Ethics & Marketing Ethics & Marketing ComplianceCompliance

Social and Ethical Issues in Marketing

• A number of social and ethical issues are sometimes raised in relation to marketing practice, and emerge as areas of attention for marketing practitioners and regulators. These issues often generate considerable criticism of marketing, some of which is justified, but much of which is not.

Cont’d

• Consumers have many concerns about how well a firm’s marketing activities serve their interests.

• Surveys often show that consumers hold mixed, or even slightly unfavourable, attitudes toward marketing practices.

The Impact on Consumers

• Consumer worries include:– High price of products– Poor-quality– Products that are dangerous– Planned obsolescence of products– Misleading advertising claims– Deceptive practices– Breaches of privacy– High-pressure selling– Poor service to disadvantaged consumers

The Impact on Society

• The marketing system and private enterprise has been accused of adding to several issues in society:

– Generating false wants and placing too much emphasis on material possessions.

– Delivering too few social goods.– Creating cultural pollution.– Gaining too much political power.

Cont’d

• Materialism– emphasis on spending (buying unnecessary goods?)

– increased levels of personal debt

• Few social goods– high public spending to support private goods

• Cultural pollution– intrusive advertising (poorly targeted)

• Political power– self interest of industry (e.g. oil; automobiles)

Impact On Other Businesses

• Three major problems:

– Acquisition of competitors

– Marketing practices that create barriers to prevent, or discourage, other firms from entering the industry

– Unfair competitive marketing practices

Private and Public Actions to Regulate Marketing

• Often there are community movements that attempt to ensure firms implement ethical business practices

• Will happen at times when questionable business practices occur (e.g. excessive executive salaries; or when fraud and misappropriation of company funds are uncovered.

• Two major movements are consumerism and environmentalism

Consumerism

• Business firms have been the target of organised consumer movements since the 1960s.

• Consumers have become better educated

• Products have become more complex and hazardous, and marketing organisations have raised consumers’ expectations as they seek to gain sustainable competitive advantage.

• Consumerism is an organised movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers.

Traditional Sellers’ Rights

Sellers have the right to:

• Introduce a product in any size and style, provided it is not hazardous to personal health or safety; or, if it is, to include proper warnings and controls.

• Charge any price for the product, as long as there is no discrimination between similar kinds of buyers.

• The right to spend any amount to promote the product, provided the promotion is not seen as unfair competition.

• Use any product message, provided it is not misleading or dishonest in content or execution.

• Use any buying incentive schemes, provided they are not unfair or misleading.

• Buyers have the right to:

– Refuse to buy a product that’s offered for sale– Expect the product to be safe.– Expect the product to perform as claimed.

However, the feeling is that buyers are less aware

than sellers, and are at a distinct disadvantage

through lack of information or knowledge

Traditional Buyers’ Rights

Environmentalism• Environmentalism is an organised movement of

concerned citizens, businesses and government agencies seeking to protect and improve people’s living environment, by reducing the negative effects on natural resources and human health.

• Environmentalists are not against marketing, they simply want people and business organisations to operate with more care for the environment, conserve resources and achieve sustainable development.

• Environmentalism creates special challenges for global marketers. As trade barriers come down and global markets expand, environmental issues are having an ever greater impact on international trade.

Ethics

The moral principles and values that generally determine individual or group conduct

Will help identify how a business firm should operate within its environment

Cont’d

• Identify acceptable business practices

• Produce desired behaviour in both management and staff

• Help to reduce confusion as to what decision employees should make

Adopting Ethical Marketing

• Ethical marketing is an approach by organisations ,whereby they recognise that the task of marketing requires them to be both conscious of society’s views and ethical in the way they approach their customers and society as a whole.

Cont’d

• Most business organisations respond positively to consumerism and environmentalism, in order to better serve the needs of their customers and continue to grow the business

• In adopting these approaches, a firm will set a broad guideline that directs employee actions

• Companies need to develop suitable corporate policies on marketing ethics, because not all staff will have the necessary sensitivity to the issues

Cont’d

• An enlightened company that adopts the ‘societal marketing principle’ makes marketing decisions by considering consumers’ wants; the company’s requirements; and society’s long term interests.

• Products may be classified according to their degree of immediate customer satisfaction and long-term consumer benefit:– Deficient products.

– Pleasing products.

– Salutary products.

– Desirable products.

Societal Classification of Products

Legal Compliance in Marketing

• A legal compliance program is a system designed to identify, manage, and reduce the risk of the company breaking the law.

• ‘Australian Standards’ are used to guide many businesses and are a useful approach for a firm when implementing a compliance program in marketing.

• The Standards draw together guidance from the courts; the opinion of legal practitioners; and the benefits of ‘best practice’.

Aimed at ensuring company employees know the law, and comply with it

• Education tends to cover four sets of relationships that need to be monitored:

– the relationships with competitors– the relationships with suppliers– the relationships with other parties, such as

patent licensees– the relationship with the industry itself

Legal Education

Australian Marketing InstituteCode of Professional Conduct

Legal-compliance program

Objective is to:

• Promote a culture of legal and ethical compliance within the business organisation

• Prevent, or correct, any breaches of business regulations / laws within the organisation

• Enable the organisation to operate as a ‘good corporate citizen’

Coverage of Compliance Program

• Competition law• Contract and consumer law• Standards• Product liability• Marketing Communication• Sales and after-sales finance• Franchising• Intellectual property

Intellectual Property (IP) Law

• A law involving such areas as copyright; trademarks; patents; designs; trade secrets.

• There are many other legal requirements, particularly under the Trade Practices Act; and consumer rights under Common Law, that the marketer needs to be aware of.