Marketing Ethics – Product

Safety and Pricing

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 Four “Ps” of Marketing
• Product
• Pricing
• Promotion
• Placement

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 Basic Concept of the Market
• A place where a seller brings a product or
service and where a buyer is willing to
“exchange” something of value for the
product or service.

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 Big Questions
• Who would be interested in buying the good or
service?
• What price would they be willing to pay?
– How much can they afford?
• How will the price affect other stakeholders
(distributors, retailers, competitors)
• Who is responsible for the product should harm
occur?
• Are requirements different if selling in other
countries?

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 Ethical Perspectives
• A free exchange is “Prima Facie” (On its face)
ethically legitimate
– Kantian – respect for individual because they are
seen as capable of pursuing their own interests.

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 Issue Occur When
• Exchange was a result of informed or
voluntary consent
– No Fraud
– No Deception
– No Coercion

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 Kant Again
• Were participants treated simply as means to
an end?
• Are there real benefits from the transaction?
• What other values maybe at stake (societal
concerns)

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 Coercion
• The more an individual needs the product the
less free they are to decide (addicts or very ill
people)
• Informed consent
– What about buyers with impaired skills (reading,
math, life experience)?
• Addition to “Affluenza” (higher degree of
consumption will lead to higher degrees of
happiness)

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 Values beyond needs of buyer
• Fairness
• Health
• Justice
• Safety
• There is a market for children

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 Product Liability
• First sense
– Who or what caused the problem
• Second sense
– Assignment of blame or fault “who is
responsible?”
• Third sense
– Who is accountable? Such as who is responsible
for paying an elderly persons bills

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 Negligence
• Contract – only what is promised
• Contractarian view – I have duties to what I
have narrowly and explicitly assumed
• General duty: Not to put others at
unnecessary or avoidable risk
– One does not neglect their duty to exercise
reasonable care not to harm other people
• Ought not reasonably oblige someone to do what they
cannot do
• One ought not to harm others

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• One standard – liable only for harms they could
actually foresaw occurring
– Recklessness or even intentional harm are far beyond
simple negligence
• A higher standard – Avoid harm that even if not
actually thought about they should have thought
about.
• What would a reasonable person expect an
“average person to know”
• Higher your knowledge the greater your
obligation
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 Product Liability
• Strict – Product performance. Therefore
responsibility is on producers
• Who pays
– Tough luck – consumer pays
– Society – Socialized insurance
– Manufacturer
• Deep pockets and ability to pass on cost
• “compensatory justice” Those who caused the harm or have
benefited from the transaction should compensate people
harmed
• Guns and Cigarettes

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 Caveat Emptor
• You are required only to live up to your end of
the bargain. Pay the price – Deliver the goods
or services

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 Pricing
• A fair price is one that both parties agree to
– What about availability of buyers and sellers? If either
limited then no market equilibrium
• Knowledge of buyers
– AIDs drugs in Africa
• What about patents?
• What about monopolistic pricing?
– Wal-Mart, COSTCO, Target, Safeway
• What about stair-step pricing in auto industry?
• What about government subsidies?

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 Chapter Nine
Marketing Ethics: Advertising and
Target Marketing

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 The Last Two “Ps”
• Promotion and Placement
– Target Marketing
– Market Research
• Ethical Influence
– Persuading, Asking, Informing, Advising
• Unethical Influence
– Threats, Coercion, Deception, Manipulation, Lying

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 Draw the line between Ethical and
Unethical

Unethical Ethical

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 Consumer Protection
• Federal Trade Commission
– Focus on effect or intent
– Who judges what “might” happen
– Political consequences if regulate after harm is
done
• Do we assume consumers are reasonable or
relatively ignorant

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 Other forms of consumer autonomy
• Over time the market will weed out deceptive
ads and practices
• Affluent Society (John Kenneth Galbraith)
– “Dependence effect” Market was creating the
consumers
• Disrupting supply and demand
• Creating irrational and trivial consumer demands
• Violates consumer autonomy through manipulation
• What would Kant say?
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 Possible violations of individual
autonomy
• Advertising creates want which are not
autonomous
– Why do people shop?
• Non-autonomous desires
– First order (Happen at any given time and rational
individuals can step away from them)
– Second Order (unable to step back. Like an Alcoholic
• Arrington argues that marketing influences us by
appealing to pre-existing conditions
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• Dworkin – To be an autonomous choice it must
indepedently accepted by the individual
• Crisp – Need to know why it is accepted. Gets to
the capacity of the consumer
• Lippke – To be an autonomous decision maker
the individual must have a variety of intellectual
skills, discipline, attitudes, and motivations
– Ads carry meta-messages (emotional appeals,
oversimplification, superficiality, shoddy standards of
proof.

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Marketing to the vulnerable

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 Unique Volunerability
• Consumer (unable to fully participate as an
informed participant in the marketplace
• General (Susceptible to some physical,
psychological or financial harm)
• What about target marketing to poor, minority
groups, accident victims, funeral settings,
college students.

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