Ethics and Marketing

Unit III

Code of ethics in marketing - AMA

AMA has established a code of ethics to provide guidelines for ethical conduct. It says in part that Marketers shall uphold and advance the integrity,honour and dignity of the marketing profession , by being honest in serving consumers , clients, employees, suppliers, distributors and the public.

ETHICAL NORMS as per AMA

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 dilemmas in marketing

Two acute problems emerge from the definition of ethics
Society is not homogenous in ethical values Ethical values are not fixed and unalterable, they change overtime.

Notions of ethics change vary from group to group from time to time. E.g. exposure of children to television advertising ,gaps in legal system which might not be ethical always.

Unethical marketing practices

Unethical marketing practices can exist in the whole marketing system, as an integral part of goals, methods and results of marketing activity. Can comprise of various areas as follows Public relations Issues related to lobbying Concern over privileged position of third parties

 Advertising :

Failing to provide information Deceiving consumer Exhibiting poor taste Penetrating the wrong values (hedonism, excessive consumption) Adding to the cost of products Excessively Influencing particular audiences such as children or the poor Exaggerated claims Tasteless advertising Inappropriate targeting Deceptive ads Persuasive role models and nave audiences

 Personal selling Area of criticism for less importance Subject of scrutiny by buyer and seller organizations

Product
Safety :manufacture of flammable products Shoddy goods Inadequate warranties Environmental pollution Mislabeled products Brand knock offs counterfeit products

 Packaging and labeling Irregularities of package size and shape Provision of intelligible labeling information Ecological issues like recycling Pricing practices
Excessive markups Price differentiation Price discrimination e.g. Price differential between national and international packages

Ethical and social issues in advertising

Advertising plays a unique role in information dissemination on various products and services marketed by different firms. It aids the consumers in understanding process and increasing ability to make a better choice. Marketers use this for
Creating awareness Developing consumers interest Stimulating demand for various products & services

Deceptive advertising practices

False and misleading representation of facts Deliberate omitting of required information Implying benefit that hardly exists Trade puffing and exaggeration Using unnecessary technical jargon Creating cultural degeneration Creating ambiguities Creating fear in consumers Plagiarism Open criticism of competitors

CONSUMER PROTECTION

UN GUIDELINES FOR THE CONSUMER PROTECTION

Protect from hazard to health & safety;

Promote & protect economic interests;

Provide adequate information for informed choice; Consumer education; Provide effective redressformal and informal procedures; Freedom to form groups & present views in decision-making

affecting consumers;

THE CONSUMER PROTECTION ACT, 1986 (ACT) - WHO IS A CONSUMER?

Two kinds of consumer under the Act
Consumer of goods
buys or agrees to buy goods any user of such goods

Consumer of services
hires or avails any services any beneficiary of such service

CONSUMERS NEED PROTECTION AGAINST

Unfair trade practice Restrictive trade practice Defects Deficiencies

CONSUMERS NEED PROTECTION AGAINST

UNFAIR TRADE PRACTICE
Adopting unfair methods or deception to promote sale, use or supply of goods or services e.g. Misleading public about price (e.g. bargain price when it is not so). Charging above MRP printed. Misleading public about anothers goods or services. Falsely claiming a sponsorship, approval or affiliation. Offering misleading warranty or guarantee.

CONSUMERS NEED PROTECTION AGAINST

RESTRICTIVE TRADE PRACTICE
Price fixing or output restraint re: delivery/flow of supplies to impose unjustified costs/restrictions on consumers.
Collusive tendering; market fixing territorially among competing suppliers, depriving consumers of free choice, fair competition. Supplying only to particular distributors or on condition of sale only within a territory. Delaying in supplying goods/services leading to rise in price.

Requiring a consumer to buy/hire any goods or services as a precondition for buying/hiring other goods or services.

CONSUMERS NEED PROTECTION AGAINST

DEFECTS
Any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods.

DEFICIENCY
Any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.

CONSUMER'S RIGHTS

Right to safety against hazardous goods and services

Right to be informed about quality, quantity, purity, standard, price

Right to choose from a variety at competitive prices

Right to be heard Right to seek redressal Right to consumer education

FORUM & JURISDICTION

Consumer Disputes Redressal Forums (District Forum)
Claims less than or equal Rs.20 lacs.

Consumer Disputes Redressal Commissions (State Commission)

Claim more than Rs.20 lacs & less than Rs.1 crore & appeals.

National Consumer Disputes Redressal Commission (National Commission)

Claim equal to Rs.1 crore & appeals

REQUISTIES OF A COMPLAINT
Who can file a complaint Where to file a complaint How to file a complaint What constitutes a complaint?

Procedure for filing the appeal

ESSENTIAL INFORMATION IN THE APPLICATION

Name and full address of complainant

Name and full address of opposite party

Description of goods and services Quality and quantity Price Date & proof of purchase

Nature of deception
Type of redressal prayed for

BENEFITS & RELIEFS

Benefit
Disposal within 90 days
No adjournment shall ordinarily be granted - Speedy trial

Relief
Removal of defects in goods or deficiency in services.
Replacement of defective goods. Refund against defective goods or deficient services.

Compensation.
Prohibition on sale of hazardous goods.

Ethical consumerism
Ethical consumerism is about using purchasing power to make the world a better place. Ethical consumerism is marked by the convictions such as Multinationals are inherently bad. Natural and organic are inherently superior. Science and technology are not to be trusted.

 The rise in ethical consumerism and green brands that identify themselves as ethical, has led to a rise in ethic-based decisions in the mass market, enabled by increased understanding and information about businesses practices. The term ethical consumerism may refer to the wider movement within marketing, which means that large corporations wish to be seen as working ethically and improving the ethical standards of their industry.

Due Care Theory

The due care approach is based on the assumption that in commercial transactions, the consumer and manufacturer do not meet as equals in the relationship. The manufacturer, and to a lesser degree the retailer, has greater knowledge and expertise. This leads to assigning the duty to deliver a product that lives up to the expressed and limited claims made about the product to these individuals. The manufacturer is held to the duty of due care even if an explicit disclaimer of responsibility is made.

 Due care theory propagates the view that because manufacturers are in a more advantaged position, they have a duty to take special acre to ensure that consumers interests are not harmed by the products that they offer them. Areas of Due care
Design Production Information

Problems with Due Care Theory

No way to measure or quantify. Utilitarian view of happiness for majority is proposed. Manufacturer is supposed to measure harmful effects which might evolve after years of use. Manufacturer to care for consumerpaternalistic ,whereas consumer has free choice.

Social Costs view

The view that manufacturer should pay the costs of any injuries sustained through any defects in the product, even when the manufacture exercised all due care in the design and manufacture of the product and has taken all reasonable precautions to warn users of every foreseen danger. Strict Liability: A legal doctrine that manufactures must bear the costs of injuries resulting from product defects regardless of fault.

 Caveat Vendor : Let the seller take care Caveat Emptor :Let the buyer take care Criticisms of social cost view
Unfair to manufactures since it forces them to compensate unforeseen injuries. Assumption that adherence to the social cost view will prevent accidents is false. Leads to successful consumer lawsuits in cases where manufacturers took all due care.

Consumer Privacy
Right to Privacy: The right of persons to determine what, to whom, and how much information about themselves will be disclosed to other parties. Psychological Privacy: Privacy with respect to a persons inner life. Physical Privacy: Privacy with respect to a persons physical activities.

Importance of Privacy
Protects individuals from shame, interference ,hurting loved ones ,self-incrimination. Enables the development of personal relationships, professional relationships, distinct social roles and self determination.

Key to balancing Privacy

Relevance Informing Consent Accuracy Purpose Recipients and security