Ethics in Marketing

By Prof. Sugato Tripathy

The Competitive
Environment
Interactive process that occurs in the
marketplace among:
Marketers of directly competitive products
(Mobile phone, laptops)

Marketers of products that can be substituted for

one another
(Food industry, Apparels)

Marketers competing for the consumers

purchasing power
(A customer has limited amount of money)
2

Levels of Competition
Beers
Ice
cream

Tea

Pepsi/
Thums Up

Maaza/
Slice

Diet-Mnt
Dew

Wine
Diet
Pepsi
Fast
food

Bottled
water

Minute
Maid

Coffee
Theme
park

Diet
Coke

Sprite
/7UP

Product form
competition:
Diet colas

Juices

Product
category
competition:
Soft drinks

Video
rentals

Generic
competition:
Beverages
Budget
competition:
Food and
entertainment

Consumerism
The concept that an ever-expanding
consumption of goods is advantageous to
the economy
A modern movement for the protection of
the consumer against useless, inferior, or
dangerous products, misleading advertising,
unfair pricing, etc.
4

Consumerism

Buyers have the right to:

1.
2.
3.
4.

not buy a product offered for sale.

expect the product to be safe.
expect the product to perform as claimed.
be well informed about important aspects of the
product.
5. be protected against questionable products and
marketing practices.
6. influence products and marketing practices in
ways that will improve their quality of life.

Contract view of Business duties

to consumers

Duty
Duty
Duty
Duty

of disclosure
not to misrepresent
not to coerce
to exercise due care (caveat emptor/caveat vendor)

Caveat Emptor: the principle that a person who buys something is responsible for making sure that it
is in good condition, works properly, etc.
Caveat Vendor : Tacit warning to the sellers that, unless they expressly disclaim any responsibility,
they will be held liable if the sold items are found defective in any way or vary from the specifications

Duty to comply
Reliability of goods and services
Service life
Maintainability of the product (to keep the goods in operating condition)
Product safety

GMO Wheat?

GMO Genetically Modified

Organism
Genetically modified wheat is wheat that has been
genetically engineered by the direct manipulation of its

GMO Wheat

Resistant to insects
Tolerance to heat, drought and salinity
High content of glutenin to aid bakers
Improved nutrition (high protein content, dietary fiber)
High yield
No proven health hazards
Field trails have taken place in USA and Europe

Still no GMO wheat has been approved for cultivation anywhere in the world.
Why??

For USA, natural wheat is a highly exported commodity.

No demand for GM product else where in the world
Cultural Issues

Ethics in Product Strategy

Product quality, planned obsolescence and
packaging raise ethical issues
Example: Packaging strategy
Larger packages are more noticeable on the
shelf
Quality imagery
Oddly sized packages make price comparison
difficult
Bottles with concave bottoms appear to have
19
more liquid in them than they do

Planned Obsolescence
Refers to:
Products needing replacement before they
should because they are obsolete. (computers and
software)

Producers who change consumer concepts of

acceptable styles. (clothing and fashion)
Intentionally holding back attractive or
advanced functional features, and introducing
them later to make the old model obsolete.
(electronics)

Ethics in Promotion
Bait and Switch Advertising
Bait and switch advertising is when a company offers consumers an
appealing deal and then changes the deal when consumers make
direct inquiries. Ex?
Car dealers, Limited period offer (free items), finance schemes,
original prod.not displayed

False and Deceptive Advertising

Fair and Handsome, Revital, Perk Energy bar

Promotional Allowance?
Bribery?
Creating demand for unwholesome products (tobacco,
alcohol, fattening foods)

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Shoddy or Unsafe Products

Includes

Poorly made products

Products that do not perform well
Products that deliver little benefit
Harmful products (cause bodily harm, illness, even death)

How it happens

Undue focus on profit, increased production complexity,

poorly trained labor, and poor quality control
New products without safety track records
Outsourcing of production often leads to quality issues

High-Pressure Selling
Salespeople are trained to deliver smooth,
glib talks to entice purchase
High-pressure selling persuades people to buy
goods they neither need nor want
Driven by compensation structures (i.e. high
bonus potentials)
High-pressure selling ultimately destroys
customer relationships and goodwill

McDonalds and Obesity

A 2002 lawsuit unsuccessfully sued McDonalds on behalf of obese children,

claiming McDs marketed food that is high in fat, salt, sugar, and cholesterol.

Ethics in Pricing
Price Fixing
Price Discrimination
A pricing strategy that charges customers different prices for
the same product or service

Deceptive Pricing
Deceptive pricing occurs when a retailer uses a pricing
gimmick to make customers believe they are getting a bargain
when they are not

High Pricing
Variable costs included in the final price

Ethics in Distribution
Exclusive distribution
Dumping
Predatory competition