A SEMINAR PAPER ON

ETHICS IN MARKETING
PRESENTED BY Mr. .Vasim Kalawant (MBA) E-Mail: [email protected]

PRESENTED TO Co-ordinator National eminar

Sinhgad Institute Of Business Management,Kamalapur, Tal-Sang la, Dist- S lapur!

"##$ -"#%#

Intr du&ti n'Et!ics !ave ta"en t!e center sta#e of mar"etin# $ractice. %irms wit! &nfair mar"etin# $ractice cannot s&stain for lon# time in t!e mar"et. 'nl( sociall( res$onsi)le firm wit! !i#! val&e and et!ical standards can meet t!e needs of c&stomers and ac!ieve s&staina)le #rowt!. *Mar"etin# et!ics are t!e moral $rinci$le t!at defines ri#!t and wron# )e!avior in mar"etin#+. ,!e most )asic et!ical iss&e !as )een formali-ed t!ro&#! laws and re#&lation to confirm t!e standards of societ(. At t!e ver( list. mar"eters e/$ected to o)e( to t!is laws and re#&lations. 0owever t!at mar"etin# et!ics #o )e(ond t!e le#al iss&es. Mar"etin# et!ics e/tend to a wide ran#e of )&siness activities li"e $rod&ct man&fact&rin#. distri)&tion. $ricin#. $romotion and disclos&re of information. 1n $resent times. it incl&des new areas s&c! as environmental res$onsi)ilit( and t!e firm2s relations!i$s wit! its com$etitors. 1n toda(2s "nowled#e econom(. cons&mers !ave #reater access to information and t!eir mat&rit( level is also ver( !i#!. No com$an( can e/ist for lon# )( ma"in# false $romises or deliverin# $oor 3&alit( $rod&cts. Com$anies need to #ive #reater im$ortance to social res$onsi)ilit( and et!ical as$ects as t!e( o$erate in a societ(. and comm&nit( consent is essential for t!eir s&rvival. All com$anies !ave t!eir own codes of cond&ct. ,!ere are also $lent( of e/ternal standards s&c! as t!e code of et!ics develo$ed )( t!e American Mar"etin# Association (AMA) and vario&s ot!er ind&str(-s$ecific #&idelines develo$ed )( different #overnin# )odies and trade associations. Et!ical mar"etin# re$resents $rod&ct deliver( t!ro&#! a $ro$er cost-effective s(stem and deliverin# val&e to t!e c&stomers in a sociall( res$onsi)le wa(. ,!e AMA !as defined mar"etin# et!ics from two different $ers$ectives. ,!ese are as follows: (egislati n Mar"etin# decision ma"in# is on t!e )asis on 4w!at is ri#!t2 and 4w!at is wron#2 emanates from one2s reli#io&s !erita#e. c&lt&re. social. $olitical and economic freedom.

En)ir nments 1t incl&des t!e &se of moral codes and standards to determine w!et!er mar"etin# actions are #ood or evil. ri#!t or wron#. ver( often. t!ese standards are )ased on $rofessional or association code of et!ics. O*+e&ti)es' ,o st&d( t!e role of et!ical iss&es in 56s of mar"etin#. ,o st&d( t!e et!ical iss&es in s$ecific mar"etin# conte/ts.

Signifi&an&e 7it! t!e !el$ of t!is $a$er one can &nderstand et!ical iss&es in mar"etin# and w!at e/actl( et!ical iss&es are follows in $ractical mar"et. (imitati ns' ,!e limitations of st&d( is a) (a&, f time' d&e to t!e lac" of time it was not $ossi)le to reac! lar#e n&m)er of individ&al and retailer. Resear&h Meth d l g,!e $resent researc! $a$er is )ased on $rimar( and secondar( data. %. Primar- data ' %or t!e $resent $a$er $rimar( data was &sed w!ic! was collected as follow Sample si/e: ,!e sam$le was selected at two levels. a. 89 individ&als were selected for t!e $resent $a$er *. 59 retailers were selected for t!e $resent $a$er.

Sampling Te&hni0ues: %or t!e selection of individ&als and retailers :andom am$lin# ,ec!ni3&e we &sed.

ls f & lle&ting Primar- data'

a) 1uesti nnaire' well str&ct&red 3&estionnaire was $re$ared for collectin# re3&ires data from res$ondents.

)) Dis&ussi n' ,!e re3&ire information and data were also collected )( t!e wa( of disc&ssion wit! individ&als.

c) O*ser)ati n' ;ata was also collected )( t!e wa( of o)servation. ". Se& ndar- data' %or $re$arin# t!e $a$er. t!e second !and information was also &sed w!ic! was collected t!ro&#!<. Boo"s =.1nternet
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>. ?o&rnals

5.6eriodicals

Data 2nal-sis 3 Interpretati n

,!e $resent c!a$ter ta)&lates and inter$rets t!e em$irical data collected from t!e res$ondents t!ro&#! an interview and @&estionnaire. ,a)le alon# wit! #ra$!s. is s!own for )etter &nderstandin# of t!e anal(sis. %. Ethi&al issues in pr du&t Mi4'At t!e most )asic level. cons&mer !ave ri#!t to and in most co&ntries. or#ani-ations are le#all( o)li#ed to s&$$l(-$rod&ct and services w!ic! are safe. efficacio&s. and fit for t!e $&r$ose for w!ic! t!e( are intended. ,!e mar"eter s!o&ld consider t!e im$act of t!e $rod&ct on $&)lic ot!er t!an its tar#et c&stomers. ,o)acco is t!e o)vio&s e/am$le. Ci#arette smo"in# not onl( !arms smo"ers )&t also non smo"ers w!o $resent aro&nd !imA !er.
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In the area f pr du&t de)el pment and management' ;isclos&re of all s&)stantial ris"s associated wit! $rod&ct of service &sa#eB 1dentification of an( $rod&ct com$onent s&)stit&tion t!at mi#!t materiall( c!an#e t!e $rod&ct or im$act on t!e )&(er2s $&rc!ase decisionB 1dentification of e/tra cost-added feat&res. 6ac"a#in# Ta*le N '-% Title' 5 mpanies pr mises and a&tual happening 6In per&entage. 62. 2ut m *ile 6B. 5 smeti&s

Com$an( Name 0ero-0onda BaFaF Cama!a

Ces D=.E9 E9.99 E9.99

No

,o some E/tent <=.E9 =E.99 <=.E9 >G.E9 =E.99 =E.99 Com$an( Name %air H lovel( Vicco Jarnier Ces =E.99 IG.E9 IG.E9 No <=.E9 ,o some E/tent D=.E9 <=.E9 <=.E9

65.Tele& mmuni&ati ns Com$an( Name Air,el 1dea Vodafone Ces E9.99 >G.E9 <=.E9 No >G.E9 >G.E9 E9.99 ,o some E/tent <=.E9 =E.99 >G.E9
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%rom t!e a)ove ta)les. in t!e case of a&tomo)ile ind&str( (two w!eeler) D=.E9K.E9K HE9K res$ondents are !a$$( as t!e( are #ettin# w!at com$an( $romises. in realit( from 0ero 0onda. BaFaF and Cama!a res$ectivel( . 1n cosmetics sector Vicco H Jarnier res$ondents are #ettin# (IG.E9K) t!eir desire res&lt as $er s!own )( com$an( . 1n ,elecomm&nication sector. E9K.>G.E9K H<=.E9K res$ondents from Airtel. 1dea H Vodafone res$ectivel( !ave no o)Fection in t!e $romises made )( t!e com$an( as t!e( (com$an() f&lfillin# t!eir (res$ondents) ". Ethi&al issues in pri&e Mi4'6rofit is t!e &ltimate o)Fective of )&siness. B&t mar"eters m&st set $rices. w!ic! are reasona)le and afforda)le )( t!e cons&mers. 6rices s!o&ld not )e made !i#! in order to earn more $rofit. ociall(-res$onsi)le mar"eters m&st set $rices t!at t!e tar#et cons&mers can reasona)l( afford. 1f a $!armace&tical com$an( discovers a dr&# t!at can control t!e s$read of A1; . even t!o&#! some sectors of t!e $&)lic ma( )e willin# to $a( an e/or)itant $rice for t!e $rod&ct. et!ical mar"etin# $ractices s&##est t!at t!e $ricin# s!o&ld )e reasona)le so t!at it is afforda)le to as man( $eo$le infected wit! t!e vir&s as $ossi)le. B&t firms !avin# mono$ol( c!ar#es !i#!er $rice for t!eir $rod&cts. ;iscriminator( $ricin# . 1t is also not et!ical mar"etin# $ractices. %ollowin# areas of $ricin# are considered &net!ical and ille#al <) De&epti)e pri&ing' - Bait H witc! $ricin# is one t($e of dece$tive $rice a low $rice offer intended to l&re c&stomers into a store. 7!ere a sales $erson tries to infl&ence intended to l&re c&stomers into a store. ,!ereafter. a sale $erson tries to infl&ence t!em to )&( a !i#!er $riced item.

=) 7nfair Pri&ing' - w!en com$etitors are driven o&t )( low $rices (less t!an cost) t!e com$an( raises $rice )ac" to t!eir former level. Pri&e Dis&riminati n' offer a same $rod&ct to vario&s c&stomers at different $rice. Ta*le NO' " Title' Malpra&ti&es 6In&rease f pri&e. *- the retailers during the sh rtage f the pr du&ts 61n 6ercenta#e. Resp ndents 6&ust mers. ,elecomm&nication A&tomo)ile %MCJ Yes 89 G9 <9 N <9 >9 89

,!e a)ove dia#ram e/$ress t!at. 89K res$ondents of ,elecomm&nication sector are e/$ressin# t!at t!e retailer increase t!e $rice. w!en t!ere is s!orta#e of $rod&ct (i.e.) in t!e mar"et vice versa condition is t!ere in t!e mar"et of %MCJ ( %ast Movin# cons&mer Joods ) $rod&ct. G9K res$ondents of A&tomo)ile a#reed t!at )( t!e retailer t!ere is increase in t!e $rice w!en s!orta#e of ve!icle in t!e mar"et. Ethi&al issues in pla&e 6Distri*uti n. Mi4'8

ales e/ec&tives are eval&ated )ased on t!eir $erformance directl( related to t!e sales tar#et. Beca&se of t!is. tendenc( is t!at sale e/ec&tives often force c&stomerAdealers to )&( more 3&antit( t!en w!at t!e( re3&ire and also com$el c&stomers to )&( $rod&ct w!ic! t!e( don2t re3&ire. 6&ttin# $ress&re on t!e vendors to #ive less s$ace to com$etitor2s $rod&ct is anot!er &net!ical $ractice. 6rovidin# a)normall( !i#! commission to vendors to stoc" one2s $rod&ct is anot!er common $ractice in mar"etin#. Not mani$&latin# t!e availa)ilit( of a $rod&ct for t!e $&r$ose of e/$loitation. Not &sin# coercion in t!e mar"etin# c!annel for e/ertin# &nd&e infl&ence over t!e retailer c!oice to !andle a $rod&ct Ta*le N '-8 Title' - 9eeling f e4&ess pressure *- the Retailer in & mpleting target (1n $ercenta#e) :es$ondents (:etailer) A&tomo)ile ,elecomm&nication %MCJ 6!armace&tical Ces E9 <9 >9 I9 No >9 I9 59 ,o some e/tent =9 <9 >9 =9

%rom t!e a)ove ta)le it is o)served t!at. in A&tomo)ile sector E9K dealers feel t!at t!ere is e/cessive $ress&re from s&$$lier to com$lete t!eir tar#et. )&t in case of telecomm&nication t!ere is low $ress&re on retailer (i.e.=9K) re#ardin# tar#et ac!ievement. 1n %MCJ sector. >9K res$ondents feel t!at stress is #iven )( t!e s&$$lier. A ver( !i#! $ress&re is #iven in $!armace&tical sector accordin# to $!armace&tical res$ondents.

8. Ethi&al issues in pr m ti n Mi4'9

As com$are to all ot!er 62s in mar"etin# re#ardin# et!ics $ertainin#. so m&c! foc&s is need to #ive on mar"etin# comm&nication. 'r#ani-ation need to conve( ri#!t information a)o&t contents. si-e. wei#!t and after sales services to $ros$ect c&stomers and also necessar( to follow et!ical $ractices in res$ect to $ersonal sellin#. sales $romotion. direct mar"etin#. $&)lic relation and ot!er means of comm&nicatin# to cons&mer. %! Tr- t a) id misleading and de&epti)e pra&ti&es '1t affects individ&al cons&mers. mar"etin# comm&nications are t($icall( said to f&lfill two main f&nctions: 1) to inform cons&mers a)o&t #oods and services 11) to $ers&ade cons&mers to act&all( #o a!ead and $&rc!ase $rod&cts. 1f s&c! comm&nications were F&st a)o&t $rovidin# cons&mers wit! information. t!en it co&ld )e s&##ested t!at t!e 3&estion of misleadin# $ractices is essentiall( one of assessin# w!et!er a $artic&lar claim is fact&all( tr&e or not. ;ece$tion occ&rs w!en a mar"etin# comm&nication eit!er creates. or ta"es advanta#e of a false )elief t!at s&)stantiall( interferes wit! t!e a)ilit( of $eo$le to ma"e rational cons&mer c!oices. Cons&mer can also )e deceived )( an advertisement t!at a$$ears to intimate t!at &sin# a certain $rod&ct will ma"e t!em more attractive. more $o$&lar and more s&ccessf&l. %or e/am$le %air H lovel( &sin# ta# line of 47dino main nikhar "! 2) id misleading sales pr m ti n te&hni0ues '-

ome or#ani-ations are &sin# sales $romotion tec!ni3&es w!ic! are misleadin# to $eo$le in order to visit t!eir s!o$ )( t!em. %or e/am$le- Bi# )a-aars offerin# =9K or >9K disco&nt if we are $&rc!asin# in first E da(s of mont!. 'nce c&stomers2 enter in to Bi# )a-aar !e reali-e t!at !e will #et disco&nt if !e $&rc!ase more t!an >999:s items at a time.

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Ta*le N '-: Title' - Ethi&alness f using f &harit- as a pr m ti nal t Parti&ular :es$ondents(89) Yes G>K N =GK l

,!e a)ove #ra$! s!owin# et!icalness of &sin# c!arit( as a $romotional tool. MaForit( res$ondents (G>K) t!in" t!at it is et!ical and remainin# =GK feel it is &net!ical. 7nethi&al Pra&ti&es in 2d)ertising 1n 1ndia. it is $erfectl( le#al to man&fact&re li3&or and ci#arettes and sell t!em freel(. )&t it is ille#al to advertise t!em t!ro&#! t!e $&)lic media. &rro#ate advertisin# is one w!ere a $rod&ct w!ic! is different from t!e main $rod&ct ($arent )rand). is advertised and $romoted advertises wit! t!e same )rand name as t!at of t!e main $rod&ct ($arent )rand) to deceive. ,!e $rod&ct is called *s&rro#ate $rod&ct22. and s&c! advertisin# refer to as *s&rro#ate advertisin#+. ,!ere is one view a)o&t !ow to res$ond to t!e $ro)lem of s&rro#ate advertisin#. ome feel t!at. if t!ere is no an( )an on sellin# t!e $rod&ct. so w!( s!o&ld t!ere )e a )an on advertisin# t!e
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sameL ,!e #overnments want t!e enormo&s ta/ reven&e t!at it #ets from t!ese ind&stries. )&t wants to stran#le t!ere le#itimate mar"etin# efforts. ,!is is off co&rse a controversial stand.

Surr gate Pr du&t

Surr gate 2d)ertise

(egitimate *usinesses and their surr gate ad)ertisement (egitimate Business Mc;owell2s malt 7!is"( 0a(ward2sE999Beer Ba#$i$er li3&or tar #&t"!a :ed H 7!ite ci#arettes %o&r 3&are ci#arettes :o(al c!allen#e w!is"( team Kin#fis!er Beer Kin#fis!er )ottled drin"in# water
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Surr gate 2d)ertisement Mc;owell2s odaA7ater 0a(ward2s 7aterA oda Ba#$i$er soda H Cassettes tar oil :ed H 7!ite )raver( awards %o&r 3&are w!ite water raftin# :o(al c!allen#e #olf accessories :o(al c!allen#e cric"et

mimoff vod"a

mimoff cassettes and C;s

Ta*le NO' ; Title' 7sefulness f Se4 appeal t attra&t the &ust mer t <ard the pr du&t (1n $ercenta#e) :es$ondents (c&stomers) Male(D9) %emale(>9) D9 <9 =9 I9 =9 <9 Ces No ,o some e/tent

,!e a)ove ta)le reveals t!at. D9K Male res$ondent a#reed t!at se/ a$$eal in t!e advertisement is attractin# t!em toward t!e $rod&cts. B&t in case of female res$ondents I9K res$ondents are not attractin# toward t!e $rod&cts of se/ a$$eal in t!e advertisement.

Ethi&al issues in spe&ifi& mar,eting & nte4ts Ethi&al issues <ith referen&e t &hildren and ad les&ents C!ildren $la( an im$ortant role in mar"etin#. As t!e( do not &nderstand #immic"s of mar"etin#. t!e( are more v&lnera)le to &nfair mar"etin# $ractice. Man( et!ical 3&estions arises w!en c!ildren are e/$osed to 3&estiona)le mar"etin# tactics and messa#es. Mse of e/cessive se/ a$$eal in advertisement is 3&estiona)le from t!e $oint of c!ildren and adolescents. Man( alco!ol com$anies advertise )eer &nder t!e cover of soda or water wit! t!e same )rand name t!ro&#! cele)rities. &c! advertisement can 3&ite easil( a$$eal to t!e (o&t! $s(c!olo#icall(. ,!e increased &se of direct mar"etin# and &se of internet to mar"et $rod&cts and services to c!ildren raise man( et!ical iss&es. ometimes. mar"eters desi#n t!e sites in s&c! fas!ion t!at c!ildren can directl( access t!em )( $assin# t!e ad&lt s&$ervision control. ometimes mar"eters $resent
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o)Fectiona)le materials to &ndera#e c&stomers a $ress&re t!em to $&rc!ase items or $rovide credit card n&m)ers. ,!is is t!e reason w!( t!ere is strict control on advertisement of to)acco in alco!ol on mass media and ot!er o)Fectiona)le cam$ai#ns are also &nder t!e scanner over t!e (ears. 1n America. mar"etin# $rod&cts and services to c!ildren are strictl( controlled. ,!e %ederal ,rade Commission (%,C). e/ercises e/treme control and monitors t!e mar"etin# $ractices of com$anies. 1n addition. t!ere are #ro&$s s&c! as cons&mer #ro&$s. $arental #ro&$s. etc.. w!ic! ins&re t!at mar"eters ad!ere to re3&isite et!ical standards.

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Spe&ifi& ad)ertising restri&ti n & n&ern <ith &hildren Advertisin# to c!ildren &nder t!e a#e of <= (ears is )anned

C untr- r area Norwa(. weden.

Advertisin# )efore and after c!ildren2s $ro#rammed is 6ro!i)ited. (%lemis! $art onl().

A&stria. Bel#i&m Norwa( N&/em)o&r#.

Advertisin# of to(s to c!ildren )etween G am and << $m is 6ro!i)itedB advertisin# of war to(s are $ro!i)ited at all times.

Jreece.

Advertisements d&rin# cartoons are $ro!i)itedB advertisements Msin# cartoon c!aracters )efore and after t!e $ro#rammed in w!ic! t!e( a$$ear are also $ro!i)ited.

1tal(

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Advertisements t!at attem$t to $ers&ade a c!ild to )&( a 6rod&ct t!ro&#! a direct offer also $ro!i)ited

%inland.Jerman(

Advertisements in w!ic! sales $itc!es are delivered )( familiar Cartoon c!aracters or c!ildren are $ro!i)ited.

%inland

%i#&res and $&$$ets t!at a$$ear in c!ildren2s $ro#rammed are 6ro!i)ited from a$$earin# in advertisements.

;enmar"

C!ildren television $ersonalities are $ro!i)ited for a$$earin# in An( advertisements )efore 8 $m. merc!andise )ased on C!ildren2s television $ro#rammed m&st not )e advertised wit!in = !o&rs $roceedin# or s&cceedin# t!e $ro#rammed concerned.

Mnited Kin#dom

Mar,eting t Min rities 1f a societ( !as wide diversit(. wit! $eo$le from different ocioeconomic and et!icAc&lt&ral )ac"#ro&nds. t!is )rin#s in additional et!ical

dimensions to mar"etin#. 6ress&ri-in# a wea"er or v&lnera)le section of t!e societ( in to )&(in# certain $rod&cts and sellin# $rod&cts to s&c! comm&nities at !i#! $rofit are $ossi)le &net!ical $ractices. ometimes firms s&$$l( low 3&alit( $rod&cts to wea"er se#ments of t!e $o$&lation and even c!ar#er !i#! $rices for t!e same. ,!e M mar"et is com$osed of different comm&nit( and races. some of w!ic! are !i#!l( s&sce$ti)le to t!ese "inds of mar"etin# $ractices. ,!e %,C e/ercises stron# control to c&r) t!ese "inds of &nfair mar"etin# $ractices. imilar to $rovidin# $rotection to c!ildren and (o&t! a#ainst !armf&l mar"etin# $ractices. t!ere !ave )een consistent efforts to $rotect t!e interests of minorit( c&stomers.

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P rtra-al f = men in Mar,eting ,!e role of women !as c!an#ed over t!e (ears from t!at of a !omema"er to )ein# a stron# m&ltifaceted $ersonalit(. As societ( !as c!an#ed over t!e time. t!e role of women too !as c!an#ed. 7omen !ave )een $ortra(ed in different wa(s in different times and sit&ations. 1f firms contin&e to &se stereot($ed or )iased ima#es. it ma( )e considered offensive or &nacce$ta)le. ,!ere are man( e/am$les of s&c! $resentations li"e $ortra(al of women as less intelli#ent. s&)missive. dressed to a$$eal to se/&al interests of males. etc. t!ese are !i#!l( o)Fectiona)le. Mar"eters m&st &nderstand t!e role of women and t!en desi#n and develo$ advertisement accordin#l(. Ethi&al issues in Mar,eting Resear&h Mar"etin# researc! is anot!er area w!ere lots of et!ical iss&es are involved. ometimes firms twist t!e researc! data in t!eir favor. At a more f&ndamental level. firms invade t!e $rivac( of t!e res$ondents in t!e #&ise of researc! and ma"e &se of t!e data for t!eir commercial advanta#e. Conversel(. sometimes res$ondents "nowin#l( $rovide incorrect data or information. w!ic! leads to wron# inferences. 9indings 1t is fo&nd t!at. in a&tomo)ile sector E5K res$ondents are onl( !a$$( as t!e( are #ettin# w!at t!e com$an( $romises in realit(. More t!an =A> res$ondents t!in" t!at &sin# c!arities s!ows or activit( as t!e mar"etin# tool is et!ical. :e#ardin# mal $ractices (increase in $rice )w!en t!ere is s!orta#e of $rod&ct in mar"et it is o)served t!at it is !i#! in case of telecomm&nication i.e. I9K H followed in a&tomo)ile sector it is an avera#e E9K. E/cess $ress&re re#ardin# tar#et com$letion is ver( !i#! in $!armace&tical com$an( i.e. I9K and E9K in a&tomo)ile sector.

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I9K female res$ondents are not attractin# towards $rod&ct )eca&se of se/ a$$eal in t!e advertisement )&t D9K male candidate attract towards it.

1n order to mar"et t!eir $rod&ct com$anies are &sin# !idden &net!ical strate#( li"e s&rro#ate advertisement.

5 n&lusi n ,!e et!ical iss&es in mar"etin# straddle across vario&s dimensions and are 3&it com$licated. At times. t!ere is lac" of clarit( as to w!at ma( )e considered as et!ical or ot!erwise. Mar"eters !ave to ta"e intelli#ent and res$onsi)le decisions )ased on t!e conte/t. Ever( da(. )&siness e/ec&tives face a variet( of sit&ations w!ic! can lead to an et!ical dilemma. 1t is. t!erefore. &sef&l and im$ortant for firms to !ave an et!ical code of cond&ct w!ic! can serve as a #&ide to t!e em$lo(ees. 1n addition .t!ere are formal r&les H re#&lations sti$&lated )( laws and also accordin# to vario&s $ress&re #ro&$s. w!ic! set )o&ndar( conditions on w!at a firm can do or can not do .Nonet!eless. mar"eters s!o&ld not )e!ave et!icall( onl( )eca&se of #overnment re#&lations and ot!er e/ternal $ress&res. 1n toda(2s world it is im$erative for commercial or#ani-ations to reco#ni-e t!e im$ortance of )ein# et!ical and oriented towards concern for one2s c&stomers a societ(. ,!is is w!at one will call enli#!tened et!ical mar"etin#.

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