Ethics in marketing by aniket kulkarni

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Ethics In Marketing by Aniket K. Kulkarni Roll No:- MT14IND003 Industrial Engineering (2014-15) Mechanical Engg. Department VNIT Nagpur

Transcript of Ethics in marketing by aniket kulkarni

Ethics In Marketing

by

Aniket K. Kulkarni

Roll No:- MT14IND003

Industrial Engineering (2014-15)

Mechanical Engg. Department

VNIT Nagpur

WHAT IS ETHICS?

• It is the art and science of determining good and

bad or right and wrong moral behaviour.

• Ethics are moral guidelines which govern good

behaviour. So behaving ethically is doing what is

morally right.

• Behaving ethically in Marketing is widely

regarded as good Marketing practice.

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An important distinction to remember is thatbehaving ethically is not quite the same thing asbehaving lawfully.

• Ethics are about what is right and what is wrong.

• Law is about what is lawful and what is unlawful.

An ethical decision is one that is both legal andmeets the shared ethical standards of thecommunity.

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What Is Marketing?

• Marketing is about identifying and meetinghuman and social needs.

• “meeting needs profitably.”

• Marketing is the activity, set of institutions, andprocesses for creating, communicating,delivering, and exchanging offerings that havevalue for customers, clients, partners, and societyat large (American Marketing Association).

• Process by which companies create value forcustomers & build strong customer relationshipsin order to capture value from customers in return.

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Marketing Ethics

It is the area of applied ethics which deals with the

moral principles behind the operation and regulation

of marketing.

Ethics in marketing applies to different spheres such

as in Marketing segmentation, Marketing research,

Product packaging, Pricing, Distribution, Personal

selling, Advertising & promotion.

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Why we need Ethics in Marketing?

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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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 & Promotion.

• Ethical issues in Distribution.

• Ethical issues in Personal Selling.

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Ethics of Marketing researchEthics in marketing research refers to moral

principles that researcher or research organization

should consider.

Generally three parties are involved in marketing

research:

• The client who sponsors the research project.

• The supplier who designs & executes the

research.

• The respondents who provides the information.

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Ethical issues in Marketing research

• Information or data collected from respondentsshould not used for other purpose or for otherresearch work.

• Researcher should not force any respondentsfor answers.

• Protection of data or confidentiality of data.

• In case of personal or sensitive questions,researcher should give enough time torespondents to think about it.

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• Proper, unbiased and accurate information

collection.

• Invasion of privacy (e.g. obtaining research data

without permission).

• Stereotyping (drawing unfair or inappropriate

conclusions).

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Ethical issues in Marketing

segmentation

Ethical danger points include:

• Excluding potential customers from the market

(e.g. discouraging demand from undesirable

market sectors or simply refusing to sell to certain

customers).

Examples of unethical market segmentation or

selective marketing are past industry attitudes to the

gay, ethnic minority etc.

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• Targeting the vulnerable (e.g. children, the

elderly).

Children 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’’).

In the case of children, the main products are

unhealthy food, fashion ware and entertainment

goods. Children are considered as lucrative market.

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• Marketing in schools is a widespreadphenomenon in which schools sign contractsallowing certain businesses to conduct marketingactivities in school facilities - primarilyadvertising. For example, a school might allowonly one brand of soft drink to be sold in vendingmachines on the campus; in return, the soft drinkcompany would provide compensation to theschool (frequently money, but it may provideother compensation as well, such as building newfacilities or paying for school supplies).

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Ethics of Product Packaging

Packaging is a crucial element in the marketing of a

product, as it is essentially the casing that the

product comes in. So after all the advertising and

promotion, when customers go to the store and pick

up the product, it is only the packaging that they

see, smell, and touch. It is thus extremely important

for the marketer to ensure that potential customers

like what they see. The packaging should be

appropriate to the product, and induce customers to

buy it.

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Ethical issues in Product Packaging

• Problems With Label Information: Sometimes

marketers use label information to mislead

consumers by providing untrue information to

exaggerate the attributes of their product. Labels

that display nutrition information like low fat, fat

free, cholesterol free, and 100% pure juice are

examples.

• Problems With Packaging Graphics: There are

many cases in which marketers use pictures in

packaging that do not represent the actual

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• Problems With Packaging Safety: Consumers are concerned with packaging safety issues, especially when it comes to products for children. Marketers should avoid unsafe packaging that uses high ingredients of chemicals that are unsuitable for young children and are not tamper-proof.

• Problems With Environmental Issues: Some marketers tend to label their products as environmentally friendly. However, the products actually do not have environmentally friendly attributes.

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Ethics of Pricing

Economist defines price as the exchange value of aproduct or service always expressed in money.

The amount a customer pays for the product.

The price is very important as it determines thecompany's profit and hence, survival. Adjusting theprice has a profound impact on the marketingstrategy, and depending on the price elasticity of theproduct, often it will affect the demand and sales aswell. The marketer should set a price thatcomplements the other elements of the marketingmix.

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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 pricingEthics In Marketing Aniket K.Kulkarni 20

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• Bid rigging:

Illegal conspiracy in which competitors join to artificially increase the prices of goods and/or services offered in bids to potential customers.

Dumping (pricing policy):

In economics, "dumping" is a kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.

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• Predatory pricing

Predatory pricing (also undercutting) is a pricingstrategy where a product or service is set at a verylow price, intending to drive competitors out of themarket, or create barriers to entry for potential newcompetitors. If competitors or potential competitorscannot sustain equal or lower prices without losingmoney, they go out of business or choose not toenter the business. The predatory merchant then hasfewer competitors or is even a de facto monopoly.

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• Price discrimination: Price discrimination or price

differentiation is a pricing strategy where

identical or largely similar goods or services are

transacted at different prices by the same provider

in different markets or territories.

• Price fixing: It is an agreement between

participants on the same side in a market to buy or

sell a product, service, or commodity only at a

fixed price, or maintain the market conditions

such that the price is maintained at a given level

by controlling supply and demand.Ethics In Marketing Aniket K.Kulkarni 23

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• Price skimming is a pricing strategy in which a

marketer sets a relatively high price for a product

or service at first, then lowers the price over time.

• Price war is "commercial competition

characterized by the repeated cutting of prices

below those of competitors".

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• price gouging - pricing above the market price

when no alternative retailer is available.

• Variable pricing is a pricing strategy for products.

Traditional examples include auctions, stock

markets, foreign exchange markets, bargaining

and discounts.

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Ethics of Advertising & Promotion.

• There is no doubt that advertising attracts all of us

in number of ways, but there are also number of

controversies associated with advertising.

• Advertising is primarily a means by which sellers

communicate “ The worth of their goods and

services” to prospective buyers.

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Ethical issues in Advertising &

Promotion

• Advertising Should not mislead the consumer.

• What it promises must be there in the

performance of products.

• Ads. should not be indecent and obscene.

• As advertising is also a social process, it must

honour the norms of social behaviour, and should

not offend our moral sense.

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Unethical Issues in Advertising &

PromotionAdvertising is a highly visible business activity andany lapse in ethical standards can often be risky forthe company.

• Vulgarity/Obscenity used to gain consumer’sattention.

• Misleading information and deception.

• Puffery.

• Stereotypes.

• Racial issues.

• Controversial products (e.g. alcohol, gambling,tobacco etc.).

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Fake adds.

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Exaggerated ads.

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Racial issues in ads.

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The ad starts with the host asking a youngcontestant the question, “Kohima city is part ofwhich country? A.China, B.Nepal, C.India,D.Bhutan” The contestant opts for an audience poll,a life-line in the game show, where 100% of therespondents say India. “It’s India, everyone knowsthis answer,” says Amitabh Bachchan, to which theyoung contestant replies: “Everyone knows theanswer, but how many people actually acknowledge

it?”

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Unethical issues in promotion

• Offers of additional gift items (bonuses)

• Discounts

• “Free” offers.

• Distribution of discount vouchers, coupons and

samples.

• Using personalities for sales promotion.

• Linking charity purposes with sales promotions.

• Consumer contests and lotteries.

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Unethical issues in Distribution.

• Powerful supermarket chains often demand

payments from producers (slotting allowances) to

ensure that their products will have shelf space in

supermarkets. Many supermarket operators also

demand pay-to-stay fees payments to

supermarkets by producers to keep their products

on the shelf.

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• The gray market also raises ethical issues. The

gray market is unauthorized intermediaries that go

around authorized marketing channels by buying

in low- price from wholesaler and reselling in

markets at lower prices than those charged by

authorized channel members.

e.g. Importing and selling Apple products in

countries such as South Korea where official Apple

retail stores aren't present.

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• One ethical issue that arises in connection with

distribution is the use of power by a channel

leader.

• Conflicts that arises between different levels or at

the same levels within the same channel .

e.g.HUL came into conflict with its distributers

in Kerala on the issue of commissions.

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Unethical issues in Personal Selling

• Misrepresentation.

• Deception: Deliberately presenting inaccurate

information, or lying, to a customer is illegal.

• Bribes, gifts and entertainment: Bribes are

payments made to buyers to influence their

purchase decisions.

• Kickbacks are payments made to buyers based on

the amount of orders placed.

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• High-Pressure Selling: High Pressure Selling is

defined as a extremely aggressive behaviour by an

salesperson to convince a consumer to purchase

the product or service without due regard for the

consumer’s ability to pay and/or needs for the

product or service.

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• Kotler, Philip, Keller, Kevin Lane, Koshy, Abrahan,& Jha, Mithileshwar. (2009). MarketingManagement (13th ed.). Dorling Kindersley:pearson education in south asia.

• https://www.boundless.com/marketing/textbooks/

boundless-marketing-textbook/social-

responsibility-ethics-in-marketing-16/ethics-in-

marketing-102/issues-in-marketing-502-10770/

• http://en.wikipedia.org/wiki/Marketing_ethics

• http://www.slideshare.net/clawtin09/marketing-

ethics

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THANK YOU

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