to E- lining")
Ethicalb', tlw crucial point is tlw asseltion that advertising völates consunvr autonomy. The law of supply am] denund is reversed al%l tlv
economy oftle affluent society is contiived and dist01ted, only ifconsuner automny can be violated by adveltising's ability to create wants. But can
adveltising Golate comuner autonomy' alkl, if it does thß occur? Consider tlr: annual investnent in tlfi eff01t (see tlw• Reality Check "Advertising
Spending' '). Giw•n investnent, what does adveltisingdo to people to society?
One point of vi•wr within this debate tlut advettising contmls consunu- behavior. Sone psychological beluviorists and critics of subliminal
advertising for exanple, ha',e clained tlMt advertising can control consuner behavior by contmlling their choices. But this is an enpirical claim and
tlw• evidence suggests tlut it is filse. For exanple, sone studies show that nxjre than lulfofall new prodwts introduced in tlw nurket fail, a fäct tlut
should not be hue ifconsuner behavior really could be controlled by nurketing The claim here is that cotN1ners cettainly don't seem controlled by
advertising in any ob\ious sense ofthat word.
 But consunvr autonomy might be fi)lated in a subtler way. Rather tlun controlling belw.ior, perhaps adW1tiSing creates wants and desires on
tlr basis of which consuners act. föcus Irre becones tle concept ofautonomous desües ratlrr tlun autonomous behavior. This is null closer to tie
original assertion by Galbraith other critics ofadvertising Consuner autonomy is fi)lated by adveltising's ability to create nonaut01%jnxjus desi•es.
A helpfill exercise to undeß'tarxl Ixjw desires mi@lt be nonautomnx»trs is to think ofth2 nuny reasons people buy tlw they buy alll consune
tlw• things they do, and Why, in general, people shopping After certain basic needs are net; there is a real qwstion ofwhy people consune tle way
they do. People buy things for nuny including tle desire to appear fishiomble, for statts, to feel good, because everyone else is buying sonw•thing,
so fjrth. The interesting ethical question at this point where these desires originated, and how nuketing has influenced tlese mnnecessity
purchases. These questions and issues are raised in the Reality Check "Adve1tising for Erectile
Dysfunction"

page 307

Reality Check New to Cd Problems: From Redlining to E-linirv

by Tara J. Radin, M artin Calkins, and Carolyn Predmore
Today, more than two decades since the Internet became Wdely and publicly available, still lack consensus about the degree of ownership and
acceptable limits of data gathering and use. In fact, Richard De George's 1999 remark is arguably more valid now than previously: "The U.S. is
schizophrenic about information privacy, wanting it in theory and giving it away in practice." * Such schizophrenia is problematic in itself, but
it has been exacerbated by the questionable applications of data collection that have occurred. E-lining (electronic redlining) represents one
glaring example of how data gathering crosses moral boundaries.
Redlining is the practice of denying or increasing the cost of services to residents of certain geographic locations. In the
United States, it has been deemed illegal when the criteria involve race, religion, or ethnic origin. The term came to prominence
Mith the discussions that led to the Housing Act of 1934, Mich established the Federal Housing Authority, which later became
the Department of I-busing and Urban Development. It occurs vfien financial institutions (banks, brokerages, and insurance
companies) literally draw red lines on maps to distinguish between creditworthy and financially risky neighborhoods.
Although illegal, redlining has not died out completely. It reemerged recently Wien MCI removed international long-distance service via
calling cards from pay phones in poorer communities in the suburbs of Los Angeles. It reappeared also in retail sales when Victoria's Secret
allegedly tailored its catalog prices along customer demographics (specifically, ethnicity). In this case, two sisters living in different parts of
town discovered price differences when discussing items from seemingly identical catalogs. As the t'.nvo compared prices on the phone, they
found that the cost of some items varied by as much as 25 percent. A subsequent and more thorough investigation revealed that Victoria's
Secret had been engaging in an extensive practice of price variation according to gender, age, and income. In the end, although Victoria's
Secret was vindicated in the court of law, it lost in the court of public opinion.
Finally, it resurfaced when Kozmo.com, an online provider of one-hour delivery services, used zip codes to refuse to deliver merchandise
to customers in predominantly black neighborhoods. In all of these cases, companies (to different degrees) "exclude[d) classes of individuals
from full participation in the marketplace and the public sphere."
E-lining differs from these more traditional forms of redlining by not drawing a red line on a map, but by using information that Internet
users unWttingly leave behind as they surf websites. E-liners use "spyware" programs embedded in web pages to collect information
surreptitiously and with little or no outside oversight. They are able to "spy on" surfers in this way without much challenge because, at
present, there are few limits on Mat companies can do Wth the information they gather.
In recent years companies have used customer information to direct customers to particular products or services. In this way, they have
used information in much the same way high-end clothing stores use a list of customer phone numbers to alert customers about neWy
arrived items that match or complement prior purchases. At other times, businesses have not acted so benevolently. They have used the data
they collected in a discriminatory way to direct customers to particular products or services that fit a profile based on demographics. Amazon
has received significant criticism for its use of historical purchase information to tailor web offerings to repeat customers. Amazon allegedly
used data profiling in order to set prices. In September 2000, Amazon customers determined that they charged different prices for the same
CDs. Although Amazon claimed that the price differentiation part of a randomized test, the result was price discrimination that appeared to
be based on demographics.
This sort of discrimination and deprivation of financial opportunities according to demographics is exactly what the rules against redlining
are intended to prevent. The absence of comparable rules against e-lining is not, as some firms might like to argue, an indication that this sort
of behavior is acceptable in e-commerce, but, rather, is a reflection of the lag in time it is taking for the legal infrastructure to catch up with e-
commerce. Our current legal infrastructure, particularly in the United States, vhich is aimed almost exclusively toward brick-and-mortar
enterprises, does not account for the tremendous amount of information available through ecommerce or for the numerous in which e-
merchants are able to exploit customers through misuse of that informatiom The unfortunate reality is that there is not a clear distinction
betneen acceptable and unacceptable forms of information paqe 308 gathering, use, and market segmentation, and e-commerce provides a
cloak that insulates from detection meny firms engaging in inappropriate behavior.
There are few if any obstacles to firms engaging in questionable e-commerce business practices in the first place. Public
outcries are generally short-lived and do not appear to have a significant impact on e-shopping. If anything, e-commerce
continues to attract an increasing number of customers. In the meantime, few generally agreed-upon standards exist regarding
the acceptable limits of information gathering via the Internet. Instead, businesses are shaping the expectations of web users
and society in general as they