Ethics in Marketing

Ethics in Marketing

Ethics are a collection of principles of right conduct that shape the

decisions people or organizations make.

Practicing ethics in marketing means deliberately applying

standards of fairness, or moral rights and wrongs, to marketing

decision making, behavior, and practice in the organization.

Marketing is a field which is often viewed as inherently unethical,

but it is in fact governed by law and standards of conduct just like

any other field.

People who actively work in the marketing field are expected to

study and abide by the ethical standards of the industry, and

academics interested in the study of marketing also look at how

ethics are applied.

There are a number of areas of ethical concern in marketing.

The purpose of marketing is to sell products, services, and ideas to

people, and this can be done in a variety of ways, not all of which are

ethical.

In a market economy, a business may be expected to act in what it believes

to be its own best interest.

The purpose of marketing is to create a competitive advantage.

An organization achieves an advantage when it does a better job than its

competitors at satisfying the product and service requirements of its target

markets.

Those organizations that develop a competitive advantage are able to satisfy

the needs of both customers and the organization.

As our economic system has become more successful at providing for needs

and wants, there has been greater focus on organizations' adhering to ethical

values rather than simply providing products.

This focus has come about for two reasons.

First, when an organization behaves ethically, customers develop more

positive attitudes about the firm, its products, and its services.

Thus, most organizations are very sensitive to the needs and opinions of

their customers and look for ways to protect their long-term interests.

Second, ethical abuses frequently lead to pressure (social or government)

for institutions to assume greater responsibility for their actions.

The central and state government agencies are charged both with

enforcing the laws and creating policies to limit unfair marketing practices.

Because regulation cannot be developed to cover every possible abuse,

organizations and industry groups often develop codes of ethical conduct or

rules for behavior to serve as a guide in decision making.

UNFAIR OR DECEPTIVE MARKETING PRACTICESMarketing practices are deceptive if customers believe they will get more value from a product or service than they actually receive.Deception, which can take the form of a misrepresentation, omission, or misleading practice, can occur when working with any element of the marketing mix. Because consumers are exposed to great quantities of information about products and firms, they often become skeptical of marketing claims and selling messages and act to protect themselves from being deceived. Thus, when a product or service does not provide expected value, customers will often seek a different source.Deceptive pricing practices cause customers to believe that the price they pay for some unit of value in a product or service is lower than it really is.The deception might take the form of making false price comparisons, providing misleading suggested selling prices, omitting important conditions of the sale, or making very low price offers available only when other items are purchased as well.

Promotion practices are deceptive when the seller intentionally misstates how a product is constructed or performs, fails to disclose information regarding pyramid sales (a sales technique in which a person is recruited into a plan and then expects to make money by recruiting other people), or employs bait-and-switch selling techniques (a technique in which a business offers to sell a product or service, often at a lower price, in order to attract customers who are then encouraged to purchase a more expensive item). False or greatly exaggerated product or service claims are also deceptive. When packages are intentionally mislabeled as to contents, size, weight, or use information, that constitutes deceptive packaging. Selling hazardous or defective products without disclosing the dangers, failing to perform promised services, and not honoring warranty obligations are also considered deception.

Code of Ethics in Marketingincludes numerous activities, marketing is basically meeting the needs of

customers in return for appropriate payment from them.

It involves analyzing potential customers and competitors, evaluating

what clients will be willing to pay or invest, and deciding how to present

products or services to the public.

Adhering to a code of ethics is vital for successful marketing.

The American Marketing Association (AMA) offers a concise ethical

code to be embraced by the marketing community.

Its goals are to disseminate information, to provide professional

opportunities and to advance the discipline.

The AMA's code of ethics divides principles into norms and values.

NormsThere are three norms named in the American Marketing Association

code of ethics: Marketers will do no harm, foster trust and embrace ethical

values.

ValuesThe AMA code of ethics also lists six values.

Marketers must embrace honesty in their transactions, take responsibility

for their activities and exhibit fairness for both the buyer and seller.

They must also show respect for all stakeholders, transparency in their

operations and responsible citizenship in the community.

For Example - Indian scenarioThere were some reports in the newspapers in the recent past regarding promotional expenses being made by the Pharma companies. The reports suggest that some unethical marketing practices are being followed by certain pharma companies. Keeping in view the seriousness of the allegations made in the media reports, Department of Pharmaceuticals felt the need to take up the matter in the interest of the consumers/patients as such promotional expenses being extended to doctors had direct implications on the pricing of drugs and its affordability. After discussing the issues with the Pharma Associations/Industry, this Department has been able to persuade most of the associations to have Code of ethics. Organisation of Pharmaceutical Producers of India (OPPI) and Indian Drug Manufacturers’ Association have informed that they along with Confederation of Indian Pharmaceutical Industry (CIPI), Federation Pharmaceutical Entrepreneurs (FOPE), Indian Pharmaceutical Alliance (IPA) and SME Pharma Industries Confederation (SPIC) have worked out the ‘Uniform Code of Pharmaceutical Marketing Practices’ (UCMP).

Challenges before Ethical MarketingAlthough marketing offers significant benefits to society, a number of

criticism reveal that more responsible marketing is expected from

marketing professionals and marketing organizations.

Criticism 1: Marketing encourages people to purchase what they do not needWhile many marketers are indeed often guilty of manipulating customers

into purchasing items they do not need, this criticism also fails to respect

customers who make an informed choice.

The criticism is based on the belief that marketers are only interested in

making profit by any method possible, even if it may involve manipulation.

Experienced marketers know that such an approach can not work in the

long run as it does not lead to loyal customers.

Criticism 2: Marketing exaggerate product features

There is a widespread belief that marketing and advertising make

exaggerated claims and values that the product does not deliver.

There could often be a fine line between what a rational person may

accept as a ‘reasonable exaggeration’ and what is misleading.

Criticism 3: Marketing Discriminates Customer SelectionMarketing often engages in targeting the market segment that is most

important to them.

Identifying the right target demography is a key to marketing success.

The argument against this is that marketing targets those who can afford

to pay for the product, and this often discriminates against poorer sections

of society, who have access to only inferior products.

This criticism is often valid, but at the same time, while many ‘low end’

products are inferior to their high end counterparts, they still have improved

in comparison to some years ago.

A good example is low cost electronic equipments, such as handsets and

digital cameras, which offer the same features that high end products

offered a few years ago.

Ethics in Marketing

Marketing ethics is the 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.

Frameworks of analysis for marketing ethical:

Possible frameworks:

1. 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.

2. Stakeholder-oriented framework, analysing ethical problems on the basis of whom they affect (e.g. consumers, competitors, society as a whole).

3. Process-oriented framework, analysing ethical problems in terms of the categories used by marketing specialists (e.g. research, price, promotion, placement.)