Ethical limits on marketing harmful products to vulnerable consumers

Organization Behavior

Ethics in Marketing

Ethics of Marketing

Ethics in Marketing

In order to realize themselves as socially responsible corporate entities, business organizations have to maintain a sound ethical track record in every aspect of their business (Arnold 2009). They have to formulate their business policies and strategies in such a fashion that no societal values are exploited and no human being is harmed in any way (Crane & Matten 2007). It is essential for organizations to keep themselves on the safest ethical path in their marketing, promotional, and general operational activities (Lamb, Hair, & McDaniel 2012). It cannot only save them from severe criticism by their stakeholders, but also contribute towards a sustainable future in their industry. Respecting the ethical values and social norms of a society helps an organization in standing on competitive grounds among its competitors and strengthening its public image (Abela & Murphy 2008).

This paper presents an analysis of a range of marketing activities and tactics which are widely used by business organizations to promote their businesses without taking into consideration any ethical values or social norms. An assessment criteria is also provided which may be used to judge whether a particular marketing activity or business operation is ethical or not.

ETHICS IN MARKTING

Ethical Marketing:

Ethics are the principles that define whether a certain action is right or wrong for an individual or the whole groups of a society in terms of social values and norms (Murphy, Laczniak, & Prothero 2012). Like other business management areas, marketing also requires business organizations to define policies and procedures that are morally and socially acceptable by the members of the society in which they operate (Arnold 2009). Each and every step which an organization takes in its day-to-day business operations is vigilantly observed by its stakeholders. If any of these steps is against some social or moral value, the organization is widely criticized by these stakeholders and the rest of the world (Lamb, Hair, & McDaniel 2012).

Profit Maximization vs. Social Considerations:

In the Business world, every organization is expected to behave like a socially responsible corporate citizen (Pride & Ferrell 2011). Therefore, it is supposed to implement policies and procedures that are not just focused on profit maximization, but also contribute towards the welfare of the society (Crane & Matten 2007). However, there are a significant percentage of organizations that do not generally care for their products or operations which may bring harmful effects to the society members or the external environment (Abela & Murphy 2008). The following sections are dedicated to highlight the most common examples of marketing ethics from the business world that show how organizations are indulging and spoiling the social and moral values for the sake of promoting their business (Kurtz 2012).

Illegal promotion and selling of cigarettes and alcoholic products:

The most common example of unethical marketing is observed when some organization offers its products to those customers that do not actually fall under its target market (Murphy, Laczniak, & Prothero 2012). For example, some cigarette and alcohol manufacturers are selling their products without considering the social and religious values of the markets in which these products are offered. They are openly selling their cigarettes and alcoholic products in all the regions and geographical boundaries of their target market (Arnold 2009).

It is quite unethical for these types of organizations as they are just trying to increase their sales volume and maximize profitability (Pride & Ferrell 2011). Almost all countries have made their own laws and regulations which restrict cigarette and alcohol manufacturers from selling their products to the children under the age of 18 years. Unfortunately, some organizations are totally ignoring these laws and regulations. They encourage their business development agencies and product distributors to promote and sell their products to every potential customer (Crane & Matten 2007).

Unethical Marketing for Housing Finance Facility:

Another example of unethical marketing is seen in the banking industry. Since the popularity of housing and consumer finance, banks have entered into a stiff competition in attracting more and more potential customers towards these service offerings. They use attractive and influential advertisements to promote these offerings to their target markets (Murphy, Laczniak, & Prothero 2012). Now the question arises how this marketing and promotion of housing finance is unethical? The answer lies in the fact that banks try to sell their services to all those people who are either living in rental houses or are searching for new houses. Banks try to offer their housing finance without looking at these people's repaying ability.

The interest amount which a bank charges for its services puts a heavy financial burden on the customers. Especially, the low income group is affected by this interest amount the most. This group gets attracted towards easy repayment installments of housing finance facility by banks without considering whether they will be able to pay them back or not. Therefore, it is socially unethical for banks to promote their products and services to those customers who are not financially fit in their target market for those products and services. The same ethical principles can be applied in other banking products and financial services, like car leasing, credit card facility, etc.

Unethical Marketing in Ammunition Markets:

Ethical marketing is totally ignored in the ammunition market. Guns sellers are openly promoting their products to every kind of citizen without following proper criteria set by the licensing authorities. They do not care for any loss which may be caused by the illegal usage of ammunition and guns. It is generally observed that governmental bodies do not take any legal action against these unlawful selling and promotional activities of ammunition sellers (Arnold 2009).

It does not mean that the Laws and regulations do not contain provisions on these unlawful practices; it is merely the negligence of governments and regulatory bodies that ammunition is openly sold and purchased at quite reasonable prices. This thing has promoted terrorism and violence up to a large extent. To dismay these activities, there should be a strict implementation of the laws and regulations on selling, promotion, and purchase of ammunition.

Unethical Marketing example -- Nestle Corporation:

Nestle has not always been esteemed since its incorporation. It had to face severe criticism and boycotts in different regions. For instance; in 1977, Nestle was boycotted for its Instant Formula (a substitute for Breast milk) that it is not made up to the health standards and it has caused serious diseases and health problems in some regions. This boycott badly affected the profitability of Nestle not just in the United States but all over the world. A similar boycott had remained the hot issue in the whole world.

It was claimed that Nestle promotes whole milks (like Nido) even knowing that it is not the substitute for mother's milk. A big criticism was made on the Nestle's marketing. Nestle was also boycotted in Brazil on the issue of extracting water from an aquifer in Sao Lourenco. Although Nestle has managed to survive from this criticism of unethical marketing, but still there are people who claim that Nestle is not a good corporate citizen as it violated labor laws, did not care for the cultural issues in some regions, and is more concerned with its profitability than the social responsibility.

Unethical Marketing by McDonald's:

McDonald's is one of those largest multinational corporations that enjoy the highest level of brand loyalty and acceptability. But when it tried to sell its beef burgers in the Indian region, it had to face a severe criticism by the Hindu people. McDonald's had not considered the religious values of these people in promoting this product in Indian region. As Hindus worship cows, they furiously reacted on McDonald's marketing activities and kept it banned for a long period of time. They claimed that McDonald's is not respecting the religious and social values in their country.

Selling and marketing low quality products:

It is unethical to promote and sell those low quality products that may cause serious injuries or bring harmful effects they break or go out of order. These products may be sold at a much lower price than better or high quality products, but may ultimately result in a negative public image of the manufacturer. Businesses should avoid manufacturing and selling such products as they may take them under serious legal actions by the quality assurance departments by the government (Crane & Matten 2007).

Limited Time Offers:

Limited Time Offers are one of the most common marketing strategies that are used by business organizations around the Globe (Murphy, Laczniak, & Prothero 2012). Through these offers, organizations try to attract their potential customers by giving a fair price cut on their medium and low shelf products or giving free gift hampers with expensive and high shelf products. Although Limited Time Offer is an effective marketing strategy, but it is generally observed that organizations use the word 'Limited' to attract their potential customers (Lamb, Hair, & McDaniel 2012). That is, their price cut or gift hamper offer may be for an unknown period of time, but they use the word 'Limited' to achieve higher sales targets in a short period of time. This marketing strategy can also be regarded unethical as it is totally a misrepresentation of the facts in front of customers (Crane & Matten 2007).

The Assessment of Ethics in Marketing and Promotional Activities:

After discussing a number of examples and issues from the business world, it is essential to explain what makes a marketing and promotional activity socially and morally ethical in the eyes of Law and society. The first and the foremost assessment criterion for this process are to look into the marketing objectives for the business and define the ethical boundaries for it. Following are the most important steps which assess whether a marketing activity is ethical or unethical:

1. The sales and marketing of products must not be illegal:

For a business to be operative on legal grounds, it is essential to follow all the Laws and regulations that are implemented by the Government and regulatory bodies in the country. But there are possibilities that a legal business is promoted in an illegal or prohibited way. For example, some countries may totally ban the selling and promotion of some particular products in their markets. If still these products are sold or marketed in those countries, it will be legally unethical. Illegal marketing can be done through various means (Crane & Matten 2007).

The most common form of this type of marketing is smuggling. Some products are promoted through illegal imports. These products may not be too costly for the local citizens, but are restricted by governments in order to encourage legal businesses or dismay illegal activities from the markets. Therefore, it is necessary for all business organizations to market their products that are legally acceptable by the Government of their country (Lamb, Hair, & McDaniel 2012).

2. Deceptive Marketing Practices:

Some businesses promote and sell their product by communicating wrong information to their potential customers. For example, they may convey wrong information of their product's price, quality, warranty, manufacturer, features, capacity, and the like. If customers are attracted through wrong information, it will be totally called an unethical practice (Murphy, Laczniak, & Prothero 2012). Therefore, a marketing campaign must not be deceptive to customers, suppliers, distributors, or business promotion agencies of the company. It can save it from criticism in the future and help maintain a good public image.

3. Ambiguous Information on Products and Services:

Sometimes it is difficult for customers to comprehend or understand product information correctly. It may be due to the ambiguous labeling or user information printed on the products. This information may totally change the purchase decision of customers as they choose wrong product from a range of other products (Murphy, Laczniak, & Prothero 2012). Afterwards, when they realize that the product which they chose does not meet their requirements; they criticize the company for its misrepresentation or fraud (Schlegelmilch & Oberseder 2010). Therefore, companies should make their promotional campaigns and product labeling easy for the target customers. The structure of sentences must be the simplest while the product features must be communicated as they actually are (Lamb, Hair, & McDaniel 2012).