ETHICS IN BUSINESS

FUNCTIONS

Lecture 6 and 7

BECG

Prof Soumitra Mookherjee

 What is MARKETING?

Marketing is the art of exploring, creating, and

delivering value to satisfy the needs of a target
market at a profit.

- Acquisition and Retention of customers

-- Make Profits through customers
- - Creating a value proposition
Unethical Business Practices

Businesses resort to a wide range of unethical practices which

are not only detrimental to customers but also to the civil
society at large, such as

Corruption and bribery,

Financial misappropriations,
Circumventing law enforcement,
Evading taxes and duties,
Dumping,
Making exaggerated and even false claims,
Exploiting customers,
Flouting basic norms of civil decency, and
Even manufacturing and distributing pirated and fake
products.

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 Corruption

Abuse of entrusted power for private gain. It is a form of

behaviour, which departs from ethics, morality, tradition, law,

and civic virtue.

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 Detrimental Effects of Corrupt Practices
on Business
1. Legal risks
2. Reputational risks
3. Financial costs
4. Repeat bribery demands
5. Blackmail and security risks
6. Risk of getting cheated
7. Undermines businesses’ vested interest in
sustainable development

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 Smuggling

Surreptitious trade across the borders aimed at

circumventing enforcement of regulatory prohibitions
and restrictions and evading payment of legitimate
customs duties.

Products with higher prohibition and restrictions, such

as liquor, cigarettes, drugs, arms and ammunitions are
generally appealing to smugglers.

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 Unethical Marketing Practices

Businesses often adopts both fair and unfair marketing

practices to entice customers and establish their

supremacy in the marketplace.

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 Grey Marketing

Import or export of goods and their distribution

through unauthorized channels.

International brands with high price differentials and

low cost of arbitrage constitute typical grey market
goods.

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 Types of Grey Marketing Channels

Parallel importing: Selling a product at a higher price to the

authorized importer in the overseas market than the price at
which the product is available in the home market.
Re-importing: Re-importing takes place when a product is priced
lower in overseas market as compared to home market.
Lateral re-importing: Products are sold from one export market
to another through parallel importing when the price differences
exist in different export markets.

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 Dumping

Selling of a product or commodity below the cost of

production or at a lower price in overseas markets

compared to domestic markets that causes injury to

domestic industry in the importing country.

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 Forms of Dumping
Sporadic dumping : Occasionally selling excess goods or
surplus stock at lower prices in overseas markets than the
domestic price or below the cost.

Predatory dumping: Aimed to force competitors to leave the

market, thus enabling the predator to raise the price in the
long-run.
Persistent dumping: It involves a consistent tendency of a firm
to sell the goods at lower prices in foreign markets compared
to domestic markets.

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Marketing Ethics:

Marketing ethics is an area that deals with

the moral principles behind marketing.

Ethics in marketing applies to different

spheres such as in product, pricing,
Distribution, promotion & advertising etc...
Why we need Ethics in Marketing?

• When an organization behaves ethically,

customers develop more positive attitudes
about the firm.

• To create Values or trust with

the key stakeholders
Why we need Ethics in Marketing?

• To build good image about the

organization in the minds of critical
stakeholders
Ethical Issues in Marketing:

The 4P’S OF MARKETING:

• PRODUCT & PACKAGING

• PRICE
• PLACE (DISTRIBUTION)
• PROMOTION (ADVERTISING &
BRANDING)
Product
• Consumer safety
• Product reliability
• Designing for special needs
Product
• Ingredients
• Raw Materials
• Nutritional value
Product
• Quality
• Consistency
• Eco-friendly
Packaging
 Label information
 Packaging graphics
 Packaging safety
 Environmental implication
of packaging
• Packaging Material
• Protection, shelf life
Price: Second P of Marketing
• Non Affordability

• Super Competitive pricing

• Unusual Price Discrimination

• Price skimming

• Excessive Premium
 Unethical Practices
Many retailers sell products that have crossed
expiry date is unethical.

Exerting influence to vendors to reduce

display space for competitors' products is
unethical.

Promising shipment when knowing delivery

is not feasible within the stipulated date
 PROMOTION (ADVERTISING &
BRANDING)
• Promotion is one of the four elements of
marketing mix (product, price, promotion, place).
It is the communication link for influencing,
informing, or persuading a potential buyer's
purchasing decision.
• To present information to consumers as well as
others
1. To increase demand
2. To differentiate a product
 Ethical Issues in Advertising

• Puffery ( Nothing to support the fact. )

• Advertising to Children
• Promoting Unhealthy Products
• Subliminal Advertising
• Deceptive Advertising
 Ethics in
Consumer
Protection
 What is Consumer Protection ?

 Consumer: refers to any individuals or

households that use goods and services
generated with in the economy.

 Consumer Protection: a concept that

are designed to ensure fair competition,
quality sustenance and the free flow of
truthful information
Contd…..
• Consumer Protection laws :

• Laws designed to prevent businesses that

engage in fraud or specified unfair practices
from gaining advantage over competitors
 Who is responsible for consumer
protection?

• Responsibility of Business

• Responsibility of Consumer

• Responsibility of Government
 Responsibility of Business

The business including producers and traders

have to due regard to consumer rights as it is
their social responsibility.

They have to come out with quality goods at

affordable/ reasonable prices.
Responsibility of Consumer

All efforts regarding consumer protection will

not produce desired results

Consumerism has to be acceptable.

Responsibility of Government

1. Innocent consumers should be protected

by the Government through enacting
legislations.

2. Government will have to set its own

priorities for the protection consumer’s
right.
Consumer Protection Act,1986
 Better protection of interests of consumer.

 Protection of rights of consumers.

 To prevent practices having adverse effect on

competition.

To promote/ sustain competition in the

market..
 But how to file a complain?

** Consumer courts

** Consumer complaints online.

Green Marketing-Definitions

Definition:
There is more than one definition of green marketing:
“The holistic management for identifying, anticipating and
satisfying the requirements of customers and society, in a
profitable and sustainable way”

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 Green Marketing-Definitions

Environmental sustainability
involves developing strategies that sustain the environment
and produce profits for the company. It protects and preserves
the environment
A green consumer
someone who voluntarily engages in consumer practices that
are regarded as environmentally friendly.
green or environmentally friendly activities
energy-efficient operations, better pollution controls and
recycled materials

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 Green Products

Definition : Green products are products that

recycle and do not cause harm to people or the
environment
Example:
Cars: Green cars are energy-efficient; they create limited
air pollution and greenhouse gases
Food: Green food isn't necessarily peas and string beans,
although both of these things can be green

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 Future trends

Main trend – green trend

Influence product design
Green materials
Manufacture
Disposal

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 Benefits of Green Products

Human being’s health condition

Benefits from better water bodies, air quality, building
material, animals, and plants

Sustainable environmental development

Green products bring the benefits for the sustainable
developments in the respects of balanced and
equitable economic development, high level of
environmental protection, and renewable natural
resources.

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 Green Marketing

Green Marketing
Definition: marketing products and services based on
environmental factors or awareness

Example: Tata Motors Ltd. has developed their showroom

by using green items and elements in its design.

The Taj chain is going to produce eco-friendly atmosphere

by using organic bed linen, energy efficient bars and
napkins that are made of waste papers.

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 Examples of “green” advertising
claims?
Biodegradable
recyclable/recycled
environmentally safe
ozone friendly

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 Why do companies use it?

Research shows that consumers prefer--and are

willing to spend more money on--products they
perceive as environmentally safe

More than half of American consumers have

purchased a product because of a label that said
it was environmentally safe or biodegradable

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