Joseph Heath discusses two Canadian bear companies & argues that they should scale back their

advertising expenditures. "Until they are eliminated completely."(2014, P.12-13) Analyze his
market failure approach & explain why he believes they should eliminate advertising
expenditures. Do you agree with him or not?

Introduction:
The prevalent advertisement in our daily lives drives us to question its moral list of fact. It is believed that
advertising is one of the key factors of any contemporary marketing plan’s success and has an impact on
the consumer and the market systems. It is an important issue, which raises considerations of the business
ethical environment at large. This part of the article contains a philosophical perspective on the issue of
advertising market failures and considered by Joseph Heath, a professor of philosophy, and continued that
enterprises should cease funding the advertising until it ceases to occur. Heath also opposes deceptive and
obtrusive techniques because they harm the efficiency in markets, consumer choices, as well as the
broader society. This paper is going to attempt to evaluate Heath’s market failure approach and why he
wants to excluded all costs on advertising. It will also provide an assessment of the consequentialist
theory, as well as the market failures approach to business ethic which underpinned Heath. Last but not
least, I would like to express my opinion on the subjects, which like Heath, I am in agreement that
manipulative advertising must be criticized, while, on the other hand, I comprehended that it is
informative advertising is required for an efficient market operation. Last, the essay will discuss the
critique to Heath’s argument and the one presented here in chapter to determine the ethicality of
advertising in the present business world.
Unpacking Heath's position will in turn require an engagement with two of the primary modes of ethical
analysis, namely consequentialism and the market failures approach. In Section 1, I will discuss the
Ethics of advertising, theoretical framework of consequentialist theory and the market failure approach to
business ethics. Section 2 will examine Heath's specific arguments against advertising. In Section 3, I will
present my position on advertising, supported by examples and references from the Moodle texts. Finally,
Section 4 will address objections to both Heath's and my own perspectives, providing a comprehensive
analysis of the issue. This essay will try to be fair and square and to relate both part of this argument
before offering a simple conclusion.

Section-1:
The Ethics of Advertising
Due to the availability of advertisements in our everyday life, it is essential to consider the ethical aspect
of it. This paper aims to explore the issues related to the advertising ethics and to do so it will compare
and contrast Joseph Heath’s market failure approach and a consequentialist thinking. We will then discuss
my impression on the ethicality of advertisement, bearing in mind on the positive impacts it has and the
negative impacts it has as well.
Consequentialism and Business Ethics
Consequentialism is one of the most important and influential ethical theories, which examines the
rightness or wrongness of an action depending on its consequences. Ethical action according to
(Shaw,W.D, 2007, pp. Moodle Text-1) is defined by the fact that it generates the maximum possible
utility to the maximum possible number of users. Both the teleological and utilitarian approaches of
Business Ethics means that businesses should aim to do what is better for society regardless the fact that it
may cost some money in the short-term. For instance, the company may decide to avoid polluting a river
even though it adds to the cost of production, because the latter does not pay in the long run while the
environment does.

The Market Failures Approach

More specifically, in his book called Morality, Competition, and the Firm: The Market Failures
Approach to Business Ethics (Joseph Heath, 2014) Heath explains why market failures are the right
solution in business ethics. This view presupposes that markets are efficient in their provision of
resources for the consumption and in the protection of consumers. However, due to market imperfections
such as information problems and externalities the efficiency of provision of resources is not perfect.
Heath also points out that advertising may also amplify these market failures and lead to efficient points
too. (Joseph Heath, 2014)

Section-2:
Heath's Critique of Advertising
Heath asserts that through advertising, it becomes the responsibility of the consumers to wade through
heaps of slanted and insufficient info. This may result in the perpetration of fake and misleading
advertisements and consumers being left stranded when trying to make their decisions based on the
information they receive. Moreover, he also explained that usually the process of advertising produces
unwanted side effects like social pressure and consumerism which are also not good for people’s welfare
or values as a society. For instance, flawed advertisement content such as that which encourages the
consumption of unhealthy foods is likely to lead to obesity and related diseases. (Joseph Heath, 2014)

Section-3:
My Position on Advertising Ethics
Although, Heath has also listed some serious negative repercussions of advertising, I do not personally
think that it is ethically right to completely ban advertisements. Here's why:

Consumer Information and Choice: Clearly, advertising can help to educate customers on products
and services and make their choices greater and the market more competitive. (Kotler, P., & Keller, K.
L. , 2016) This can make consumers more informed on aspects such as the type of product they want to
buy thus efficiently allocating resources in the Market. Let’s assume a world with minimal advertising –
customers may not be able to identify the products that correspond to their requirements in the best
possible manner, and this may lead to unnecessary utilizations of resources and customer discontentment.
Innovation and Competition: Through the advertising process, people become informed of new
products in the market, and this puts pressure on firms to perform better and produce better goods (Shaw,
W.D., 2014, pp. Moodle Text-3). This gives consumers access to better quality products at discounts
resulting in more products being available in the market. For example, the availability of smartphones for
advertising purposes has catalyzed competition among manufacturers thus pursuing innovation in making
more advanced and diversified hi-tech options in the market with a relatively lower price tag.

Funding Media: Advertisement-income is another major funding source for media and entertainment
(Rosati, F., 2016, pp. Moodle Text-4)This revenue aids to produce various content, sustain free media,
and make people informed by releasing information and opinions. This is especially the case for many
media outlets, that, while they may have a very loyal client base, would not be able to sustain themselves
solely off of advertising revenue alone. All information sources may someday become paid – paid
subscriptions eliminate variety and critical perspectives can become scarce and put a brake on progress.

Finding the Balance

Arranging for advertising and socially responsible advertising will help to reduce the negative impact of
advertising. There is a possibility for self-regulating bodies to tighten rules for advertisers and enforce
anti-deception rules to protect consumers. Ethical theories can help direct advertisement towards the
honest, polite, and non-DECEPTIVE means of persuasion. For example, the American Association of
Advertising Agencies (AAAA) has developed a code of conduct which calls upon its members to act
responsibly to society and to advance the culture of the right values (American Associations of
Advertising Agencies, 2016, pp. Moodle Text-5). For instance, Patagonia having concentrated on the
protection of the environment in their advertisements, and Dove’s “The Campaign for Real Beauty” that
encourages women to accept their bodies as they are show that advertising can do good. These examples
show how advertising as an instrument can convey crucial messages, appeal to the higher conscience, and
even stimulate the audience to make the right choices of products. It is in line with the consequentialist
approach to business ethics where the emphasis is placed on the greatest human good. However, it is also
crucial to note that advertising may employ images that reinforce negative stereotyping or endorse
undesirable commodities. In this case, it is important for the regulatory agencies and consumers in the
countries to stand up and act. Advertising can be regulated since this is an efficient way of making sure
that advertising is not misleading to the public. Consumers, as they are informed of the biases and other
persuasive tactics used.

Section-4:
Justification of My Perspective
The nature of the world of advertising is one of the interesting ethical dilemmas. On the one hand, it can
turn into a valuable trend, which would help consumers learn about new solutions and promote active
development of the market. While it has the potential to bring positive change, it also has the potential to
become an oppressive tool that takes advantage of weaknesses and twists options. In terms of values and
beliefs, I can be considered liberal leaning utilitarian where the effectiveness of the advertising message
and its impact of consumers should be used for the benefit of the society.
I absolutely agree with the utilitarian principles as a foundation for the belief that certain methods of
persuasion used in advertising that manipulate or deceive consumers and which in the end have a negative
impact in society are inherently unethical. While ethical advertising should not mislead or manipulate the
consumers but instead should help to guide the consumers by providing them with the necessary
information to enable them make the right choices in the society.

This aligns with two key ethical frameworks: consequentialism, a utilitarian approach that is aimed at
achieving the most benefits, and the market failures approach that aims at tackling imperfection in the
market. Here, it is useful to rely on Joseph Heath’s work. His analysis provides clarity on issues such as
misleading advertisements, and issues to do with information asymmetry where the consumer does not
have the required information. Heath also focuses on the ethical obligation of firms not to take advantage
of this loss of perfect information and enhance market failures. (James Rachels, 1986)

By following these principles, the firms can contribute towards achieving a higher level of market
transparency. To consumers this enables them to make the right decisions, to society as a whole it creates
an efficient and responsible market. The message here is not that advertising should be removed from the
world completely; instead, its purpose should be refocused so that it positively contributes to the world by
encouraging advances in technology and improvements of social welfare.

Discussing Objections
One potential objection to my position is that advertising is a necessary tool for businesses to differentiate
their products and compete effectively. A possible response to my arguments is that advertising is an
essential means by which firms can communicate their product’s value and the competitive position of
their products. People supporting this view have argued that were it not for advertising, the consumer
would not have adequate information that would enable him or her to make adequate decisions with
regard to the available products, further indicating that the market would indeed be less competitive. For
example, many engineers in Canada wear an iron ring on their little finger, which is conferred during a
ceremony called “The Ritual of the Calling of an Engineer (Rudyard Kipling, 1925)

Even if one may concede to providing information, this objection addresses the issue of informative and
non-informative advertising. Thus, I would like to underline that informative advertising that actually
informs customers about product’s characteristics, advantages, and prices is indeed useful and complies
with the ethical standards. However, the critique is with regard to pointless as well as deceptive
advertising that form the goal of swindling the buyers instead of enlightening them. Also, shareholders
can create impact on advertising. The manager’s responsibility toward the shareholder is clearly restricted
to the latter’s investment returns. Or, as Friedman puts it when he is being careful, the responsibility of
managers is “to make as much money for their stockholders as possible” (Friedman, 1962)

Joseph Heath directly mentions the type of advertising that does not contribute to the overall knowledge
of consumers, but rather manipulate their emotions and ability to choose a product based on a brand
loyalty. Heath points out that such advertising creates “advertising externalities” which result to
“deadweight losses” whereby huge resources are channeled towards producing signs of competition that
do not benefit the consumer in the form of better quality or cheaper prices but serve to switch market
share between organizations. Such advertising makes costs higher and the market less efficient, thus
negating any advantage resulting from real product differentiation. (Joseph Heath, 2014)
Also, Heath’s perspective is work in harmony with the consequentialist theory of business ethics,
particularly the utilitarianisms whereby actions are measured by their consequences. Thus, non-
informative advertising, which creates the conditions leading to the increase of prices without any
proportional growth of their quality and, in fact, contributes to the net loss of welfare, cannot offer
solutions adhering to the utilitarian principles of happiness and well-being. As a result, Heath is right to
take such a stand against this kind of advertising on both moral and fiscal grounds.
Another argument which could be raised in the discussion is that advertising operates within the frame of
consumer demand/choice. Consumers have to react positively to some forms of advertising if
organizations are to spend money on them. Such a market-oriented view indicates that advertisement
activities are actual reflections of people’s behaviors, not issues confusing ethical.

This argument overlooks the realities of authority and subordination between businesses and the general
public. Through various forms of marketing strategies, consumption trends and habits can be influence by
business organizations, a fact that might be unbeknownst to the consumer. Heath also stress that Madlin
saw that advertising relies on cognitive biases and psychological weaknesses hence impersonating the
consumers instead of reflecting them. (Joseph Heath, 2014) For example, consistent advertising can make
consumers develop a perception that they are familiar with it and hence will be trust worthy even if they
have not interacted with the product before.

In addition, advertising can lead to the creation of unnecessary wants because it persuades individuals to
adopt certain standards, goals, ethics and even norms that are not always in their best interest. This occurs
especially in sectors such as clothing and beverages or cosmetics since the commercials disseminate
values and role models that foster the culture of consuming more and more, even when it is not necessary.
The MFA puts business ethics in its rightful context: ‘‘one cannot do business ethics without some
appreciation of what justifies the system of private enterprise. We need to understand why corporations
should be entitled to pursue profits, in order to understand the responsibilities of managers.’’ (Joseph
Heath, 2014) From a consequentialist point of view, these manipulative actions lead to a decrease in
utility by promoting materialism and discontent whereas, according to utilitarianism, it is to increase
pleasure.

Moreover, Heath has employed real life behavior observation from the study of behavioral economics in
an attempt to show that in some circumstances, advertising makes people act irrationally. For instance,
people have been found to incline to those products that are publicized frequently, even when the
products that are advertised extensively are not necessarily the best or most suitable for the consumer’s
needs. (Joseph Heath, 2014). This manipulation goes against the behavioral assumption that consumers
make rational choices, the bedrock of efficient and fair markets.
Conclusion:
The adverting ethical dilemmas can be a complex and challenging act to balance properly. Technology
can enlighten consumers with innovation or take advantage of opportunities with manipulation. From the
utilitarianism ethical model, and based on the supreme importance of the consumer and the society, I still
maintain. Through ethical advertising which supports both the consequentialism and the market failure
approaches, consumers are educated and a more transparent market is created. Think about it, the sounds
of advertising as a symphony and not a disruptive noise and taking consumer into a journey through
knowledge and experience while allowing the market to grow through innovation that continuously
empowers the consumers. This ethical symphony is a two-fold win for companies and for customers and
society as a whole, creating a richer and fairer world.

References:
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James Rachels, 1986. The Elements of Moral Philosophy. s.l.:Temple Univ Pr.
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Rosati, F., 2016. Media and Advertising.. [Online]
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