Marketing research ethics and tobacco industry practices in America

Marketing Research Ethics in the Tobacco Industry

THE FIGHT NOT OVER YET

Marketing Research Ethics: the Tobacco Industry in America

Marketing Research

Market research differs from marketing research ((Marketing Teacher 2010). Market research only presents data about a specific market. Marketing research begins with market research data but goes on to other aspects, including research into new products and appropriate modes of distribution. It is much broader. It connects the consumer, customer, and the public to the marketer through information. The marketer also uses this information to discover marketing opportunities and issues; evolve and polish marketing actions; monitor marketing outcomes; and better understand the marketing process. Marketing research comes up with the precise information that addresses issues and problems, develops data collection methods, oversees this collection process, analyzes and transmits findings and implications to appropriate recipients (Marketing Teacher).

Marketing research deals with the elements of the marketing mix, competitors, markets and everything about the customer (Marketing Teacher 2010). It uses a systematic approach of 10 steps. These are defining the problem, determining the methods of data collection, selecting the sample method, analysis of collected data, setting a time frame and a budget, consulting with the managers or clients requesting the research, conduct and analyze the data, check for errors, write the data report. Defining the problem requires a clear knowledge of the purpose of the research. Methods of data collection include a telephone survey and a focus group. Sampling can be random, stratified or cluster. Data analysis should include a method, the software to use and the required degree of accuracy. The sources of data are either primary or secondary. Primary data are original. Secondary data are drawn from existing sources developed for other purposes. Ideally, the final report should include charts, tables and diagrams and all aimed at obtaining the solution to the problem or need previously stated (Marketing Teacher).

Why Ethics is Important

All organizations are continuously exposed to all forms of ethical misconduct and illegal behavior by employees and managers, even when they mean no harm (Ferrell 2006). Potential risks must be identified and forms of misconduct must be promptly discovered. Among these risks are over-billing, deceptive sales methods, fraud, antitrust and price fixing. A plan and system must be set up to determine what is going on and deal with it promptly without covering up, ignoring or staying away from legal and ethical complications. Marketing misconduct happens in all firms and the only effective way to succeed in contemporary business is to discover and deal with this misconduct. The courts of law are often the last resort for unethical practices. But negative publicity can badly hurt or destroy a company's reputation. Many unethical activities, which often land in court, are marketing activities. These usually begin as marketing efforts, which eventually turn out to be unethical. Businesses, which manage ethics effectively, are better able to absorb, react and adjust to most problems in conduct or decisions. There should be a plan to reduce potential damages from poor choices by the leadership, effective ethics programs, prompt response, and public crisis management communication before the situation goes out-of-hand (Ferrell).

Value-driven leadership and compliance-driven ethics training, monitoring and reporting systems must be incorporated into the ethical corporate culture (Ferrell 2006). The organization must understand what influences behavior and how it aligns with organizational goals. It must establish a kind of framework for ethical decision-making. It will not dictate how to make decisions but describes how these are made. It will facilitate the factors that influence decision-making within the organization. A marketing manager who must make effective ethical decisions must know the subject matter very well, evaluate the risk, and must have the experience in projecting consequences of his decision to all stakeholders. These organizational decisions call for a manager's ability to work through directives and pressure from the work group (Ferrell).

The Tobacco Industry

Tobacco grows indigenously in North and South America (Randall 1999). It belongs to the same species as the potato, pepper and the night shade, which is a very deadly plant. Tobacco growing dates back to 6,000 B.C. In around 1 B.C., American Indians began using tobacco in their religious rites and medicinal practices. They viewed it as a panacea for disease and to dress wounds and to stop pain or relieve toothache. Historical records say that on October 15, 1492, American Indians offered dried tobacco leaves as a gift to Christopher Columbus. European sailors brought the tobacco to Europe where it was popularly grown for its supposed healing properties. A Spanish doctor, Nicolas Monardes, wrote a book about the history of medicinal plants in the new world in 1571. In this book, he claimed that tobacco can cure 36 health conditions. Thomas Harriet of Virginia promoted smoking tobacco as a means of obtaining daily dose of the "cure-all." Tobacco reached peak success so that it was even used as legal tender, something seen as "good as gold." The adverse effects of the habit were, however, not ignored by everyone. In 1610, Sir Francis Bacon commented that quitting the habit was extremely difficult. Moral beliefs also opposed it. Public smoking was illegal in Massachusetts 12 years after the Mayflower arrived in Plymouth Rock. Nonetheless, the industry was established. In 1613, John Rolfe conducted the first successful tobacco cultivation in Virginia (Morrison 1965 as qtd in McGrew 2010. In 1760, Pierre Lorillard put up his company in New York, named after him. P. Lorillard processed tobacco, cigars and similar items. It was the oldest tobacco company in the United States (Randall).

The Growth of the Industry

The industry continued to grow. Tobacco served as collateral for loans borrowed by the Americans from France to finance the American Revolutionary War (Randall 1999). In the meantime, more and more scientists came to know the toxic chemicals in tobacco and the danger of smoking to health. They discovered nicotine in 1826 as a poison. In 1836, Samuel Green of New England considered tobacco an insecticide, which can kill human beings. The famous Philip Morris USA was established in 1847, first selling hand-rolled Turkish cigarettes. It was followed two years later by J.E. Liggett and Brother in St. Louis, Missouri. In 1875, R.J. Reynolds Tobacco Company was established and produced chewing tobacco. By the 1900s, cigarette became the major tobacco product. In 1901, cigarette sale reached 3.5 billion and cigars, 6 billion. Philip Morris put up its New York headquarters in 1902 and began to market its cigarette brands. These were the famous Marlboro, Virginia Slims, Merit, Parliament, Alpine, Basic Cambridge, Bucks, Dave's, Chesterfield, Collector's Choice, Commander, English Ovals, Lark, L & M, Players and Saratoga. An anti-tobacco campaign was beginning to form then and proposed a total ban on tobacco. But the demand for cigarette continued to grow, so R.J. Reynolds introduced the cigarette brand, Camel, in response (Randall).

Cigarettes became popular among World War soldiers as "soldier's smoke (Randall 1999)." Camel held 45% of the U.S. cigarette market by 1923 while Philip Morris produced women's cigarette, described as "mild as May." The American Tobacco Company produced Lucky Strike for women and captured 38% of the market. The number of female teenage smokers increased three times between 1925 and 1935 alone. In the spirit of competition, the American Tobacco Company in 1939 launched Pall Mall, which made it the largest tobacco company in the U.S. Cigarette sales went up higher during World War II when cigarettes even became part of soldiers' C-rations with food. Tobacco companies sent free cigarettes to soldiers at war. When they went home, they were a steady source of income to these companies. Alongside in the 50s, more and new evidence about the link between smoking and lung cancer was turning up. Tobacco companies first denied the connection and hazard and introduced new and "safer" products with lower tar and with filters. P. Lorillard came up with Kent with the "micronite filter" in 1952. It was found to contain asbestos and production was discontinued in 1956. In 1953, Dr. Ernst L. Wynders experimented on cigarette tar and discovered that it produces tumor when placed on the backs of mice. The following year, R.J. Reynolds produced and marketed filtered Winston brand and the first filter-tipped menthol Salem brand (Randall).

The 1964 Surgeon General's Office report on "Smoking and Health" allowed and helped the government regulate the advertising and sale of cigarettes (Randall 1999). It was during this decade when many health hazards to tobacco smoking were reported. Television cigarette ads were banned in Great Britain in 1965. Health warning labels began to be placed on cigarette packs by 1966. On account of adverse publicity, the major tobacco companies begin to diversify or change their image. Philip Morris bought the Miller Brewing Company for its Miller Lite and Red Dog Beer and to aluminum R.J. Reynolds Tobacco changed its name to R.J. Reynolds Industries. American Tobacco Company also changed its name to American Brands, Inc. Cigarette ads were finally stricken off from TV in the U.S. In 1971. But cigarettes have remained the second most heavily advertised products next only to automobiles. The 1979 Surgeon General's Office report publicized the health consequences of smoking on women. It was based on the increasing rate of women smokers who were influenced by the ad campaign of Virginia Slims (Randall).

Many lawsuits were filed against tobacco businesses in the 1980s because of the harmful effects of their products (Randall 1999). More public places began to ban or discourage it. The Surgeon General came farther by reporting in 1982 that second-hand smoke could cause lung cancer. Cigarette smoking was restricted in public places and especially in workplaces. Phillip Morris diversified further and bought General Foods Corporation and Kraft Inc. In 1985 R.J. Reynolds bought Nabisco and changed its name to RJR/Nabisco. Smoking in all domestic flights of less than 2 hours was banned by Congress in 1987. In 1990, it was banned in all domestic flights, except in Alaska and Hawaii. In the 80s and the 90s, cigarette marketing looked out of the U.S. And focused on developing countries in Asia. Recent evidence suggests that the tobacco industry had known all along about the harmful effects of their products but continued producing and marketing them. They also knew about the addictive property of nicotine but took advantage of public ignorance about it (Randall).

Tobacco Regulation

Commercial producers and promoters of tobacco have been subjected to different regulations in the past 360 years (McGrew 2010). Damage to health has been pointed out by social and medical opponents but tobacco has also been a strong source of State and federal revenue. These regulations have prohibited smoking in various places and times but not throughout the United States. Opponents push for regulations to suppress the habit and addiction. Promoters focus on the regulation of the quantity and quality of products. The strongest movement against tobacco was waged by Lucy Gaston of the Women's Christian Temperance Union in the 1890s. She succeeded in lobbying for the passage of legislations between 1895 and 1921, favoring her cause. These banned the sale of cigarettes in 14 States and smoking in public places by women. The National Education Association pooled efforts to protect the young from cigarette smoking by stressing the high ideals of American manhood. The National Congress of the PTA committed itself to the same mission. The sad experience of the Prohibition, the spread of the tobacco industry, the need for new sources of State revenue and the established popularity of cigarette smoking altogether frustrated the rising opposition force. Federal income from high tobacco sales went higher because of increased cigarette use and advanced rates. By 1937, the 14 States immediately imposed taxes on cigarettes. By 1950, all 50 States banned the sale of cigarettes to minors. Today, the sale of cigarettes is restricted to age 18 in most States, later lowered to age 15 in 11 States. The Tobacco Merchants Association places the liability on the vendor and donor of cigarettes (McGrew).

Advertising to Children

A specifically vulnerable sector to tobacco advertising consists of children. Psychologist Allen Kanner and his team went up against fellow psychologists who use psychological knowledge help marketers target children more effectively (Clay 2000).. Kanner and his team believed that this trend would spread materialistic values among the young. It would also encourage a wrong view that they would be inferior if they did not possess many new products. According to Kanner and his team, many studies are available in public libraries on how make effective ads but not one addressing the impact of advertising on children. They argued that psychologists who help advertisers achieve their ends are manipulative and drive in the capitalistic message. They viewed this as unethical. As it is, advertising and advertisers seem to succeed. According to a marketing expert, children under 12 today are already spending $28 billion a year in response to advertising. Teenagers are spending $100 billion and their parents, $249 billion for the same purpose. Kanner and his team said tobacco companies can always access basic research findings and theories available in public libraries. They can then use these and psychological principles to sway very young and vulnerable minds (Clay).

Master Settlement

The Attorneys-General of 46 States in 1998 signed a Master Settlement Agreement

with the four largest tobacco companies in the United States (King & Siegel 2001). It was to prohibit tobacco advertising in media catering to those younger than 18. The companies were to refrain from directly or indirectly advertising, promoting or marketing tobacco products. In September 2000, Philip Morris announced that it would restrict its advertising to magazines whose young readership was less than 15% or fewer than 2 million readers aged 12-17 (King & Siegel).

A review was conducted on the data provided by Competitive Media Reporting of New York on cigarette advertising in youth-oriented magazines between 1995 and 2000 Mediamark Research provided data on readers aged 12-17 and adult readers for each magazine (King & Siegel 2001). Results showed that the Master Agreement did not have substantial effect on advertising in magazines. Before and after the 1998 signing, tobacco companies continued to allocate a huge part of their budgets precisely for such magazines than for adult brands. They, in fact, maintained a consistently high level of exposure among young people. Despite restrictions to these magazines, young readers could not be significantly prevented from access to such advertising. This is so, even if they represent less than 15% of the readership of these magazines (King & Siegel).

R.J. Reynolds and Lorillard's advertising remained high in youth-oriented magazines in the first two years after the signing of the Master Settlement. Even the voluntary withdrawal of Philip Morris did not affect the substantial exposure of young readers to cigarette advertising in these magazines. Findings of this study suggested the stronger policies to fulfill the intention of the Master Settlement. These policies should be drawn from a careful analysis of the extent and frequency of cigarette advertising instead of the undependable criterion of percentage of young readers (King & Siegel). #