Marketing ethics


Marketing ethics is an area of applied ethics that deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics such as the ethics of advertising and promotion overlap with media and public relations ethics.

Two types of marketing ethics

Marketing ethics can be divided into two categories:
  1. Positive marketing ethics.
  2. Normative marketing ethics.
Positive marketing ethics looks at the statement "what is" when it comes to examining marketing practices. An example would be to research fraudulent advertising and keep a record of the violations.
Normative marketing ethics looks at theories that dictate how moral marketing should take place. The theories and substructures used in business ethics to determine its level of morality are used to analyze whether moral marketing is taking place in normative marketing ethics. The three structures are known as duty-based theories, virtue ethics, and utilitarianism.

Fundamental issues in the ethics of marketing

Possible frameworks of analysis for marketing

  • Value-oriented framework, analyzing ethical problems on the basis of the values which they infringe. An example of such an approach is the American Marketing Association Code of Ethics.
  • Stakeholder-oriented framework, analyzing ethical problems on the basis of whom they affect.
  • Process-oriented framework, analyzing ethical problems in terms of the categories used by marketing specialists.
None of these frameworks allow, by itself, a convenient and complete categorization of the great variety of issues in marketing ethics.

Power-based analysis

Contrary to popular impressions, not all marketing is adversarial, and not all marketing is stacked in favor of the marketer. In marketing, the relationship between producer/consumer or buyer/seller can be adversarial or cooperative. For an example of cooperative marketing, see relationship marketing. If the marketing situation is adversarial, another dimension of difference emerges, describing the power balance between producer/consumer or buyer/seller. Power may be concentrated with the producer, but factors such as over-supply or legislation can shift the power towards the consumer. Identifying where the power in the relationship lies and whether the power balance is relevant are important in understanding the background to an ethical dilemma in marketing ethics.

Is marketing inherently evil?

A popularist anti-marketing stance commonly discussed in the blogosphere and popular literature is that any kind of marketing is inherently evil. The position is based on the argument that marketing necessarily commits at least one of three wrongs:

Market research

Market research is the collection and analysis of information about consumers, competitors and the effectiveness of marketing programs. With market research, businesses can make decisions based on the responses of the market, leading to a better understanding of how the business should adapt to the changing market. It is used to establish which portion of the population will or does purchase a product, based on age, gender, location, income level, and many other variables. This research allows companies to learn more about past, current, and potential customers, including their specific likes and dislikes. Meticulous codes of ethics have been devised by multiple professional institutions which aim to communicate conflicts that occur during the implementation of marketing research.
Ethical danger points in market research include:
Invasion of privacy
Without information from the public, it is difficult to do market research. As companies conduct research, they also come into contact with confidential and personal information, which comes with a level of risk for both the business as well as the individual. At times this information can be sensitive and in the wrong hands, ethical abuse and misuse of sensitive data may happen. This is why the invasion of consumer privacy is still an issue in marketing research ethics. Today's consumers are bombarded with mail after using their email address to enter in a competition, thus becoming part of a business's mailing list. Therefore, companies are provided with critical information which they must not take advantage of but use in an ethical manner.
Stereotyping:
Portraying an ideal body, weight or physical appearance can have potential harmful effects on individuals such as low self-esteem issues or anorexia. Good marketing is ethical marketing, it is about pleasing and developing a strong relationship with customers in an ethical and humanitarian manner without focusing too much on generating profit.
People affected by unethical market research:
  • Public
  • Respondents
  • Clients
  • Researchers
Approaches to privacy can broadly be divided into two categories: free market, and consumer protection. In a free market approach, commercial entities are largely allowed to do what they wish, with the expectation that consumers will choose to do business with corporations that respect their privacy to a desired degree. If some companies are not sufficiently respectful of privacy, they will lose market share. In contrast, in a consumer protection approach, it is claimed that individuals may not have the time or knowledge to make informed choices, or may not have reasonable alternatives available. Stereotyping occurs because any analysis of real populations needs to make approximations and place individuals into groups. However, if conducted irresponsibly, stereotyping can lead to a variety of ethically undesirable results. In the American Marketing Association Statement of Ethics, stereotyping is countered by the obligation to show respect.
Profit motive:
Manipulation of information and personal data can take place during market research conducted by for-profit organizations because they have a profit motive. This motive can affect the accuracy and objectivity of the marketing research and create an exaggerated positive image of the organization's products and services in order to attract clients to invest in their business.

Market audience

Ethical danger points include:
  • Excluding potential customers from the market: selective marketing is used to discourage demand from undesirable market sectors or disenfranchise them altogether.
  • Targeting the vulnerable.
Examples of unethical market exclusion or selective marketing are past industry attitudes to the gay, ethnic minority and plus size markets. Contrary to the popular myth that ethics and profits do not mix,
the tapping of these markets has proved highly profitable. For example, 20% of US clothing sales are now plus-size. Another example is the selective marketing of health care, so that unprofitable sectors will not
attempt to take benefits to which they are entitled.
A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries
from AIDS drugs.
Examples of marketing which unethically targets the elderly include: living trusts, time share fraud, mass marketing fraud and others.
The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation.
In the case of children, the main products are unhealthy food, fashionware and entertainment goods. Children are a lucrative market: "...children 12 and under spend more than $11 billion of their own money and influence family spending decisions worth another $165 billion", but are not capable of resisting or understanding marketing tactics at younger ages. At older ages competitive feelings towards other children are stronger than financial sense. The practice of extending children's marketing from television to the school grounds is also controversial. The following is a select list of online articles:
Other vulnerable audiences include emerging markets in developing countries, where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries, and where, conversely, marketers may not be aware how excessively powerful their tactics may be. See Nestle infant milk formula scandal. Another vulnerable group are mentally unstable consumers. The definition of vulnerability is also problematic: for example, when should endebtedness be seen as a vulnerability and when should "cheap" loan providers be seen as loan sharks, unethically exploiting the economically disadvantaged?
Targeting the Vulnerable
Marketing targeting strategies for products that may cause economic, physical and psychological harm has become an aspect of marketing which is criticized a considerable amount, especially in marketing literature with a particular focus on vulnerable consumers
Children, elderly consumers, and economically disadvantaged consumers are often categorized as being a part of the vulnerable group in marketing, in terms of ethics. “Ethics and social responsibility communities seem to agree that targeting a vulnerable group with marketing campaigns that take advantage of their vulnerability is unjust”. George G Brenkert was amongst the first to raise the issue about taking advantage of the vulnerability of a person, which therefore makes marketing practices immoral or unjust. Adolescents and children in the US are major market force in the food and beverage industry and as a result, food marketers are “attracted to the youth as consumers because of their spending power, purchasing influences and as future adult consumers”. It is ethically wrong to target children especially when it comes to unhealthy food and beverages, as children may not want anything else, which could lead to child obesity. Children have difficulty deciding between the purpose of advertising and other modes of communication; therefore it is morally unacceptable to target vulnerable children with such products. In Belgium, it is banned to show commercials during children's programs, similarly in Australia, such ads are not allowed during television programs for preschoolers. It is considered unethical to generate profits through marketing to vulnerable groups, such as children, the poor or the elderly.
The ethics of marketing practices, especially those directed toward the vulnerable, can be divided into two areas: product and process.
Process related ethical issues are often demonstrated through the use of deceptive or misleading advertising, where as product related issues is predominately focuses on marketing of certain “harmful” products such as tobacco, unhealthy food etc.
Excluding potential customers from the market:
There are certain high caution aspects of ethical marketing in terms of market audience. Using selective marketing to discourage demand from an unwanted market group or exclude them altogether. Examples of market exclusion or selective marketing are certain company's attitudes towards the gay, ethnic groups and overweight market groups. Customers are treated like this because companies think that they are unprofitable so they try to deprive them or avoid them altogether. It is often debated amongst the business community that in order to be profitable, often businesses have to be unethical. However, this idea is seemingly outdated as most businesses nowadays follow an ethical business plan. In the United States, plus size apparel is thought to have generated $17.5 billion between May 2013 and April 2014, which is a 5% increase from the previous year, this is to be expected as 65% of American women are plus sized. Another example of exclusion from the market is some pharmaceutical industry's exclude developing countries from AIDS drugs