Ethics in Marketing

International cases and perspectives

Patrick E. Murphy, Gene R. Laczniak, Fiona Harris

• Editore: Routledge
• Anno: 2016
• ISBN:
  9781317235644
• Edizione: 2
• Argomento: Betriebswirtschaft
• Categoria: Business allgemein

Understanding and appreciating the ethical dilemmas associated with business is an important dimension of marketing strategy. Increasingly, matters of corporate social responsibility are part of marketing's domain.

Ethics in Marketing contains 20 cases that deal with a variety of ethical issues such as questionable selling practices, exploitative advertising, counterfeiting, product safety, apparent bribery and channel conflict that companies face across the world. A hallmark of this book is its international dimension along with high-profile case studies that represent situations in European, North American, Chinese, Indian and South American companies. Well known multinationals like Coca Cola, Facebook, VISA and Zara are featured. This second edition of Ethics in Marketing has been thoroughly updated and includes new international cases from globally recognized organizations on gift giving, sustainability, retail practices, multiculturalism, sweat shop labor and sports sponsorship.

This unique case-book provides students with a global perspective on ethics in marketing and can be used in a free standing course on marketing ethics or marketing and society or it can be used as a supplement for other marketing classes.

Part I
Background

1
Foundational perspectives for ethical and socially responsible marketing decisions

Five years ago, when we prepared the first edition of this book, we commented extensively on the fallout from the financial ethics scandals of the first decade of the twenty-first century. In particular, at the outset of the 2000s, the technology “bubble” had burst showing the purported value of many Internet-related companies to have been greatly inflated. More dramatically, in 2007–2008, a housing “bubble” centered in the USA dramatically cratered. Housing, it turned out, was built on “easy credit” and was hyper-leveraged by complex and over-valued mortgage-based securities that financial institutions had broadly perpetuated. The subsequent economic rout led to a “Great Recession” in the U.S. as well as Europe and, for a while, the global banking system teetered on collapse. While many observers considered both these events to be ethical failures of the financial system, we pointed out back then how marketing actions had also been central causes, especially the aggressive packaging and selling of home loans to those who could not afford them as well as the financialization and sale of mortgage-based securities. While “big banks” were quickly bailed out by the economic guarantees of their governments, middle-class people lost considerable sums of money from the marked decline in their homes’ value, the downturn in their retirement savings accounts and the loss of jobs due to a faltering economy. Tragically, they have yet to fully recover. Consumers in the U.S. and Europe remain in a state of considerable discontent.

As we approach the end of the second decade of the twenty-first century, we wish we could report that lessons of past years have been learned and that business and marketing ethics across the world are much improved. Unfortunately, that is not the case. While most marketers strive to do the right thing (as we discuss in this chapter), there are still too many breeches of ethics, many of which flow from marketing connected practices.

For example, in a major scandal that broke in 2015, Volkswagen (VW), the German-headquartered global manufacturer of automobiles, was found to have been systematically deceiving consumers about engine emissions for many years.¹ The company installed computerized “cheatware” on their diesel automobiles to make it look like these cars could pass various government-mandated emissions tests, when in fact the vehicles were polluting the environment at up to 40 times the stipulated limits. That a company might be tempted to “rig” its product performance measures was not so much a surprise as the extensive nature of the duplicitous intervention by VW as well as the large number of executives and employees who must have known that the violations were occurring. As of 2016, VW diesel sales have been banned in the U.S. for many models, Volkswagen's market share has plunged due to the horrible publicity, many VW executives have been sacked and, according to one estimate, this sad episode could cost the company 48 billion dollars (U.S.) in assorted penalties before everything plays out.²

Not all marketing ethics scandals are as dramatic as the VW one, but if a given consumer is a victim of a dubious marketplace transaction, her frustration is equally high. The current landscape of marketing ethics, in terms of how some companies treat their consumers, is not a particularly pretty one. In one recent analysis of how some marketers abuse and exploit their customers, the following examples were documented:³

• On-line marketers regularly extract valuable personal information from their clients; data extraction often occurs surreptitiously aided by oblique agreement forms and difficult to take advantage of opt-out procedures. Once in control of the customer information, too often marketers do not protect the data files adequately or they sell them to others who do not insure its safety, and/or they do not provide redress mechanisms for incorrect information. Most of the information gathered ends up in the hands of data aggregators, who create enhanced consumer profiles available for additional re-sale.
• Marketers exploit megatrends such as environmental sustainability and healthy nutrition by “greenwashing” product claims such as “natural” and “organic” or by exaggerating the wellness effects of unproven items such as herbal supplements. For example, Coke recently promoted the ecological advantages of a partially plant-based plastic bottle but a high-ranking consumer-protection official found that it exaggerated the product's environmental benefits without offering proof.⁴
• In the airline industry, where many consumers desire an integrated package of airline services, sellers have unbundled their offerings to the frustration of many customers—i.e., there are often separate fees for checked bags, meals, early boarding, aisle seats, headphones, extra leg-room and many other dimensions that are then leveraged to maximize the amount of customer rent extracted. In many smaller markets, consumers are also without basic choice as to which carrier to fly. Irish Ryan Air once even proposed selling standing room tickets to travelers as well as charging flyers a fee to use the restroom on short flights.

Each of these situations is at odds with authentic customer-orientation. Whereas the marketing actions described are arguably legal, they also can be shown to be unethical according to several standards of professional practice that will be discussed in the next two chapters. We must realize that ethics (and its transgression) always has personal, organizational, and societal implications. Since the shady activities occurring in these organizations were undertaken by individuals, the personal ethics of managers are called into question. The particular corporate culture also may have encouraged and often supported unethical actions as in the VW case. Thus, organizational ethics is pertinent to good marketing practice. The societal implications are relevant as well. In the case of the housing bubble, the economies of the U.S., Western Europe and much of the developed world wobbled on the brink of implosion and have yet to fully recover, all due to the activities of a few powerful and unethical business firms. What seems clear is that an inter-connectedness of worldwide economy and virtually instantaneous communication about misdeeds through the Internet makes a commitment to ethics a growing imperative as marketers move toward the third decade of the new century.

With this brief tour of twenty-first century ethical failings in marketing as our backdrop, this chapter begins with a definition of marketing ethics that serves as the foundation for all that follows. The core of our message is around seven “basic perspectives” for ethical and socially responsible marketing. Each of these normative approaches is explained and discussed in some depth. In order to make this material digestible, this chapter examines the first four perspectives and the second chapter focuses on the final three normative recommendations.

Ethical marketing defined

In an earlier book on this topic, we indicated that ethics deals with the morality of human conduct. We went on to say that:

Marketing ethics is the systematic study of how moral standards are applied to marketing decisions, behaviors, and institutions.⁵

The fact that marketing ethics, like legal and medical ethics, is an applied field constitutes an important aspect of the definition. Marketing decisions pertain to a host of specific issues like selling cigarettes to teenagers, violence-themed products, pricing at a level that gouges unsuspecting consumers, advertising that manipulates viewers and so on. The behavior governed by ethical principles involves all personnel involved in marketing—top management, the CMO, sales, distribution, customer service, advertising and public relations. Finally, marketing ethics issues arise in institutions of several types: SMEs (small and medium-size enterprises), MNCs (multinational corporations), NFPs (nonprofit organizations) and other NGOs (non-governmental organizations).

Our approach here is consistent with the above definition, but subtly different, because we take primarily a normative, prescriptive approach. Therefore, our definition emphasizes the ideals toward which marketing and marketers should aspire:

Ethical marketing refers to practices that emphasize transparent, trustworthy, and responsible personal and/or organizational marketing policies and actions that exhibit integrity as well as fairness to consumers and other stakeholders.

Because ethics often deals with subjective moral choices, the question becomes what moral standards ought to be applied to which ethical questions in marketing. For example, is it proper for an advertising copywriter to use a blatant (but legal) sexual stereotyping, which might involve the objectification of women, when the agency has demonstrated that such appeals sell more of a client's cosmetics products? Cynics claim issues like these tend to generate much disagreement and, thus, illustrate the futility of dealing with the “always subjective” ethics area. However, as we shall repeatedly show in the following pages, in many industries and in many situations, there is a great deal more consensus about what is accepted by the majority of stakeholders as ethically “proper” than many casual observers suspect.

We see ethics, or the study of moral choice, as having two dimensions. First, ethics, via its foundation in moral philosophy, provides models and frameworks for handling ethical situations, i.e., various approaches to ethical reasoning. Typically such models help describe the behavior of marketers in facing ethical situations. For instance, ethics leads us to consider whether one might judge the moral appropriateness of marketing decisions based on the consequences for various stakeholders or on the basis of the intentions held by the decision-maker when a particular action is selected. Often, differing approaches lead us to similar conclusions about the “ethicalness” of a specific activity. Unfortunately, different approaches sometimes lead to divergent conclusions. In Chapter 1, we set out to discuss the fundamental approaches to analyzing marketing ethics and we explain what rationale lies behind the way managers actually deal with ethical problems—an approach sometimes called positive or descriptive ethics.

The second dimension of ethics addresses the question: “What is the ‘right’ thing to do?” This is the normative aspect of marketing ethics. When people say that someone is acting ethically, they usually mean the person is doing what is morally correct. The underpinnings for understanding what one ought to do come mostly from our individual values. These are shaped by our family, local community, religious training, life experience, and personal feelings about how we should treat other people. A prominent manager once remarked that some of the elusiveness about what constitutes an ethical person could be overcome if the word trust were substituted for ethics; that is, ethical marketing managers are trustworthy in that they can always be counted on to try to do the right thing. Such managers have developed what the Greek philosopher Aristotle and others have called practical wisdom.

It is also correct to observe that ethics is a subject where people cannot say anything of substance without revealing quite a bit about their own values. Throughout this chapter and the next, we will make normative judgments about various marketing practices. While some of our evaluations may cause debate and disagreement, our major purpose is to increase students’ and managers’ sensitivity to the ethical questions which regularly occur in marketing and to assist them in making more consistently ethical decisions.

Normative approaches to ethical marketing⁶

To this end, the set of basic perspectives [BPs] offered below is about the broader moral dimensions that should ideally characterize the marketing and society interface even as firms operate as autonomous, economic units. In that sense, the social and ethical commentary of this chapter applies to the practices of all marketing organizations even as certain observations may be especially relevant to a particular few companies or industries. Our perspective about marketing ethics here is not mainly concerned with the descriptive details of “what is”—such as percentage of marketing firms that currently have ethics codes or their extant policies about the misrepresentation in sales reps’ expense accounts. Rather, it is about the normative “what should be,” that is, what marketing organizations ought to consider in order to better evaluate and improve their ethical behavior. Our observations here are intended “to advocate and establish guidelines” for better ethical marketing practice rather than attempting to report what practitioners say such activities presently are.

The discussion below lays out a set of basic perspectives [BPs] essential for...