Marketing ethics is an area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics (ethics of advertising and promotion) overlap with media ethics.
- 1 Fundamental issues in the ethics of marketing
- 2 Specific issues in marketing ethics
- 2.1 Market research
- 2.2 Market audience
- 2.3 Pricing ethics
- 2.4 Ethics in advertising and promotion
- 2.5 The use of ethics as a marketing tactic
- 2.6 Neuromarketing ethics
- 2.7 Marketing strategy
- 2.8 Further issues in marketing ethics
- 3 Regulation and enforcement
- 4 See also
- 5 References
- 6 Bibliography
- 7 External links
Fundamental issues in the ethics of marketing
Frameworks of analysis for marketing Possible frameworks
- Value-oriented framework, analyzing ethical problems on the basis of the values which they infringe (e.g. honesty, autonomy, privacy, transparency). An example of such an approach is the AMA Statement of Ethics.
- Stakeholder-oriented framework, analyzing ethical problems on the basis of whom they affect (e.g. consumers, competitors, society as a whole).
- Process-oriented framework, analyzing ethical problems in terms of the categories used by marketing specialists (e.g. research, price, promotion, placement).
None of these frameworks allows, by itself, a convenient and complete categorization of the great variety of issues in marketing ethics
Contrary to popular impressions, not all marketing is adversarial, and not all marketing is stacked in favour of the marketer. In marketing, the relationship between producer/consumer or buyer/seller can be adversarial or cooperative. For an example of cooperative marketing, see relationship marketing. If the marketing situation is adversarial, another dimension of difference emerges, describing the power balance between producer/consumer or buyer/seller. Power may be concentrated with the producer (caveat emptor), but factors such as over-supply or legislation can shift the power towards the consumer (caveat vendor). Identifying where the power in the relationship lies and whether the power balance is relevant at all are important to understanding the background to an ethical dilemma in marketing ethics.
Is marketing inherently evil?
A popularist anti-marketing stance commonly discussed on the blogosphere and popular literature is that any kind of marketing is inherently evil. The position is based on the argument that marketing necessarily commits at least one of three wrongs:
- Damaging personal autonomy. The victim of marketing in this case is the intended buyer whose right to self-determination is infringed.
- Causing harm to competitors. Excessively fierce competition and unethical marketing tactics are especially associated with saturated markets.
- Manipulating social values. The victim in this case is society as a whole, or the environment as well. The argument is that marketing promotes consumerism and waste. See also: affluenza, ethical consumerism, anti-consumerism.
Specific issues in marketing ethics
Market research is the collection and analysis of information about consumers, competitors and the effectiveness of marketing programs. With market research, businesses can make decisions based on how the responses of the market, leading to a better understanding of how the business has to adapt to the changing market. It is used to establish which portion of the population will or does purchase a product, based on age, gender, location, income level, and many other variables. This research allows companies to learn more about past, current, and potential customers, including their specific likes and dislikes.
Ethical danger points in market research include:
People affected by unethical market research:
Approaches to privacy can, broadly, be divided into two categories: free market, and consumer protection. In a free market approach, commercial entities are largely allowed to do what they wish, with the expectation that consumers will choose to do business with corporations that respect their privacy to a desired degree. If some companies are not sufficiently respectful of privacy, they will lose market share. In a consumer protection approach, in contrast, it is claimed that individuals may not have the time or knowledge to make informed choices, or may not have reasonable alternatives available. Stereotyping occurs because any analysis of real populations needs to make approximations and place individuals into groups. However if conducted irresponsibly, stereotyping can lead to a variety of ethically undesirable results. In the American Marketing Association Statement of Ethics, stereotyping is countered by the obligation to show respect ("acknowledge the basic human dignity of all stakeholders").
Ethical danger points include:
- Excluding potential customers from the market: selective marketing is used to discourage demand from undesirable market sectors or disenfranchise them altogether.
- Targeting the vulnerable (e.g. children, the elderly).
Examples of unethical market exclusion or selective marketing are past industry attitudes to the gay, ethnic minority and obese ("plus-size") markets. Contrary to the popular myth that ethics and profits do not mix, the tapping of these markets has proved highly profitable. For example, 20% of US clothing sales are now plus-size. Another example is the selective marketing of health care, so that unprofitable sectors (i.e. the elderly) will not attempt to take benefits to which they are entitled. A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries from AIDS drugs.
Examples of marketing which unethically targets the elderly include: living trusts, time share fraud, mass marketing fraud and others. The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation.
In the case of children, the main products are unhealthy food, fashionware and entertainment goods. Children are a lucrative market: "...children 12 and under spend more than $11 billion of their own money and influence family spending decisions worth another $165 billion", but are not capable of resisting or understanding marketing tactics at younger ages ("children don't understand persuasive intent until they are eight or nine years old"). At older ages competitive feelings towards other children are stronger than financial sense. The practice of extending children's marketing from television to the schoolground is also controversial (see marketing in schools). The following is a select list of online articles:
- Sharon Beder, Marketing to Children (University of Wollongong, 1998).
- Miriam H. Zoll, Psychologists Challenge Ethics of Marketing to Children, (2000).
- Donnell Alexander and Aliza Dichter, Ads and Kids: How young is too young?
- Rebecca Clay, Advertising to children: Is it ethical? (Monitor on Psychology, Volume 31, No. 8 September 2000), American Psychological Association
- Media Awareness Network. How marketers target kids.
Other vulnerable audiences include emerging markets in developing countries, where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries, and where, conversely, marketers may not be aware how excessively powerful their tactics may be. See Nestle infant milk formula scandal. Another vulnerable group are mentally unstable consumers. The definition of vulnerability is also problematic: for example, when should endebtedness be seen as a vulnerability and when should "cheap" loan providers be seen as loan sharks, unethically exploiting the economically disadvantaged?
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List of unethical pricing practices.
- Bid rigging
- Dumping (pricing policy)
- Predatory pricing
- Price discrimination
- Price gouging
- Price fixing
- Price skimming
- Price war
- Supra competitive pricing
- Variable pricing
Ethics in advertising and promotion
Ethical pitfalls in advertising and promotional content include:
- Issues over truth and honesty. In the 1940s and 1950s, tobacco used to be advertised as promoting health. Today an advertiser who fails to tell the truth not only offends against morality but also against the law. However the law permits "puffery" (a legal term). The difference between mere puffery and fraud is a slippery slope: "The problem... is the slippery slope by which variations on puffery can descend fairly quickly to lies." See main article: false advertising.
- Issues with violence, sex and profanity. Sexual innuendo is a mainstay of advertising content (see sex in advertising), and yet is also regarded as a form of sexual harassment. Violence is an issue especially for children's advertising and advertising likely to be seen by children.
- Taste and controversy. The advertising of certain products may strongly offend some people while being in the interests of others. Examples include: feminine hygiene products, hemorrhoid and constipation medication. The advertising of condoms has become acceptable in the interests of AIDS-prevention, but are nevertheless seen by some as promoting promiscuity. Some companies have actually marketed themselves on the basis of controversial advertising - see Benetton. Sony has also frequently attracted criticism for unethical content (portrayals of Jesus which infuriated religious groups; racial innuendo in marketing black and white versions of its PSP product; graffiti adverts in major US cities).
- Negative advertising techniques, such as attack ads. In negative advertising, the advertiser highlights the disadvantages of competitor products rather than the advantages of their own. The methods are most familiar from the political sphere: see negative campaigning.
- Direct marketing is the most controversial of advertising channels, particularly when approaches are unsolicited. TV commercials and direct mail are common examples. Electronic spam and telemarketing push the borders of ethics and legality more strongly.
- Shills and astroturfers are examples of ways for delivering a marketing message under the guise of independent product reviews and endorsements, or creating supposedly independent watchdog or review organisations. For example, fake reviews can be published on Amazon. Shills are primarily for message-delivery, but they can also be used to drive up prices in auctions, such as Ebay auctions.
- Native advertising is the blurring of lines between advertising and content.
Deceptive Advertising and Ethics
Another breach of marketing ethics has to do with the use of deceptive advertising. This form of advertising is not specific to one target market, and can sometimes go unnoticed by the public. There are a number of different ways in which deceptive marketing can be presented to consumers; one of these methods is accomplished through the use of humor. In a study conducted by Hassib Shabbir and Des Thwaites, 238 advertisements were assessed and 73.5% of them were found to have used deceptive marketing practices. Of those advertisements that were conducted deceptively, 74.5% of them used humor as a masking device in order to mislead potential customers. Part of what drives this study is the idea that humor provides an escape or relief from some kind of human constraint, and that some advertisers intend to take advantage of this by deceptively advertising a product that can potentially alleviate that constraint through humor. Through the study it was also found that all types of humor are used to deceive consumers, and that there are certain types of humor that are used when making certain deceptive claims.
It is important to understand that humor is not the only method that is used to deter consumer’s minds from what a product actually offers. Before making important purchases, one should always conduct their own research in order to gain a better understanding of what it is they are investing in.
The use of ethics as a marketing tactic
Business ethics has been an increasing concern among larger companies, at least since the 1990s. Major corporations increasingly fear the damage to their image associated with press revelations of unethical practices. Marketers have been among the fastest to perceive the market's preference for ethical companies, often moving faster to take advantage of this shift in consumer taste. This results in the expropriation of ethics itself as a selling point or a component of a corporate image.
- The Body Shop is an example of a company which marketed itself and its entire product range solely on an ethical message.
- Greenwash is an example of a strategy used to make a company appear ethical when its unethical practices continue.
- Liberation marketing is another strategy whereby a product can masquerade behind an image that appeals to a range of values, including ethical values related to lifestyle and anti-consumerism.
"Liberation marketing takes the old mass culture critique — consumerism as conformity — fully into account, acknowledges it, addresses it, and solves it. Liberation marketing imagines consumers breaking free from the old enforcers of order, tearing loose from the shackles with which capitalism has bound us, escaping the routine of bureaucracy and hierarchy, getting in touch with our true selves, and finally, finding authenticity, that holiest of consumer grails." (Thomas Frank)
Neuromarketing and its precursor, neuroeconomics, uses clinical information about brain functions and mechanisms to help explain what is happening inside of the “black box” so prevalent in many explanations of consumer behavior. In order to do so, specialists use neuroimaging techniques and record brain responses to different stimuli. The Neuromarketing Science & Business Association has launched on November 2012 a Neuromarketing Code of Ethics. This is a first step towards adopting international standards applied to using neuroscientific methods to study the effectiveness of advertising campaigns, packaging and product design, as well as communication campaigns from non-profit organizations and government institutions. However, some ethicists condemn the code as protecting only a very narrow class, and in the extreme position that neuromarketing itself should only be used for the advancement of what is reasonably believed to be public good, employing Thomas Aquinas' doctrine of double effect (DDE). Although one could make the argument that engineering profit serves the public good, it would not be saved under the DDE because the intention behind it is not to generate a greater good than to which the collective harm of manipulation is greater. However, neuromarketing programs to encourage healthy lifestyle choices may be saved under the DDE, provided it is based on good scientific information in the first place, such as regular exercise.
The main theoretical issue here is the debate between free markets and regulated markets. In a truly free market, any participant can make or change the rules. However when new rules are invented which shift power too suddenly or too far, other participants may respond with accusations of unethical behaviour, rather than modifying their own behaviour to suit (which they might not be able to anyway). Most markets are not fully free: the real debate is as to the appropriate extent of regulation.
Case: California electricity crisis, which demonstrates how constant innovation of new marketing strategies by companies such as Enron outwitted the regulatory bodies and caused substantial harm to consumers and competitors.
A list of known unethical or controversial marketing strategies:
- Anti-competitive practices
- Bait and switch
- Planned obsolescence
- Pyramid scheme
- Vendor lock-in / Vendor lock-out
- Viral marketing / guerilla marketing
- Subliminal advertising
Controversial marketing strategies associated with the internet:
Further issues in marketing ethics
Some, such as members of the advocacy group No Free Lunch, have argued that marketing by pharmaceutical companies is negatively impacting physicians' prescribing practices, influencing them to prescribe the marketed drugs rather than others which may be cheaper or better for the patient.
Ethical thinking is responding to situations that deal with principles concerning human behavior in respect to the appropriateness and inappropriateness of certain communication and to the decency and indecency of the intention and results of such actions. In other words, ethics are distinctions between right and wrong. Businesses are confronted with ethical decision making every day, and whether employees decide to use ethics as a guiding force when conducting business is something that business leaders, such as managers, need to instill. Marketers are ethically responsible for what is marketed and the image that a product portrays. With that said, marketers need to understand what good ethics are and how to incorporate good ethics in various marketing campaigns to better reach a targeted audience and to gain trust from customers.
Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for which good marketing is practiced. When companies create high ethical standards upon which to approach marketing they are participating in ethical marketing. To market ethically and effectively one should be reminded that all marketing decisions and efforts are necessary to meet and suit the needs of customers, suppliers, and business partners. Ethical behavior should be enforced throughout company culture and through company practices.
However, marketers have been known to market questionable products to the public. These tend to be controversial products in that they appeal to some while offending others. An example of such a product that is sold regularly today is a cheap handgun. America is a country in which its citizens have the right to bare arms, yet these weapons are criticized by the public because they are sold at a low price making it rather easy to purchase by members of less affluent communities. Critics have referred to these weapons as " Saturday Night Specials" referring to the negative connotation that they are purchased to commit crimes. In defense of the critics opinions, if in fact these guns are purchased with the intent to commit such crimes, than one must question the ethics behind marketing these products to criminals. Is the marketer facilitating the crime by appealing to this target market with a weapon that is easily accessible? While the argument in this case may seem unethical due to the questionable nature of these cheap handguns, this argument does not apply to the sale of all guns. That is because weapons that are legally sold to customers at an affordable rate for safety purposes, self-defense, hunting, and law enforcement are perfectly ethical due to the fact that they are safe product that is marketed to a responsible consumer. This comparison supports the fact that ethical marketing can be perceived differently consumers depending on the nature of the nature of the product that is being sold.
Regulation and enforcement
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Marketing ethics and marketing law are related subjects. Relevant areas of law include consumer law which protects consumers and antitrust law which protects competitors - in both cases, against unethical marketing practices. Regulation extends beyond the law to lobbies, watchdog bodies and self-regulatory industry bodies.
- Customer relationship management
- Ethical marketing
- False advertising
- List of business ethics, political economy, and philosophy of business topics
- Marketing warfare strategies
- Media ethics
- Socially responsible marketing
- American Marketing Association Statement of Ethics (2004)
- Lizabeth England,Marketing With A Conscience: Sales and Ethics, US Dept. of State.
- A.J.Kandy, Is marketing evil?, King Marketing, 2004; William DeJong, Marketing Gets Unfairly Branded as Evil, Youth Today; Kathy Sierra, You ARE a marketer. Deal with it, 2005.
- The vastness of the literature on this topic is perhaps best conveyed by D. Slaters 1999 bibliography of consumer culture with over 1500 items. W.R. Childs (Ohio State University) has posted a shorter bibliography of consumer culture.
- ^ Quinn, Michael J. (2009). Ethics for the Information Age. ISBN 0-321-53685-1.
- American Marketing Association Statement of Ethics
- The term "selective marketing" is preferred. The term market exclusion is normally used in the different context of a cartel of suppliers excluding newcomers from distribution chains.
- CBS News, Plus-Size People, Plus-Size Stuff, Nov 10, 2003
- Mark H. Waymack, The ethics of selectively marketing the Health Maintenance Organization, Journal of Theoretical Medicine and Bioethics, Issue Volume 11, Number 4 / December, 1990, Pages 301-309
- Ruairí Brugha, Antiretroviral treatment in developing countries, BMJ 2003;326:1382-1384
- Senior Journal, Hundreds Arrested in Mass-Marketing Fraud Targeting Senior Citizens, May 24, 2006
- Washington State Department of Financial Institutions, Frauds That Target The Elderly, July 11, 2006 (Originally from: Federal Deposit Insurance Corporation Consumer News)
- US Federal Trade Commission, Consumer fraud against the elderly.
- Tom McGee and Kevin Heubusch, `Getting Inside Kids' Heads', American Demographics, Vol. 19, No. 1 (1997), quoted in Sharon Beder, Marketing to Children, University of Wollongong, 1998.
- Deborah Josefson, Marketing of antipsychotic drugs attacked BMJ 1998;316:645
- Chickenhead Productions, Truth in Advertising.
- Lew McCreary, Lies, Damn Lies and Puffery: Is it OK to bend the truth if no one believes you anyway?, CMO Magazine, July 2005.
- S.Gilman, Ethics Today Newsletter, September 17, 2003
- S.J.Gould, Sexuality and ethics in advertising: A research agenda and policy guideline perspective, Journal of Advertising, Sep 2004.
- David S. Waller, What factors make controversial advertising offensive?, ANZCA04 Conference, Sydney, July 2004
- Vladimir Cole, Sony's fony graffiti sparks lashback, Joystiq, Dec 3, 2005
- Richard Monson-Haefel, Amazon.com reviews are a farce, Jave.net, Nov 16, 2003.
- Shill Bidding Exposed in E-Bay Auctions, Consume Affairs, November 2004.
- Shabbir, H., & Thwaites, D. (2007). The use of humor to mask deceptive advertising. Journal Of Advertising, 36(2), 75-85.
- Liberation Marketing and Consumer Society, KLM Inc., 2001.
- Thomas Frank, Liberation Marketing and the Culture Trust, (date unknown).
- Douglas L. Fugate (2007) Neuromarketing - a layman's look at neuroscience and its potential application to marketing practice, Journal of Consumer Marketing, 24(7) Pages 385–394
- Definition of marketing ethics (in German), excerpted from: Bruhn, M., Homburg, C.: Gabler Marketing Lexikon, Wiesbaden 2001.
- Brendan I. Koerner. Dr. No Free Lunch. Mother Jones, March/April, 2003. Retrieved on 2007-10-06.
- Davidson, D. Kirk (2002). The Moral Dimension of Marketing: Essays on Business Ethics. South-Western Educational. ISBN 0-87757-300-X.
- Murphy, Patrick E.; Gene R. Laczniak; Norman E. Bowie (2004). Ethical Marketing. Prentice Hall. ISBN 0-13-184814-3. OCLC 54805964.
- American Marketing Association Statement of Ethics (2004)
- "Ethics in Marketing." Encyclopedia of Business and Finance. Mohandeep Singh. Thomson Gale, 2001. eNotes. 2006. 16 Oct, 2006
- Marketing Ethics Resources from the Center for the Study of Ethics in the Professions, Illinois Institute of Technology.
- Direct Marketing Association, Guidelines for Ethical Business Practice (September 2006)
- The Catholic Church's Handbook on Ethics in Advertising
- Federal Trade Commission, FTC Guidelines on Advertising