Ethics in Functional areas of Business-Marketing Management-2
The following is a discussion on individual aspects of Marketing Mix and how each one has ethical implications for a firm’s business
1. Price
Common ethical issues are Price fixing, Destructive pricing et... Organizations have right to price their product to earn a reasonable profit, but issues may crop up when they seek to earn high profits at the expense of its customers.
American corporation Turing Pharmaceuticals was publicly vilified for its predatory pricing when it raised the price of the drug Daraprim by 4000%. This is a drug used to treat infections associated with HIV and AIDS. Turing’s CEO Martin Shkreli was described by the Washington Post as “the most hated man in America”
i. Dumping
It occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect.
ii. Price fixing
Price fixing 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.
• The actions of the OPEC oil cartel, an international organization of 14 oil producing nations which collectively accounts for 44 percent of the world's oil production.
iii. Price Skimmimng
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.
· Sony PlayStation 3 was originally sold at $599 in the US market, but it has been gradually reduced to below $200
2. Place
a. Distribution
Ethical issues in distribution involve relationship among producers and middlemen or intermediaries (wholesales and retailer), facilitate the flow of products from producer to the ultimate customer
Serious issues with regard to distribution include manipulating a product availability for price gaining.
Eg – Milk Powder shortage
i. Tying arrangement
A tying arrangement is defined as "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees he will not purchase the product from any other supplier." Tying may be the action of several companies as well as the work of just one
ii. Black Market
A black market, underground economy or shadow economy, is a clandestine market or series of transactions that has some aspect of illegality or is characterized by some form of noncompliant behavior with an institutional set of rules.
b. Promotion
It can create ethical issues in many ways among them false or misleading advertising and manipulative or deceptive sales promotions, tactics and publicity.
Advertising has often been regarded as the 'secret persuader'; encouraging consumers to purchase products they do not need
Eg: Ethical issues around the marketing of national lotteries that can build gambling addictions, or
The offers of financial services which make the creation of unsustainable debt a problem
• Sub-prime crisis
Other ethical issues may be around the Content of advertisements like attack ads, subliminal messages, sex in advertising, products regarded as immoral or harmful, or it can also be about marketing certain products in the schools or its vicinity.
i. Advertisements
The Creates social trends, dictating how people think and act. In India, Advertising Standards Council of India(ASCI) controls and regulates the contents of advertisements in any form. Products advertising for liquor, cigarette is banned in the country since 1995. Alcohol advertisement promotes underage drinking.
i.1 Surrogate advertising is a form of advertising which is used to promote banned products, like cigarettes and alcohol, in the disguise of another product.
• Bacardi Blast - music CD's
• Bagpiper - Club Soda
• Officers Choice - Playing cards
• ITC – Lifestyle stores
i.2 Deceptive advertising, or false advertising, is any type of advertising that is false, misleading, or has the effect of deceiving consumers. An ad can be deceptive in many aspects, including:
• Price of a product
• Quantity of a product
• The quality or standard of the item
• Times, dates, and locations that the product is available
• Information regarding warranties
• False facts regarding deals or sales
• Confusion over interest rates or other factors
The Advertising Standards Council of India (ASCI) said a Bharti Airtel advertisement promoting its 4G services by promising a "lifetime free mobile connection" was misleading. It asked India's no. 1 phone company to stop airing and printing the commercial by October 7, 2015. The advertisement promises: "If your network is faster, we will pay your mobile bills for life." According to ASCI, the advertisement contravened Chapter 1.4 of the Code
In May, 2015 the ASCI issued notices to Idea Cellular Ltd and Vodafone India as well as to Airtel for their 3G advertisements. In the case of Idea, ASCI said that its advertisement of Idea Internet Network was found to be misleading by ambiguity as it led consumers to believe that through Idea Internet Network (IIN), a student can avail of the same level of education (economics and biology) as is being provided in a college. There is no data to support that the subjects being referred to in the advertisement are being made available for formal education was the stand taken by ASCI.
Similarly, the case for Vodafone India Ltd’s advertisement claiming “Fastest 3G Network" was also not substantiated adequately and was misleading by ambiguity, ASCI said. In the case of Airtel’s 3G ads, ASCI found that the claims of being “India’s Best 3G network" and that “Airtel gives 122% faster download speeds than other 3G networks" were not adequately substantiated.
ii. Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains.
The specific marketing strategies involve one or combinations of : Greenwash, Bait and Switch, Shill, Viral marketing, Spam (electronic), Pyramid scheme, Planned obsolescence.
ii.a Greenwashing is the process of conveying a false impression or providing misleading information about how a company's products are more environmentally sound. Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company's products are environmentally friendly
ii.b Bait and switch is a morally suspect sales tactic that lures customers in with specific claims about the quality or low prices on items that turn out to be unavailable in order to upsell them on a similar, pricier item. It is considered a form of retail sales fraud, though it takes place in other contexts
ii.c A shill, also called a plant or a stooge, is a person who publicly helps or gives credibility to a person or organization without disclosing that they have a close relationship with the person or organization
ii.d Viral marketing or viral advertising is a business strategy that uses existing social networks to promote a product. Its name refers to how consumers spread information about a product with other people, much in the same way that a virus spreads from one person to another.
Viral marketing is a sales technique that involves organic or word-of-mouth information about a product or service to spread at an ever-increasing rate. The internet and the advent of social media has greatly increased the amount of viral messages in the form of memes, shares, likes, and forwards.
ii.e Spamming is the use of messaging systems to send an unsolicited message to large numbers of recipients for the purpose of commercial advertising, for the purpose of non-commercial proselytizing, or for any prohibited purpose.
ii.f Spam is digital junk mail: unsolicited communications sent in bulk over the internet or through any electronic messaging system.
ii.g Pyramid schemes—also referred to as franchise fraud or chain referral schemes—are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships.
A pyramid scheme is a sketchy and unsustainable business model, where a few top-level members recruit newer members, who pay upfront costs up the chain, to those who enrolled them. As newer members in turn recruit underlings of their own, a portion of the subsequent fees they receive is also kicked up the chain.
ii.h Planned obsolescence (also called built-in obsolescence or premature obsolescence) is a policy of planning or designing a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a certain pre-determined period of time upon which it decrementally functions or suddenly ceases to function, or might be perceived as unfashionable
It is the deliberate shortening of a lifespan of a product to force consumers to purchase functional replacements
3. Product
Withholding critical information such as performance, risk associated and also fail to inform customers about existing condition and changes in product quality that could affect purchase decision.
• Lucy & Yak, India: Ethical fast fashion accessories ;You can see their whole production process. Transparency is a key aspect of ethical marketing
• Dr. Bronner’s Activist Soap: The top-selling organic liquid soap brand in America. Not only do they have strong visual branding (the bottles feature a 30,000 word-long philosophical creed that founder Emanuel Bronner spoke of while touring in the 1940s), they also have strong ethics; campaign for income equality, drug policy reform, regenerative organic agriculture and animal advocacy
• In 2019, the clothing company People’s Tree teamed up with BBC Earth to highlight the importance of our oceans and marine conservation. It’s the second collaboration the pair have created and allows consumers to simultaneously look trendy, promote sustainability and wear something that’s GOTS Certified.
4. People
People resolve their ethical conflicts in their daily lives, with their own values and principles of right or wrong.
People learn values and principles through socialization, social group, religion, and formal education. “ however research has established that an organization values often influence on marketing decisions than a persons own values “
That is important for influencing a persons ethical decisions there is two aspects of personal moral philosophies
• Idealism
• Relativism
Ethical choices in marketing are often made jointly, in work groups and committees or in conversations and discussions with coworkers Marketers resolve their issues based not only on what they learned from their own background but also on what they learn from others in the organization. Out come of the learning process depends on the strength of each individual’s personal values…..
Another factor that may shape ethical decisions in marketing is the “opportunity” that limits barriers or provide rewards.
A marketer who takes advantage of an opportunity to act unethically and is rewarded or suffers no penalty may repeat such acts when an opportunity arise
Organizational culture can be defined as values, beliefs, and norms shared by all employees of that organization. In most organizations, a moral atmosphere can be detected – people can feel and pick subtle hints and clues that tell them what behavior is approved and what is forbidden. The unspoken understanding among employees of what is and is not acceptable behaviour is called ethical climate.
Firms culture may be expressed formally through codes of conduct, memos, manuals, dress codes, and ceremonies. It is also conveyed informally through codes work habits, extracurricular activities.
Culture gives its members meaning and suggests rules for how to behave and deal with problems within the organization.
Interaction between corporate culture and leadership helps determine the ethical value system .
• Eg -Ethics & Compliance
The core of the ethics and compliance program at The Coca- Cola Company is our Code of Business Conduct. The Code guides our business conduct, requiring honesty and integrity in all matters. All of our associates and directors are required to read and understand the Code and follow its precepts in the workplace and larger community.
-Muhtar Kent, Coca-Cola's chairman and CEO(2008)
Comments
Post a Comment