BUSINESS ETHICS

Chapter 4
Ethics and Marketing
LECTURER: DUONG THI HOAI NHUNG
(MBA)
FACULTY OF BUSINESS
ADMINISTRATION
EMAIL: nhungdth@ftu.edu.vn
MOBILE: 0985867488
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 CHAPTER 4: ETHICS AND
MARKETING

Readings:
Mike Harrison, 2005, An introduction to business and
management ethics (1st). Palgrave Macmilla.
- Chapter 18. An introduction to marketing ethics, p.275-
p.290
- Chapter 19. A moral distance- the selling of financial
products, p291-p.308

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 CHAPTER 4: ETHICS AND
MARKETING

Readings:
Laura P.Hartman, et.al, 2014, Business Ethics- Decision
making for integrity and social responsibility, Mc. Graw
Hills.
- Chapter 8: Ethics and Marketing

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 CHAPTER 5: ETHICS AND MARKETING
Purpose and learning objectives
The purpose of this chapter is to introduce some of the
concepts and issues in marketing ethics, illustrated by a
range of case studies.
You will be able to
- understand some concepts of marketing ethics;
- show an appreciation of the ethical issues raised in
marketing and selling.

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 CHAPTER 5: ETHICS AND MARKETING
Main contents:
First, it concerns the theory of marketing ethics,
presenting a model which places ethical issues in a
competitive marketing context.
Second, there are discussions of two specific contexts in
order to explore some issues of markets and management
The first area concerns some of the ethical problems
which exist in marketing concerned with management
practice and the consumer as stakeholder.
The second area concerns advertising strategies and its
ethical dilemmas
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 CHAPTER 5: ETHICS AND MARKETING
Main contents:
1. Fundamentals of marketing ethics
2. The ethical problems in marketing
2.1 Ethics in marketing practices (Consumer-related
issues)
2.2 Ethical considerations when deciding advertising
strategies
2.3 Analysing advertisement using applied ethics

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 1. Fundamentals of marketing ethics
Normative marketing ethics are prescriptions of the
values, principles and ideals which marketing professionals
should hold. It is interesting to ask if these are context
dependent and whether they refer to individual marketing
decision makers or to organisations.
Brenkert (1999), in the context of a brief survey of approaches
to marketing ethics, tellingly comments:
“there is little agreement among marketers on what kinds of
justification can be offered for normative moral judgments
made regarding marketing. There is also considerable
disagreement on whether marketing ethics is (or should be)
separate from the rest of business ethics – or, indeed, from
7 the ethics of (non-business) society”.
 1. Fundamentals of marketing ethics
Ethical Marketing refers to the application of marketing
ethics into the marketing process
Marketing ethics has the potential to benefit society as a
whole, both in the short and long term
Study of ethical marketing should be included in applied
ethics and involves examination of whether or not an honest
and factual representation
Marketing ethics has influenced companies and their
response is to market their products in a more socially
responsible way
The increasing trend of fair trade is an example of the
8 impact of ethical marketing
 1. Fundamentals of marketing ethics
The importance of marketing ethics:
We can give many reasons but will notify some:

• When an organization behaves ethically, customers

develop more positive attitudes about the firm, its
products, and its services.
• To create values or trust with key stakeholders.
• To build good image about the organization in the
minds of customer, employees, shareholders and the
society.

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 2. The ethical problems in marketing
When making marketing decisions, a company needs to
make considerations in four major areas – called the 4Ps.
The 4Ps include product, price, promotion and place, and
each of these aspects may involve ethical considerations,
e.g., whether a product is safe.
Teleology considers whether the overall wellness of both
parties and of the society has increased after the
transaction.
Deontology examines whether the parties involved in the
transaction do so out of willingness, whether respect is
paid, or if complete knowledge is made available.
Justice theory examines whether the transaction is fair and
10 whether the underprivileged party is taken advantage of.
 2. The ethical problems in marketing
2.1 Ethics in marketing practices (Consumer-related issues)

Exercise 1:
?? Are the following behavior ethical or unethical? Please
explain.
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 Ethical issues related with rights of consumers
Rights of consumers Related Marketing Ethical consideration
areas
1. Obtaining safe and
effective products

2. Obtaining honest and

truthful information

3. Respecting the
personal privacy

4. Paying fair and

reasonable prices

5. Obtaining the rights to

buy products

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 2.1 Ethics in Marketing practices
(Consumer-related issues)
a. Ethical considerations when making marketing decisions
From the perspective of social contract theory or
deontology, companies have an ethical responsibility to
protect the rights of the consumers. Once a consumer has
purchased a certain product, the company is under
contractual obligation to treat the consumer fairly. The
company should not only treat consumers as a source of
profit, but should actively protect the multiple rights of the
consumer.

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 Ethical issues related with rights of consumers
Rights of consumers Related Ethical consideration
Marketing
areas
• Is the product safe?
1. Obtaining safe product • Are the qualities and functions in
and effective policy accordance with the descriptions on
products the label?
• Do the advertisement and way of
2. Obtaining honest promotion promotion deceive, mislead and
and truthful policy threaten consumers?
information • Do the advertisement and way of
promotion involve any
discrimination and any undue
stereotyping?
3. Respecting the promotion • Does the promotion invade
personal privacy policy privacy ？
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 Ethical issues related with rights of consumers
Rights of consumers Related Ethical consideration
Marketing
areas

4. Paying fair and pricing • Is there any price manipulation

reasonable prices policy when enterprises set the price?
• Do the enterprises gain excessive
profit?
• Concern the ability of the less
advantage?
• Are there any unfair treaties when
setting the price?
5. Obtaining the
rights to buy place policy • Do enterprises hinder consumers of
purchasing products with unjust
products means?

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 2.1 Ethics in Marketing practices
(Consumer-related issues)
a. Ethical considerations when making marketing decisions
A customer is an important stakeholder of the company. According
to stakeholder theory, the company has three courses of action
toward the customer:
 Immoral
 Treats the customer as a target for exploitation, maximizing
individual and organizational benefits through such
exploitation;
 Does not advocate a style of following ethical standards in
operations, and instead often deliberately tricks or misleads
customers;
 All marketing decisions, including advertising, pricing,
16 packaging and distribution are made in order to take greatest
advantage of the customers.
 2.1 Ethics in Marketing practices
(Consumer-related issues)
a. Ethical considerations when making marketing
decisions
 Unethical (but legal)
 The management does not make decisions or take actions
from an ethical perspective, but only make decisions
based on the principle of “making a profit while staying
within the law”;
 The management has no concern for the principle of
fairness that values the customers, but only focuses on
the interests of the management;
 Has no consideration of the ethical issues involved in the
exchange with customers.
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 2.1 Ethics in Marketing practices
(Consumer-related issues)
a. Ethical considerations when making marketing
decisions
 Ethical
 Treats the customers as equal partners in the transaction;
 The customer specifies the needs and expectations of the
transaction, and is treated fairly;
 The company’s decision concerns the provision of fair
prices, full access to information, reasonable protection
and satisfaction to customers;
 Fairly interprets and respects the rights of the consumer;
 Actively compensates the losses of customers.
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 2.2 Ethical issues in Marketing
Ethical issues in Marketing Research

Ethical issues in Marketing segmentation

Ethical issues in Product Packaging

Ethical issues in Pricing

Ethical issues in Advertising and Promotion

Ethical issues in Distribution

19 Ethical issues in Personal Selling

 2.2 Ethical considerations when deciding
advertising strategies
a. The definition of Advertisement
Advertising is the broadcast of messages through a
suitable media to a target through paid means by an
organization or an individual, aiming at reaching
intended effects. These effects may include conveying of
messages, elicitation of action (for example:
consumption), and image-building.

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2.2 Ethical considerations when deciding advertising
strategies
b. Type of advertisements

Commercial advertisements

Cultural advertisements

Social advertisements

Government announcements

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 2.2 Ethical considerations when deciding
advertising strategies
b. Type of advertisements
 Commercial advertisements: Commercial advertisements aim at selling
products and mainly provide consumers with information on commercial
products.
 Cultural advertisements: Advertisements that aim at conveying
information about science, culture, education, and news and publishing.
 Social advertisements: advertisements that provide social services, for
example social welfare, medicine and health, social security, or the seeking
of marriage partners, lost persons, lost items and new employees.
 Government announcements: Announcements made by Government
departments, which also carry an advertising function. For example: public
information released by public departments involving security, traffic,
legal, financial, taxation, commercial and industrial, and public health

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 2.2 Ethical considerations when deciding advertising
strategies

c. Aims of advertisements
Advertisements aim at achieving three levels of purposes including

communication of convincing the

information consumer to make
purchases

constructing certain
values

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 Ethical issues in advertising
Concealment of Facts
Advertisements using children
Dangerous Stunts
Usage of Inappropriate Stereotypes
Subliminal advertising
Puffery
Surrogate advertising
Improper language usage

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 Ethical issues in advertising
 Concealment of Facts
 When consumers are deprived of comprehensive information about a
product, their choices are limited and distorted
 Concealing facts misleads people and undermines truth
 Subliminal advertising
Subliminal messages are pieces of information which occur so quickly,
or are so small or unnoticeable, that we do not actually perceive them
consciously—but our SUB-conscious mind notices everything, and
DOES perceive it.
 Puffery
Advertisers often throw in a lot of unnecessary positive adjectives into
their ads, and possibly even other words that exaggerate the quality of
the product. Words like “best”, “finest”, “ultimate”, “most”, or even
words like “courage” and “trust”
 Surrogate advertising
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Banned products mask under another product under same brand name.
 Code of conduct for
Marketing Ethics

Responsibilities of the marketer to all relevant

publics (consumers, organizations, and society)

Honesty and fairness, uphold integrity, honor, and

dignity of the marketing profession

Rights and duties of participants in the marketing

exchange process (including 4p”s and marketing
research)

Ethical behavior in organizational relationships

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 Code of conduct for Marketing Ethics
Several mobile organizations have created Code of
Ethics for their members
Intent is to:
1. Protect consumers from fraudulent mobile content
2. Help mobile companies operate within an ethical
framework
3. Help insulate the mobile industry from regulators
4. Provide the mobile companies with some legal
protection

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 CASE STUDY:
ETHICAL DILEMMAS IN FASHION ADVERTISING
Questions to discuss:
1. What does ethical issue raise?
2. What should Sarah do and what should her advertising firm do?
(Don’t discuss what the client should do, I don’t want you to be
overwhelmed with issues to discuss).

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