An Examination of Marketing Ethics - Essay Example

An Examination of Marketing Ethics INTRODUCTION Marketing ethics is an interesting and controversial subject debated often and furiously among leading academicians. First, this article reviews the definition of and conditions of ethics in the modern sense. Secondly, the article explores modern marketing and its ethical implications. Third, the article reviews marketing ethics specifically associated with guerrilla marketing. The conclusion states that the system of international trade and its implications change marketing and ethical questions more quickly than modern theory can stay current. It is rather important to understand the concept of ethics before going in the detail of marketing ethics. Ethics are related to moral values of an individual, an organization and a society. “Morality is the right and wrong thoughts and behaviors in the context of a social group.” (Shermer, 2004, p.7) “Ethics is the scientific study of and theories about moral thoughts and behaviors in the context of rules in a social group”. (ibid) Morality is a concept of right and wrong of an individual. The reason that right and wrong concept is narrowed down to the individual is because the behavior about right and wrong and moral values occur within the context of culture. Acceptable thought and behavior differs from culture to culture, and from country to country. What is considered right and fair is considered wrong and unfair in some other culture. Ethics are part of our everyday lives; we make decisions everyday based on our ethics. Most decisions have deep roots in ethics which develop during childhood, taught by parents, social groups, and cultural settings. For instance a common practice in eastern countries is the use of office phones, and their transport for personal use; it may not be considered righteous but it surely is not considered unethical. However, the same practice in many western countries will be considered unethical and in some cases may be viewed as unfair and wrong. ETHICS Taylor (1975) defines ethics as an “inquiry into the nature and grounds of morality where morality is taken to mean moral judgments, standards and rules of conduct.” Standards and rules of conduct imply codification of morals, and indeed, societies do build moral standards into law. The Ten Commandments are largely codified in modern society. A review of ethics requires a review of certain principles and rules. The following list from Laczniak (1983): 1. The Golden Rule states ethical behavior treatment is based on how the actor would want to be treated. 2. The utilitarian principle implies ethical behavior is a result of the greatest good for the greatest number of people, and by extension, the least amount of bad. 3. Kant’s categorical imperative demands to act so that the action, under the circumstances, could be a universal ethical law or standard of behavior. 4. The professional ethic requires action that would be viewed as proper by a peer review process. 5. The TV test relies on management reflecting on a TV interview and asking “Would I be comfortable explaining to a national TV audience why I took this action?”’ The utilitarian principle implies the end is more important than the means in ethical behavior. The other rules or theories consider behavior to be moral or immoral, and results to be less controllable by the actor. Behavior based ethics are referred to as deontological while the results or consequence theories are teleological. (Hunt & Vitell, 1986) The teleological, or consequences driven ethics, involve the utilitarian principle. Essentially, this means the ends justify the means. It also means someone must determine what is best for the most people, and what hurt tolerance is acceptable for the remainder. The individual perspective drives these utility decisions and perspectives more than a central decision maker can determine. So, how do researchers use these various rules and theories to study ethics? The first controversy regards whether the ethical application is a framework or a theory. (Laczniak, 1983) There is no real consensus among marketers, so Laczniak opts to deal with these issues as framework: “a skeletal structure designed to support a perspective.” (1983) Supportive of this framework structure is a lack of empirical evidence to theorize about ethical behavior. The framework discussed will not derive ethical rules or laws, but will help marketing managers deal with decisions that have ethical implications. (ibid) The consequences based ethic framework, that is, teleological, concerns four data points: perceived consequences for considered actions; probability that consequences will affect the stakeholder group; the good or bad of each consequence; and the relative importance of each group. (Hunt etal, 2006) The subjective nature of these data is striking. The perceived consequences of any action are likely to be an incomplete list at best and in polar opposition to reality at worst. Intent and reality can differ; intent is deontological in nature. For example, the Golden rule implies choose actions that would be acceptable if reciprocated; but do not hold accountable for consequences. The utilitarian principle implies ethical behavior is a result of the greatest good for the greatest number of people; therefore, if one group considers the consequences bad, that group should take heart in the assumption that all other groups did better. Good was maximized at the expense of the one group. Kant’s categorical imperative demands to act so that the action, under the circumstances, could be a universal ethical law or standard of behavior. Absolutism suggests that the act, the ethic, is the only thing that matters. The consequence is an unimportant result of morality. The professional ethic requires action that would be viewed as proper by a peer review process. There is a certain arrogance to this suggestion. The ethics of the peers take precedence, or are greater than, the ethic of other people or the consequence bestowed upon them. The group ethic of professionals is more learned or appropriate than the masses. The consequences of this professional action are not mentioned in this ethical model. The TV test relies on management reflecting on a TV interview and asking “Would I be comfortable explaining to a national TV audience why I took this action?”’ The modern world of video and immediate news cycle creates a new ethic. This ethic implies the ethic and the consequences of actions are less important than the explanation for public consumption. The new ethicist is the “spin doctor”. The new ethical framework is based on proportionality. The proportionality of intentions, means of delivery and the ends, the consequences delivered. (Hunt etal 2006)That framework requires a utilitarian view of the overall problem. When the solutions are considered which will bring about utilitarian results, the deontological, behavioral, approach is then inserted. The course of action is chosen from the list that survives both perspectives of ethical behavior. Hunt & Vitell (1986) looks at organizational ethics as a hierarchy of needs: economic implications, organizational expectations and effects on constituents are all considered in choosing a course of action. From the decision makers point of view, the considerations are: individual ethics, organizational expectations and professional ethics. The individual within an organizational structure can decide ethical questions, then review the professional and organizational ethic to decide which alternative is the best choice. MARKETING According to Shelby Hunt (1986), “Marketing is human activity directed at satisfying needs and wants through exchange process.” This definition speaks to the utilitarian ethic, a consequence oriented ethic. Marketing, a field of study related to selling products to the end customers, devising advertising campaigns, making marketing plans and marketing research to determine the customers’ needs, then fulfilling those needs or desires. Ethics plays a very important role in marketing. The most important marketing sub field where ethics have been discussed greatly is marketing research. Marketing research is a sub field in marketing that researches potential customers’ preferences, attitudes and buying behavior towards a certain product or service. These behaviors are judged and measured using different tools in the field. These tools include questionnaires, focus groups, observations, and interviews. Most of these tools are ethical when used correctly. However, the tool of observation has been criticized mainly due to invasion of privacy. It’s been said that it is quite unethical for a marketing researcher to view or notice someone’s action without permission to reach a conclusion about a product or a service. However, marketing researchers argue that people who sit in a public place allow their actions to be viewed; therefore, simple observation is not unethical at all. Another marketing field greatly criticized has been advertising. Customers complain and critics point out that many advertising campaigns do not depict the real picture of the product or service offered. The advertising campaigns focus on presenting the product in a way that potential customers feel they get more value for their money. However, it is not true almost 90% of the time. The charge is that companies do deceive their customers to buy products, or buy products that will require replacement; and the ultimate goal is profit rather than customer satisfaction. Again, companies feel that it is ethical because customers want to see glamour and novelty in ads; so they feel proud to own the product. That is why such ads are made, and they become successful too. Another important marketing practice, which is also related to advertisement, is marketing towards children. Many ads made for children’s products focus on manipulating parents to buy those products despite the fact that, as is the case with “junk Foods”, those products are unhealthy for children. However, no warning or ethical messages are delivered in the beginning or the end of the advertising. Companies feel that they do not need to warn about product flaws since they are not meant to do any harm if they are not used in excess. The last but not the least marketing practice discussed in ethics is practice of sales man or marketing representatives. It is continuously observed through different researches that attitudes of sales representatives towards selling the products are not ethical. They, at times cross the lines while making an effort to sell the product to the vendor. In order to make commission they describe the product in glamorous ways. Although it is also a fact that commissions incent them do it, their practice is considered highly unethical by some. The answer by salesmen is simply that they are doing their job, which one can’t completely disagree with. According to Nantel, etal., the actual definition of marketing is the opposite of selling. The intention of marketing is to offer products that the consumer wants or needs. The successful marketer must know his potential customer well enough to meet his need. The aim of selling is to get people to buy, sometimes by creating a need or using psychological pressure. (Nantel, etal. 1996) Most researchers agree that marketing is utilitarian, or teleological, in nature. Market managers and salespeople use a more behavioral approach. Marketing, as discussed here, involves selling products to the end customers, devising advertising campaigns, making marketing plans and developing marketing research to determine the customers’ needs, then fulfilling those needs or desires. MARKETING ETHICS Ethical treatment of customers is an organizational top down phenomenon. The top management needs to create a code of ethics and enforce it in order to have an ethical culture of marketing. Training sessions for new employee orientation should include ethics and the company’s code of ethics with possible interventions. (Singhapakdi and Vitell, 1990) A codified ethical paradigm also speaks to the company. Customers can read what to expect by way of ethical treatment. A code of ethics helps to avoid and resolve ethical conflicts. Employees with ethical codes are more likely to perceive ethical components to situations. These relationships between ethics and ethical behavior are well documented through empirical research. (ibid) Some of the marketing ethical questions reviewed are: the study of consumer behavior; product and service management; advertising management; marketing research; price management; international marketing; viral marketing and guerrilla marketing. The study of consumer behavior ranges from test marketing to focus groups to questionnaires. The ethical question regards the invasion of privacy issue. The study of consumers can also be a manipulative tool to ensure brand loyalty by the test group. The ethical company explains why they do this research, and obtain permission to continue. Product and service management creates some interesting ethical dilemmas. For example, should a company create a product with a prematurely limited useful life when a more rugged prototype is available? Omission in advertising products, so the inability to satisfy consumer needs is hidden, is unethical, certainly on the greater good scale of ethics. The fact that government intervenes and insists on warning labels or flatly bans a product speaks ill of ethical marketing efforts and rhetoric. (Singhapakdi and Vitell, 1990) Advertising is marketing, not sales. Advertising should be truthful for very good reasons. First, marketing concerns informing the consumer about the benefits of a product, how it will resolve an issue or solve a problem for the consumer. When advertising is deceitful, even in little ways, the consumer loses trust in the company. Integrity is hard to attain and easy to lose. Consumers, once they sense deceit, will turn against the company. Word of mouth advertising works two ways: either the consumer tells good things about the company or ten times as many say bad things. Honesty is by far the best policy. Advertising behaviors are highly codified. Truth in lending and false advertising laws speak to the consumer’s expectation of ethical behavior. Infomercials and spokespeople transfer consumer responsibility to research to the celebrity, a neat but ethically challenged trick of marketers. (Singhapakdi and Vitell, 1990) Marketing research is appropriate and at times ethically challenging. The goal may be to find out what product features are valued, but the research skews toward the participants and their desire to please the interviewer. Price Management involves falsely claiming a high base price to impress high discounts, or simply pricing to value. The consumer wants to decide the value to price in order to make a wise consumer choice; however, complicated financing terms, adding price and offering 0% financing, or simply claiming a false value or “comparable to” reports confuse the consumer, purposefully. The price structuring and strategies that create confusion are unethical, but many times successful. International Marketing exploits differing cultural values. When a company knows a product is unhealthy and one country is intervening with sanctions, for example, tobacco companies must advertise a no smoking campaign for kids, and the company begins advertising in other countries aimed at young beginning smokers, that behavior may be deemed unethical. (Singhapakdi and Vitell, 1990) Viral marketing, the latest craze on the internet. Marketers are either advertising products or demonstrating products by showing videos meant to entertain and purport to be entertainment rather than advertising. The ethical challenge is to honestly portray the product and inform the consumer of its uses. Guerrilla marketing is a strategy where a couple or individual demonstrates the product to strangers on the street under the guise of needing help. For example, a couple might ask a stranger to take their picture with a new camera. Then, they explain the camera to the stranger, showing its features and benefits. Often, the stranger does not know he was being sold something. These outlined marketing techniques can be valid and valuable to the consumer; however, the unethical marketers create doubt for the ethical ones. . GUERRILLA MARKETING Using the same guidelines of ethics that were discussed, guerrilla marketing and viral marketing challenge the ethical standards. The following discussion involves the Golden Rule, the utilitarian principle, Kant’s categorical imperative, a peer review and the TV test. The line between entertainment and advertising blurs a bit when product placement is used to finance movies and television shows. The computer the hero uses has an Apple logo, or the cool detective drives a Chevy. This subliminal message speaks to the audience; but the audience hears it subconsciously. In guerrilla marketing, good citizenship is used to spread word of mouth advertising, “to start a buzz”. But, is it ethical to market a product in such a way that the target does not know it is a product demonstration. A subtle example is the car rental business. The major suppliers of rental cars negotiate deals with car manufacturers to use vehicles for 6000 miles or so. Then, they swap for newer cars and sell the old ones as “program cars”. The program cars are sold implying they were used as corporate executive vehicles. The person who rents the car is taking a test drive and paying for the privilege. The car manufacturer “sells” the car at a deeply discounted price to get car renters to test drive under favorable conditions. The question is, should the average car renter know the arrangement, or is it irrelevant to their decision to rent. The Golden Rule states ethical behavior treatment is based on how the actor would want to be treated. Most people resent dishonest or unethical treatment. Most people would want to know whether they are doing a favor for the young couple or demonstrating a new product because they are donating their time for the activity. The camera company knows they would not get the same results going door to door demonstrating the camera, or for that matter, asking passersby to spend time looking at a new technology or product. When viral video is used for advertising, but is offered as entertainment, the same rule applies. The company is attempting to get word of mouth advertising by deceptive means. The company wants viral videos to get passed around among friends and colleagues through the internet so a trusted source sends the advertising rather than spam or junk mail. The demonstration approach seeks the good Samaritan who will tell friends about helping the cute couple with the neat camera. The unethical part is not telling the good Samaritan they just spent time in a marketing call, and they are being used to spread the benefits of the new technology. The Golden rule standard of ethics implies consent; most people prefer to volunteer time or effort under the conditions of an open agenda, not a secret one. The utilitarian principle implies ethical behavior is a result of the greatest good for the greatest number of people, and by extension, the least amount of bad. Dishonesty in presentation is a bad, maybe not terrible, but bad. In effect, time is being stolen under false pretenses in the guerrilla marketing scheme and prestige is being borrowed in the viral video advertising protocol. The products marketed in this manner may be a consumer good; however, society will continue without the latest phone that can double as a camera. Guerrilla marketing is used primarily for new technology consumer goods, or for the product development and consumer research of these goods. The greater good is not the incentive for these products, profit is. To fool people into helping with market research or marketing, to try to achieve a free ride on the word of mouth marketing underground, is dishonest. These marketing techniques do not pass the utilitarian test. Losing faith in your fellow citizen through dishonest acts of marketers is too great a loss compared to demonstrating a gadget that is antiquated by newer technology in six months. Kant’s categorical imperative demands to act so that the action, under the circumstances, could be a universal ethical law or standard of behavior. Fraudulently claiming to need help taking a picture so the good Samaritan gets a product demonstration will not replace the Golden Rule any time soon. Neither will creating a commercial and releasing it as a reality piece for the internet. Contrivance makes a poor imperative. Particularly in the case of guerrilla marketing, rather than ask if people could help taking a picture, the marketer could ask if the person wants a product demonstration. Forthrightness makes a good imperative. The marketer knows he will achieve two things through dishonesty: a product demonstration and word of mouth advertising. And, he will achieve these things at a higher success rate than through honestly peddling his wares on street corners. The professional ethic requires action that would be viewed as proper by a peer review process. Professional marketers dreamed up the guerrilla marketing approach, viral videos and the product placements. This behavior may very well pass professional standards of conduct. Truly professional marketing; however, cares for the brand name and company. The TV test relies on management reflecting on a TV interview and asking “Would I be comfortable explaining to a national TV audience why I took this action?”’ This ethical test is difficult. Most people would not want to explain a dishonest or underhanded marketing tactic to the general public. If the spokesman were explaining a product defect that was unknown at the time of sale, peple would judge by the reaction to discovering the defect. If the spokesman was explaining why the company sold a product with a known defect, most people would judge the dishonesty. In a more subtle way, people do not like being outsmarted or fooled. Most people would judge guerrilla marketing harshly as a deceptive tactic. Product placement, perhaps less so. With product placement in movies, the hero is sitting at a computer, what kind of computer may be unimportant to the story. If the average movie-goer saves a few dollars a year on ticket money because the movie is partially funded through product placement, the computer is Dell rather than Apple, most people will not be too outraged. Viral videos are a form of entertainment with a purpose. Explaining the competitive benefits of viral video may put the audience to sleep. Viral video is probably ethics neutral by this standard. By most of these standards of ethics, guerrilla marketing and viral videos are not ethical forms of marketing. The company brand name should stand for integrity; these latest developments in marketing do not honor that standard. Conclusion In this small essay the author tried covering different aspects of ethics in marketing. One concluding point is that marketing practices do have a big element of potential unethical practices in them, which needs to be reviewed in detail. Last concluding point is that critics also need to realize that marketing is not just unethical practice, rather it’s a productive and good part of our lives, and unethical practices can only be removed by positive criticism and solutions, rather than destructive criticism. Advertising is a form of education when at its best. Consumers need information on service, product features, functionality, price and durability. Ethical marketing teaches these values. Business ethics and marketing begin at the very first communication between business and consumer. Businesses that do not seem interested in answering the phone or getting the customer to the right person to resolve issues seem secretive or incompetent. Promising to call back and not doing so or missing appointments also speaks to the company ethical standard. So does the choice of marketing strategy and tactic. Straightforward demonstrations or literature teaching and informing are welcomed. Guerrilla tactics and dishonesty are not. This report suggests the best strategy is to earn integrity by being honest and forthright in dealing with consumers. Companies should teach product or service information through advertising and be ethical in their treatment of customers. The Golden Rule makes a good Kant imperative. References CHONKO, L. B. & HUNT, S. D. 1985. Ethics and marketing management: an empirical examination. Journal of Business Research, 13, 339-359. Fritzsche, David J. 1988. 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