Ethics In Marketing

by
Aniket K. Kulkarni
Roll No:- MT14IND003
Industrial Engineering (2014-15)
Mechanical Engg. Department
VNIT Nagpur

WHAT IS ETHICS?
It is the art and science of determining good and
bad or right and wrong moral behaviour.
Ethics are moral guidelines which govern good
behaviour. So behaving ethically is doing what is
morally right.
Behaving ethically in Marketing is widely
regarded as good Marketing practice.

Ethics In Marketing
K.Kulkarni

Aniket

An important distinction to remember is that

behaving ethically is not quite the same thing as
behaving lawfully.
Ethics are about what is right and what is wrong.
Law is about what is lawful and what is unlawful.

An ethical decision is one that is both legal and

meets the shared ethical standards of the community.
Ethics In Marketing
K.Kulkarni

Aniket

What Is Marketing?
Marketing is about identifying and meeting human and
social needs.
meeting needs profitably.
Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering, and
exchanging offerings that have value for customers,
clients, partners, and society at large (American
Marketing Association).
Process by which companies create value for customers
& build strong customer relationships in order to
capture value from customers in return.
Ethics In Marketing
K.Kulkarni

Aniket

Marketing Ethics
It is the area of applied ethics which deals with the
moral principles behind the operation and regulation
of marketing.
Ethics in marketing applies to different spheres such
as in Marketing segmentation, Marketing research,
Product packaging, Pricing, Distribution, Personal
selling, Advertising & promotion.

Ethics In Marketing
K.Kulkarni

Aniket

Why we need Ethics in Marketing?

We can give many reasons but will notify some:
When an organization behaves ethically,
customers develop more positive attitudes about
the firm, its products, and its services.
To create Values or trust with key stakeholders.
To build good image about the organization in the
minds of customer, employees, shareholders and
the society.
Ethics In Marketing
K.Kulkarni

Aniket

Ethical issues in marketing

Ethical issues in Marketing Research.

Ethical issues in Marketing segmentation.
Ethical issues in Product Packaging.
Ethical issues in Pricing.
Ethical issues in Advertising & Promotion.
Ethical issues in Distribution.
Ethical issues in Personal Selling.

Ethics In Marketing
K.Kulkarni

Aniket

Ethics of Marketing research

Ethics in marketing research refers to moral
principles that researcher or research organization
should consider.
Generally three parties are involved in marketing
research:
The client who sponsors the research project.
The supplier who designs & executes the
research.
The respondents who provides the information.
Ethics In Marketing
K.Kulkarni

Aniket

Ethical issues in Marketing research

Information or data collected from respondents
should not used for other purpose or for other
research work.
Researcher should not force any respondents for
answers.
Protection of data or confidentiality of data.
In case of personal or sensitive questions,
researcher should give enough time to
respondents to think about it.
Ethics In Marketing
K.Kulkarni

Aniket

Continues..
Proper, unbiased and accurate information
collection.
Invasion of privacy (e.g. obtaining research data
without permission).
Stereotyping (drawing unfair or inappropriate
conclusions).

Ethics In Marketing
K.Kulkarni

Aniket

10

Ethical issues in Marketing segmentation

Ethical danger points include:
Excluding potential customers from the market
(e.g. discouraging demand from undesirable
market sectors or simply refusing to sell to certain
customers).
Examples of unethical market segmentation or
selective marketing are past industry attitudes to the
gay, ethnic minority etc.
Ethics In Marketing
K.Kulkarni

Aniket

11

 Targeting the vulnerable (e.g. children, the

elderly).
Children are not capable of resisting or
understanding marketing tactics at younger ages
(children don't understand persuasive intent until
they are eight or nine years old).
In the case of children, the main products are
unhealthy food, fashion ware and entertainment
goods. Children are considered as lucrative market.
Ethics In Marketing
K.Kulkarni

Aniket

12

 Marketing in schools is a widespread phenomenon in

which schools sign contracts allowing certain
businesses to conduct marketing activities in school
facilities - primarily advertising. For example, a
school might allow only one brand of soft drink to be
sold in vending machines on the campus; in return,
the soft drink company would provide compensation
to the school (frequently money, but it may provide
other compensation as well, such as building new
facilities or paying for school supplies).
Ethics In Marketing
K.Kulkarni

Aniket

13

Ethics of Product Packaging

Packaging is a crucial element in the marketing of a
product, as it is essentially the casing that the
product comes in. So after all the advertising and
promotion, when customers go to the store and pick
up the product, it is only the packaging that they see,
smell, and touch. It is thus extremely important for
the marketer to ensure that potential customers like
what they see. The packaging should be appropriate
to the product, and induce customers to buy it.
Ethics In Marketing
K.Kulkarni

Aniket

14

Ethical issues in Product Packaging

Problems With Label Information: Sometimes
marketers use label information to mislead
consumers by providing untrue information to
exaggerate the attributes of their product. Labels
that display nutrition information like low fat, fat
free, cholesterol free, and 100% pure juice are
examples.
Problems With Packaging Graphics: There are
many cases in which marketers use pictures in
packaging that do not represent the actual product.
Ethics In Marketing
K.Kulkarni

Aniket

15

Continues..

Ethics In Marketing
K.Kulkarni

Aniket

16

Continues..

Ethics In Marketing
K.Kulkarni

Aniket

17

Continues..

Problems With Packaging Safety: Consumers are

concerned with packaging safety issues, especially
when it comes to products for children. Marketers
should avoid unsafe packaging that uses high
ingredients of chemicals that are unsuitable for
young children and are not tamper-proof.
Problems With Environmental Issues: Some
marketers tend to label their products as
environmentally friendly. However, the products
actually do not have environmentally friendly
attributes.
Ethics In Marketing
K.Kulkarni

Aniket

18

Ethics of Pricing
Economist defines price as the exchange value of a
product or service always expressed in money.
The amount a customer pays for the product.
The price is very important as it determines the
company's profit and hence, survival. Adjusting the
price has a profound impact on the marketing strategy,
and depending on the price elasticity of the product,
often it will affect the demand and sales as well. The
marketer should set a price that complements the other
elements of the marketing mix.
Ethics In Marketing
K.Kulkarni

Aniket

19

List of unethical pricing practices

Bid rigging
Dumping (pricing policy)
Predatory pricing
Price discrimination
Price gouging
Price fixing
Price skimming
Price war
Supra competitive pricing
Variable pricing
Ethics In Marketing
K.Kulkarni

Aniket

20

Continues..

Bid rigging:
Illegal conspiracy in which competitors join to artificially
increase the prices of goods and/or services offered in
bids to potential customers.
Dumping (pricing policy):
In economics, "dumping" is a kind of predatory pricing,
especially in the context of international trade. It occurs
when manufacturers export a product to another country
at a price either below the price charged in its home
market or below its cost of production.
Ethics In Marketing
K.Kulkarni

Aniket

21

Continues..
Predatory pricing
Predatory pricing (also undercutting) is a pricing
strategy where a product or service is set at a very low
price, intending to drive competitors out of the market,
or create barriers to entry for potential new
competitors. If competitors or potential competitors
cannot sustain equal or lower prices without losing
money, they go out of business or choose not to enter
the business. The predatory merchant then has fewer
competitors or is even a de facto monopoly.
Ethics In Marketing
K.Kulkarni

Aniket

22

Continues..

Price discrimination: Price discrimination or price

differentiation is a pricing strategy where identical
or largely similar goods or services are transacted
at different prices by the same provider in
different markets or territories.
Price fixing: It is an agreement between
participants on the same side in a market to buy or
sell a product, service, or commodity only at a
fixed price, or maintain the market conditions
such that the price is maintained at a given level
by controlling supply and demand.
Ethics In Marketing
K.Kulkarni

Aniket

23

Continues..
Price skimming is a pricing strategy in which a
marketer sets a relatively high price for a product
or service at first, then lowers the price over time.
Price war is "commercial competition
characterized by the repeated cutting of prices
below those of competitors".

Ethics In Marketing
K.Kulkarni

Aniket

24

Continues..
price gouging - pricing above the market price
when no alternative retailer is available.
Variable pricing is a pricing strategy for products.
Traditional examples include auctions, stock
markets, foreign exchange markets, bargaining
and discounts.

Ethics In Marketing
K.Kulkarni

Aniket

25

Ethics of Advertising & Promotion.

There is no doubt that advertising attracts all of us
in number of ways, but there are also number of
controversies associated with advertising.
Advertising is primarily a means by which sellers
communicate The worth of their goods and
services to prospective buyers.

Ethics In Marketing
K.Kulkarni

Aniket

26

Ethical issues in Advertising &

Promotion
Advertising Should not mislead the consumer.
What it promises must be there in the
performance of products.
Ads. should not be indecent and obscene.
As advertising is also a social process, it must
honour the norms of social behaviour, and should
not offend our moral sense.

Ethics In Marketing
K.Kulkarni

Aniket

27

Unethical Issues in Advertising & Promotion

Advertising is a highly visible business activity and
any lapse in ethical standards can often be risky for the
company.
Vulgarity/Obscenity used to gain consumers
attention.
Misleading information and deception.
Puffery.
Stereotypes.
Racial issues.
Controversial products (e.g. alcohol, gambling,
tobacco etc.).
Ethics In Marketing
Aniket
K.Kulkarni

28

Fake adds.

Ethics In Marketing
K.Kulkarni

Aniket

29

Exaggerated ads.

Ethics In Marketing
K.Kulkarni

Aniket

30

Ethics In Marketing
K.Kulkarni

Aniket

31

Racial issues in ads.

Ethics In Marketing
K.Kulkarni

Aniket

32

The ad starts with the host asking a young contestant the

question, Kohima city is part of which country?
A.China, B.Nepal, C.India, D.Bhutan The contestant
opts for an audience poll, a life-line in the game show,
where 100% of the respondents say India. Its India,
everyone knows this answer, says Amitabh Bachchan,
to which the young contestant replies: Everyone knows
the answer, but how many people actually acknowledge
it?
Ethics In Marketing
K.Kulkarni

Aniket

33

Unethical issues in promotion

Offers of additional gift items (bonuses)

Discounts
Free offers.
Distribution of discount vouchers, coupons and
samples.
Using personalities for sales promotion.
Linking charity purposes with sales promotions.
Consumer contests and lotteries.
Ethics In Marketing
K.Kulkarni

Aniket

34

Continues..

Ethics In Marketing
K.Kulkarni

Aniket

35

Continues..

Ethics In Marketing
K.Kulkarni

Aniket

36

Unethical issues in Distribution.

Powerful supermarket chains often demand

payments from producers (slotting allowances) to
ensure that their products will have shelf space in
supermarkets. Many supermarket operators also
demand
pay-to-stay
fees
payments
to
supermarkets by producers to keep their products
on the shelf.

Ethics In Marketing
K.Kulkarni

Aniket

37

Continues..
The gray market also raises ethical issues. The
gray market is unauthorized intermediaries that go
around authorized marketing channels by buying
in low- price from wholesaler and reselling in
markets at lower prices than those charged by
authorized channel members.
e.g. Importing and selling Apple products in
countries such as South Korea where official Apple
retail stores aren't present.
Ethics In Marketing
K.Kulkarni

Aniket

38

Continues..
One ethical issue that arises in connection with
distribution is the use of power by a channel
leader.
Conflicts that arises between different levels or at
the same levels within the same channel .
e.g.HUL came into conflict with its distributers
in Kerala on the issue of commissions.

Ethics In Marketing
K.Kulkarni

Aniket

39

Unethical issues in Personal Selling

Misrepresentation.
Deception: Deliberately presenting inaccurate
information, or lying, to a customer is illegal.
Bribes, gifts and entertainment: Bribes are
payments made to buyers to influence their
purchase decisions.
Kickbacks are payments made to buyers based on
the amount of orders placed.
Ethics In Marketing
K.Kulkarni

Aniket

40

 High-Pressure Selling: High Pressure Selling is

defined as a extremely aggressive behaviour by an
salesperson to convince a consumer to purchase
the product or service without due regard for the
consumers ability to pay and/or needs for the
product or service.

Ethics In Marketing
K.Kulkarni

Aniket

41

 Kotler, Philip, Keller, Kevin Lane,

Koshy, Abrahan, & Jha, Mithileshwar.
(2009). Marketing Management (13th
ed.). Dorling Kindersley: pearson
education in south asia.
https://www.boundless.com/marketing/textbooks
/boundless-marketing-textbook/social-responsi
bility-ethics-in-marketing-16/ethics-in-marke
ting-102/issues-in-marketing-502-10770/
http://en.wikipedia.org/wiki/Marketing_ethics
http://www.slideshare.net/clawtin09/marketing
-ethics
Ethics In Marketing
K.Kulkarni

Aniket

42

THANK YOU

Ethics In Marketing
K.Kulkarni

Aniket

43