Marketing - Marketing consist of the performance of business activities that direct the flow of good s & services from producer

or manufacturer to consumer or user. The distinct elements coming under marketing includes : -product development -distribution -pricing -promotion -sales etc

Marketing Ethics & Consumer Rights The American Marketing Association has established a codes of ethics to provide guidelines for ethical conduct. It says in part that Marketers shall uphold & advance the integrity, honor,& dignity of the marketing profession by being honest in serving consumers, clients, employees, suppliers, distributors,& the public.

AMA has outlined responsibilities for each component of the marketing mix Marketing Mix Products & services- marketers have the responsibility to ensure product safety to disclose all product risks & to identify any factor that might change product performance. Advertising- marketers must avoid deceptive & misleading communications must repeat high pressure sales tactics,& must avoid manipulating consumers to buy.

Distribution Suppliers should not coerce their intermediaries in to taking unwanted products ,they should not create false shortages to drive up prices for their products. Pricing Marketers must not engage in price fixing/predatory pricing & must disclose all prices associated with the purchase including service ,installation & delivery.

. department etc .which the org are not able to adhere due to the play of their own interest.Reasons for unethical practices in Marketing -Competition cut through competition in the Similar industries will undoubtedly induce the mkt s to adhere to unethical practices -Prevailing practices in the industry. firm.

creating awareness .Understanding process .increasing their ability to make a better choice Marketer's use this for.Ethics & Advertising An advertising Enables the consumers.Stimulating demand for various products & services .Developing interest .

using unnecessary .Deliberate omitting of required information .Trade puffing & exaggerations .implying a benefit that hardly exist .creating cultural degeneration .Common Deceptive /unethical practices in Advertising -false & misleading presentation of facts .unwanted technical jargons .

-Creating ambiguities in the minds of consumers -creating fear in consumers -Plagiarism taking another's writing as his own -open critism of competitors. .

Ethics & Regulation In Pricing Acts that are in action for controlling unethical pricing are .where as sales person try to influence them to buy a high priced item. .FTC Act (Federal Trade commission Act) .Robinson Patman Act Four unethical areas of pricing includes  Deceptive pricing which includes bait & switch pricing -a low price offer intended to lure a customer in to a store .

which was phased out & was often unavailable. Inflated pricing to offer a discount off an inflated discount.For eg : Audi in USA was accused of Bait & switch tactics in 1998. Eg In India buy one sari & take two sari's free . the price would have been jacked upon the first sari covering the prices of the other two .It offered rebates on a product . the consumer is not actually getting a discount. leaving customers to consider other products without rebates.

the company then raises the prices back to their normal level. . Unfair pricing pricing practices to drive competitors out of business -Predatory pricing decrease in prices even below cost when competition are driven out .  Price Discrimination involves selling the same product to buyers at different prices with out any cost justification.

 Price fixing It is an agreement among firms in an industry to set prices at certain levels .price fixing agreement btw manufacturers & retailers or between manufacturers & distributors.The Sherman Act prohibits it because such actions restrict price competition . This involves an agreement that a product will be sold at the manufacturers suggested price & will not be discounted by whole salers /retailers .Two types of price fixing are -Horizontal price fixing -agreements amg competitors to fix price at artificially high levels -Vertical price fixing.

Retailers who are not cooperative were threatened Ethics &Product Packaging & Labeling Two important Acts that controls packaging are -Fair Packing & Labeling Act 1996 to enable consumers to make meaning full value comparisons -Nutrition Labeling & Education Act 1990 .Eg : Panasonic was accused of vertical price fixing by forcing its retailers to raise prices by 5-10 % .

.such as the policy of apartheid in south Africa.Nutrition Labeling & Education Act of 1990 (NLEA) states that the labels on the packaged food products contain information abt certain ingredients expressed by weight & as a percentage of the recommended daily diet in a standard serving size. Ethics & International marketing -doing business in certain countries regarded as having unethical political policies .

-Some companies from industrialized nations sell products to underdeveloped third world countries that have harmful effect on consumers or take unfair economic advantage of them.However Mobil remains in south Africa arguing it is better to continue & support blacks economically through higher wages.Most US companies have withdrawn from south Africa at the urging of US govt . .

. Four Pragmatic Reasons for Behaving Ethically by the Marketing Executives To protect the image of the org .Eg In 1970 s serious health problems amg babies in underdeveloped countries being fed Nestle s infant formula products. He should build up the image of the entire company acting in a dignified way.Buyers often form an impression of an entire org based on their contact with one person . He should be highly ethical.That person represents the marketing functions.

If marketers do not use their power in a socially acceptable manner . .To retain the power granted by the society Marketing executives wield a great deal of social power as they influence markets & speak out on economic issues.that power will be lost in the long run. There is responsibility tied to that power.

Mgt s interest is to be concerned with the well being of the consumers as the latter are the life blood of business.To reverse declining public confidence in marketingWe hear sometimes abt misleading package labels.phony list prices & infringements of well established trade marks. false claims in adds . . Due to this reputation of all marketers are damaged. Business leaders must demonstrate convincingly that they are aware of ethical responsibility & fulfill it.

To avoid increases in govt regulations Most of the govt limitations on marketing are as a result of mgt s failure to live up to its ethical responsibilities at one time or another. Once some form of govt control is introduced it is rarely moved. .

products that cannot withstand ordinary wear & tear.manufacture of non bio degradable plastic products -Mislabeled Products.Unethical Marketing Behavior wrt Important Elements of Marketing Product -Shoddy goods.flavored sugar water sold as apple juice for babies. -Inadequate warranties.warranties with insufficient time or parts coverage -Environmental pollution. .

-Brand Knock offs counterfeit branded good s sold as originals. Price -Excessive mark ups -Price fixing -Price discrimination .-Bribery of FDA officials to secure agency approval of generic pharmaceuticals -Manufacturing unauthorized substitutions in general drugs after FDA approval.

Persuasive role models for inappropriate products. .Promotion -Exaggerated claims .Inappropriate targeting . (Selection of wrong target mkt) .Deceptive advertising .Tasteless advertising -using vulgarity in advertising .Naïve audience -promoted to a segment totally ignorant abt that specific product.

. Distribution -Fraudulent sales -bait & switch tactics luring consumers with adds for low priced merchandise for the purpose of switching them to high priced models -direct marketing.Captive audience Mandatory viewing of TV commercials by students in schools .as per agreement mkting to be carried out by distributors but violating it the manufacturers directly mkt the product.

Packaging Deceptive quantities go for decreasing the product qty while maintaining the same price & traditional package size. Unethical consumer Practices -Shop lifting -Returning cloths that has been worn -Abusing the products & returning them as damaged goods -Redeeming coupons that are expired .

-Copying copy righted materials ( books .video tapes.-Returning products bought at sale & demanding the full price refund -Stealing belts from store clothing -Returning partially used products for full store credit -Abusing warranty or unconditional guarantee privileges -Damaging merchandise in a store and then demanding a sales discount.) . computer software with out permission.

There exist three theories which are common in use to determine when a product is defective & what is owed to the victims of accidents caused by defective products.Product Liability The right of consumers to be protected from harmful products raises a number of problems for manufacturers as products can injure & even kill People. .

1The Due Care Theory. It is based on Aristotelian principle of compensatory justice . Their obligation is to take all reasonable (due) precautions to ensure that products they put on the market are free of defects likely to cause harm.Manufacturers ought to exercise due care. largely on utilitarian considerations. The disadvantage of this theory is the difficulty of deciding what constitutes due care & whether it was exercised.on freedom of contract & strict liability. .the contractual theory .

Due care should be taken in fabricating parts to specifications & assembling them correctly. -Quality control-A systematic program me to inspect products at the operations end to ensure that they are of sufficient quality .The Due Care standards -Design designed in accordance with govt & industry standards -Materials Materials specified in the design should meet Govt & industry standards -Production.

.there may be an implicit understood contract between the two parties that is established by their behavior.which is subject to the terms of a contract. Even in the absence of an explicit written contract . The seller & the buyer relation is viewed here as a contractual relation .2The contractual Theory The responsibility of manufacturers for harm resulting from defective products is that specified in a sales contract.

a manufacturer need not be negligent nor be bound by any implied /express warranty to have responsibility. It provides a powerful incentives for manufacturers to take extreme precautions & creates a workable legal frame work for compensating consumers who are injured by defective products.3The Strict Liability Theory Here Law is considered to be strict liability . . Despite the absence of a fault is arguably the best theory.

Rights & Duties of parties in the marketing Exchange process General things to be kept in consideration by parties to the marketing exchange process -products & services offered are safe & fit for their intended uses -communication about offered products & services are not deceptive -All parties intend to discharge their obligation & otherwise in good faith .

-identification of extra cost added features In the area of promotion -Avoidance of false & misleading advertising . -identification of any product component substitution that might materially change the product /impact on buyers purchase decisions.In the area of product development & mgt -disclosure of all substantial risks associated with product or service usage.

-Rejection of high pressure manipulations or misleading sales tactics -Avoidance of sales promotions that use deception /manipulations In the area of Distribution -not manipulating the availability of the product for the purpose of exploitation -not using coercion in the marketing channels -not exerting undue influence over the resellers choice to handle a product. .

In the area of pricing .Disclosing the full price associated with any purchase.Not practicing Predatory pricing . -Treating outside clients & suppliers fairly .Not engaging in price fixing . In the area of marketing research -Maintaining research integrity by avoiding misrepresentation & omission of pertinent research data.

Meet their obligations & responsibilities in contracts & mutual agreements in a timely manner .Avoid taking the work of others. in whole or in parts & represent this work as their own or directly benefit from it without compensation or consent of originator /owner .Marketers & org relationship -Apply confidentiality & anonymity in professional relationships with regard to privileged information .

-Avoid manipulation to take advantage of situation to maximize personal welfare in a way that unfairly deprives or damages the org . .

Most Common Type of Advertisement Corporate -Encourages customers to buy the firms products -tries to establish or change the image of the company -take a position on an issue that is important to the company .

Cooperative Manufacturers offers retailers an allowance to advertise their stores at the local level Brand Designed to increase the market share of a brand by getting users of competitive brands to use the companies brand Product Designed to increase the demand for a product Category. .

Ethical consumerism Should be about using our purchasing power to make the world better place. It is characterized by 3 almost religious convictions:  multinationals are inherently bad  the natural & organic are inherently superior  science & technology are not trusted. .

Code of Ethics For Professional GroupsCodes of Medical Council of India The code covers 33 principles: General principles Duties to patients Duties to profession Doctor to doctor relationship .

Ethics for Chartered Accountants in Chartered Accountant s Act Some misconducts are -if a person allows any person to practice as CA if he is not one -if a person advertises or solicits work -if he accepts a position held by another CA without communicating with him. -if a CA discloses confidential information abt his client -If CA certifies a statement without adequate scrutiny .

which requires professional to -Dissociate themselves from org that are of a questionable character -Further the cause of public good -Avoid engineeringly unsafe ventures -Maintain confidentiality -Advice clarity.The Engineer s Code The National Society of Professional Engineers has a code . if a technical opinion is overruled by a non technical person. . the consequences.

Code For Marketing Mgr s -Basic guidelines -Honesty & fairness -Follow the well understood principles of rights & duties in the process of exchange: -product development -promotion -distribution -Pricing -Market research -Organizational behavior .

The code of Ethics for Public Relations Practitioners: -The core philosophy of the code is to uphold the universal declaration of Human rights of the UNO -It uphold the free flow of information -To develop the confidence of those who come in contact with them whether clients or employers. -The practitioners must avoid ambiguous language & maintain loyalty to the clients & employers .

-They must protect the interest of the org they serve & the general public -they must never compromise on the truth due to other requirements -they must manipulate to create subconscious motivations -they must never impair human dignity & integrity .

.Code of Ethics of Association for computer Machinery (ACM) -Act with integrity at all times -Strive to increase his own competence & competence & prestige of the profession -Accept responsibility for his work -Act with professional responsibility -Use his knowledge & skills for the advancement of human welfare.

if the product is not good should be avoided.Code of Advertisers issued by the Advertisement Council of India -Moral & religious sentiments should not be offended -Advertisements should not directly & adversely compare products with those of the competitors -Rhetoric like offering to refund money. .

Improving Ethical Climate Ethics Programs & Officers Effective Communication Ethics Audit Realistic Objectives Top Management Leadership Ethics Training Ethical Decisionmaking Processes Codes of Conduct Discipline of Violators Whistle-blowing Mechanisms (³Hotlines´) .

business firms train their employees. . More corporate are providing training in ethics also. Simulated case studies based on actual events in the company used to illustrate how to apply ethical principles on the job problems of everyday.Ethics Training In all disciplines and areas. The training programmes acquaint employees with: Official company policy on ethical issues.

‡ Arrange workshops for employees frequently and to make aware of company commitment to ethics. designed and ‡ Carefully administered ethics training programmes can bring positive contribution to the company. .

values. understanding of culture & values. provide for recognition of ethical issues. & opportunity in the ethical decision making process ‡ overall. ‡ reflect organizational size..Ethics Training Programs Should.. culture. management style & employee base ‡ improve employee understanding of ethical issues ‡ influence the organizational culture. and influence ethical decision making 9/30/2010 godveda@jmmc&ri 51 . significant other aspects.

Ethics In Finance Two important visible aspects of finance includes: -Financial services -which includes commercial banks. both pvt as well as public sector those financial institutions who are engaged in providing financial service to both individual as well as institutional investors Financial Mkts Primary & secondary markets . insurance company. mutual funds. investment banks.

insurance agents.Personal selling make way for whole lot of misconduct& adherence to unethical practices from the part of intermediaries . Ethics & Financial services Financial services largely operates through personal selling by stock brokers.Less visible aspects includes the financial activities carried out by CFO with in corporate.& other finance professionals etc . tax advisors. financial planners.

Again it may be in the form of not revealing the entire relevent information wrt a product /service. For example while explaining abt a MF the intermediary may mislead the prospective buyer by increasing it s strong points & minimizing weakness.Deception is the intentional hiding of relevant information with regard to a financial product or service by an intermediary.Three objectionable practices in selling financial services to clients are: -1Deception . ..

In churning cases. the entire assets of the fund will be involved in buying and selling transactions once every six to twenty-four months.2 Churning . the entire assets of the investor are often traded once a month. or even more frequently. commissions can substantially destroy the value of an investment account in a very short period of time. for an actively traded mutual fund. As a commission is paid on each trade. . For example.It is defined as excessive or inappropriate trading for a clients account by a broker who has control over the account with the intent to generate commissions rather than to benefit the client.

The Legal definition of churning contains three elements -The broker controls the account -The Trading is excessive for the character of the account -The broker acted with intent In churning the brokers doesn t conduct the trade in the client s best interest. .

& other sales people have an obligation to recommend only suitable securities & financial products. . The most common causes for unsuitability's are: -referring unsuitable types of securities -unsuitable grades of securities -unsuitable diversification. which leaves the portfolio vulnerable to changes in the mkt.3 Suitability-In general brokers .insurance agents.

-unsuitable liquidity. .-unsuitable trading techniques which create greater volatility & risk. a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts. In short in recommending to a customer the purchase sale or exchange of any security.which provide non liquidity for customers who may need to liquidate their assets.

.if any disclosed by such customer as to his other security holding & as to his financial situations & needs.

Ethics& Financial Markets Ethics in financial markets are influenced by the following: 1Equity & efficiency Efficiency is to achieve maximum output is an with minimum input provides abundance of goods & services Ethical value hence considered promotes the general welfare .

While manipulation involves the buying or selling of securities in order to create a false or misleading impression abt the direction of their prices so as to induce the other investors to buy or sell securities. .2Unfairness in mkts which in turn are influenced by the following: *Fraud & manipulation-if the company fails to report proper information is considered to be committing fraud.

if all the investors have equal information abt the stock mkt aspects it is said to be equal information .It is termed as Level Playing Field every one plays by same rule Level means playing field equally equipped to compete equal information : process same info equal access to info same information Level playing field .*Equal information.

insider trading is one such aspect which leads to unfairness in information * Equal bargaining power-The fairness of bargained agreements assumes that the parties have relatively equal bargaining power. A trader who negotiates for a futures contract that results in great loss has only himself or herself to blame .Possession of unequal information is said to be unfair.

.Unequal bargaining power is influenced by the following Resources wealth does matters the rich/ big investors are better able than the poor /small to negotiate over a transaction Processing Ability Even with equal access to information. people vary enormously in their ability to process information & to make informed judgments.

provides a further check on peoples greedy impulses. *Efficient Pricing Fairness in financial mkts includes efficient prices that reasonably reflect all available information. .The legal duty of brokers & investment advisers to recommend only suitable investments & to warn adequately of the risk of any security.Vulnerability The investors being human beings are susceptible to weaknesses that can be exploited .

Individual investors are harmed by buying at too high a price or selling at too low price during periods of mispricing. -volatility also affects the mkts by reducing investors confidence & driving them away .-Inefficient pricing can bring great harm to the investors .The loss of confidence depresses stock prices .

Insider Trading Insider trading is defined as trading in stock of publicly held corporations on the basis of material .non public information by insiders of a corporate viz CEO BOD or even employees of that corporate and some times the outsiders too get involved in this aspect when : -Printers who was able to get information wrt several take overs from legal documents that were being prepared .

ethical .-Stock broker who tipped off a client who was the relative of CEO of that company etc -a financial analyst who uncovered a huge fraud at a high flying firm & advised his clients to sell -lawyer advising a client planning a hostile take over.

Worse effects of insider trading on stock markets -tends to decline the liquidity of the stock -an increase in the variability of stock prices -a decline in markets ability to spread risk -a decline in mkt efficiency due to reduce number of buyers or sellers -a decline in utility gains available to traders .

nonpublic. . information when (1) The trader has violated some legal duty to a corporation & its shareholders (2) The source of information has such a legal duty & the trader knows that the source is violating that duty.In short Insider trading could be defined as A person who trades on material .

nonpublic information stealing property that belongs to the corporation In support of a law against main rationales are insider trading Fairness .Traders who use inside information have an unfair advantage over the other investors -The stock market is then not a level playing field .Those who trade on material.Arguments against insider trading can be represented as follows: property rights .

.Ethics & financial statements Accounting is a system of principles applied to present the financial position of a business & the results of its operations & cash flows. Adherence to these principles will result in fair & accurate reporting of this information.

Accountant Independent Certified Public Accountant hired by the com as outsider counselor he comes to perform the audit for the benefit of public Responsibility works for the com salaried employee Nature of the audit may or may not work independent independently/may be guided by corporate executives .

The ethical issues associated with accounting practices are -under reporting income -falsifying documents -allowing or taking questionable deductions -illegally evading income tax s & otherwise engaging in fraud .

.To prevent such unethical issue the following methods have been adopted -American institute of CPA s publishes their professional rules -Financial Accounting standards Board governs accounting practices & establishes the Generally Accepted Accounting principles (GAAP) -Accountants are also governed by The American institute of certified Public Accountants which has a code of professional conduct.

. with an international secretariat in Berlin. and claims to be moving towards a completely democratic organisational structure.Transparency International TI is organised as a group of some 100 national chapters. TI is now an international nongovernmental organisation. Germany. Originally founded in Germany in May 1993 as a not-for-profit organisation.

It brings people together in a powerful worldwide coalition to end the devastating impact of corruption on men. TI's mission is to create change towards a world free of corruption. women and children around the world." ."Transparency International is the global civil society organisation leading the fight against corruption.

companies and governments to implement them . It develops tools for fighting corruption and works with other civil society organisations.‡ Since 1995. a Global Corruption Barometer and a Bribe Payers Index. TI has issued an annual Corruption Perceptions Index (CPI). it also publishes an annual Global Corruption Report. ‡ TI does not undertake investigations on single cases of corruption or expose individual cases.

. International Institutions such as the World Bank and the International Monetary Fund now view corruption as one of the main obstacles for development.‡ TI's biggest success has been to put the topic of corruption on the world's agenda. whereas prior to the 1990s this topic was not broadly discussed.

‡ TI furthermore played a vital role in the introduction of the United Nations Convention against Corruption and the OECD Anti-Bribery Convention. .

Steps in Induction program me/training Introduction-the employee s been acquainted with the company policies . the training opportunities and career prospects are explained the process through which a new recruit begins to understand & accept he values .introduce them to key personnel. Socialization.Hr dept representative helps the new recruit to internalize the way things are done in the org. .norms & beliefs held by others in the org.

Follow up despite the best efforts of supervisors certain dark areas may still remain in the orientation programme. New hires may not have understood certain aspects so to cover up those gaps the supervisors use a check list & find out whether all aspects have been covered or not.

Programmed Decision making and Unprogrammed Decision making in Management A decision that is fairly structured or recurs with some frequency is termed as programmed decision making. -problems are routine & repetitive -solutions are offered in accordance with some habit, rule or procedure -the conditions for programmed decisions are highly certain

-Made by lower level people Non programmed decisions A decision made in response to a situation that is unique ,is poorly defined & largely unstructured & influences important consequences of the org. -problems are unique & novel -there are no pre -established policies or procedures to rely on . Each situation is different & needs a creative solution.

-The conditions for non programmed decisions are highly uncertain -Top mgt responsibility This concept of decision making is been put forth by a person called Herbert Simon

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