Teaching PowerPoint Slides - Chapter 9

9
MARKETING ETHICS
AND CONSUMERISM
Learning Outcomes
At the end of this chapter, you should be able to:

Explain the concept of marketing
Describe the theories of marketing ethics
Identify and explain ethical issues in product development
Identify and explain ethical issues in packaging and labelling
Describe ethical issues in pricing
Describe ethical issues in advertising
Explain ethical issues in retailing
Identify and explain ethical issues in the use of direct marketing
Describe what consumer ethics and customer responsibility are
Explain the company ethical review
BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2018 9–3
Marketing in Definition
 Marketing is a social and managerial process by which

individuals and groups obtain what they need and want
through creating, offering and exchanging products of
values with others (Kotler et al., 1999).
 There are many benefits of marketing, including:
– Brand marketing
– Competition
– Contributing to economies
– Social marketers

Marketing in Definition (cont.)
 However, there are some criticisms of marketing, including:

– Advertising
– How marketers treat their business customers
– Being wasteful
– Anti-globalization protests relating to marketing

Theories of Marketing Ethics
 The theories of marketing ethics can be divided into two

main components:
– The Hunt-Vitell General Theory of Marketing Ethics
– Consumer Ethics Theory
 On one side is the dilemma faced by suppliers or sellers of

the products, and on the other is the ethical dilemma faced
by buyers/consumers.

Theories of Marketing Ethics (cont.)

 The Hunt-Vitell General Theory of Marketing Ethics

 The Hunt-Vitell General Theory of Marketing Ethics (cont.)

– The model ties both the deontological and teleological
theories together.
– It gives an individual the opportunity to compare various
alternatives and perceive the possible consequences of
each alternative for various stakeholders.
– The decision-maker has more than one option to choose
from.
– The model also requires the decision-maker to compare
various alternatives. In the model, the concept of ‘ethic’
can be weighed.

 Consumer Ethics Theory

– Consists of four dimensions: actively benefiting from
illegal activities, passively benefiting, actively benefiting
from deceptive but legal practices, and no harm, no foul
activities.
– In 2005, Vitell and Muncy extended this model by
adding new items that would allow information to be
included on the consumers’ desire to do good, and that
would enable this new dimension to be contrasted with
the other dimensions.
– The fifth dimension was named ‘doing good/recycling’.


Ethical Issues in Product
Development
 There are three main ethical issues in product

development:
– Value durability: The likelihood that a product will
continue to maintain its value over time.
– Safety: Requires companies to consider the due care
theory, contractual theory and strict liability theory to
determine product safety before dissemination to public.
– Environmental impact: Requires companies to make
products that can be serviced or recycled, and market
products that have a minimal impact on the environment
and meet foreseeable sustainability standards.

Ethical Issues in Packaging and
Labelling
 Packaging
– Communication of contents: The item is appealing,
desirable to customers, and is not a deception in any
form.
– Safety: The item is the one the seller intends to sell, and
is not altered in any way that might compromise the
consumer’s safety.
– Environmental impact: Minimal packaging materials,
recyclable, recoverable or reusable.

Ethical Issues in Packaging and
Labelling (cont.)
 Labelling
– Information: This will depend on the product, the
information involved, as well as who the potential
customers are (e.g. illiterate customers).
– Deception: Information on the package might also be
deceptive through the way it is presented (the size,
description etc.)

Ethical Issues in Pricing
 Customer knowledge of the price

– Prices should be clearly shown in stores, and information
on the prices should be available to the customers in a
timely manner.
– The customer has the right to know if there are any
additional fees if the payment process is different from
normal (credit terms v. cash terms).
 Deception
– Too often, companies try to deceive customers who may
find it difficult to know what the full price of a product is,
or understand the significance of a particular price.

Ethical Issues in Pricing (cont.)
 Special situations
– The pricing of a product might be altered in any number
of ‘special situations’ (e.g. natural disasters, epidemics,
etc.).
– The ethical dilemma here would be if it would be
legitimate or morally right for businesses to charge
higher prices?

Ethical Issues in Advertising
 Truth in advertising
– An advertisement tells the truth of what it portrays/states,
captures/reflects, in some substantive or materially
relevant manner of the actual characteristics of the
product.
– An advertiser who knowingly includes some false
statement, when this statement is material to the
understanding of the product, and who does so with the
intention to deceive, would be lying about the product.

Ethical Issues in Advertising (cont.)
 Puffery and the desire for deception

– Overstatements and claims are often used in most
adverts (e.g. the best burger in the world).
– Are these forms of puffery deceptive? Some say they are
not, but are rather embellishments and are recognized
as such.
– People desire to have puffery to make their lives a little
less dull.
– These emotional associations are effective in moving
people to purchase the advertised products; otherwise,
they would not be used in the first place.

Ethical Issues in Advertising (cont.)
 Offensive advertisements
– Adverts can be offensive by portraying people in various
stereotypical and demeaning roles, or through the language
used.
 Manipulation
– In order to manipulate people, advertising may appeal to the
desires, needs, emotions, and wishes that customers have
regarding, for example, their physical appearance or safety,
acceptance by others, sexual interests or patriotism.
 Digital advertising
– It is critical to have ethics and regulations given the reach and
impact of the Internet (i.e. the ads, pop-ups, misleading dialogue
boxes, clickbait articles, SEO).

Ethical Issues in Retailing
 Gifts and entertainment

– This can influence or make a person feel obliged to the giver.
 Honesty in sales
– Honesty requires providing accurate information where the
legitimate expectations of the customer require accurate
answers.
 Privacy in retailing
– Companies must make special efforts to ensure that private
information with which they have been entrusted remains
private. With computer databases and the Internet, the
dangers of the loss of confidential information have increased
greatly.
Ethical Issues in Retailing (cont.)
 Retail sales pressures

– The use of pressure on customers that are particularly
vulnerable raises special ethical problems.
– Salespersons should be careful not to take advantage of
these vulnerabilities to sell their products/services.

Ethical Issues in the Use of Direct
Marketing
 Irritation
– Many people find the increasing number of hard sell and
direct marketing solicitations to be a nuisance.
– They dislike direct response TV commercials that are too
loud, too long and too insistent.
 Unfairness
– Some direct marketers take advantage of impulsive or less
sophisticated buyers.
 Deception and fraud
– Some direct marketers design mailers and write advertorials
intended to mislead buyers. They may exaggerate product
size, performance claims or the retail price.

Ethical Issues in the Use of Direct
Marketing (cont.)
 Invasion of privacy
– Direct marketers sometimes find it difficult to distinguish
the fine line between their desires to reach carefully
targeted audiences and consumers’ right to privacy.
– Many critics worry that direct marketers may know too
much about consumers’ personal details and that they
may use this knowledge to take unfair advantage of
consumers.

Consumer Ethics and Customer
Responsibility
 Customers and the law
– Shoplifting is a serious offence against the law and yet
many companies lose a great deal of products to
shoplifters yearly.
 Soft theft
– Music and software downloading from the Internet is
common nowadays. Many who do this perceive their act
as merely sharing files with other people.
 Soliciting information
– Some customers go to small outlets to obtain information
on a product before leaving to buy it online at a lower
price. Such behaviour is legal, but morally suspect.
Consumer Ethics and Customer
Responsibility (cont.)
 Exploiting companies’ return policies

– Retailers have various return policies with regard to
customer purchases. Some of them, however, may be
exploited by customers to their own advantage.
 Sourcing of products
– Consumers can find out a great deal about the sources of
the products they intend to buy.
– For any ethical issues that arise, the consumer can choose
to boycott the product (which can be done in many ways,
including stopping purchases, writing letters to the
producer/media, joining protest groups, or lobbying against
unethical practices).

The Company’s Ethical Review
 Companies need to evaluate whether they are truly

practicing ethical marketing.
 Business success and continually satisfying the
customer and other stakeholders’ interests are
intimately tied to the adoption and implementation of
high standards of business and marketing conduct.
 Most companies try to abide by a code of serving
customers’ interests and not only their own. This code
has the value of being both an internal guideline and
an external statement of corporate values and
commitments.

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9

At the end of this chapter, you should be able to:

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Marketing is a social and managerial process by which

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 However, there are some criticisms of marketing, including:

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 The theories of marketing ethics can be divided into two

 On one side is the dilemma faced by suppliers or sellers of

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 The Hunt-Vitell General Theory of Marketing Ethics

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 The Hunt-Vitell General Theory of Marketing Ethics (cont.)

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Consumer Ethics Theory

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 There are three main ethical issues in product

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Customer knowledge of the price

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Puffery and the desire for deception

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Gifts and entertainment

 Retail sales pressures

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Exploiting companies’ return policies

BUSINESS ETHICS (SECOND EDITION) All Rights Reserved

 Companies need to evaluate whether they are truly

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