Unethical practice in marketing

Deceptive Marketing

Unethical Practices in Marketing: Deceptive Marketing

Business ethics requires that business organizations should act in a manner that is morally and ethically upright. One of the areas where ethical behavior is crucial is marketing. Marketing is one of the major functions within an organization. It is basically concerned with communicating and reaching out to customers in an attempt to promote products, services, and/or brands. Nonetheless, unethical behavior in marketing is not a rare phenomenon. There are often instances of misleading or deceptive advertising, exaggerated claims, using fear tactics, spamming, exploitation, and other practices that fit the unethical tag. If not addressed, these practices can in the long run affect an organization's reputation. Deceptive marketing is one of the common forms of unethical behavior within the marketing realm. This paper discusses this practice. Following a definition of deceptive marketing, the paper pays attention to regulations for deceptive marketing and real-world cases of deceptive marketing. Finally, the paper considers the implications of deceptive marketing on organizations and what organizations can do to avoid deceptive marketing.

Also known as false advertising, deceptive marketing involves making false, unverified, or exaggerated claims about a certain product or service with the intention of influencing potential consumers to buy the product or service (Ferrell & Hartline, 2014). For instance, claiming that a product is safe while it is actually not safe is deceptive marketing. Equally, claiming a product reduces weight in two weeks (even without dieting or exercising) while it does not is tantamount to deceptive marketing. Other forms of deceptive marketing include photo retouching, omitting important information, hidden fees and surcharges, tampering with measurement units, and oversized packaging (Ferrell & Hartline, 2014). These examples represent deceptive marketing as consumers are deceived or misled into buying a product or service that may or does not offer the claimed benefits or attributes. Essentially, a representation is deceptive or misleading if it could sway a consumer to purchase or consume the product or service advertised.

There is a thin line between persuasive marketing and deceptive marketing. This is because the two seek to achieve the same goal. Persuasion is the heart of marketing. Any marketer puts out a marketing message with the aim of convincing consumers to buy or believe in a product. Some marketers may, however, employ unacceptable ways to persuade consumers -- deception. The main difference between persuasive marketing and deceptive marketing is the underlying intension. In persuasive marketing, the marketer intends to convince consumers why their product can solve their need better than others in the marketplace. In deceptive marketing, however, the intention of the marketer is to mislead or misrepresent, not to inform or induce the consumer to believe (Ferrell & Hartline, 2014). Additionally, persuasive marketing often benefits both the marketer and the consumer, while deceptive marketing only benefits the marketer, making it unethical.

False advertising is unlawful in most countries around the world. In the US, the Federal Trade Commission (FTC) seeks to ensure marketers communicate truthful, accurate, and verifiable claims to consumers in their marketing messages, and if possible support their claims with scientific evidence (DeMers, 2017). From television and radio ads to print media, online, and outdoor ads, the commission examines claims that have the potential to affect consumer health. The claims may be related to food products, tobacco, alcohol, dietary supplements, over-the-counter drugs, high-tech products, as well as the internet (FTC, n.d.).

FTC derives its authority from various legislations such as the Federal Trade Commission Act and the Lanham Act. The primary aim of FTC is prevention as opposed to punishment. In other words, the commission treats instances of deceptive advertising from a civil law perspective rather than a criminal law perspective. Accordingly, in the event of deceptive marketing, the commission typically orders the marketer in question to cease its illegal behavior or to disclose more information to avoid the possibility of deception. Though the commission may mandate an advertise to correct its advertising there are usually no jail sentences save for when a marketer declines to obey orders requiring it to stop deceptive marketing practices.

Even so, instances of marketers making exaggerated claims in an attempt to make their products more convincing or more attractive are still common. The prevalence of these instances makes the line between ethical and unethical marketing quite blurred. The ethical line according to DeMers (2017) is when a marketer's claims begin to be unverifiable. For instance, long before regulations for the marketing of tobacco products were introduced, cigarettes were promoted as "healthy." This is not true as scientific evidence has extensively linked tobacco smoking to serious health risks such as lung cancer. More recently, the manufacturers of Nutella, a sugary nut spread, advertised the product as a nutritious breakfast meal for children. The claims were found to be misleading, causing the company to be the subject of numerous lawsuits.

There are many other cases of companies being sued for deceptive advertising. In March 2016, the FTC sued Volkswagen, a German automobile manufacturer, for representing its diesel cars as low-emission, environmentally friendly cars (Heilpern, 2016). Volkswagen sold over 550,000 units based on this false claim. In 2008, Dannon, a French food company, falsely claimed in its ad that its Activia yoghurt brand contained special bacterial ingredients, causing the brand to fetch higher prices than rival products. Red Bull, a company that produces energy drinks, was also the subject of a 2014 lawsuit for claiming its caffeinated drink improved consumers' reaction and concentration speed. In 2013, Tesco, a UK retailer, was caught up in a scandal that involved retailing beef contaminated with horse meat. The revelations caused the retailer to run a misleading campaign, falsely implying that the entire meat industry had contributed to the meat fiasco. Coca Cola has also faced allegations of representing its sweetened drinks as healthy while, as per claimants and evidence, the drinks pose health risks to consumers, such as obesity and diabetes. Other major companies that have been accused of deceptive marketing include Kellogg, Wal-Mart, Procter and Gamble, Hyundai, KIA, Taco Bell, and L'Oreal (Heilpern, 2016).

Deceptive marketing can be costly to an organization. In addition to expensive litigations, deceptive marketing can immensely damage the trust and confidence consumers have in an organization or brand. For the above case of Dannon, for instance, the lawsuit ended in a $45 million settlement. Red Bull also paid $13 million, while Tesco lost approximately $432 million in market value in the wake of the horse meat scandal (Heilpern, 2016). These few examples indicate the severe implications deceptive marketing can have on organizations. Paying millions of dollars in fines may be a little pinch for most large firms given their immense financial power. Nonetheless, the possible damage and loss of reputation is a far greater concern for business organizations (Ferrell & Hartline, 2014). Building a good name takes time. It takes years of effort and investment. The reputation, however, can go down the drain in a matter of days or weeks. This can be likened to a building. Though it often takes several months or years to put up a skyscraper, it takes just a single storm to bring down the skyscraper. The same is true for the reputation of an organization.

Loss of reputation means possible loss of customers and key stakeholders. For instance, if customers discover a company was deceptive, they may cease being customers, and shift their loyalty to another company. For a business organization, the loss of customers can have severe consequences on its top line and bottom line results. In addition to customers, a business may lose critical stakeholders such as suppliers as some stakeholders may not want to be associated with an organization caught up in cases of deceptive marketing. In essence, deceptive marketing may have serious implications on an organization, hence the need for organizations to ensure their marketing practices constantly adhere to the relevant ethical and legal guidelines.