Mallen Baker-Marketing Responsibly - Addressing The Ethical Challenges - Institute of Business Ethics (2009)

Marketing
Responsibly
Addressing the
ethical challenges
By Mallen Baker
Published by The Institute of Business Ethics,

24 Greencoat Place, London SW1P 1BE
MARKETING RESPONSIBLY
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Marketing
Responsibly
Addressing the
ethical challenges
By Mallen Baker
1
All rights reserved. To reproduce or transmit this book in any form or by any
means, electronic or mechanical, including photocopying, recording or by any
information storage and retrieval system, please obtain prior permission in
writing from the publisher.
© IBE www.ibe.org.uk
Marketing Responsibly
ISBN 0 9562183 1 5
First published November 2009

by the Institute of Business Ethics
24 Greencoat Place
London SW1P 1BE
A list of publications that have resulted from IBE research, surveys,

conferences and seminars is given at the back of this publication. The IBE’s
website (www.ibe.org.uk) is regularly updated and provides information on
events and other aspects of the Institute’s work.
2
Contents
Page
Author and Acknowledgements 4

Sponsor’s Foreword 5
Executive Summary 6
Introduction 7
Chapter 1. Marketing and Ethics 9
1. What is marketing? 9
2. Where do ideas of responsible marketing come from? 11
Chapter 2. Crossing the Ethical Line 14

1. Misleading customers 14
2. Competitive intelligence 18
Chapter 3. Managing Ethical Dilemmas 21

1. Marketing across cultural boundaries 21
2. Selling controversial products 26
3. Marketing to children 30
4. Sex sells – but how much is too much? 32
5. Shock advertising 32
6. Paying the real price 33
Chapter 4. Responding to Wider Challenges 40

1. Sustainable marketing 40
2. Responsible use of customer influence 41
3. Supporting vulnerable customers 43
Chapter 5. Recommendations 45
1. General marketing 45
2. Market research 45
3. Advertising 46
Appendices: 1: A decision framework for marketers 47

2: Some frameworks for responsible marketing 49
3: Examples of marketing commitments 51
in company codes
4: Ethical Q&As for marketers 54
Index of Cases 58
IBE Publications 59
3
Author Mallen Baker is a writer, speaker and strategic advisor on corporate

responsibility issues in marketing, supply chain and overall corporate strategy.
He is the editor of the longest running email newsletter on CSR issues Business
Respect, and is a regular columnist with Ethical Corporation. He was formerly
development director with Business in the Community (BITC), where he
developed the organisations approach to responsible marketing issues,
working with a leadership team of top CEOs and Heads of Marketing. He wrote
the Marketplace Responsibility Principles for BITC, as well as the report of the
All Party Parliamentary Group on CSR’s inquiry into vulnerable customers.
Acknowledgements The author would like to thank the many interview respondents who provided
information and support for this report. He is also indebted to BITC, who first
encouraged and permitted the development of the marketplace themed work
that led to so much exposure to the thoughts of senior marketers on this
agenda, and experience of company best practice.
The IBE is grateful to L’Oréal for its financial support and encouragement of
this project. This support does not imply endorsement of the content of this
report and editorial control lies solely with the IBE.
The IBE thanks the following reviewers for comments on early drafts:
David Thorp at the Chartered Institute of Marketing, Judith Luker at Pfizer,
and Vanessa Edwards at WPP. Any errors or omissions remain ours.
We are grateful to Nicole Dando, Judith Irwin and Damien Joseph at the IBE
for their contributions to this project.
4
Sponsor’s Foreword
Foreword
At L’ORÉAL, we believe that the strength of our brands is the result of our
commitment to delivering innovative, effective and practical products, which we
have manufactured to the most demanding standards of quality and safety for
over 100 years. In practice, we know that this only matters if our consumers
agree: our brands are really defined by what they think of us.
All successful brands are built on a relationship of trust with consumers.

By marketing our products in a way that reinforces our brand promise, with
integrity, honesty and clarity, we have an exciting opportunity to nurture and
build this relationship.
That is why we have included responsible marketing in L’ORÉAL’s global Code of

Business Ethics.
We are delighted to support this report to help raise awareness of the challenges
that marketers face. We believe that responsible marketing is a subject which
cannot be avoided and must continue to inspire discussions and debates within
all organisations, whatever their activity and wherever they operate.
Emmanuel Lulin
Group Director of Ethics, L’ORÉAL
L’Oréal is a worldwide leader in the cosmetics industry, developing innovative

products to meet the diverse needs of consumers in 130 countries worldwide.
With annual consolidated sales in 2008 of €17.542 billion, the company
employs more than 67,500 people in 62 countries and manufactures 4.6 billion
products in 42 industrial plants around the world. The prestigious portfolio of
leading brands for personal care products are developed by scientists in the
company’s 16 research & development centres around the world and includes:
L'Oréal Paris, Garnier, Maybelline New York, SoftSheen-Carson, Lancôme,
Helena Rubinstein, Giorgio Armani, Shu Uemura, Yves Saint Laurent Beauté,
Diesel, Cacharel, Kiehl’s Since 1851, Ralph Lauren, Biotherm, L'Oréal
Professionnel, Kérastase, Redken 5th Avenue NYC, Inneov, Matrix, Vichy,
La Roche-Posay, SkinCeuticals and The Body Shop.
5
Executive Summary
Executive Summary
This report explains why a discipline of ethics and responsibility is essential for
the marketing function of any company. Without such discipline, the marketer’s
objective of creating sales can be undermined by an erosion of trust between
the customer and the vendor. Trust is necessary for marketing to succeed.
Irresponsible marketing destroys it, as the case studies in this report illustrate.
It considers how principles such as honesty, fairness, responsibility and
transparency are viewed in the context of the modern marketplace, and how
they are changing. The report is aimed at:
• business managers wanting to understand the challenges faced by the

marketing team, and
• marketers concerned to ensure that their practice is in line with key
principles identified for their profession, as well as with their own company’s
ethics policies.
Some of the issues, explored through actual case studies, are well known.
For instance, one of the highest profile areas is that of false claims in adverts.
Others, such as ‘stealth marketing’, get less exposure. Both rely on
misleading customers.
Some ethical dilemmas that marketers face can be harder to resolve. Marketing
across cultural boundaries or to vulnerable customers, products that are
inherently controversial, products that have big environmental impacts, and
pricing are some such issues. The changing agenda on responsible marketing
means that it is no longer enough to talk about how marketers should strive to
‘do no harm’. In addition to dealing with customers and consumers responsibly
and with integrity, the term responsible marketing has also come to embrace
product responsibility, considering value judgements around the positive and
negative impacts of the products themselves.
Examples in this report can serve as important lessons for those wanting to
avoid the damage to reputation and to market share that comes with bad
practice. Every marketer should know these examples, understand why they
happened and fear the possibility that they could be the cause of the next
headline. Business ethics practitioners will want to ensure that their ethics
programmes include guidance on how to avoid replicating such examples.
Included is a set of practical recommendations and a decision framework which

provide a basis for support and internal dialogue around where to draw the
ethical line.
6
Introduction
Introduction
Marketers have a huge responsibility. They define what brands mean to a
company’s customers. They set the tone for how the company interacts with
those customers and other important stakeholders. They create the reasons
for it becoming famous or, sometimes, notorious.
Discussions between the author of this report and a number of different

marketing leaders over the last couple of years suggest that much of the
language around ethics and compliance is anathema to the marketing mindset
generally. It is not that they believe in irresponsible marketing, just that the
language of responsibility has not yet found common currency with the
language of opportunity – which is where they prefer to position their activity.
Many a marketing faux pas has been created due to pressure to make a move
before the competition, or by the enthusiastic (often) junior who is simply
unaware of the implications of what seems like an exceptionally clever course
of action. The incentive to rush into print or online before all aspects have
been considered is a strong one.
However, there is a growing body of history regarding the development of just

what constitutes marketing responsibly. It doesn’t mean that marketing has to
be boring or that it can’t be effective in achieving the goals of delivering quality
products to customers that want them. But it does mean that the creativity and
the drive to create value have to operate within a framework of ethical and
responsible principles. The absence of such a discipline risks an erosion of
trust between the customer and vendor, in turn undermining the marketer’s
objective to create sales. Trust is a necessary condition for marketing to
succeed. Irresponsible marketing destroys it.
Controversial marketing can be defended, of course, with the “there’s no such

thing as bad publicity” line. Publicity that causes a stir, and creates debate, can
be good value for a company, but it treads a fine line with publicity that destroys
trust. Nobody wants their edgy marketing campaign to take on Gerald Ratner’s1
position as iconic case study of the high cost of losing customers’ trust.
The changing agenda on responsible marketing means that it is no longer

enough to talk about how marketers should strive to ‘do no harm’. For many
sectors, there is now a positive expectation that marketers can and will, within
reasonable bounds, contribute to ‘doing good’. In particular, where products
have an influence upon the health of people or the natural environment, it is
simply not enough to eliminate the negatives associated with marketing practice.
This report focuses on the intersection of business ethics and marketing

practice. It is aimed at key decision makers within business, heads of
marketing, ethics practitioners, compliance officers and heads of corporate
responsibility. It aims to help them to understand the scope of the challenges
facing the marketing operations within their businesses, and to develop a
basis for creating an internal dialogue.
1 A British businessman best known as the former chief executive of a major British jewellery company who achieved
notoriety after making a speech jokingly denigrating its products which caused the company's near collapse:
http://en.wikipedia.org/wiki/Gerald_Ratner
7
Throughout the report, practical examples of company experience drawn from

a range of companies are used. At the very least, the examples of poor
practice – where marketers have knowingly or unwittingly crossed the ethical
line – can serve as important lessons for those wanting to avoid the damage
to reputation and to market share that comes with bad practice. Every
marketer should know these examples, understand why they happened and
fear the possibility that they could be the cause of the next headline. Business
ethics practitioners will want to ensure that their ethics programmes include
guidance to avoid replicating such examples.
This report is in 5 chapters.
The first chapter provides the overall context of the role of marketing in business,
and how it is best supported and challenged by the discipline of business ethics.
It looks at where ideas of what is responsible marketing originate.
Using examples of marketing campaigns that have clearly crossed ethical lines
or that have raised ethical dilemmas, the next three chapters illustrate the need
for marketers to be aware of the challenges and the lessons they might learn.
Chapter 2 considers areas where drawing a line about what constitutes ethical
conduct is relatively straightforward. It covers areas such as lying to customers
through false claims in advertising or stealth marketing. It also looks at ethical
issues in the collection of market intelligence and wider market research.
The third chapter looks at ethical dilemmas that marketers may often face –
where right and wrong choices are not so clear cut or obvious. This can include
issues from marketing across cultural boundaries, products which are
inherently controversial, pricing issues, marketing to children, and the use of
sex or other shocking content in advertising.
The fourth chapter considers some of the new challenges posed to marketing
strategies from a fast changing external business environment. Issues such as
climate change and poverty are posing much more radical demands on
businesses and subsequently expectations regarding what constitutes
responsible marketing are becoming more strategic and far-reaching.
The fifth chapter provides some general recommendations for good practice,
and the questions marketers should ask themselves in order to identify any
potential ethical dilemmas before putting a product on the market.
The appendices provide examples of how marketers have tried to express

codes and principles covering responsible marketing, both at an industry level,
and at an individual company level.
This report was produced following a review of recent and classic academic
material in this sphere and a series of interviews with marketing, ethics and
compliance practitioners within business. The author also was able to draw
upon previous experience working with marketers and heads of corporate
responsibility on some of the key issues.
8
CHAPTER 1
1 Marketing and Ethics
Marketing and Ethics

1. What is marketing?
The Chartered Institute of Marketing defines marketing as “the management
process responsible for identifying, anticipating and satisfying customer
requirements profitably”. The Marketing Society describes it as “the creation of
customer-led demand, which is the only sustainable form of business growth”.
In the course of carrying out interviews for this report, it became obvious that
there was some confusion amongst a number of non-marketers about the scope
implied by ethical marketing – with the assumption often made that the phrase
‘marketing’ was interchangeable with ‘advertising’. Marketing texts make a
distinction between the ‘selling model’ and the ‘marketing model’.
The selling model focuses on price and promotional activities. However, at a

strategic level, marketing is about acquiring a deep understanding of the needs
and desires of existing and potential customers and designing the business
(products, services, delivery mechanisms, customer experience, branding,
outreach etc.) to meet or exceed those needs and desires. This is the
marketing model.
A company’s response to the needs of its customers, and the business

environment within which it operates, will be expressed as a marketing
strategy. The detail of this strategy will then dictate which of the marketing
tactics, such as advertising, media relations, direct mail, promotional offers,
sales brochures etc, are appropriate.
Examples of the distinction between the selling model and the marketing
model are plentiful. For instance, the typewriter company Smith Corona
responded some years ago to threats to its business by improving the quality
of its typewriters, and putting pressure on the sale price. The company had
taken a selling approach. Ultimately it lost out to the companies that
introduced a new generation of word processors and computers. Other
companies were taking a marketing approach and were realising that
customers did not want typewriters per se; they wanted to be able to produce
and process documents. The new generation of machines fulfilled this need in
more effective and popular ways2.
The scope of marketing is embedded throughout the business. It is across this

breadth of scope that the marketer has to deal with increasing numbers of
ethical challenges.
Often described as the foundations of marketing, or the ‘marketing mix’, are

the 4 P’s – product, place, promotion and price. These are the things that a
company can control. Each involves potential ethical challenges and dilemmas
that the marketer must face, but particularly the areas of product and
promotion (Fig 1). The issues explored within this report span each of the four
areas (Box 1).
2 Example taken from ‘Introduction to Marketing’, Lars Perner PhD, at

http://www.consumerpsychologist.com/marketing_introduction.html accessed 26th May 2009.
9
CHAPTER 1
Fig 1. Headline ethical challenges relating to the marketing mix
Product Price
• What does the customer • What is the value of the product
want from the product? or service to the buyer?
• What features does it need • Is the customer price sensitive?
to have to meet these needs? • How will the price compare to
• How is it different to the those of competitors?
offering of competitors?
Ethical challenges
Ethical challenges • Potential harm caused to
• Potential harm caused by certain customers or
the product suppliers by price decisions
Place Promotion
• What are the right distribution • How do you get messages to
/ retail channels? target market?
• Which countries are • What are the right messages
targeted? to convey?
Ethical challenges Ethical challenges

• Potential harm caused by store • Potential harm caused by
design and distribution choices irresponsible advertising
• Potential cultural issues within • Customer privacy and data
international marketing protection
Box 1: Issues explored in this report related to the marketing mix

Product
Sustainable design and concept of products
Influencing customer behaviours
Inherently controversial products
Price
Clear and transparent pricing
Predatory pricing
Impact of prices on vulnerable customers
Impact of prices down the supply chain
Forcing price concessions or exclusivity
Place
Selling products for one market considered offensive in another
Accepting market conditions in one country that governments or
customers consider a betrayal of values or principles
Operating to lower standards because of lax regulation / enforcement
Promotion
False claims
Stealth marketing
Shock advertising
Marketing to children
Using cultural references in advertising held to be offensive to the
cultures concerned
10
CHAPTER 1
2. Where do ideas of responsible marketing come from?

Responsible marketing implies an approach that is values led. This means that
where a number of courses of action are possible in the pursuit of higher sales,
some are counted out because they could be considered as unacceptable or
because they contravene certain values or principles.
In addition to dealing with customers and consumers responsibly and with

integrity, the term responsible marketing has also come to embrace product
responsibility, considering both the positive and negative impacts on society.
This reflects a change in what marketing is expected to achieve. So long as

consumers wanted them, or could be persuaded to want them, products were
considered as a positive or, at worst, neutral. Now, value judgements are
commonly being made about what makes a good or a bad product. For
instance, UK do-it-yourself retailer B&Q recently withdrew the commercially
successful outdoor patio heaters product from its stores due to the
incompatibility of this product with concerns over climate change3.
If the line between what is considered as responsible and what is not is

continually being redrawn, how is that line being established?
Legal requirements Marketers most often run foul of the law in areas of comparative advertising and
pricing claims4. These areas are covered by legislation such as the EU
Comparative Advertising Directive, which places restrictions on how a company
can make claims about its products. The spirit of the Directive is to seek to avoid
misleading advertising, false claims or denigrations of competitors’ products.
In addition, marketers are covered by a raft of legal provisions relating to the

use of trade marks, data protection and unfair commercial practices. The
position can change very quickly.
The huge boom in internet-based sales and marketing has led to an equivalent
focus on restricting the worst marketing excesses. Unsolicited commercial
email (spam) is often illegal. But what counts as allowable varies in different
countries. Unsolicited email to commercial entities, for instance, is allowed in
some countries, but is unlawful in others.
The nature of the marketplace means you can expect that competitors will be
reviewing your advertising for grounds to make a legal challenge to claims you
make if it buys them a competitive advantage.
Professional codes Different professional marketing associations have codes of ethics/conduct

which they expect members to abide by.
One of the most significant is the International Chamber of Commerce’s

Consolidated Code on Advertising and Marketing Communication Practice5.
A separate code covering market research also exists; the ICC/ESOMAR
(International Chamber of Commerce/European Society for Opinion and
Marketing Research) International Code on Market and Social Research.
The Codes are tools for self-regulation amongst businesses that want clear,
very detailed guidelines on how marketers should operate in a way that
demonstrates responsibility.
3 Announced in 2008.
4 Correspondence with Insights, Rafi Azim-Khan, Nov 2005,Wragge & Co.
5 http://www.iccwbo.org
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CHAPTER 1
In addition, professional codes have been developed in a number of countries

for marketers to establish the expected standards of behaviour; such as the
American Marketing Association’s (AMA) Statement of Ethics, the Market
Research Society Code, and the Canadian Marketing Association’s Code of
Ethics. These will typically include basic principles of respect and openness
and honesty in terms of messages that are given to customers and other
stakeholders.
Some professional codes go further than ethical conduct and include social
responsibility. The AMA, for instance, includes a clause on citizenship specifying
that marketers should show a strategic focus on fulfilling the societal
responsibilities that serve stakeholders. The implication is that understanding
those societal responsibilities is a key job for the marketer. The marketer is
not, in other words, wholly defined by the quest to understand, and respond to,
the customer.
The AMA statement provides broad headings that are reflected to a large
degree in many of the other codes. These are in summary:
• Honesty – aiming for communications to be truthful and for the company to

honour its promises
• Responsibility – accepting the consequences of marketing decisions,
including to vulnerable customers and the environment
• Fairness – rejecting manipulative practices and safeguarding the private
information of customers
• Transparency – communicating clearly with all, particularly about products
and prices, and accepting constructive criticism.
Such aspirations reflect the intent on the part of marketers to show that
marketing can be carried out from an ethical baseline. However, ethical values
(or business principles) written down are not always easy to embed into day to
day practice and can be difficult to define when applied to specific examples.
What constitutes, for instance, a truthful communication or a manipulative
practice can be hotly debated in practice.
Corporate codes Having a clear and relevant set of values is the starting point for any company
of ethics that wants its marketers to make the right choices when faced with ethical
dilemmas. In addition to a statement of values, many companies provide their
staff with a code of ethics or similar guidance on ‘how we do business around
here’. The idea behind such a code is that there is clear, consistent
communication across the organisation around what is encouraged and,
alternatively, what is not acceptable.
These codes should apply to all staff and all activities, including marketing and
related activities. However, an IBE survey of 60 codes of ethics from a range of
sectors and countries showed that 48% were lacking in any mention of the
issues around marketing and any guidance to staff on what responsible, values
led marketing might be6.
6 Electronic copies of Codes of Ethics, or similar, held on the IBE’s database of codes and dated 2006 to 2008 were searched using the terms:
‘market’;‘advert’;‘promote’;‘sell’; and ‘sale’.
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CHAPTER 1
Of those codes that do include commitments regarding marketing, very few

actually set out what ‘marketing responsibly’ meant in practice. They typically
referred to the following principles around information and product
responsibility:
• To market fairly
• To market honestly
• Not to mislead
• To be clear
• To assist with responsible product use
• Not to encourage unhealthy or damaging behaviour
Appendix 3 of this report illustrates some of these commitments in examples

of actual corporate codes.
13
CHAPTER 2
2 Crossing the Ethical Line
Ethical Line
There are times when what is right and wrong seems clear. Situations involving
obvious lying and deceiving customers, or behaving in an underhand way to
gain advantage in the marketplace are examples of the latter. Although such
areas are usually already regulated, occasionally they are not. In either case,
it is generally in the interests of companies to act proactively before they
become forced to do so or caught out by the law. Being caught out brings
reputational risks that any marketing team would want to avoid.
And yet, there are plenty of examples of companies that have been pulled up
for getting it wrong where the line is apparently clear; and the list continues to
grow. Obviously, what can seem in retrospect to have been a clear-cut ethical
or legal breach might have looked very different through the lens of a marketer
facing a number of choices about how best to achieve the results demanded of
him or her.
Following are some of the most common areas where marketers can cross the
line into particularly obvious irresponsible marketing.
1. Misleading customers
False claims The intent behind a false claim doesn’t have to be wilful lying. Sometimes it
can be an honest mistake, arising from a lack of understanding of scientific
fact or other key factors. The health benefits of certain products, for instance,
may be based upon current scientific understanding, but may have to be
revised as new information becomes available that disproves previous
assumptions.
At other times marketers will know exactly what they are doing when they make
false claims. With regards to environmental issues, the phenomenon of false
claims has been prevalent enough to have attracted its own term – greenwash.
There is a spectrum here – some claims are false because they make factually
incorrect statements, or use irrelevant or confusing facts to give a false
impression. These are the sorts of claims that are clearly within the realms of
unethical, or even illegal, marketing, and to be avoided.
Some campaigners however draw a very wide circle indeed around what they
identify as greenwash. One group, for instance, suggested that 98 percent of
all environmental claims on products are subject to one of the so-called ‘sins
of greenwashing’7. This can become highly subjective, and the frustration for
executives comes when they feel that the campaigners take stretching
definitions that become unreasonable. Yet those groups retain more trust with
the general public than do the marketers.
7 Most green products seen to make false claims, 16th April 2009, Reuters
http://uk.reuters.com/article/environmentNews/idUKTRE53E6RS20090416 accessed 17th April 2009.
14
CHAPTER 2
There are a number of basic rules of thumb that might be applied when making
claims about products.
• The claimed features or benefits should be able to be substantiated.

• It should be clear whether the claim (such as ‘recyclable’) applies to the
product, the packaging, or both.
• Any claims must represent a substantial benefit. So, for instance, saying
something like ‘contains 50 percent more recycled fibre’ may be good if the
recycled content has gone from 30 to 60 percent. It is less impressive if it
has gone from 2 to 4 percent.
• Claims should not be so general as to be meaningless, such as
‘environmentally friendly’.
• Claims should be serious and material to the nature of the product. So
claiming a product to be 100 percent free of saturated fat is only relevant
if the standard for that product is that it contains substantial amounts of
saturated fat, rather than absence of fat being standard.
• Any label used should not be designed to look like a third party assurance
symbol if it is nothing of the sort.
In the UK, DEFRA (Department for Environment Food and Rural Affairs) is in
the process of updating its guidance for companies on green claims8.
Box 2: False claims and false alarms

Shell and the chimneys of flowers
Oil giant Shell provoked a significant number of complaints from an advert
that showed flower petals coming from the chimneys of one of its refineries
and the claim “we use our waste CO2 to grow flowers”.
The UK’s advertising regulator, the Advertising Standards Authority, banned

the advert following complaints centred on the fact that the company only
used 0.325 percent of its CO2 output in this way – a fact that was quite the
opposite of that implied by the image and the overall text of the advert.
The company was embarrassed when Lord Smith, the former Culture
Secretary called the claim “ridiculous”. He said:
“This is an extreme example but what they were doing was taking their bit
of good environmental practice and making a big claim about themselves
and their products 9.”
The example has gone on to be cited by numerous sources as one of the

most glaring examples of greenwashing.
Innocent and the non-UK smoothies

Ethical icon Innocent Drinks found that the campaigners and the press can
seize upon any mistake and label it as greenwashing when they were
accused of telling lies in 2008. The company said on its website that all its
smoothies sold in the UK were blended in the UK. This had been true, but
then the practice was changed.
8 ‘Defra updates Green Claims Code to help industry and protect consumers’ DEFRA press release, 18th February 2009.
9 ‘Record complaints over greenwashing’, DailyTelegraph 25th April 2008 http://www.telegraph.co.uk/earth/earthnews/3340750/Record
complaints-over-greenwashing.html accessed 17th April 2009.
15
CHAPTER 2
Box 2:
Since most fruit arrived into Rotterdam, the company decided it made
Continued
logistical and environmental sense to blend the drinks there. But the text
on the website was forgotten and therefore became out of date.
The Daily Telegraph found out about the untruth, got a quote from an
environmental campaign group prepared to use the ‘greenwash’ label and
ran the story.
Innocent apologised for the mistake and changed the website. It managed
to brush off the controversy for a couple of reasons. First, the company had
no history of making great claims, even though it had adopted a leading
approach to how it managed the business. People therefore saw the
company as having an authentic commitment to environmental and social
values, and were happy to believe that it was just an honest mistake.
Secondly, there was a rational and credible environmental reason for why
the change had been made.
Innocent’s approach of slightly understating its commitment whilst being

very serious about trying to make progress served it well. But the incident
showed how easy it is to become the focus of unfavourable headlines, and
companies with a less watertight profile would have struggled not to suffer
more serious damage.
Volvo and the uncrushable car 10, 11

In 1990, Volvo ran a television advert that showed a four-wheel drive truck,
Bear Foot, driving over a line of cars. All the cars, except of course for the
Volvo, were crushed beyond repair. The demonstration was meant to show
the superior quality and crash safety of the Volvo.
It turned out that the Volvo had been reinforced with steel before the
demonstration. Not only that, the other cars had been doctored to collapse
more easily. The company was fined over $300,000 by the state of Texas for
the misrepresentation. The company admitted the facts and said it had no
knowledge of the deception. It published a corrective statement in the Wall
Street Journal and the advertising agency involved was unsurprisingly fired.
Stealth marketing Stealth marketing is defined as “the use of surreptitious marketing practices
that fail to disclose or reveal the true relationship with the company that
produces or sponsors the marketing message”12. It is designed to generate
word-of-mouth excitement around a product that is trusted because it is
thought to originate from the positive experience of other users.
But it is based on a deliberate intention to deceive, since the tactic would not
work if customers were aware that the apparently disinterested endorsements
they saw were no such thing.
10 Ethical Marketing Decisions – the Higher Road, Gene R. Laczniak, Patrick E. Murphy, 1993, Prentice Hall.
11 A Short Course in International Marketing Blunders, MichaelWhite, 2002,WorldTrade Press.
12 Commercialising Social Interaction:The Ethics of Stealth Marketing, Kelly D. Martin & N. Craig Smith, 2008,
The American Marketing Association.
16
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When it comes to setting trends, customers trust the experience of other

customers far more than they trust the growing number of advertising
messages13. Web retailers such as Amazon have used this to great effect by
allowing customers to give feedback on their satisfaction – or otherwise –
with their purchases. Marketers increasingly aim to persuade the army of
independent bloggers to discuss their products so as to gain the authority of
a significant ‘influencer’ group. This can be effective for all concerned. The
important distinction is that the engagement is open and transparent.
Companies have often been tempted to go one step further in order to

generate a ‘buzz’ and to disguise commercially funded marketing as
independent consumer reaction. This has been labelled as ‘stealth marketing’.
Box 3: Stealth marketing case studies
USA: Sony Ericsson’s fake tourists

In 2002, passers-by at tourist locations in New York were stopped by actors
hired by an ad agency (Fathom Communications) for Sony Ericsson. The
actors asked people if they would help by taking a photograph of them with
the camera phone which they pretended was a recent purchase.
In the course of getting the people to take the picture, the actors would
extol the virtues of the device, failing to disclose any commercial
relationship with the company. The 60 actors got hundreds of people to
have hands-on experience with the new product. Actresses were also
employed to engage strangers in conversation in bars, with pairs of
actresses playing an interactive version of the game of Battleship on their
phones at either end of a bar14.
The scam was eventually exposed by the Wall Street Journal and the 60
Minutes television programme. Sony Ericsson’s marketing director at the
time defended the practice, suggesting that such interactions were normal,
and arguing that the actors would – if challenged – admit that they were
working for the company.
Australia: The Witchery jacket man

An actress posted a video on YouTube claiming to be on a romantic quest to
find a mystery man she met in a café who left his jacket behind. The video,
which received over 200,000 views, caught the imagination of a lot of
people, but also attracted the suspicion of others because it seemed just
too clever.
Eventually, it was revealed that it was in fact a viral marketing campaign for
retail company Witchery, which was expanding its clothing line – previously
only for women – to men.
Japan: The McDonald’s fake customers

McDonald’s launched a new Quarter Pounder product in Japan and, at one
of its chains in Osaka, it hired around a thousand people to queue up
outside the store to buy one of the burgers. The sight of this huge line of
people from before the moment of opening communicated that there was
huge demand and excitement for this new product. The apparent ‘social
proof’ for the product launch encouraged many others to join the queue to
see what all the excitement was about, and also made the news. It was
revealed very quickly to have been artificial popularity.
13 Peer reviews significant to shoppers in Consumer Brand Trust, 31st July 2007, Center for Media Research.
14 ibid.
17
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2. Competitive intelligence
Companies are understandably hungry for market intelligence – both for
insights into the habits, priorities and attitudes of their customers and the
plans and strengths of their competitors. Given that the value of such
intelligence is considerably greater if it is exclusive, the temptations are inbuilt
to use a number of unethical means to gain such intelligence, or to learn the
jealously guarded intelligence available to competitors.
Abusing trust in There are a number of potential ethical issues around market research, both
market research in terms of how the information is gathered and then latterly how it is
represented in use. So, for instance, ethical issues may include:
• Companies hiding their true identity when carrying out market research.
• Misleading use of research findings (for example, claiming that more
doctors recommend a brand than any other, when in truth 95 percent
don’t recommend any brand).
• Requiring that findings contained within research intended to be made
public are sanitised in order to remove information damaging to the
interests of the commissioning companies.
When it comes to carrying out market research with actual or potential

customers, or other random sample groups of individuals, there are a number
of approaches that involve deceptive practices, invasion of privacy or otherwise
indicate a lack of concern for the respondents.
Deceptive practices include false promises of anonymity – particularly for

respondents who have a contractual relationship of some sort with the
company, eg. employees or suppliers, who might be at risk of serious
consequences.
Also included would be falsified sponsors’ identity, using data for a purpose
other than that disclosed or selling under the guise of research. Invasion of
privacy issues include the observation of targets without informed consent.
Companies can also show a lack of concern for respondents by allowing the
use of incompetent reviewers and, if an element of deception has been used
during the interview (to get, for instance, objective views untainted by
knowledge of the commissioning company) to properly debrief the situation
after the interview has concluded.
The importance of trust and integrity to the market research process is well
known, and the key professional bodies require adherence to formal,
comprehensive codes of conduct. These typically cover ethical questions
such as those outlined above, as well as standards of professionalism
and performance15.
15 See, for instance, the Market Research Society’s Code at http://www.mrs.org.uk/standards/downloads/code2005.pdf

18
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Stealing the insight When a new product appears, you can be sure that the competition will be
of others taking it apart very carefully to see how it’s put together, and what they can
learn from it. That is entirely legal and ethical. But it is then one step further
to begin looking for evidence that would not normally be considered in the
public domain for additional information that might give an added advantage.
There has been considerable debate, for instance, as to whether so-called

‘dumpster diving’ is legal. This is the process whereby employees or
contractors of one company go through the rubbish bins of another looking
for sensitive documents that have been thrown out carelessly. After all, some
have argued, if the company has thrown documents into receptacles that are
freely accessible and unlocked on the public highway, they have effectively put
those documents into the public domain.
Other techniques used to gain such intelligence can include aerial photography
of a competitor’s manufacturing plant or holding phony job interviews with the
intention of attracting applications from competitors’ employees and then
using the interview to pump them for information16.
Box 4: Gathering competitive intelligence
Procter & Gamble

Procter & Gamble was involved in a famous instance where it employed the
Phoenix Consulting Group who went through the trash of Unilever and
managed to get potentially useful competitive information around future
marketing plans.
In the US ‘dumpster diving’ is legal, but when Procter & Gamble CEO
John Pepper found out what had happened, he concluded immediately that
it was unethical, and called his counterpart at Unilever Niall Fitzgerald to
explain what had happened and to offer to settle17.
PepsiCo
In another instance in 2006, PepsiCo was approached by a number of
individuals who had stolen confidential information from Coca-Cola,
including a sample of a new drink, and now wanted to sell it to Coca-Cola’s
rival. PepsiCo immediately informed Coca-Cola of the breach, and the FBI
was brought in to arrest the individuals concerned.
In the wake of the affair, PepsiCo spokesman Dave DeCecco said:

“Despite the fierce competition in this industry, it should also be fair 18.”
16 For a more detailed review of issues around competitive intelligence, see ‘Competitive Intelligence – Ethical challenges and good
practice’, Institute of Business Ethics, December 2008.
17 Marketing Ethics, George G. Brenkert 2008, Blackwell Publishing.
18 ‘Trade secret plot pulls Coke, Pepsi together’, Pittsburgh Post Gazette 7th July 2006
http://www.post-gazette.com/pg/06188/704045-28.stm accessed 27th April 2009.
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CHAPTER 2
Protecting The age of the internet has made it easier than ever before to gather customer
customer privacy contact details, and to supplement this information with rich intelligence over
buying history and interests.
Such ease quickly gave rise to misuse of such details, leading to an

inevitable backlash.
Accordingly, increasing numbers of countries have stringent data protection

laws that require companies to only gather customer details for specific
purposes, which are communicated to customers at the point of collection.
There remains an ongoing debate about how information can be used,
however. For instance, Google now uses details from an individual’s history
of searches carried out on the internet to select appropriate and relevant
adverts to show that person when using other Google services, such as its
free web-based email service.
For some, such use of information is providing good service. It ensures that
adverts that people get shown are most likely to be of interest and relevance
to them. For others, this use of behavioural data to feed into advertising is a
breach of privacy, and the thin end of the wedge in terms of how personal
data can be used.
Google has been forced to back down several times on its data collection
activities. For instance, its Chrome web browser was found to be able to
record search terms along with identifying computer addresses that logged
with Google even before the user had hit the ‘search’ button. Following an
outcry, the company anonymised this information.
Previously, concerns had been raised when the US Government demanded

information from search logs from Google, Yahoo and AOL related to
pornographic material. The information was anonymised, but privacy
campaigners argued that subsequent queries might push the line further
each time. Of the companies approached, only Google refused to provide
the information requested19.
19 ‘Google records subpoena raises privacy fears’, NPR, 20th January 2006. http://www.npr.org/templates/story/story.php?storyId=5165854
accessed 20th July 2009.
20
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3 Managing Ethical Dilemmas
Ethical Dilemmas
An ethical dilemma is a situation where there may be a choice that needs to be
made over what to do, and where there may be negative consequences – or at
least potential negative consequences – associated with either choice. When
asked, marketing managers often say that they don’t face ethical dilemmas20.
However, research has shown that between 65-75 percent of all managers face
such dilemmas at some point in their careers, although they may not recognise
them as such21.
The problem with dilemmas is that it is others, with the benefit of hindsight,
that pass judgement on whether the correct course of action was taken.
Sometimes these judgements can feel unfair and arbitrary. It is not unknown
for key stakeholders to punish a company for doing precisely what those
stakeholders previously asked them to do22.
But there are a number of general principles that can be helpful in seeking to
make decisions around ethical dilemmas in marketing. And there are types of
dilemma that recur often enough to be able to recognise their challenges.
1. Marketing across cultural boundaries

Marketers have traditionally done best by being very clear about the needs and
desires of their target audience. If they can truly understand their customer then
they can create, brand, and sell products that meet that customer’s need.
The internet has increasingly reduced the walls around how a company does
business in any particular country. This has led to an increase in instances where
companies have caused offence, or have been accused of operating ‘double
standards’ because of differences in how they market across the world.
Typically, problems in this area fall under one or more of the following headings
explored below:
• Selling products to one market that are considered distasteful or offensive

in another.
• Accepting market conditions in one country that customers consider to be
a betrayal of values or principles.
• Operating with a marketing code in certain countries – typically developing
countries – which are seen to set lower standards in important customer
protection / information areas.
• Using foreign cultural references in advertising which are held to be
offensive to people of the cultures concerned.
Typically, these problems are dilemmas. There may be strong views on both
sides of the discussion, but no objective ‘right or wrong’ that can determine
what the company should do.
20 Marketing Ethics – Cases and Readings, Patrick E. Murphy & Gene R. Laczniak 2006, Pearson Prentice Hall.
21 ibid
22 For instance, in the UK the supermarkets were praised by the Government for agreeing to raise prices in 2003 to help the
struggling dairy farmers, and then fined for price fixing in relation to exactly the same initiative.
21
CHAPTER 3
These dilemmas can become particularly difficult given the complete

incomprehension people often have of the motivations, sensitivities and
attitudes of different cultures. Such incomprehension can leave consumers in
the company’s home market outraged at how a company could behave in a
certain way abroad, whilst the company sees that such behaviour is expected
– even required – in those foreign markets. And they face local competitors
that have no such compunctions because they are not yet global companies
that have to deal with such dilemmas.
Selling products There may be a straightforward ethical case to be made against selling
to one market products that offend moral sentiment or outrage public decency. But such
that are considered reactions to products are very specific to the cultural norms of the country
distasteful or concerned.
offensive in another
What happens when a product might offend sentiment in one country, but is
considered benign, even highly desirable, in another?
In the days before global communications were so ubiquitous the problem

seemed a distant one. Now, however, whatever the company does will be
available to audiences in its home market within seconds, and it has created
difficult dilemmas for companies that have a global reputation, but local
products and branding.
Box 5: Culturally controversial products
The case of Unilever’s ‘Fair & Lovely’

In India, one of Unilever’s most successful products is the skin whitening
cream ‘Fair and Lovely’. It has held a majority share of the skin whitening
market in India - a market that was valued at over $200m in 2006 and has
been growing strongly23.
According to Hindustan Lever Ltd, the product fulfils a social need. 90 percent
of Indian women want to use whiteners because it is “aspirational ...A fair
skin is like education, regarded as a social and economic step up”24.
Critics have attacked the product on a number of grounds. Some dispute

that any skin cream can actually make skin paler, since the melanin that
causes skin pigment is not reachable by external use of creams. Others
have said that darker skin is actually healthier in the Indian climate since it
affords better protection from the sun.
But the key cross-cultural issue, of course, is the discomfort felt in Western
countries about the idea that companies should promote to Indians or
Africans a message that greater beauty is associated with whiter skin. The
use of classic marketing messages becomes rather controversial in this
context. TV commercials typically showed young women being unsuccessful in
career or love who resolve the problem by using the skin whitening product.
23 Doing Well by Doing Good Case Study: Fair & Lovely Whitening Cream,Aneel G. Karnani, 2007, Ross School of Business
Working Paper Series.
24 ibid
22
CHAPTER 3
Box 5: On the one hand, defenders of the product say that this is merely taking the
Continued cultural norms of the country. People, and that includes the poorest people
in the world, have the right to define their own wants and needs. They have
the right to value aspirational brands just as much as consumers elsewhere
do, and to tell them otherwise is a distasteful imposition of one society’s
values on another.
On the other, the critics say that such advertising fuels expectations and
desires proactively, and since it is promoting a state that is less healthy,
this is inherently a bad thing to do. And consumers in the home market who
hear about the product can be aghast at what they see as the implied racist
undertones.
It is not a static situation. Discomfort over the advertising of skin whitening

products has created reactions in India as well. Hindustan Lever withdrew
several of its adverts in 2003 after protests from the All India Democratic
Women’s Association25. It created the Fair & Lovely Foundation to promote
the empowerment of women as an attempt to associate the brand’s
mission with a positive social goal.
Vogue India photo shoot

Vogue India provoked controversy when it carried out a fashion photo shoot
using ‘average Indian people’ – many of whom were living in considerable
poverty. They were photographed modelling high end items, such as a
Burberry umbrella that would have cost around $200.
The shoot was derided as “not just tacky but downright distasteful”26 by
commentators. The symbols of opulence were being modelled by people
who might not earn more than $2 a day, and India had seen a lot of farmer
suicides because of growing levels of debt.
The Vogue India editor was unapologetic suggesting that critics should ‘lighten
up’. The shoot, she said, was sending the message that fashion was no longer
a rich man’s privilege. Critics did not agree that putting clothes onto people
that they could never hope to afford was sending that message.
Accepting market A related instance is one where, in order to operate in a country, conditions
conditions that have to be met which are seen as contrary to the company’s values and / or
customers those of its home country.
or governments
consider a So, for instance, if a government is behaving unethically towards its own citizens,
betrayal of values is a company itself behaving unethically if, by its presence in the country, it is
or principles directly or by implication considered to be lending support to that behaviour?
This is a difficult dilemma because by and large companies have accepted that
their first duty is to obey the law in the countries where they operate. They have
traditionally not believed themselves to be qualified, nor trusted, to pick and
choose which governments and which laws (other than those affected by
international sanctions) they should treat as legitimate.
25 ‘IndianWomen Criticize ‘Fair and Lovely’ Ideal,Womens E-News, 28th April 2003
http://www.womensenews.org/article.cfm/dyn/aid/1308/context/archive accessed 8th April 2009.
26 Vogue’s Fashion Photos Spark Debate in India’, NewYorkTimes 1st September 2008.
23
CHAPTER 3
Box 6: Do Google’s values translate into Chinese?
Google provides access worldwide to a standardised and effective way to

locate relevant and credible information on the internet. When it first started
with this mission, it could have been forgiven for imagining that such a goal
would be a context-neutral ambition.
The control of information has, historically, been anything other than neutral
and certain governments of certain countries see the state control of
information as important for the achievement of their political objectives.
These governments have not accepted the received wisdom that ‘you cannot
control the internet’ and have set about doing just that.
The key dilemma in this regard for Google has been how it operates in
China. Its government is not democratically elected, although it is
acknowledged and dealt with by all states as the legitimate government of
China. And any socially responsible company would be expected to abide
by the law of the land as laid down by the government.
China insisted that internet search engine results would be disrupted

unless they conformed with the government’s censorship requirements on
a wide definition of sites that were considered subversive. Google’s main
competitor in China, Baidu, happily accepted such operating expectations
as the norm, and has been growing strongly.
But for Google, this was a dilemma. Its existing, home market, user base is
largely supportive of freedom of speech as a fundamental human right. Such
users found the Chinese government’s position abusive and unsupportable.
At the same time, China is home to the largest likely new market of internet
users, and not operating in that market at all would give a powerful platform
for others to build market share and become global competitors.
There is a huge cost for Google in not being accessible to Chinese users. And
it is worth noting that, whilst US lawmakers condemned Google for dealing in
China, the US government continued to deal with China. The company was
being asked to take a higher moral standpoint, with greater cost, than any of
its critics were prepared to do. And the company has its own values – which
are to make information freely accessible to as many people as possible. How
could censorship ever be compatible with such a mission?
In the event, the company decided that it would submit its Chinese portal to
the government’s requirements, but it would clearly state on its search
results that filtering had been used. This, it reasoned, was the compromise
that was most transparent and honest for the user, and achieved the goal of
improving access to information to the greatest extent possible to the
largest number of users.
The evidence seems that the compromise was just enough. Google remains
the number one choice for internet search within its home market – by far.
And although it suffered damage to its reputation and has its critics, it has
been able to maintain its right to operate.
24
CHAPTER 3
Operating with a Some demands made on companies for their marketing can be very specific to
marketing code in local interests or local demands. However, some are about expectations within
countries with advanced societies, around for example universal standards for product safety
lower standards and informed customers.
The argument is made that an ethical company would operate to the same high
standards in countries that do not legally require such standards as they would
in those that do.
For instance, a product that is potentially dangerous if used in ways other than
those specified as safe, would require a special responsibility for the company to
ensure that all its customers understood the nature of the problem.
Companies may resist such logic, arguing that cluttered labels are the result of
overzealous legislation and are not effective in any case in achieving the end
result of well-informed consumers. Therefore they should not replicate across
the globe what does not work at home.
Such arguments only hold up if the company can demonstrate that it is taking
an alternative approach that it can arguably claim is more effective.
Box 7: Nestlé and the baby milk boycott
One of the highest profile, and most contentious, examples of a company

being accused of unethical marketing in developing countries has been the
long-running critique of Nestlé’s marketing of baby formula products.
As recently as 2007 – 30 years after a boycott of the company was

launched – Nestlé was being accused by groups such as Save the Children
of promoting infant formula to mothers in situations where the product was
likely to be mixed with dirty water and to be a threat to health27.
In 1981, concerns over the marketing of baby products led to the creation of a
World Health Organisation code. Save the Children alleges that a number of
manufacturers still get around the code in the way products are promoted.
Nestlé vigorously defends itself against charges, knowing only too well how
much its reputation was damaged with the initial charges 30 years ago. So,
in 2008, the company commissioned a third party auditor to check its
compliance with the marketing code for markets in Malaysia and Indonesia.
It runs a website with detailed point-by-point rebuttal of the main
accusations made against it28.
27 ‘Nestlé bypasses baby milk code’, 15th May 2007,The Guardian,

http://www.guardian.co.uk/society/2007/may/15/childrensservices.food accessed 13th April 2009.
28 http://www.babymilk.nestle.com
25
CHAPTER 3
Box 8: Cases of offensive cross cultural marketing
The Maori Mix controversy

Tobacco giant Philip Morris discovered the dangers of making such cultural
references when they launched, in Israel, a brand of cigarettes branded as
‘Maori Mix’. In addition to the name, the packaging used imagery
associated with the Maori culture along with a map of New Zealand. The
branding was quickly publicised in New Zealand, and the company faced a
storm of protests and a threat of legal action from a Maori community that
was sensitive to its exploitation for commercial operations.
The company, which faced protesters at its group AGM in New York,
withdrew the brand from sale in the wake of the controversy. The CEO
Louis Camilleri was forced to personally apologise for the insult29.
Diageo
Drinks giant Diageo also had to beat a hasty retreat over an advertising
campaign it ran on the UK London underground. Adverts for one of its vodka
brands made unflattering references to the quality of products from Taiwan –
a country where the company has substantial markets.
Within days, the offending message was being highlighted by the media in
Taiwan, and lawmakers and others were calling for an organised boycott of
the company’s products there. The company quickly withdrew the ads and
formally apologised to Taiwan for the offence caused30.
Citroen
Another example was that of Citroen which ran an ad featuring a scowling
picture of Chairman Mao looking at a car, with the legend ‘It’s true we are
leaders, but at Citroen the revolution never stops’. Protests from China
where, for many people, Mao Tse Tung is venerated, led to the speedy
withdrawal of the ad and apology from the company31.
2. Selling controversial products

For many people, responsible or ethical marketing becomes an impossible
proposition when it involves selling certain products that are considered to be
inherently harmful. Such products include armaments and tobacco and,
depending on the perspective of the viewer, may include alcohol and gambling.
There are no absolute rights and wrongs here. When it comes to socially
unacceptable products, attitudes change over time, and different groups within
society can sharply disagree. It is not that certain products are inherently good
or evil – but that they are controversial.
29 ‘Philip Morris apologises for Maori mistake’, 28th April 2006, Business Respect,
http://www.businessrespect.net/page.php?Story_ID=1609 accessed 13th April 2009.
30 'Diageo suffers storm over UK poster adverts', 27th December 2002, Business Respect,
http://www.businessrespect.net/page.php?Story_ID=754 accessed 15th September 2009.
31 ‘Citroen regrets Mao ad insult’,BBC News 15th January 2009.
http://news.bbc.co.uk/1/hi/world/asia-pacific/7190249.stm accessed 24thApril 2009.
26
CHAPTER 3
Most marketers understand that when significant groups within the population
see the company’s products as socially undesirable, they operate under more
severe constraints than they would in working with other products. Tobacco
marketers cannot, for instance, encourage non-smokers to become customers.
This is the ultimate contradiction from a marketing point of view – a situation
where the traditional goal of maximising sales is not seen as socially acceptable.
Not only is their marketing constrained, but they may have to face some, or all,
of the following:
• Campaigns by advocacy groups whose stated aim is to close the industry

down and who will use any and all failings in controls as a weapon to
influence public opinion and the legislature.
• Avoidance of association by other companies. For instance, Kimberly-Clark
shareholders put up resolutions that the company should stop supplying
paper to cigarette manufacturers32.
• Whereas segmenting the target market is uncontroversial for most products,
for these it may be taken as evidence of discrimination.
• Price promotions – routine for other products – may create protest as being a
device designed to increase overall consumption of a product.
When the status Taboo products, and the rules that constrain them, have often developed
quo lacks logic over long periods of time and the results can be highly counterintuitive. For
instance, concerns about tobacco generally focus on the manufacturers, and
ignore the hundreds of thousands of retail outlets that actually sell cigarettes
to consumers.
Also, the companies face the logically bizarre situation that new, reduced
harm, products can be held to be illegal, whilst the traditional, more harmful,
products may continue to be sold. For instance, non-combustible tobacco
(called Snus) is illegal across most of the EU, although research has shown
that it brings fewer of the health issues of combustible tobacco.
Likewise, one of the common targets of campaigns against controversial

products focuses on the advertising. Such targets have included, for instance,
the advertising of foods high in sugar and fat to children, and the advertising of
alcoholic drinks in ways that may appeal to younger groups – so-called alcopops.
In the face of such a campaign, the president of the Beer Institute, Jeff Becker,
argued that underage drinking and drunk driving had actually declined rather than
increased, and that those problems were “not an advertising issue”33.
But in this area, more than any other, it is frequently the case that the
company can have the facts on its side but lose the public argument. The
emotional content of the debate is powerful, and the marketers are easy to
portray as uncaring and unscrupulous in pursuit of winning maximum profit.
32 Selling Sin, the marketing of socially unacceptable products, D. Kirk Davidson, 2003, Praeger.
33 ibid
27
CHAPTER 3
Box 9: Case studies of controversial products
Cigarettes, USA
In 1989, Uptown Cigarettes was launched in Philadelphia by tobacco firm
Reynolds Tobacco. The brand was targeted at African American consumers.
This was an attractive market segment for the company, since there was
generally a higher rate of smoking within this group which was more
resistant to health concerns.
However, the promotion provoked intense controversy. Campaigners argued

that this group already suffered disproportionately from the health effects of
higher rates of smoking, and that therefore to target them to smoke more
was immoral.
The company argued back, saying that the facts did not support the attack.
It said that its campaign was aimed at existing smokers to win market share,
not at non-smokers to get them to take up smoking. In addition, it accused its
critics of patronising African Americans to suggest they could not be trusted to
make the same sort of adult decisions that everyone else does.
The defence did not get popular support, and the company discontinued the
trial soon afterwards. In conceding, the company continued to argue that it
was right, but that it recognised that the resistance was too great.
McDonald’s salads
In the face of growing attacks over the links between unhealthy fast food
and the rising incidence of obesity, McDonald’s introduced a range of salads
and other healthier options. Initially, these products were not a great
success. The company which had built a global empire on burgers could not
transform its brand into something entirely different overnight.
In recent years, the company tried again. It developed more attractive

‘premium’ salad options and undertook marketing campaigns aimed at the
‘veto consumer’. The company recognised that groups of potential
customers would often be influenced by one or more in the group who
wanted to eat healthily and who would veto the selection of eating at
McDonald’s because of the belief that there would be no attractive options
for them. Win them over, and you get the whole group into the restaurant,
not just that one consumer.
The campaign has proved to be more successful, and one amongst a number
of factors that have seen a resurgence in performance for the brand.
Critics say that the company still only sees 10 percent of its sales going
towards ‘healthier option’ meals. But, for the company, this represents a
considerable margin and shows that it has begun to convince people who
would never have considered going to McDonald’s for a salad that they
have an offering for them.
The McDonald’s example shows how much of a conflict it can be when

emerging societal demands push in a direction completely different to where
a brand is positioned in the marketplace. McDonald’s has stood for fast
food, and specifically burgers. It cannot change so fast that it leaves its
traditional market behind. And initial attempts to change at all are difficult to
make successful. But over time, and with patience and intelligent marketing,
the brand can begin to modernise itself in the eyes of the consumer.
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Few areas have been more vividly contentious than that of animal testing.
The practice has gone from being considered a routine part of developing
new cosmetics and medicines some decades ago, to becoming a high risk
activity to be engaged in only if absolutely necessary.
The dilemma for companies in seeking to respond to concerns is that most

ingredients in common use today have been tested on animals at some point
in the past. It has not been possible, therefore, simply to present ethically-
branded alternative products.
Some have established a cut-off point. For instance, ethical niche chain the
Body Shop, which has used the slogan ‘Against Animal Testing’ in its
marketing, has a policy of not using products or ingredients which have been
tested or re-tested on animals since December 31st 1990.
Not only does the company not engage in such testing, it specifically requires
suppliers to ensure their practices are consistent with the position as well.
Since 1989, L’Oréal has ceased using animals in its laboratories to test its
finished cosmetic products, and supports the aim of eliminating animal testing
in the industry. The company has invested in research into alternative
methods, such as Episkin, a process for testing for skin irritants without
using animals.
The debate around the ethics of animal testing is unfortunately often

distracted by the extreme methods used by some animal rights groups to
attack those they see as being culpable. Physical violence used against
company employees, and other forms of intimidation, have often focused
debate around how robustly companies in a democratic society should resist
attempts to coerce them into a policy change.
This is a difficult dilemma for the socially responsible company that wants
to protect the safety of its employees, whilst understanding why giving in to
violence sets unwelcome precedents for society as a whole.
A changing The big challenge for marketers is that attitudes change over time, and a
environment product that was previously relatively uncontroversial may become so. This
needs constant transition process is always met by an initial period where the companies
vigilance affected are in denial that the change is happening, and through this become
defensive and angry. Eventually they are forced to accept that the rules have
changed, and they have to adapt their behaviours.
Nobody wants their product to be defined as a pariah product. Suddenly, costs

go up as the company gets involved with legal challenges, new restrictive
legislation and – often – punitive taxes. Employees may become dissatisfied
because they are now being personally challenged by friends and
acquaintances whose view is influenced by the controversy.
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CHAPTER 3
Food companies have gone through this process in relation to the rising tide
of obesity. Whilst not quite reaching the definition of a ‘pariah’ product, high
calorie fast food has certainly achieved the status of ‘controversial’, and
advertising restrictions to children have accordingly become a fact of life
within the industry.
Of course, the fact is that rising levels of childhood obesity are not down to a
single cause. More sedentary lifestyles have become a fact because of
influences such as computer games, and reduced levels of physical activity in
the school curriculum. Likewise, poor nutrition in the home has become a
factor for many as well. None of these facts have saved the food companies
from being a primary focus for government criticism.
Denial and protestations of innocence has a poor track record as a strategy to

win acceptance.
3. Marketing to children
There is no area that best typifies how the rules can change on marketers
more than that of advertising to children.
In previous decades, TV advertisements explicitly and directly aimed at children

were accepted as standard behaviour. Such ads helped to pay for children’s TV
content, and even if parents might occasionally roll their eyes at the resulting
pester-power during visits to the supermarket, it did not occur to them that the
advertisers were at fault.
The debate started in relation to growing levels of childhood obesity, and the
contention by campaigners that advertising unhealthy foods to children was
part of the problem. Now, it is an open question as to what licence companies
have to market directly to children at all – it is certainly an activity that has
rightly or wrongly become inherently controversial.
In the US, the amount spent on getting marketing messages to children has
mushroomed 2.5 times the amount that was spent in 1992 to around $15bn
annually. The average American child is exposed to 40,000 ads per year 34.
For a growing number of campaigners this is a problem. They argue that

children are especially vulnerable to advertising because they do not have the
maturity to interpret the messages that they receive. They say that most
children believe adverts to be informative. One study quoted by the group
Consumers International demonstrated the power of advertising by showing
that 3 to 5 year old children heavily preferred French fries in McDonald’s
branded wrapping compared to exactly the same product in plain packaging35.
In the UK marketing to children using traditional media has now become highly
regulated. TV adverts for any foods that are high in fat, salt or sugar are
banned around programming aimed at under 16s. Such bans have not,
however, been extended to new media such as websites, computer games,
and social networks. For many parents such media represent the unknown
compared to traditional advertising, which they felt they understood and could
better control their children’s access to.
34 Consuming Kids The hostile takeover of childhood, Susan Linn, 2004, NewYork Press.
35 Consumers International
http://www.consumersinternational.org/Templates/Internal.asp?NodeID=97058&int1stParentNodeID=89651&int2ndParentN
odeID=89689&int3rdParentNodeID=97050&int4thParentNodeID=97056 Accessed 16th April 2009.
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CHAPTER 3
Marketers, in responding to the changing landscape, have tried to find

solutions for successful marketing that both engage young people and their
parents. The ideal, which is by no means easy to achieve, is that children are
sold to with the trust and support of parents.
Box 10: Marketing to children
Tesco – Kids Club 36

Well before the process of marketing to children became such a hot topic,
Tesco was treading very carefully into this area, wanting to ensure that the
basis of trust they had established with parents would be supported, not
undermined, by their approach to selling to kids.
The message of the importance of trust was underlined by the market

research the company did with mothers. The research showed that mums
wanted Tesco to know that they were busy, and they wanted them to give
things directly to their children, not to them. However, trust was essential to
being able to play this role. As a result, Tesco created ‘Kids Club’ – a way of
providing interesting and engaging content to children, which nevertheless
was set up only to market to children with the support of parents.
The first challenge was that kids would not take seriously anything that was
not truly for them – Tesco had to impress the kids first, and reassure the
parents second. The kids told Tesco that they found a lot of the mainstream
offerings from other sources to be patronising – they wanted stuff that had
playground kudos.
This, of course, is the dilemma that leads so many marketers into activities
that surprise and shock parents – since authenticity for kids and approval
for parents can often be at odds.
Tesco decided that in order to gain the content credibility with its young
target group, it should form a partnership with Disney – a brand that carried
great weight with the kids as well as trust with the parents. When it came to
direct selling, the company was surprised how much license parents were
willing to give them. For instance, when signing up, almost 70 percent of
parents gave permission for Tesco to send free samples to their kids.
Underpinning this trust was an explicit code of conduct that the company
used to reassure parents of the nature of Kids Club.
Kids Club Code of Conduct
1. We promise that all Tesco material will have been approved by our
parents panel to ensure suitability
2. We promise not to advertise prices to children or advertise products that
could cause unnecessary pester power
3. We promise not to send coupons or money-off promotions directly to your
child. Any coupons will come addressed to you, the parent / guardian so
you can use them without being pestered by your child.
36 Scoring Points, How Tesco continues to win customer loyalty, Clive Humby,Terry Hunt and Tim Phillips, 2008, Kogan Page.
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CHAPTER 3
4. Sex sells – but how much is too much?

The use of sexual imagery in advertising has been present for as long as
companies have advertised. Often, it is subtle and suggestive. It can take the
form of an attractive model engaging eye contact with the camera (proxy for the
reader / viewer) and showing other flirtatious behaviours.
But at times, the use of sex to sell can be explicit and designed to startle,
titillate and shock. There is no one rule here. Different societies have different
tolerance levels for sexual imagery. Nevertheless, even relaxed societies have
demonstrated that they have their limits, and the question for the marketer is
how far you can stretch the boundaries of the expected in order to provoke the
reaction. How much is too much?
The trouble is that this can become an upward spiral – where more and more
is needed to achieve the shock reaction.
Box 11: France: porno-chic
French society has traditionally been relaxed about the use of naked or
semi-naked models in advertising to sell a wide range of products. For
instance, when the perfume brand Opium used a poster with a photograph
of a naked Sophie Dahl spreadeagled on a satin bed British society was
outraged – over a thousand complaints caused the ad to be banned – whilst
French commentators largely expressed admiration for the ad.
However, in 2001 a string of fashion adverts began to shock and outrage in

Paris as they increasingly married images of female nudity with situations
of fantasy involving violence and degradation. Labelled as ‘Porno-Chic’, the
phenomenon became associated with images of “women who are bruised,
bullied, even consorting with animals”37. Campaign groups were formed to
organise protests against offending retailers.
Eventually, the French government stepped in. Led by the women’s rights
minister Nicole Péry, it produced a report that aimed to achieve better self-
regulation in the industry and the ‘Truth in Advertising Bureau’ issued new
standards on what is acceptable.
5. Shock advertising
Controversy is not always unwelcome in the marketing department. If an
advert is startling, edgy, sexy or even slightly shocking, it can achieve what
the marketer most wants – an advert that gets talked about. And in the
YouTube/Facebook era, that can mean an advert that attracts attention
across a very wide audience.
There is nothing inherently irresponsible about this. If responsible marketing

means boring marketing it will have few advocates on any side of the debate.
But of course, to tread the line is occasionally to mis-judge and to cross it.
And the temptation is to push the line a little bit further each time in order to
get the same effect.
37 A Matter of Trust, Jennifer Gilbert, March 2003, Sales and Marketing Management.
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CHAPTER 3
And it does have an effect. A US study showed that shocking adverts achieved
significantly higher attention, recall and influence on behaviour amongst a
group of university students. It all depends which is your target market38.
Marketers may justify certain advertising on the grounds that the controversial
imagery used is not considered offensive by the target audience. However,
most adverts are seen by significant numbers of non-target audiences, and the
judgement of where the line should be drawn has to be based on the mix of
those that will be exposed to the ad, not just the reactions of those to whom
the advertiser is aiming to sell. As with the sexual content of ads (which
deliberately pushed to extreme constitutes shock advertising in itself) attitudes
vary depending on national culture. The iconic billboard adverts by Benetton
were shown by a study to be easily received in Germany, whereas they created
discussion and controversy in the UK39.
Shock advertising is probably more used in the promotion of apparently

progressive social causes than in any other capacity. Adverts to discourage
drinking and driving, for instance, often give graphic and emotionally upsetting
portraits of the consequences of road accidents and their impact on the lives
of victims. Or the reality behind any number of hidden disasters, such as
famine in developing countries, disfiguring diseases, or inhumane practices.
One such set of adverts was the anti-smoking series in the UK commissioned
by the government’s Department of Health called ‘Get Unhooked’ which
showed people being caught by fish hooks through the lips and dragged in
to buy cigarettes. The images, intended to be edgy but humorous, provoked
hundreds of complaints and were eventually pulled. However, the Department
of Health said that the campaign had been extremely successful – illustrating
the heart of the dilemma behind such advertising.
When it comes to evaluating whether or not a company should take a

chance with shock advertising, it starts with the values of the brand. A safe,
conservative brand suffers more damage by startling advertising that goes
wrong than does a rebellious, irreverent and youthful brand.
Shock advertising pioneer Benetton certainly discovered how it can miss

the mark. Its 2000 campaign, ‘On Death Row’, provoked insult and outrage
across the world, and led to demands for damages to be paid to the victims
of murder and violent crime. It was a taboo too far for a brand which was,
after all, about clothing.
6. Paying the real price

In principle, how products are priced should be purely down to what the market
will bear. In a competitive marketplace, the company that prices too high will
lose share to competitors, and the company that prices too low will make too
little profit.
38 ‘Does it pay to shock? Reactions to shocking and nonshocking advertising content amongst university students’, Darren W. Dahl,
Kristina D. Frankenberger & RajeshV. Manchanda, 2003, Journal of Advertising Research.
39 United Colours, United Opinions, United Cultures,Are consumer responses to shock advertising affected by culture? A case
study on Benetton campaigns under Oliviero Toscani examining German and English responses, Kerstin Holtz, 2006, University
of Birmingham.
33
CHAPTER 3
In practice, however, the way that products are priced is a veritable minefield
of issues ranging from the deeply moral to the practical.
Issues, discussed below, can include:
• Clear and transparent pricing

• Predatory pricing
• Social consequences arising from low cost pricing
• Impact of prices on vulnerable customers
• Impact of low prices in the supply chain
• Forcing price concessions or exclusivity from retailers / suppliers.
Clear and Transparent pricing implies that the customer understands what the real price
transparent pricing is that they will pay for the product or service, and has a sense of whether that
price constitutes reasonable value.
For many products, this is a straightforward equation because like-for-like

comparisons are easy to make. However, in cases where products are complex
and require sophisticated levels of understanding, it can be much harder.
A standard area of focus for this is financial services. Few people have
fully mastered the intricacies behind different mortgage, savings, loans or
insurance products. Undertaking like-for-like comparisons is therefore a difficult
and involved process – and sometimes simply impossible.
To help customers, a number of price comparison websites have sprung up

promising to give instant feedback on the cheapest provider for a particular
range of options. However, these sites can also suffer from problems with
real comparability, and with some sites taking commission from providers for
business steered their way.
The problem is that there is an entire sector where companies make a

proportion of their profits from the ignorance of the customer leading them
to make sub-optimal choices. None of the individual companies benefit from
breaking ranks in order to simplify those choices and may instead gift some
of its market share to competitors, unless it can be done in such a way as to
gain significant customer approval and reward.
Difficulties in this area in the UK led the Financial Services Authority (FSA) to
bring in a framework which required banks and other financial institutions to
demonstrate that they were treating customers fairly. These rules focused on
six outcomes:
1. Consumers can be confident that they are dealing with firms where the fair
treatment of customers is central to the corporate culture
2. Products and services marketed and sold in the retail market are designed to
meet the needs of identified consumer groups and are targeted accordingly
3. Consumers are provided with clear information and are kept appropriately
informed before, during and after the point of sale
34
CHAPTER 3
4. Customers receive advice that is suitable and takes account of their

circumstances
5. Consumers are provided with products that perform as firms have led them
to expect, and the associated service is both of an acceptable standard and
as they have been led to expect
6. Consumers do not face unreasonable post-sale barriers imposed by firms to
change product, switch provider, submit a claim or make a complaint.
The ‘Treating Customers Fairly’ framework was a significant move for the FSA
since it moved from a rules-based approach, which was difficult to define and
too prescriptive, to a principles-based approach, which is far reaching but also
hard to define and implement.
Predatory pricing Predatory pricing is alleged when a company reduces the price of a product or
range of products to an unsustainably low level with the intention of destroying
the viability of a local competitor that is unable to match the price reduction for
very long. The aim is that, once the competitor has been removed, the reduced
choice and convenience for customers will enable the company to put up prices
to a higher level, thereby recouping its costs from the discounting and gaining
greater profit thereafter.
Such practices are illegal in many parts of the world, but predatory pricing is
difficult to prove in court since it can be hard to distinguish from straightforward
competitive pricing. However, some prosecutions have been successful.
Internet service provider Wanadoo, which is majority-owned by France Télècom,

was fined over 10m euros by the European Commission for having, between
January 2001 until October 2002, charged retail prices that were below cost,
thereby restricting market entry for competitors.
During the period in question, of course, Wanadoo made substantial losses.

But its parent company was profitable, and the ongoing value of the market
share would pay dividends in future years. Wanadoo’s market share in a rapidly
growing market increased from 46% to 72%, and at least one competitor went
out of business40.
Predatory pricing is, in any case, a high risk strategy notwithstanding the legal
position. If a competitor proves to be more resilient than expected, the losses
borne by the deep discounting may not be recovered. Or sometimes a competitor
may fail, but be bought out at a distress-level price by another competitor – one
that may have deeper pockets and a stronger competitive edge.
Social consequences A key part of the marketing mix relates to pricing. Is a brand positioned as a
from low cost pricing premium good, which brings expectations of exclusivity and high quality?
Or does it compete on providing best value – reasonable quality at the lowest
possible price? For many goods, this is a neutral question as far as
responsible marketing is concerned. But for certain categories of goods,
marketers’ choices around pricing strategies have significant impacts.
40 Wanadoo fined €10.35m for stifling competition, 17th July 2003, Computer Weekly,
http://www.computerweekly.com/Articles/2003/07/17/196016/wanadoo-fined-10.35m-for-stifling-competition.htm
accessed 13th April 2009.
35
CHAPTER 3
Any economist can tell you that if prices are low, consumption is boosted.
For many products that is uncontroversial and widely accepted – but there are
certain products that will provoke a societal counter-reaction if low prices lead
to high consumption. An example of this in the UK is the ongoing debate
around whether or not supermarkets fuel the incidence of so-called binge
drinking by offering cut price deals on beer and wine sales.
Retailers have argued that the evidence of how people consume suggests that
low prices may lead to people buying in bulk and stocking up whilst not actually
consuming greater quantities41. And there is a limit to what is corporate
responsibility compared to what is personal responsibility.
However, even in the cases where such arguments may be valid, lawmakers
and commentators will often use the intuition test for such cases. If it feels
wrong, it will be reported as wrong. And that may lead to sanctions.
This is an area where the ethical judgements are based on what society thinks
of the signals the company sends by taking that approach, rather than the
direct evidence of actual harm.
Certainly, this has been the case with the issue of binge drinking. In 2007, the
UK Prime Minister Gordon Brown brushed aside the industry’s argument that
there was no link between price and problem drinking, saying that the industry
had to learn the lessons of the successful promotions to prevent drink
driving42. The industry has largely accepted the case, with 45 companies
funding a £100m advertising campaign to promote responsible drinking in an
attempt to show that the problems can be tackled without further government
intervention43.
Impact of prices Companies in the business of selling luxury goods, for example premium
on vulnerable designer-label watches, propose that the price is part of the benefit the
customers customer gets and is limited only by what people are prepared to pay and
whether it is matched by the quality of the product.
However, for those providing something that could be viewed as an essential

service, the issue can arise around the impact of pricing policies on what are
termed vulnerable customers. Vulnerable customers are those who are
unusually at risk to an unintended consequence of using the product or service
or – in certain cases – to absence of the product or service. They can be
vulnerable in all sorts of ways, but the ones most often impacted by pricing
policies are those that are vulnerable because they have limited ability to pay
for essential services, or those that have a heightened dependency on a
product or service.
41 Supermarkets ‘fuelling binge drinking’, 24th Jan 2007, Daily Telegraph

http://www.telegraph.co.uk/news/uknews/1540396/Supermarkets-fuelling-binge-drinking.html accessed 5th June 2009.
42 ‘Brown: drink industry must learn lessons’, 21st Nov 2007,The Guardian
http://www.guardian.co.uk/media/2007/nov/21/advertising.marketingandpr accessed 20th July 2009.
43 ‘Companies pledge £100m for five-year campaign against binge drinking’, 16th July 2009,The Guardian
http://www.guardian.co.uk/media/2009/jul/16/binge-drinking-campaign accessed 20th July 2009.
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CHAPTER 3
The pharmaceutical sector has faced by far the biggest challenge in relation to
pricing issues – with the real need for life-saving medicines in developing
countries being completely mismatched with the price of those drugs and the
ability of governments and patients to pay for them. The traditional business
model for these companies has been to use protected revenues from patent-
protected drugs to provide the resource to invest in new research in medicines
which then, in turn, become patent-protected ‘cash cows’ for the next
generation to follow.
This is an effective model for driving innovation, but is not well suited to
producing the lowest cost medicines in quantity. The dilemma has led to these
companies – many of whom make the most socially beneficial products
imaginable – being cast as greedy corporate villains directly responsible for
millions of people dying across the world.
But the situation is more complicated than the headlines would make it
appear. Providing drugs that require a stable delivery environment – such as
anti-retrovirals for treating AIDS – can be of little use when the infrastructure
for providing that stable delivery environment does not exist. Likewise, the
production of cut price drugs for use in developing countries may not bear too
high a cost – except that some of those drugs may then be repackaged and
smuggled back into the company’s home markets, undercutting its ability to
raise revenues for future research.
GlaxoSmithKine announced in 2009 that it would slash prices for key medicines
in the poorest countries and put its knowledge of chemicals and processes into
a ‘patent pool’ so they would become available to researchers looking at
neglected diseases. The move – particularly on patents – was a challenge to its
peers to be braver and think more creatively about the dilemma.
Impact of low prices Having an efficient and low cost supply chain can be one of the most
in the supply chain important factors in having a competitive, successful product. But if pursued
as an absolute, it can have very negative impacts in the countries where those
suppliers are based.
Stories about abusive labour conditions, forced or child labour, can be highly
destructive to the reputation of the company, its trust with customers, and the
moral character of the firm overall. Such conditions can be hard to avoid in
large, diversified supply chains based in high risk countries. But the company
cannot escape responsibility for the actions of its suppliers, so it has to try.
The marketing decisions of a company that are driven by extreme sensitivity to

the demands of customers can inadvertently lead to creating conditions in the
supply chain that have highly socially damaging consequences. For instance,
factories that have accepted that they should provide proper hours and decent
working conditions for labourers may see themselves to be forced to put such
things to one side when clothing chains suddenly demand last-minute changes
to orders so as to get their designs to market ahead of their competitors.
Such consequences have become common enough to be able to raise significant

question marks about the ethical implications of fast-to-market situations that
are careless as to the social consequences of that business model.
37
CHAPTER 3
Box 12: Marshalls and the action against child labour in Indian sandstone
UK firm Marshalls became aware that one of its increasingly popular

products for paving and garden materials – Indian sandstone – was
generating accusations of child labour in production. Having investigated the
circumstances by visiting the suppliers in India, the group Marketing Director
Chris Harrop, saw for himself how young children were being put to work in
illegal quarries and exposed to a highly hazardous working environment.
This presented the company with a dilemma. Sandstone was bought on the
open market in India, and steps to be able to control supply to guarantee an
absence of child labour would be extensive, and probably costly. The absence
of any kind of ethical premium for a material like sandstone would mean that
the company could potentially disadvantage itself against its competitors.
Marshalls decided that it was simply unacceptable to allow a product that

it sold to be produced in this way. It consolidated its supply through a
single agent so that it could wholly own or be the majority customer for the
quarries that supplied it, giving it the power to require proper health and
safety provisions, and the absence of child labour.
The company also funds a non-governmental organisation in the area that

aims to provide schooling for children who currently are forced to work in
some of the other quarries.
Marshalls has sought to make the best of its action, which has increased
costs for the material. It produces point of sale material about the issue,
and talks about what it is doing on the website.
Forcing price Certain brands are so powerful that few retailers would want to avoid stocking
concessions or them. But the very power of those brands can be used to force additional
exclusivity competitive advantage – in ways that are seen at least as unethical, and in
some parts of the world are now illegal.
For instance, Coca-Cola has around a 50 percent share of the European drinks
market. The company used its powerful negotiating position to enter into
exclusivity arrangements with retailers where the retailer would receive a better
deal in terms of the price they pay for the product provided they agreed to
stock only Coca-Cola products – or that they would only be able to sell Coca-
Cola if they agreed to stock some of Coke’s less popular products. Or they
might offer rebates on the price paid if the retailer hit sales targets – giving
them the incentive to promote Coca-Cola products above those of rivals.
Sometimes the company would provide free Coke-branded coolers, provided
they were only used to stock Coca-Cola products.
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CHAPTER 3
In 2005 the European Commission forced the company to change its policy on
exclusive deals of this kind on the grounds that they stifled competition. For
instance, free coolers had to have at least 20 percent space given over to
other companies’ products. Sales targets had to be abandoned as a tool,
along with other exclusivity arrangements.
Interestingly, Coca-Cola said that the implementation of the agreement with

the EU would have only a slight impact on its sales. That fact rather raises the
question of whether the tactics – which gave the image of Coca-Cola as a
monopolisitic bully – were worth it in the first place.
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CHAPTER 4
4 Responding to Wider Challenges
Wider Challenges
There is a broader ethical dimension appearing in relation to what marketers do
which is particularly far-reaching and difficult to address. It is about the extent
to which marketers should consider themselves as having a responsibility to use
their influence to address or respond to far-reaching challenges, such as those
presented by environmental deterioration and product misuse.
1. Sustainable marketing
In a world that has approaching 7 billion people, it is increasingly agreed by
governments and the scientific community that major changes in how people live
their lives are going to be required – in particular around the degree of material
consumption individuals expect and the types of products that will be available.
Any area that challenges the principal marketing imperative – to sell more
products to more people – is a difficult one for marketers to address.
Nevertheless, some have seen that there is an ethical imperative to address
here. Some have aimed to do this by changing their business model, and
others by seeking to use their approach to marketing to encourage customers
to be agreeable to more sustainable products.
Will it, in time, become seen as an ethical failing of those companies that
don’t do this? Will the model of encouraging overconsumption in order to feed
shareholder expectations of ever-increasing returns be, in itself, seen as a
moral failing to be laid at the door of marketers?
Some of the remarkable changes in the last few years prompted by heightened
awareness of climate change suggest that it is at least a possibility.
The reason that so many companies open themselves to charges of

‘greenwash’ is because there are real benefits to being able to promote the
environmental credentials of a product or service. Even though the exposure of
examples of greenwash has led consumers to become increasingly sceptical of
green claims for products, there remain approaches and opportunities that can
break through the scepticism. But they have to be based on solid integrity in
terms of the actual product offer, and they have to be able to demonstrate an
authentic tone of voice.
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CHAPTER 4
Box 13: Cases of sustainable marketing
Interface Carpets seeks a new business model

Interface Carpets considered this when it set about making its business
sustainable. It developed its Evergreen Lease system, whereby customers
did not pay for carpet, they paid for the service of professional carpeting for
their offices.
This changed the business model in a significant way. Whereas before the
company made more profit if it sold and shipped more product, in this
scenario it made the most profit if it provided the quality service with the
least throughput of product. So, if a part of the carpet wore out, the
company would professionally replace the part that had worn out, not the
whole carpet.
This was one example of how marketers can respond positively and
creatively to the challenges that growing demands for sustainability are
posing to the business model based on selling more and more. But the
initial prompt for action came from founder and Chairman Ray Anderson’s
realisation that there was a deep ethical question over the company’s
former, very traditional, view of its business model. Specifically, it made him
‘a plunderer’ and there was an imperative therefore to take a lead in
creating a new business approach44.
Leica’s upgradeable camera

Others are beginning to emerge as marketers experiment with what can be
achieved. When professional camera firm Leica introduced the new M8
model it offered a contract whereby improvements to the computer
technology in the camera could be retrofitted over the lifetime of the
contract, ensuring that users had access to the up to date cutting edge
technology they wanted, without having to replace the body of the camera
each time.
2. Responsible use of customer influence

There are other areas where marketers have taken the opportunity – or responded
to growing pressure – to seek to influence customer behaviour. Often this involves
products where product mis-use can lead to significant social problems or where
new ways of using the product can reduce problems.
Marketing to address mis-use may not be about directly selling more product,
but it is about minimising the damage the product is seen to do to society.
Diageo, for instance, has produced a series of advertisements designed to

discourage problem drinking. These adverts drew on the peer pressure that young
people often feel within their own social groups – putting forward the message
that you reduce yourself in the eyes of your friends by drinking to the point of
visible drunkenness.
44 For example, see Ray Anderson’s keynote speech at http://www.gpiatlantic.org/conference/proceedings/anderson.htm

accessed 8th June 2009.
41
CHAPTER 4
Box 14: Ariel ‘Turn to 30’
Procter & Gamble’s Ariel brand broke new ground when it promoted its
washing liquid with the message ‘Turn to 30’. The company had reviewed
where it used the most energy and produced the most carbon emissions
through the lifecycle of the product. It found that by far the most energy was
consumed at the stage when the product was being used by the customer,
and most of this came from the temperature of the washing water.
The marketing team carried out consumer research, and found that the
main reason why customers weren’t washing at lower temperatures was
the embedded belief that the higher temperatures were needed for
successful cleaning.
So they ran a marketing campaign promoting the message of ‘Turn to 30’

and reassuring consumers about the effectiveness of the product. Before
the campaign ran, only 2 percent of people washed their clothes at 30 C.O
After the campaign, that figure had risen to 17 percent – and the large
majority of those associated the change with the Ariel brand.
This was an example of how the company was able to be taken seriously as
a company committed to green products because rather than simply making
green claims for its product, it took on the task of using positive marketing
messages to seek to change consumer behaviour – to help them to have a
lower environmental impact in their lives. This was taken as a more
authentic message by more consumers.
The company has since moved the message on to promoting washing at

15 C, since washing machines have started to appear that offer this option.
O
The campaign was successful because it was grounded in good quality

customer research, prompted by a sound analysis to understand the real
environmental impact of the product.
On the one hand, this is very proactive and focused on opportunities. On the
other, there is growing demand for companies to respond to these needs.
A classic ethical marketing dilemma used by business schools focuses on
what a company should do if it has a cleaning product that is discovered by
scientists to be effective when diluted to a greater degree than currently
recommended by the companies that produce it. Is it the duty of the company
to tell customers that they can dilute the product, and thereby get the same
results by using less product?
This was seen as a classic defensive issue. But that is changing. Wal-Mart is
the world’s largest retailer and hugely important for any product manufacturer
of scale. It has now demanded of its suppliers that within a certain period of
time they will only carry concentrated liquids to reduce packaging and
transportation impacts, as well as to improve the environmental impact of
those products in use. What was a niche opportunity for the first company
to produce concentrated products has very rapidly become the ‘do or die’
compliance issue.
42
CHAPTER 4
The other side of the equation, of course, is to avoid using imagery or

messages that may directly encourage negative behaviours or impacts. The
fashion industry has seen huge controversy and debate over the standard use
of ultra-thin, so-called ‘size zero’ models in its advertising along with digital
manipulation to create impossible ideal women. Unilever’s Dove brand very
effectively used its marketing to add momentum to the backlash against such
imagery, with its viral internet video ‘Dove Evolution’ and others. In so doing,
the company took a potentially defensive issue and turned it into a positive.
There are other ways in which marketers can influence customers. One of
these is through the use of what have been termed as ‘smart defaults’. This
is the choice that is offered to the customer as the ‘default choice’ – the
option that they inherit as a result of making no choice. Such defaults are
recognised as having powerful effects on consumer behaviour. For instance,
research showed that in European countries with opt-in organ donor
programmes (ie. the donation of organs was not the default choice) less than
a quarter of the population opted-in. However, in opt-out systems over 99
percent of the population did not opt-out, a huge difference made by people
who still had the same information to inform their choice45.
Part of the reason why such defaults work, it is believed, is because of the
implied endorsement it carries. If it is the default choice, it must be because
it is the most usual, the most popular, choice. So long as the customer does
not suspect the marketer of trying to actively manipulate their choices (as they
often do with websites that present agreement to be contacted with follow on
offers as the default choice) they will tend to believe that this is the standard46.
This can present real questions for marketers. For instance, if an airline has a
scheme whereby customers can pay a small additional fee to purchase carbon
offsets for their journey, should this be an opt-in programme, or an opt-out?
Certainly, when British Airways first introduced such a scheme as an opt-in it
received negligible take-up. Does that mean that the company has a duty to make
it into an opt-out choice, because of the environmental impact? Or would that
incorrectly imply widespread adoption of such offsets when actually they involve
increasing the price that the customer pays? And in certain areas where there
are serious impacts, should customers be offered the choice in the first place?
Should one be able to choose to consume in a manner that is environmentally
unsustainable as though that were a legitimate consumer choice?
3. Supporting vulnerable customers

Identifying ways in which certain groups of customers may be especially
vulnerable to aspects of the company’s product can lead to initiatives that
provide better quality service, and enhance reputation amongst all customers.
At the very least, it can be an area of competitive advantage when selling to
those vulnerable groups.
In terms of business ethics, ensuring that such groups are not affected by the
company’s products or marketing approaches is a basic extension of the duty
of care towards customers.
45 ‘Do Defaults Save Lives?’, Eric J. Johnson, Daniel G. Goldstein, 2003, Science, 302, 1338-1339.
46 ‘Smart Defaults: From Hidden Persuaders to Adaptive Helpers’, N. Craig Smith, Daniel G. Goldstein, Eric J. Johnson, 2009,
INSEAD Working Papers Series
43
CHAPTER 4
Box 15: Supporting vulnerable customers
Camelot’s focus on problem gambling

UK National Lottery operator Camelot carried out market research into what
were the characteristics of people that might get into trouble with problem
gambling – people with addictive tendencies. By building a clear profile of
what sort of concepts and phrases particularly appealed to these groups, it
was able to devise a marketing approach for new lottery games that avoided
using such trigger concepts.
The company’s aim is for the National Lottery to be successful through as

many people as possible buying a small number of lottery tickets. It
monitors its impact routinely through measures such as the number of calls
made to gambling help charity GamCare on matters relating to the National
Lottery. These have remained at a very low percentage, indicating the
success of the company’s approach.
Camelot’s seriousness about such issues was seen as a strong benefit in

the recent licence renewal bidding, where the company won its renewed
licence to operate the lottery for the next ten years. Even if it missed out on
minute amounts of revenue from those problem gamblers not being enticed
to spend more money than they could afford on Lottery games, they gained
immensely because of the importance placed on the impact of the National
Lottery by the UK government.
L’Oréal keeps watchful eye for allergies

L’Oréal is always aware that the ingredients in its large range of differently
branded cosmetics could present a problem for people with specific, often
unidentified, allergies. For instance, people sometimes have allergies to hair
dyes and the company now carries instructions on such a product to get
customers to carry out an allergy test before using it. The company
operates an ongoing ‘post-marketing surveillance’ to aim to identify any
allergic reactions being experienced, enabling the company to take rapid
corrective action.
The company has phased out a number of chemicals where concerns

existed, even when in some cases scientific evidence had not demonstrated
proven harmful effects.
44
CHAPTER 5
5 Recommendations
Recommendations
General marketing
• Take time to engage all the marketing team with the values of the
company. Explore with them what this means in terms of the marketing
mission specifically.
• Make sure the Head of Marketing takes personal responsibility for
leading on the implementation of these values into the company’s
marketing strategy.
• Consider supporting the company’s ethical values with a code of practice
for marketers which states explicitly what is expected.
• Include adherence to the code in appraisal discussions.
• Introduce members of the marketing team to some of the professional
checklists and guidance for ethical marketing and consider devising
Frequently Asked Questions for the team (see Appendix 4).
• Review the social responsibility profile of your product portfolio and existing
marketing activity. Look for any aspects that could represent risks to the
trust between the company and its customers. Look for opportunities
where the product or service could address new social expectations.
• Get product developers and marketers together to carry out scenario
planning for your products. Include, for example, the scenario that energy
prices triple, and material costs steeply rise because of climate change.
How will this affect your business model? Can you change how you sell
your product so that you make more profit from less material product
being used?
• Ensure you have a timely and effective procedure to hear, and respond to,
customer complaints. Constantly review such complaints to identify any
systemic problems that require a broader company response.
Market research
• Look at the terms of your existing market research. Consider the added
value around insights into how changing social context will affect the needs
and behaviours of your customers in five years time. Check whether your
existing research helps you to know whether or not your customers trust
you, and why / why not.
• Check that your market research activities follow any guidance for your
sector regarding gathering competitive intelligence.
• Look at the benefits of joining up market research and stakeholder
engagement processes within the company – can one inform the other?
• Monitor and review emerging social and environmental issues relating to
your product and its customers.
45
CHAPTER 5
• Carry out a review to identify the existence of potentially vulnerable

customers. Depending on the outcome, make sure that you understand their
needs and issues, and can incorporate these in product or service design.
• If you are engaged with marketing to children, include parents in your market
research and answer the question – what approach to selling to these
children will win the support of parents? Monitor how this changes over time,
and use parental trust in your company as a key performance indicator.
• Consider carrying out a brainstorm – what currently acceptable things
will be the new taboos in another decade? Does this have implications for
your products?
Advertising
• Establish high standards for factual correctness and honesty within your
advertising – write a definition and make sure all staff and agencies
understand it.
• Review potential cross-cultural issues that are inherent to your product
profile, and establish guidelines for the use of cultural references in
advertising that may be controversial in other countries. Train your
marketing team to always think of every campaign as a global campaign.
• Carry out a ‘devil’s advocate’ debate on your existing approach to
advertising. What are the angles that a critic will find to argue that your
advertising is unethical or has a detrimental impact?
• Identify whether you can help customers improve their environmental impact
through giving information / advice through your advertising.
• Ensure you require enough time in your sign-off process for advertising to
ensure that ads can be properly reviewed. Tight deadlines are often the
cause of short cuts that can result in major errors of judgement.
46
APPENDIX 1
A decision framework for marketers
Appendix 1
Recognising an issue as an ethical challenge can be difficult. Here are a few
typical ‘red flags’.
It may be useful to stop and think when:

• you would prefer that nobody found out or asked questions
• you are making an exception to a rule
• you feel that no-one cares about the issue at hand
• something sounds too good to be true
• your excuse would be that everyone else is doing it
• your excuse would be that it’s part of the culture
• you feel that there is an issue but you feel you don’t have time to
deal with it
In these situations, the following may be useful to consider when taking a

business decision and making a judgement of what is the right thing to do:
• Does it comply with my company’s code of ethics or business principles?
• Is it legally permissible?
• Do I mind others knowing what I have decided?
• Who does my decision affect or hurt?
• Would my decision be considered fair by those affected?
• Would my decision undermine trust in the brand and the company?
The questions below are designed to help marketers avoid crossing an

ethical line:
Avoiding misleading consumers

• Are you aware of any intention to deceive the consumer?
• Is any of the information in the campaign likely to confuse the consumer?
• Is the accuracy of any claims about the product likely to be challenged?
• Are the claims relevant to the product and meaningful?
• Has the validity of any claims regarding the benefits of using the product
been verified?
• Could the campaign undermine trust in the brand or the company?
• Are consumers aware of data being collected about them or what they
do/buy?
• Is follow-up support in place for consumers if needed?
47
APPENDIX 1
Avoiding cultural insensitivity

• Have you understood the cultural attitudes of the markets you are targeting
regarding the nature or use of the product?
• Will the campaign offend a local non-target audience?
• Are you applying standards consistently across different markets?
• Are any current social issues and media campaigns likely to cause the
product or the marketing campaign to be seen as distasteful, irresponsible
or controversial in some way?
• Will the campaign impact vulnerable sectors of society?
Competitive intelligence
• Are you hiding your true identity to carry out market research?
• Have you properly informed the respondents that you are collecting data
and the purpose of your questions?
• Have you obtained their consent?
• Are you protecting the respondents’ privacy?
• Are you using the data for the purpose disclosed?
Marketing to children
• Have you taken into account the fact that children are a vulnerable
audience?
• Have you taken into account how parents could react?
• Have you ensured that the product is suitable for children?
Pricing
• Is the price clear and transparent?
• What are the social consequences of low pricing?
• What impact will the pricing have on vulnerable customers?
• Are you allowed to impose price concessions or exclusivity?
Use of customer influence

• What type of behaviour is your advertising encouraging?
• Would this type of behaviour be viewed negatively by persons not targeted
by your advertising?
Vulnerable customers
• Who are your vulnerable customers?
• How have you adapted your marketing to take into account their
special needs?
48
APPENDIX 2
Sample frameworks for

responsible marketing
Appendix 2
A number of loose frameworks have been produced for marketers giving
general guidelines or ‘rules of thumb’. They aim to put the elements of
responsible marketing into short, action-orientated concepts in a way that will
gain traction with practicing marketers. Key examples are presented below.
1. Business in the Community’s 2006 Marketplace

Responsibility Principles
The Principles
Respect your customers
Support vulnerable customers
Seek potential customers within excluded groups
Manage the impact of product or service
Actively discourage product misuse
Actively manage responsibility in your supply chain
Treat suppliers as partners
Work with the rule makers
Have consistent standards
Best practice behaviours

Anticipate trends
Execute with skill
Place it at the heart of the business strategy
Make it part of the culture
Encourage and motivate responsible behaviour
Make it mainstream
Share best practice within the business
Be consistent
Source:
www.bitc.org.uk/marketplace/marketplace_responsibility_principles/index.html
2. American Marketing Association’s Ethical Norms

1. Honesty – truthful to customers and stakeholders
2. Responsibility – accepting consequences of our marketing decisions
3. Fairness – balance the needs of the buyer with the interest of the seller
4. Respect – uphold basic human dignity of all stakeholders
5. Openness – transparency in marketing operations
6. Citizenship – strategic focus on fulfilling the societal responsibilities that
serve stakeholders
Source:
www.marketingpower.com/AboutAMA/Pages/Statement%20of%20Ethics.aspx
49
APPENDIX 2
3. Rules of Thumb – maxims for ethical marketing

1. The golden rule – act in a way that you would want others to act
towards you
2. The professional ethic – take only actions that would be viewed as
proper by an objective panel of your professional colleagues
3. The TV test – always ask if you would feel comfortable explaining the
action on TV or in a newspaper
4. When in doubt, don’t – if you feel uneasy about a decision there is
probably reason to question it
5. Slippery slope – engaging in slightly debatable practices as an exception
can serve to make them the norm
6. Kid / mother / founder on your shoulder – would any of the
pre-mentioned be happy with the ethical decision being made?
7. Never knowingly do harm – eg. never consciously make or sell a product
not deemed to be safe
Source:
Ethical Marketing, Patrick E. Murphy & Gene R. Laczniak, 2005, Prentice Hall.
4. ABC of Marketing Ethics

Three A’s – applied, above the law, aspirational
Applied – makes the problems specific to dilemmas faced by
marketing managers
Above the law – some companies view ethics as synonymous with legal
requirements, but the law is the floor
Aspirational – aiming for a high standard that is not always attained
Three B’s – beneficial, beyond the bottom line, breaking new ground
Beneficial – good ethics is beneficial to the firm
Beyond the bottom line – need to think beyond just the financial impact of
their decisions
Breaking new ground – employ moral imagination in dealing with intractable
ethical concerns
Three C’s – compliance, consequences, contributions

Compliance – at a minimum, marketing managers must comply with the
policies and rules of their companies and the law
Consequences – arising from actions taken
Contributions – seeing role that of contributing to society, not just
economic return
Source:
Ethical Marketing, Patrick E. Murphy & Gene R. Laczniak, 2005, Prentice Hall.
50
APPENDIX 3
Examples of marketing
commitments in company codes
Appendix 3
1. Kingfisher Responsible Marketing Code (2009)
Table of contents:
Corporate Responsibility (CR) Responsible Marketing Policy Standard
1. Purpose
2. Aim
Corporate Responsibility (CR) Responsible Marketing Guidelines

3. Introduction
4. What is meant by ‘responsible marketing’?
5. What are the business risks and opportunities related to
responsible marketing?
5.1. Risks
5.2. Opportunities
6. Guidelines on Responsible Marketing related activities
6.1. Making eco-promises
6.2. About ‘Greenwashing’
6.3. CR marketing activities
7. Other related policy and activities
8. Transparency
9. Further guidance and information
Source:
www.kingfisher.com/managed_content/files/downloads/cr_policies/
Responsible_Marketing_Policy_Standard.pdf
2. L’Oréal Code of Business Ethics (2007)

The L’Oréal Code includes the following section specifically dealing
with marketing:
L’Oréal’s advertising and marketing is based on our products’ intrinsic

characteristics and performance. This principle is essential to winning and
keeping the loyalty of our consumers.
All of us involved in the marketing and promotion of our products are

expected to:
• Ensure that all advertising and promotional material is based on proven

performance and scientific data
• Give a fair and truthful description and visual representation of our products
and their effects
• Endeavour to ensure that the purpose and correct usage of our products is
readily understandable by consumers
51
APPENDIX 3
• Be sensitive to the possible reaction of religious, ethnic, cultural or social

groups to our advertising
• Ensure that we do not undertake product placement with any outlets (TV or
radio programmes, magazines or digital media) whose strategy for attracting
an audience relies on exploiting extreme violence, pornography or
encouraging offensive behaviour or hatred toward others. Such strategies are
contrary to L’Oréal principles
• Take great care to ensure our actions are consistent with the L’ORÉAL SPIRIT
if we are envisaging advertising to children and young people.
Source:
www.loreal.com/_en/_ww/html/our-company/the-code-of-business-ethics.aspx
3. Diageo Code of Business Conduct Code (2009)

Marketing & innovation
We are proud that our brands bring pleasure to millions of adults every day, all
over the world, playing a unique part in the social lives and celebrations of
many cultures. We are also passionate about our consumers and we recognise
that alcohol beverages may be consumed irresponsibly, creating problems for
the individual and for society. We must ensure that our brands are advertised
and marketed responsibly.
The Diageo Marketing Code applies to all of our activities that communicate
about and market our brands47. Central to it are that we:
• do not target consumers under legal purchase age

• do not depict alcohol consumption in unsafe situations or before/during any
activity that requires concentration
• do not encourage or condone excessive or irresponsible consumption
• do not use high alcoholic content as a dominant theme
• do not associate our products with violence, anti-social behaviour or
offensive themes
• do not promote alcohol as a medicine, or suggest that it enhances
performance or sexual attractiveness, or is a requirement for social
acceptance or success.
Digital media, such as websites, email and mobile phones provide us with new
and dynamic ways to market to our consumers. The core principles of the Diageo
Marketing Code apply equally to digital marketing and more traditional methods.
To provide further guidance, the Digital Code of Practice has been developed to
address specific standards for all of Diageo’s digital and promotional
marketing activities48.
47 Diageo Marketing Code (2009) available from:

http://www.diageo.com/enrow/Investors/CorporateGovernance/CodesandPolicies/DMC/
48 Diageo Digital Marketing Code (2005) available from:
http://www.drinkiq.com/enrow/Documents/Diageo%20Digital%2005.pdf
52
APPENDIX 3
We are all expected to:
• Apply the Diageo Marketing Code and Digital Code of Practice to all
marketing and promotional activities
• Ensure all marketing activities are in keeping with both the letter and the
spirit of all applicable national laws
• Follow the approval process for all marketing activities as specified by our
Diageo business unit and as detailed in the Diageo Marketing Code
• Pay special attention to applying both the Diageo Marketing Code and Digital
Code of Practice to digital advertising and promotional activities.
Source:
www.diageo.com/NR/rdonlyres/AB31AE6B-6E1C-433F-BD22-2CCAAE325A4C
/0/COBC2009.pdf
53
APPENDIX 4
Ethics Q&As for marketers
Appendix 4
These Q&As, designed to assist employees, are taken from current corporate
codes of ethics.
Personal goods/cosmetics
L’Oréal Code of Ethics (2007)
Q) My colleague has shown me a marketing proposal for a body lotion which
uses an extremely thin young model. I think it’s distasteful in the least, and
could lead us to accusations of encouraging girls to starve themselves in
pursuit of an unhealthily thin physique. She said I was being over-sensitive
and that the artwork had already been approved. What can I do about it?
A) Our advertising and promotion is designed to have the maximum impact
possible on our desired audience, so we must own our responsibility for all
the messages it communicates – or is seen to communicate. There is
growing concern about eating disorders among young women, and the
health risks associated with this. This has to be taken into account when
deciding on our advertising campaigns. This does not mean that you cannot
be creative, but you need to make sure that the advertising message will
not be mis-interpreted as encouraging unhealthy or damaging behaviour.
Q) I’m just devising a marketing programme for a new product. The R&D
department responsible has said that it only “reduces wrinkles”, but my
manager has told me to say it “eliminates wrinkles”. I’m concerned that
this isn’t entirely truthful. What is the right thing to do?
A) Overselling our products by making inflated or exaggerated claims for them
is dishonest, and creates distrust among our customer base. If the product
does not eliminate wrinkles, then you should not claim that it does.
Source:
www.loreal.com/_en/_ww/html/our-company/the-code-of-business-ethics.aspx
Communications
Qwest, Code of Conduct (2009)
Q) I work in the marketing department and thought of a new slogan that I would
like to use in Qwest advertising in the future. Do I need to do anything?
A) Yes. You should notify the Qwest Law Department of the proposed new slogan
so the company can make sure it is available for Qwest to use and determine
whether Qwest can file an application to register it as a trademark.
Source: www.qwest.com/about/company/ethics/index.html
54
APPENDIX 4
Extractive
Alcoa, Guide to Business Conduct (2006)
Q) A salesperson for a competitor and I are friends. Occasionally, we talk
about marketing plans. Should I be concerned?
A) Yes. You are revealing confidential information that Alcoa has invested time
and money to develop. You also may be violating antitrust laws that ban
discussions of marketing and pricing. Talk about something else.
Source: www.alcoa.com/global/en/about_alcoa/corp_gov/business_conduct.asp
Food and beverages

Diageo, Code of Business Conduct (2009)
Q) I’ve been working on a marketing campaign for a new product. I’m
concerned that some of the things we are saying are not entirely accurate.
Should I raise the issue or not worry about it?
A) You should express your concerns to your line manager. No matter how
small or insignificant the inaccuracy may appear it could be very damaging
to Diageo’s reputation. We have a responsibility to our consumers to ensure
that our marketing is always truthful and accurate.
Q) I have received a small number of complaints both internally and from the
public that a recent local advertising campaign is culturally insensitive.
I don’t agree. Should I just ignore them?
A) No, notify your line manager and your Corporate Relations team who will
help to determine the best course of action. In addition, as a matter of
course, any Diageo business that receives criticism of its marketing
activities should inform the Diageo Corporate Relations team in London
immediately.
Source:
www.diageo.com/en-row/CorporateCitizenship/Corporategovernance/
CodesandPolicies/CoBC/
Pharmaceutical
GSK, Employee Guide to Business Conduct (2008)
Q) You are in pharmaceutical product marketing in China. A local pharmacy
has arranged for your GSK product's information to be provided to all its
customers. You are not sure where to find the right information to take
advantage of this business opportunity.
A) You should check with your Regulatory Affairs colleague on the most current
global patient information for the product and on the appropriate
information that may legally be provided in China. If necessary, you should
provide for an accurate translation to Chinese by translating the information
from English to Chinese and then reverse translating back to English to
ensure it is correct.
55
APPENDIX 4
Q) I am a junior marketing manager for one of GSK’s minor products. I have

written some marketing materials for the product and my manager has
asked me to send the materials to the sales force immediately. Is this okay?
A) The best course of action is to remind your supervisor about the
requirement for all promotional materials to receive review and approval by
Medical, Regulatory, and Legal (in the US). Remember, that your materials
must conform to our worldwide and our local standards.
EISAI, Code of Conduct (2008)

Q) I found an article in a reputable medical journal regarding one of our
products. May I circulate it to our sales representatives for them to use as
a reference?
A) Not unless it has been approved by the relevant EISAI department. Sales
representatives may use only those documents and materials that the
appropriate department in your company has reviewed and approved for
promotion and advertising. Documents provided solely for training purposes
are not to be distributed outside of EISAI.
Source: www.eisai.co.jp/pdf/ecompany/ehandbook1.pdf
Baxter, Code of Conduct (2009)

Q) Many physicians use our products for a particular procedure, even though it
is not approved for that use. Is it acceptable to discuss use of our product
for this procedure with my customers?
A) No, Baxter employees may not promote or advertise our products for uses or
indications for which they are not approved or indicated. In the U.S., all
questions or inquiries about off-label uses of our products must be directed
to Medical Affairs. Outside the U.S., it is preferred that questions are
directed to Medical Affairs for your country or region, but if necessary you
may respond to unsolicited requests for off-label information, provided that
such responses are factual and non-promotional and that you document the
requests and responses.
Source:
www.baxter.com/about_baxter/doing_business_with_baxter/global_business_
practice_standards/standards.html#download
Professional services
Dun & Bradstreet, Code of Conduct (2006)
Q) I know that our Marketing Team is in the process of developing a new
product. I’m trying to close a big sale with a new customer. I’m sure I could
make the sale if I promise the customer that the new product will be
available by the end of the year. I don’t think this is deceptive because we
are actually working on the product now.
56
APPENDIX 4
A) Team members cannot make claims about a product that are not based on
facts. Even if team members have been authorized to tell a customer a new
product is under development, if team members have not been officially
notified by D&B when the product will be available, team members cannot
promise that product by a date they have chosen.
Source:
http://media.corporate-ir.net/media_files/irol/12/123817/august2006.pdf
Tobacco
Phillip Morris, Code of Conduct (2008)
Q) I have just been hired from another company. I have a box of materials from
my former employer that would be very helpful in developing marketing
plans for my company. May I bring this with me?
A) No, you should not bring materials that may contain confidential
information to PMI from a prior job. Just as it would be wrong for someone
to take our confidential information, we should not use the confidential
information of others.
Source:
www.philipmorrisinternational.com/PMINTL/pages/eng/community/Compliance.asp
57
INDEX OF CASES
Index of cases
Index of cases
Company Page Company Page
Camelot 44 PepsiCo 19
Citroen 26 Philip Morris 26
Diageo 26 Procter & Gamble 19, 42
Google 24 Reynolds Tobacco 28
Innocent Drinks 15 Shell 15
Interface Carpets 41 Sony Ericsson 17
L’Oréal 44 Tesco 31
Leica 41 Unilever 22
Marshalls 38 Uptown 28
McDonald’s 17, 28 Vogue 23
Nestlé 25 Volvo 16
Opium 32 Witchery 17
58
PUBLICATIONS
Recent IBE Publications
Publications
EMPLOYEE VIEWS OF ETHICS AT WORK: The 2008 National Survey
This report presents the findings of the second national IBE Ethics at Work Survey.
Employee Views of Ethics at Work:
• Describes the attitudes of full-time staff and management in the UK to

workplace practices and suggests which employees are likely to have higher
ethical standards.
• Looks at the pressures employees experience and the support they are given
in ‘doing the right thing’ at work.
• Sets out the differences found in public and private sectors and explores
changes in attitudes and perceptions since the first survey in 2005.
The report provides a useful insight into influences on ethical standards in the
workplace.
April 2009 ISBN 0 9562183 0 8 Price £25.00
COMPETITIVE INTELLIGENCE: Ethical challenges and good practice

Based on interviews with intelligence professionals, this report by Andrew Crane
and Laura J Spence identifies good practices for firms involved in providing,
contracting, and accessing Competitive Intelligence (CI), as well as those seeking to
guard against CI breaches in their own businesses. This research suggests:
• developing clear guidelines and integrate competitive intelligence into the

corporate code of conduct
• extending guidelines to business partners and back up policies with targeted
training to those most at risk
• regularly reviewing competitive intelligence practices and guidelines for all
departments where competitive intelligence is an issue.
December 2008 ISBN 0 9549288 9 X Price £25.00
IBE ILLUSTRATIVE CODE – UPDATED

The Institute of Business Ethics has updated its Illustrative Code of Business Ethics
to reflect changes in company practice since its original publication in 2003.
The IBE Illustrative Code of Business Ethics provides a checklist of issues to assist
businesses and other organisations with the development of a code of ethics or
other such document as part of a corporate ethics programme.
Available free with copies of DEVELOPING A CODE OF BUSINESS ETHICS
October 2008 ISBN 0 9549288 8 1 Price £10.00
59
PUBLICATIONS
IBE GOOD PRACTICE GUIDE 2: SURVEYING STAFF ON ETHICAL MATTERS

Surveying Staff draws on the experiences of UK and international companies to
look at how organisations can use staff surveys to take their ethical temperature
and assess the efficacy of their ethics programmes.
This Guide outlines the different methods for surveying staff on ethical matters;
considers how to maximise the effectiveness of surveys; provides a list of
questions that companies can use to ask their staff about ethical matters and
introduces the IBE’s 12 benchmark staff survey questions.
July 2008 ISBN 0 9549288 7 3 Price £15.00
USE OF CODES OF ETHICS IN BUSINESS: 2007 survey & analysis of trends

This new publication sets out the findings of the fifth IBE survey of FTSE350
companies on how they use and implement their codes of ethics. It charts trends
in the way companies use their codes of ethics to embed their values within
company culture. It shows the ways in which companies seek to maximise the
effectiveness of their codes; trends in the rationale for codes; the ethical issues
perceived as most important for business and how codes address climate change
issues. The report provides a guide to managers wishing to understand current
practice and mechanisms for implementing and embedding ethical policies and
accompanying codes. The authors are Simon Webley with Nicole Dando, Niall
Gallagher and Lutz Preuss.
March 2008 ISBN 0 9549288 6 5 Price £20.00
DOES BUSINESS ETHICS PAY? – REVISITED: The value of ethics training

Do companies that actively attempt to embed their ethical values into business
practice enjoy stronger financial performance as a result?
This report by Kaodi Ugoji and Nicole Dando, describes research comparing the
financial performance of FTSE 350 companies which have a business ethics
training programme with those simply declaring a commitment to ethical values.
The findings, for the five years 2001-2005, are consistent with previous IBE
research, Does Business Ethics Pay?, suggesting that conducting business
with integrity and fairness is not only the right thing to do, it is also good for the
bottom line.
July 2007 ISBN 0 9549288 5 7 Price £25.00
ETHICAL DUE DILIGENCE: An introduction and guide

Cultural fit and ethical compatibility are increasingly recognised as important
elements of successful business relationships, from joint ventures to mergers and
acquisitions. In this report, David Lascelles describes an emerging risk
management tool for identifying integrity risk, Ethical Due Diligence (EDD), to be
used alongside financial and legal due diligence. Ethical Due Diligence is based on
interviews with companies and experts. It describes the process of EDD and
shows by means of case studies how it is being applied and shows how it can be
deployed to support business decisions.
May 2007 ISBN 0 9549288 4 9 Price £25.00
60
PUBLICATIONS
IBE Good Practice Guide 1: SPEAK UP PROCEDURES

The IBE Good Practice Guides offer practical assistance and guidance for making
ethics policies and programmes effective.
Speak Up Procedures is the first in the Good Practice series. Drawing on the
experiences of international and UK companies, it outlines why organisations
need to encourage and support staff to make enquiries on ethical issues, raise
concerns and report misconduct; provides guidance on what to consider when
establishing a Speak Up policy and the procedures to implement it. It suggests
how to operate the policy effectively, from providing training to handling and
investigating calls to Speak Up lines.
March 2007 ISBN 0 9549288 3 0 Price £15.00
LIVING UP TO OUR VALUES: Developing ethical assurance

How can boards be confident that their organisation is living up to its ethical values
and commitments? The premise of this report, by Nicole Dando and Walter Raven,
is that an ethical assurance programme will provide boards with that confidence
and assist in safeguarding the integrity, reputation and sustainability of their
organisation. It provides a practical framework for approaching the assurance of
ethical performance against an organisation’s own code of ethics. The report will
assist executive and non-executive directors understand the need for and benefits
of ethical assurance and consider whether the assurance they have in place is
sufficient and robust. The practical guidance is addressed to those overseeing the
assurance of a board and those providing an assurance opinion. It is intended as
an aid to the development of good practice in a field that is still developing.
December 2006 ISBN 0 9539517 8 2 Price £25.00
MAKING BUSINESS ETHICS WORK: The foundations of effective embedding

In many organisations there is a gap between having an ethics policy and its
effect on the business decisions and behaviour of employees. This report looks at
the reasons for this apparent failure to embed ethical values. This report by
Simon Webley is an examination of the experience of UK companies, recent
surveys and research revealing what can be done to improve the efficacy of ethics
programmes. The practical suggestions in this report will be valuable to
organisations wanting to ensure consistently high standards of corporate
behaviour and overcome the barriers to establishing a meaningful ethics policy.
October 2006 ISBN 0 9549288 2 2 Price £25.00
SUPPLIER RELATIONSHIPS IN THE UK:

Business ethics and procurement practice
Laura Spence examines the complexities of supplier relationships and ethical
procurement practice in the UK. The report explores how companies can achieve
fair relations with their suppliers and particularly considers issues raised in
relationships between large organisations and small and medium sized suppliers.
Three case studies, from Camelot, Waitrose and Toyota, help draw out the issues
and good practice approaches. Guidance on good practice is offered for suppliers
and customers alike.
September 2006 ISBN 0 9549288 1 4 Price £25.00
61
PUBLICATIONS
ETHICS AT WORK: A national survey

What do UK employees consider to be the standard of ethical conduct in their
workplace? This report by Simon Webley and Polly Dryden details the first national
IBE Ethics at Work Survey. It shows how fulltime staff and management regard
their own behavior and that of their colleagues; makes comparisons with
Management Today/KPMG Forensic survey of managers in 2000 and a US ERC
employee survey in 2003; presents the views of workers on the support they are
given in 'doing the right thing' at work ; suggests which employees are likely to be
'the most ethical' and demonstrates to all employers, the benefit of surveying their
staff on ethical issues and conduct, and the need for clearer ethical guidance.
June 2005 ISBN 0 9549288 0 6 Price £25.00
THE ETHICS OF INFLUENCE: Political donations and lobbying

The Ethics of Influence by David Lascelles analyses current corporate approaches
to the challenges in this increasingly controversial area and sets out the
pressures on companies to seek political influence. It offers guidance to business
on good practice and is drawn from interviews with senior business people in the
UK, US and Europe.
June 2005 ISBN 0 9539517 9 0 Price £20.00
SETTING THE TONE: Ethical business leadership

Business ethics will never be taken seriously unless the ethical tone is set from
the top. Leadership is essential to business ethics, as ethical qualities are
essential to good leadership.
This report by Philippa Foster Back demonstrates that business leaders

should consider ethical competence as a core part of their business acumen.
It provides guidance to those wishing to build a culture of trust and accountability
and strengthen the ethical aspirations of their organisation. Setting the Tone
includes interviews with business leaders offering practical insights into ethical
leadership issues.
March 2005 ISBN 0 9539517 7 4 Price £25.00
CORPORATE USE OF CODES OF ETHICS: 2004 survey

This report by Simon Webley and Martin Le Jeune reveals the findings of the
fourth IBE survey sent to the CEOs of FTSE 250 companies with codes. It shows:
• the ways in which companies seek to maximise the effectiveness of

their codes
• trends in the rationale for codes
• the ethical issues perceived as most important for business
The report, including two practical business case studies, provides a guide to
managers wishing to understand current practice and mechanisms for
implementing and embedding codes of ethics.
February 2005 ISBN 0 9539517 6 6 Price £20.00
62
PUBLICATIONS
TAKING THE TEMPERATURE: Ethical Supply Chain Management

Many companies are now grappling with the complexities of ethical supply chain
management. How much progress is being made and is life improving for
workers? Taking the temperature assesses the way companies are developing
ethical trading practices and explores the issues of ethical supply chain
management. It looks at emerging best practice and highlights case study
examples from a range of companies and countries. This report, by Louise
Jamison and Hilary Murdoch of Impactt Limited updates the 2000 publication
Where did that come from? It provides companies with practical guidance on how
to tackle the ethical management of their supply chain.
July 2004 ISBN 0 9539517 5 8 Price £25.00
DEVELOPING A CODE OF BUSINESS ETHICS: A guide to best practice,

including the IBE Illustrative Code of Business Ethics
Producing a code of business ethics helps companies to understand and address
ethical issues across their organisations. The author, Simon Webley, shows how
codes offer invaluable guidance for employees on how to behave and how to
make positive decisions in complex circumstances. This publication:
• Provides a practical and comprehensive guide to developing and implementing

a code of business ethics.
• Analyses the business case for codes; identifies best corporate practice and
explains the steps needed to produce and maintain an effective code of
business ethics.
• Encompasses the updated IBE Illustrative Code of Business Ethics and
includes examples of different approaches to corporate code
October 2003 ISBN 0 9539517 4 X Price £20.00
DOES BUSINESS ETHICS PAY?: Business Ethics and Financial Performance

This research report by Simon Webley and Elise More provides evidence to
company chairmen and Chief Executive Officers as well as the general public, that
conducting business with integrity and fairness are not only morally right, but are
also worthwhile. The performance of a sample from FTSE 350 companies with an
available code of ethics was compared to a similar sample of those without. Four
financial measures were used and the data covered the period 1997-2001. The
annual list of Britain's Most Admired Companies and the SERM socio/ethical risk
reduction rating were also used in the research.
April 2003 ISBN 0 9539517 3 1 Price £25.00
All publications are post free in the UK only. Please add £3 per publication for
Europe and £5 per publication for outside Europe.
Please allow 14 days for delivery. If you require a publication more urgently,
please let us know. More details may be found on our website www.ibe.org.uk
63
64
PRESIDENT: Sir Peter Walters
VICE PRESIDENTS: The Baroness Howe of Idlicote, Sir Sigmund Sternberg
CHAIRMAN: Chris Moorhouse
DIRECTOR: Philippa Foster Back OBE
RESEARCH DIRECTOR: Simon Webley
TRUSTEES: Harry Branchdale, Dr Jane Collier, Tim Cullen, Janet Haber,

Martin Le Jeune, Archie Robertson, Michael Turner-Samuels
ADVISORY COUNCIL: Lord Carey of Clifton, Sir Alistair Graham, Stephen Green, Dr Peter Harper,
Elizabeth Filkin, Sir Paul Judge, Raj Loomba, George Mallinckrodt KBE,
Tim Melville-Ross CBE, Kate Nealon, David Pritchard, James Ross,
Sir Robert Worcester
The Institute of Business Ethics was established in 1986 to encourage

high standards of corporate and business behaviour and the sharing of
best practice.
www.ibe.org.uk
How might marketers be effective
without compromising their
organisation’s ethics policy?
Using examples of marketing campaigns that have clearly
crossed ethical lines or raised broad ethical dilemmas,
this report will raise awareness of the ethical challenges
that a marketing function faces.
Based on interviews with companies and experts,

Marketing Responsibly will help senior business people,
Heads of Marketing, ethics and corporate responsibility
practitioners and Compliance Officers to understand the
scope of the challenges confronting the marketing
operations within their businesses.
The author looks at where ideas of what is responsible

marketing originate, and explores issues such as
marketing across cultural boundaries, controversial
products, pricing issues and marketing to children.
The practical guidance in this report will help marketers

avoid the damage to reputation and to market share that
comes with bad practice.
All rights reserved. No part of this book may be

reproduced or transmitted in any form or by any
means, electronic or mechanical, including
photocopying, recording or by any information
storage and retrieval system, without permission in
writing from the publisher.
Designed and produced by Designline, Havant
Price £25 ISBN 0 9562183 1 5
Text and cover pages printed on: Zanders Mega Matt - Sourced from sustainable forests, total chlorine free, recycled fibre in furnish

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Marketing

Published by The Institute of Business Ethics,

The Institute of Business Ethics (IBE)

Today it leads the dissemination of knowledge and good practice in business

We raise public awareness of the importance of doing business ethically, and

We help organisations to strengthen their ethics culture to encourage high

We facilitate the sharing of good practice in business ethics.

We achieve this by:

The IBE is a registered charity, supported by subscriptions from businesses

Through their donations, IBE subscribers help to promote ethical business

Institute of Business Ethics

Telephone: 020 7798 6040

Registered Charity No. 1084014

First published November 2009

A list of publications that have resulted from IBE research, surveys,

Author and Acknowledgements 4

Chapter 2. Crossing the Ethical Line 14

Chapter 3. Managing Ethical Dilemmas 21

Chapter 4. Responding to Wider Challenges 40

Appendices: 1: A decision framework for marketers 47

Author Mallen Baker is a writer, speaker and strategic advisor on corporate

All successful brands are built on a relationship of trust with consumers.

That is why we have included responsible marketing in L’ORÉAL’s global Code of

L’Oréal is a worldwide leader in the cosmetics industry, developing innovative

• business managers wanting to understand the challenges faced by the

Included is a set of practical recommendations and a decision framework which

Discussions between the author of this report and a number of different

However, there is a growing body of history regarding the development of just

Controversial marketing can be defended, of course, with the “there’s no such

The changing agenda on responsible marketing means that it is no longer

This report focuses on the intersection of business ethics and marketing

Throughout the report, practical examples of company experience drawn from

This report is in 5 chapters.

The appendices provide examples of how marketers have tried to express

1 Marketing and Ethics

Marketing and Ethics

The selling model focuses on price and promotional activities. However, at a

A company’s response to the needs of its customers, and the business

The scope of marketing is embedded throughout the business. It is across this

Often described as the foundations of marketing, or the ‘marketing mix’, are

2 Example taken from ‘Introduction to Marketing’, Lars Perner PhD, at

Fig 1. Headline ethical challenges relating to the marketing mix

Ethical challenges Ethical challenges

Box 1: Issues explored in this report related to the marketing mix

2. Where do ideas of responsible marketing come from?

In addition to dealing with customers and consumers responsibly and with

This reflects a change in what marketing is expected to achieve. So long as

If the line between what is considered as responsible and what is not is

In addition, marketers are covered by a raft of legal provisions relating to the

Professional codes Different professional marketing associations have codes of ethics/conduct

One of the most significant is the International Chamber of Commerce’s

In addition, professional codes have been developed in a number of countries

• Honesty – aiming for communications to be truthful and for the company to

Of those codes that do include commitments regarding marketing, very few

Appendix 3 of this report illustrates some of these commitments in examples

2 Crossing the Ethical Line

• The claimed features or benefits should be able to be substantiated.

Box 2: False claims and false alarms

The UK’s advertising regulator, the Advertising Standards Authority, banned