ETHICS AND MARKETING

The American Marketing Association defines marketing as “an organizational function and
a set of processes for creating, communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the organization and its
stakeholders.” 4 main activities of Marketing are product, price, place and promotion.
The concept of an exchange between a seller and a buyer is central to the market
economy and is the core idea behind marketing.
a.Marketing involves all aspects of creating a product or service and bringing it to market
where an exchange can take place.
b.Marketing ethics, therefore, examines the responsibilities associated with bringing a
product to the market, promoting it to buyers, and exchanging it with them.
Each of the Four Ps raises important ethical questions:

Product: Who is responsible for harms caused by a product? Are there

some products that should not be produced, or does consumer demand
decide all production questions?

Price: Should the ability to pay be a factor in setting price? Do all

customers deserve the same price, or can producers discriminate in
favor of, or against, some consumers?

Promotion: Are deceptive or misleading ads ethical? What ethical

constraints should be placed on sales promotions?

Placement/Place: Is the information gathered in market research the

property of the business that conducts the research? What privacy
protections should be offered for marketing data?
 Ethical Issues in Marketing
The simple model of a single agreed exchange between two individuals(buyer paying
money to seller to get product) is a useful way to introduce an ethical framework for
marketing ethics.
However, this exchange is only prima facie (at first impression) ethical because, like all
agreements, certain condition like autonomy of the two parties and mutual benefits
must be met before we can conclude that the exchange is truly done in an ethical
manner. Therefore:
a.We would need to establish that the agreement resulted from an informed and
voluntary consent(freely), and that there was no fraud, deception, or coercion involved.
When these conditions are violated, autonomy is not respected(buyer tricked into
buying product), and mutual benefit is not attained(low quality poduct).
b.Even when such conditions are met, other values may override the freedom of
individuals to contract for mutually beneficial purposes. For example, the freedom of
drug dealers to pursue mutually agreeable ends is overridden by society’s concern to
maintain law and order.
 Marketing
It is not always easy to determine if someone is being treated with respect in marketing
situations. A person is treated with respect when:
First, the person must freely consent to the transaction.
-The more consumers need a product (desperate), the less free they are to choose and the
more protection they deserve within the marketplace. Ex. Monopoly business
-Practices aimed at vulnerable populations raise questions of voluntariness. Products promoted
to kids during cartoon time.
Second, consent must be not only voluntary, but also informed.
-The complexity of many consumer products and services can mean that consumers may not
fully understand what they are purchasing. = n – info must be known to buyer.
-Many purchases do not result in actual benefit , due to impulse buying or unsafe products. Sale
discount.
Third, decide if other values are affected.
-Primary social values of fairness, justice, health, and safety are some of the values that can be
jeopardized by some marketing practices. Ex. Rich people will get better deals and discounts for
loans than poor people. Violation of equal treatment rights.
 Marketing
In summary , three issues in mind when approaching any ethical
issue in marketing.
• The rights-based ethical tradition would ask to what degree the
participants are respected as free and autonomous agents rather than
treated simply as means to the end of making a sale.

• The utilitarian tradition would want to know the degree to which the
transaction provided actual as opposed to merely apparent benefits.
Positive net benefits for both

• Every ethical tradition would also wonder what other values might be at
stake/affected by the exchange.
 Responsibility for Products: Safety and Liability
In general, business has an ethical responsibility to design, manufacture, and promote
its products in ways that avoid causing harm to consumers. No to deceptive
advertising, risky and dangerous products, non honouring of contract etc.
-Responsibility has several meanings:
a.In one sense, responsibility is to be identified as the cause of something.
b.In another sense, responsibility involves accountability.
c.A third sense involves assigning fault or liability for something.
Example: situations such as an automobile crash, a careless driver would be identified
as the cause of the accident and held accountable because he/she was at fault.
Both law and ethics rely on this when evaluating cases in which products or services
cause harm in the marketplace.
The legal doctrine of strict liability is ethically controversial exactly because it holds a
business accountable for paying damages whether or not it was at fault.
In a strict liability cases, no matter how careful the business is in its product or service,
if harm results from use, the business is liable.
 Ethical Debates on Product Liability

A.Product liability is the area of law in which manufacturers, distributors, suppliers,

retailers, and others who make products available to the public are held responsible for
the injuries those products cause.
The US business community is a strong critic of much of the legal standards of product
liability.

Liability standards, and the liability insurance costs in which they have resulted, have
imposed significant costs on contemporary business. Businesses believe that the
standard is especially unfair to businesses because it holds business responsible for
harms that were not the result of business negligence

B.Defenders of the strict product liability standard, including juries who decide in favor
of injured consumers, often replay with two major claims:
First: by holding business strictly liable for any harms their products cause, society
creates a strong incentive for business to produce safer goods and services.

Second: given that someone has to be accountable for the costs of injuries, holding
business liable allocates the costs to the party best able to bear the financial burden.
 Standards Related to Product Safety
a.Caveat Emptor Approach: The standard of caveat emptor, or “let the buyer
beware,” understands marketing on a simple model of a contractual exchange
between a buyer and a seller.
1. This perspective assumes that every purchase involves the informed
consent of the buyer and therefore it is assumed to be ethically legitimate.
2. Buyers have the responsibility to look out for their own interests and
protect their own safety when buying a product.
3. From this perspective, business has only the responsibility to provide a
good or service at an agreed-upon price.

b.Concept of “Implied warranty of merchantability,” holds that in selling a product,

a business implicitly (not directly stated) offers assurances that the product is
reasonably suitable for its purpose.

Even without a verbal or written promise or contract, the law holds that business has a
duty to insure that its products will accomplish their purpose.
 Consumer Protection
-The issue of people being injured when using the things which they purchase. Are they
protected? Who is responsible for ensuring good products in the market for injuries?
Some Principles/Theories to answers these questions are Market approach, Contract
theory, Due Care Theory, Social Costs View.

A.Market Approach
-In the “market “ approach to consumer protection, consumer safety is seen as a good
that is most efficiently provided through the mechanism of the free market, whereby
sellers must respond to consumer demands.
-If consumers want products to be safer, they will indicate this preference in markets
by willingly paying more for safer products and showing a preference for manufacturer
of safe products while turning down the goods of manufacturers of unsafe products.
-Government cannot force company to produce safer products.
 Problem with Market approach:
– Buyers do not have adequate information when products are complex and
information is costly and hard to find.
– Buyers are often not rational about product risk or probabilities and are often
inconsistent.
– Many consumer markets are monopolies or oligopolies. No choice but to buy
bad products.

B.The Contract View of Business Firm’s Duties to consumers

-According to this view, the relationship between a business firm and its
customers is essentially a contractual relationship, and the firm’s moral duties
to the customers are those created by this contractual relationship.
-When a consumer buys a product, the consumer voluntarily enters into a sales
contract with the business firm. The firm freely and knowingly agrees to give
the consumer a product with certain characteristics, and the consumer in
turn freely and knowingly agrees to pay a certain amount of money to the
firm for the product. So, the firm then has a duty to provide a product with
those characteristics, and the consumer has a correlative right to get a
product with those characteristic.
The contract theory of the business firm’s duties to its customers rests on the view that
a contract is a free agreement that imposes on the parties the basic duty of complying
with the terms of agreement:-the Contractual theory claims that a business has 4 main
moral duties. The basic duty of:

a.Duty to comply to terms of contract.The duty to provide customers with a product

that lives up to those claim that the firm expressly made about the product, which led
the customers to enter the contract freely and which formed the customers’
understanding concerning what they are agreeing to buy. Krim.

-Sturdivant defined product quality(expressly or implied claims) as the degree to which

product performance meets predetermined expectations with respect to:
*reliability:The probability that a product will function as the consumer is led to expect
that it will function.
*Service life. The period of time during which the product will function as effectively
as the consumer is led to expect it to function.
*Maintainability:T he ease to which the product can be repaired and kept in operating
condition.
*Product safety-refer to the degree of risk associated with using a product. Reasonable
and acceptable risk.
 b.The duty of disclosure. This implies that a seller who intends to enter a contract with a
customer has a duty to disclose exactly what the consumer is buying and what the terms of
the sale are.At minimum, this means the seller has a duty to inform the buyer of any
characteristics of the product that could effect the customers’ decision to purchase the
product. Ex. Weaknesses of the product.
cThe duty not to misrepresent.It renders the freedom of choice impossible. Second hand say
new.
d.Duty not to coerce.People act irrationally when under the influence of fear or emotional
stress. Doctors using fear of patients to agree to purchase medical check up packages.
Problems with the Contractual theory.
-Critics say that the theory unrealistically assumes that manufacturers make direct agreements
with consumers. This is not true. What about in between wholesalers and retailers. But
supporters say that it is an indirect agreement through advertisements. Defect product
leading to accident, can buyers sue manufacturer?
-A second objection to the contract theory focuses on the fact that a contract is a two edge
sword. If a consumer can freely agree to buy a product with certain quality, the consumer
can also freely agree to buy a product without those quality. That is , freedom of contract
allows a manufacturer to be released from contractual obligation by explicitly disclaiming
that the product is reliable, serviceable, safe etc.. Many manufacturers fix such disclaimers
on the products. Unit trusts. Parking lot.
-It assumes seller and buyer meet as equals.
 C.The Due care Theory
-The due care theory of the manufacturers’ duties to consumers is based on the
idea that consumers and sellers do not meet as equals and that the
consumers’ interests are particularly vulnerable to being harmed by the
manufacturer who has knowledge and expertise that the consumer lacks.
-Because of the advantage, manufacturers have a duty to take special care to
ensure that consumers’ interests are not harmed by the products offered to
them.Even if the manufacturer explicitly disclaim such responsibility and
buyers agrees to the disclaimer The doctrine of caveat emptor is replaced
by doctrine of caveat vendor:Let seller take care.
-The judgment that individuals producers have a duty not to harm or injure
vulnerable parties is solidly based on several ethical perspectives.
utilitarianism and Kant’s Theory
-According to Due care theory, the producer’s responsibilities would extend to the
following 3 areas:
*design.has safety feature?good material?Design conceal any danger?
*Production.Production managercontrol manufacturing process to eliminate defective
items, identify weaknesses. Must have adequate quality control.
*Information.The manufacturer should fix labels, notices or instructions on the product
that will warn the user of all dangers in using or misusing product.

Problems with due care

-Main problem is that there’s no clear method to determine when one has exercised
enough due care.
-secondly, it assumes that the manufacturer can discover the risks or defects of products
before consumers uses it. Sometimes defect are located years after usage. Toyota
defect.
-thirdly , it assumes that the manufacturer should be the one who makes the important
decisions for the consumer, at least with respect to the levels of risks that are proper
for customers to bear. Should customers be given choice to decide if they want to
pay extra for risk reduction?
 D.The Social Costs View of the manufacturers’ duties
-The view that a manufacturer should pay the costs of any injuries sustained
through any defects in the product, even when the manufacturer exercise
all due care in the design and manufacture of the product and has taken all
reasonable precautions to warn users of every forseen danger.
-Extends beyond contractual relationship and due care.
-It forms the basis of legal doctrine of strict liability. It holds that manufacturer
must bear the costs of injuries resulting from product defects regardless of
fault.
Problem with social costs
-It is unfair because it violates compensatory justice. Manufacturers cannot
pay for injuries that they could neither forsee or prevent.
-second criticism attacks the assumption that passing the costs of all injuries
on to the manufacturer will reduce the number of accidents. However, this
might lead to more carelessness.
-accidents happen, consumers can sue companies, insurance company pay
more , premium will rise, companies will not be able to get insurance
protection, cannot pay compensation, close business.
 Characteristics of Advertising
-A public communication aimed at a large social group intended to induce members
of this audience to buy the seller’s products. It succeeds by creating a desire for the
seller’s product or a belief that a product will satisfy a preexisting desire.
There are, of course, ethically good and bad ways to influence others:

-Ethically commendable ways include persuading, asking, informing, and advising.

-Unethical means include threats, coercion, deception, manipulation, and lying.

-Unfortunately, all too often sales and advertising practices employ deceptive or
manipulative means of influence or are aimed at audiences that are susceptible to
manipulation or deception. Ex. Kids that are not matured enough to think, people
who are not knowledgeable.

To manipulate something is to guide or direct its behavior. Manipulation need not involve
total control, and in fact it more likely suggests a process of subtle direction or
management. You can manipulate someone by lying , instilling fear, anxiety on
consumers.
a. The rights-based tradition in ethics would have the strongest objections to
manipulation. Manipulation treats a person as a means to an end, as an object to
be used rather than as an autonomous person in his or her own right.
b. The utilitarian tradition offers a more conditional critique of manipulation,
depending on the consequences.

General Guidelines for Marketing Practices:

a.Marketing practices/research that seek to discover which consumers might have

interest to purchase a product are ethically legimate. However, marketing practices
that seek to identify populations that can be easily influenced and manipulated, on
the other hand, are not.

b.Sales and marketing that appeal to fear, anxiety, or other non-rational motivations
are ethically improper. Doctor test.
 Ethical Issues in Advertising 1

The ethical defense of advertising is that it:

• Provides information for market exchanges and therefore contributes to
market efficiency and to overall happiness.
• Provides information necessary for autonomous individuals to make
informed choices.
• Note that each of these rationales provides an ethical justification only if the
information is true and accurate.

Can advertising really influence us, change our taste and make us into zombies?
 Requirements of Deceptive Advertising
-Deception is the act or practice of lying, misleading, or otherwise hiding or
distorting the truth.

-Deception violates consumers’ rights to choose for themselves(Kantian), and it

generates a public distrust of advertisng that diminishes the utility of this form
and even other forms of communication (utlitarian).

The three requirements of deception:

• An author who (unethically) intends to make the audience believe what he

or she knows is false by means of an intentional act or utterance.
• Media or intermediaries who communicate the false message of the
advertisement .
• An audience who is vulnerable to the deception and who lacks the capacity
to recognize the deceptive nature of the advertisement.
 Defining Privacy
Two general and connected understandings of privacy.
• Privacy is the right to be "left alone" within a personal zone of solitude.
• Privacy is the right to control information about oneself.
Many people believe the right to be "left alone" is too broad and not feasible in the
workplace.
• Therefore, the control of personal information is a better definition.
• A right of privacy implies control of all personal information.
• Perhaps the choice of limitation or control is one’s sense of privacy.

Calls for greater protection of privacy rights increased with the increased used of
computers.
Privacy is important as it establishes the boundary between individuals.
 Ethical Sources of a Right to Privacy
The right to privacy is founded in the individual’s fundamental right to autonomy.
Personal autonomy is the capacity to decide for oneself and pursue a course of action
in one's life.
• This right is restricted by a boundary of reciprocal(done in return) obligation.
• Reciprocal obligation: When an individual expects respect for his or her
personal autonomy, he or she has a reciprocal obligation to respect the
autonomy of others.
• In the workplace, reciprocal obligation(duty) implies that:
• An employee has an obligation to respect the goals and property of the
employer.
• The employer has a reciprocal obligation to respect the rights of the employee,
including the right to privacy.
 Ethical Sources of a Right to Privacy
• Individual privacy is important because it is at the core of many of the
hypernorms. Hypernorms are values/minimal basic rights that are
fundamental across culture and theory. Example, freedom of speech,
informed consent, right to physical movement.
• The failure to protect privacy may lead to an inability to protect personal
freedom and autonomy.

• Your information can be classifies as property. Property rights means

determining who owns and maintains control over tangibles(houses) and
intangibles(ideas), including personal information.
 Importance of Consumer Privacy
Why is right to privacy important?
*because privacy ensures that others do not acquire information about us, that sometimes
would put us to shame or embarrassment if exposed.
*Privacy also prevents others who do not hold same values like us from interfering in
our plans. Even though our activity is not illegal.
*Privacy enables relationship development. Sharing of personal secrets. Intimate. If not
intimate, privacy gives you the right to not to share. Friend vs boyfriend.
*privacy allows certain professional relationships to develop. Doctor and patient.
 REFERENCES
Hartman, L. P., DesJardins, J., & MacDonald, C. (2021). Business
ethics. McGraw-Hill
Velasquez, M. G. (2018). Business ethics: Concepts and cases
(8th ed.). New York: Pearson.