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Marketing Ethics

Dr. Geurts Lecture Winter 1998

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Ethics “Inquiry into the nature and grounds of morality, where the term morality

means judgements, standards, and rules of conduct.” Plato says, “whatever in any city is regarded as just and admirable, is just

and is just and admirable in that city, for so long as it is thought to be so.” “Marketing exploits the greed and ego of consumers” “We have learned by sad experience that it is the nature of nearly all

men…Immediately exercise unrighteous dominion.” “Sidney Gilbert” Kirtland and Independence “sell goods without fraud”

D&C 56 If it’s wrong make it illegal?

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A. Areas of Ethics

1. Salespeople a. Distortions- misleading information b. Use of personal charisma to sell c. Use of connections or threats d. Get salesperson to get in debt so they sell more

2. Marketing Research a. Distort findings to fit own views b. Pretend to be a study when it is really a sales pitch c. Report surveys not held or ask leading questions

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A. Areas of Ethics- con’t 3. Deceptive Advertising and Puffing

a. Lies b. Puffing- an exaggeration of the benefits through the selling process c. Puffing can be illegal if:

there is a probability of deception for most consumers a reasonable consumer would believe the deception the material would have you believe what is printed

d. Deception can be beneficial, decreases cognitive dissonance e. Subliminal advertising and packaging

message presented below the perception threshold, message in cloud or picture ad, message in shape of package, double meaning words “take it all off,” “fly me,” “my men wear English leather or nothing at all”

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A. Areas of Ethics- con’t 4. Product Offerings

a. Dangerous products b. Cause social or physical harm

5. Pricing a. Quote an original or normal price that is sometimes dishonest b. Two for one price--consumer distorts as two for one c. Odd pricing $1.98 d. Price breaks--trade up, sell additional features e. Bait and switch- never intend to sell the low-priced product f. Package to price (eg., Hershey reduced size of candy bar instead of increasing

price) g. High price for a short period then quote old price to show appeal for the low price

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B. Reasons for Ethical Behavior

Public relations--Drexel Personal reputation Societal practice Difficulty in employment Religion-- 1 Thessalonians 4:6 Social Improvement Self-confidence

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C. Ethical Terms

Deontology-- deed good or bad “Satisficing” Tentology-- outcome of deed = utilitarian

ex. Nephi & Laban

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D. Role ethics* Lawyers, Doctors, Salespeople

E. What is the difference between opportunistic and unethical?

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Ethical Situations

Is this the lowest price you have sold this at or will your boss authorize a lower price?

Better product out from competitor and asked is this the best product for me to buy

Ask for lunch, golf balls, clubs, club membership, prostitute in Nevada where legal

Competitive salesperson is divorced and abandoned wife and kids. President about to give him the sales order. He doesn’t know about the salesperson’s divorce and abandoned kids. It happened to his daughter, and if he knew, he would not buy from competitor.

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Customer stopped buying several years ago. Calls up for a bit on a drill rig that is obsolete. You have been trying to sell at $1500. The bit will save him $100,000 a day, and his only other source of supply will take 5 days to make the part.

Boss wants you to take part of your salary by padding expense account.

Split commission Sell in December to make quota and then make agreement to

return inventory in January Let it be known that you uncle is governor (different last name)

when selling to a state agency

Ethical Situations- con’t

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Any .01% of a life-saving drug is defective and will allow person to die. Don’t know which .01% and have 10 million bottles. Testing destroys the drug. Value of drug is $50 million.

Hot new product. Customers want badly. Must allocate product. Dream up deal to move dog, must take 1 razor blade sharpener for every three negative calorie candy bars.

Discovery of cancer cure. Can only produce 10 a month. Allocate on price? Cure works on infant cancer?

Need cash. No one will lend because of stock price-- large sale between companies to show an artificial sales increase and profits. Then sell stock?

What is the difference between opportunistic and unethical?

Ethical Situations- con’t