What are several examples of unethical behavior in marketing and their consequences? A. Misleading Advertising B. Exploitation C. Pushy Sales Tactics IV. Conclusion “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself. ” – Peter Trucker, Management consultant Today, it seems as though everyone is aware of ethics, and what ethical values he or she holds and how they apply to their everyday life. Similarly, many companies are changing their structures, training their staff and defining the high importance and expectations when it comes to ethics in business, specifically marketing.
Over the many years that businesses have advertised products and services, advertising has gained the general reputation of being dishonest or in some cases adversarial. However, all marketing is not adversarial or stacked in favor of the marketer. A very popular view of marketing in an article from the contact Corporation website called “Marketing Ethics” makes the stated how marketing ethics in general “is inherently evil, with little truth or outrageous claims that are designed to generate sales. One of the best examples of this is the products promoted on late night television in infomercials.
Products that claim overnight wrinkle reduction, hair growth for those experiencing early pattern baldness, or instant weight loss are commonly viewed as unreliable at best and a total scam at their worst” (2014). However, in order to have a fundamental understanding of what unethical marketing is one must understand what constitutes ethics in marketing, what are some of the laws and code of ethics that protect unethical practices, and what are some examples of unethical behavior n marketing and their consequences.
To get a better understanding what constitutes unethical marketing, let us take a look at what marketing ethics mean. Penn (2012) stated “marketing ethics” is a standard by which moral principles are considered within the marketing profession and execution of an advertising campaign or overall strategy for a business and/or organizations. He continued to discuss, the reason we look to the field of applied ethics is that by definition, marketing is working with a large number of people, and attempting to define right and wrong or good and bad is an exercise in futility.
Rather, we have to look to the people we are serving and try to match what we do to the greatest good for them as we understand it (Penn, 2012). As we have learned marketing creates a competitive advantage between organizations in order to keep current customers and acquire new customers; companies should also be focused and aware of the wants and needs of their customers. By focusing on the long term interests of their customers, using good marketing techniques and acting ethically while doing so helps a business to be as successful as possible.
Unfortunately, many organizations today still act unethically. So the question then one must ask is, what are some of the laws and code of ethics that protect unethical practices? Ethical guidelines are critical to establishing a trustworthy reputation in the marketing industry. Enforcing the guidelines is critical for maintaining the reputation and business (Dean, 2010). The Federal Trade Commission and the American Marketing Association have made laws and codes that specifically deal with unethical issues in marketing.
Let us first discuss the Federal Trade Commission, it was formed in 1914 and its overall goal is prevent business practices that are anti-competitive, exceptive or unfair to consumers; also to enhance informed consumer choice and public understanding of the competitive process; and finally to accomplish this without unduly burdening legitimate business activity (The Federal Trade Commission, 2014). Dean (2010) in an article called “Ethical imperatives off marketing company’ pointed out that “The Federal Trade Commission’s Bureau of Competition enforces the nation’s antitrust laws, which form the foundation of our free market economy.
The antitrust laws promote the interests of consumers; they support unfettered markets and result in lower prices and more choices. We can see that the Federal Trade Commission’s Bureau of Competition protects not only consumers but businesses as well from exploiting marketing strategies that create an unfair advantage by enforcing the laws and ethical guidelines. Another agency that provides a code of ethics that protects against unethical marketing is the American Marketing Association.
The roots of the American Marketing Association (AMA) can be traced to the early sass’s when the National Association of Teachers of Advertisers and American Marketing Society, comprised of marketers and marketing researchers, merged to ring together all marketers, across all specialties to collaborate and inspire one another (American Marketing Association, 2014). The article continues to discuss how the AMA commits itself to promoting the highest standard of professional ethical norms and values for its members (practitioners, academics and students).
Below are some examples of ethical norms and values: ETHICAL NORMS As Marketers, we must: Do no harm. This means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make. Foster trust in the marketing system. This means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, and delivery of distribution.
Embrace ethical values. This means building relationships and enhancing consumer confidence in the integrity of marketing by affirming these core values: honesty, responsibility, fairness, respect, transparency and citizenship. ETHICAL VALUES Honesty – to be forthright in dealings with customers and stakeholders To this end, we will: Strive to be truthful in all situations and at all times. Offer products of value that do what we claim in our communications. Stand behind our products if they fail to deliver their claimed benefits.
Honor our explicit and implicit commitments and promises. Responsibility – to accept the consequences of our marketing decisions and strategies Strive to serve the needs of customers. Avoid using coercion with all stakeholders. Acknowledge the social obligations to stakeholders that come with increased marketing and economic power. Recognize our special commitments to vulnerable rarest segments such as children, seniors, the economically impoverished, market illiterates and others who may be substantially disadvantaged.
Consider environmental stewardship in our decision-making. It is understood that the main goal of the Mama’s statement of ethics is to help the industry understand the code of ethics and to provide businesses with the proper usage of the ethical norms and ethical values. We have looked at how the Federal Trade Commission and the American Marketing Association provide guidelines, code of ethics and laws to prevent and instill ethical business practices in organizations. Let us now take a look at some examples of unethical behavior in marketing and their consequences.
Burrow (2014) has indicated that ethical marketing involves making honest claims and helping to satisfy the needs of customers. Besides being the right thing to do, ethical marketing can have significant benefits for your business. For example, if customers believe you’ll live up to your word, brand loyalty will develop, customer retention will increase and your customers will tell others of their good experiences. If this is the case then why do organizations and/or businesses persist n having unethical marketing behaviors?
Mack (2014) goes into detail in his article called “Unethical Activities in the Field of Marketing” on how unethical marketing activities, in contrast, can destroy your business’s reputation and possibly lead to legal troubles. He goes on to discusses and provide a few examples of unethical marketing activities: Misleading Advertising – Outright false advertising is illegal. For example, reporting that your product is safe for people to use when it isn’t can land you in serious trouble. Misleading advertising might not rise to the level of false advertising, but it’s unethical and can hurt your reputation with the public.
For example, if you claim your product is much better than it actually is, your company will appear untrustworthy. While it’s important to put your best foot forward in marketing, avoid crossing the line by making dishonest or exaggerated claims. Exploitation – Manipulating people by exploiting their fears is unethical. For example, exaggerating the risks people face so you can sell them insurance is a form of manipulation, as is tricking your customers into buying overpriced or useless extended warranties. This approach is called the “fear-sell” tactic and is especially immoral when it targets people who are disadvantaged in some way.
For example, the fear-sell tactic is often used by insurance salesmen to trick low-income earners into buying unnecessary insurance. Pushy Sales Tactics – It’s a salesperson’s Job to convince customers to buy a product, but being overly aggressive is unethical. For example, suppose a customer seems interested in a purchase but asks for more time to consider the deal. An unethical salesperson might bully the customer into making a quick decision, perhaps by lying about how the deal will expire soon or how another customer is interested in the same item.
The line between being persuasive and being a bully isn’t always clear, so it’s more ethical to focus on helping customers make informed decisions rather than focusing on making the sale at any cost. There are many more examples of unethical behavior in marketing but we can see from the above examples that unethical behavior in marketing can be both illegal and immoral. It is no wonder why we have the Federal Trade Commission making laws and American Marketing Association providing code of ethics for organizations and business to abide by.
It is unfortunate that many businesses and/or organization practice unethical behavior in order to get an unfair advantage on the competition. As many more businesses compete against each other for the market it is unlikely that unethical behavior will be going away any time soon. It is up to the consumers that are victimized and those employees that see unethical acts that need to stand up and turn in those businesses in. In the meantime all we can do is hope and have faith that businesses and/or organizations are aware of the laws and code of ethics and act responsible and ethically when dealing with consumers and each other.