GLOBAL MBA CCGA module GCU

UK 2022
• (Corporate Citizenship in a Global Age: MMN225372)

• Consumers and Business Ethics Lecture Week Nine (Part One)

 GLOBAL MBA
CCGA module GCU UK 2021
(Corporate Citizenship in a Global Age: MMN225372
 Consumers and Business Ethics

Lecture, Week Nine (Part One)

Reading:
• Chapter 8, ‘Consumers and Business Ethics’, Pages 333 – ….. of Crane
et al(2019) ‘Business Ethics’ core text,

Other useful references:

• Chapter 9, ‘CSR Reporting and Auditing’, Pages 401-442 of
• Crane et al (2014) ‘Corporate Social Responsibility: Readings
• and Cases in a Global Context
 Lecture Content Overview

• Evaluate the unique stake that consumers have in corporate activity

• Specify the ethical issues and dilemmas faced in business-consumer
relations
• Discuss the above issues in the context of globalization in the 21st Century
• Critically appraise the arguments advocating more (socially and
environmentally sustainable) responsible marketing practices
• Examine the application of the concept of ‘corporate citizenship’ in relation
to consumers
• Examine the particular challenges posed by the advocacy of sustainable
consumption by consumers
The Consumer as stakeholder (I)
Self evident (‘business orientation’) contention that businesses are best served by treating their customers well
(via satisfying human needs, wants and demands, usually at a profit)

So why have we witnessed the continued ethical abuses of consumers and sustained poor reputation (in some
quarters) of marketing and sales professions?

Some examples of organizations previously accused of treating customers in a questionable (unethical)

manner:
• Multinational drug companies (eg availability of drugs in poorer countries)
• Fast food and soft drink companies (healthy/unhealthy foods)
• Banks and credit card companies (interest rates, etc)
• Mobile phone companies (hard-to-cancel contracts)
• Technology companies (customer service)
• Schools, colleges and universities (online, remote, fees, accommodation?)
 The Consumer as stakeholder (II)

Consumer rights can be seen as:

• An inalienable entitlement to fair treatment when entering into exchanges with sellers. Arise
from the assumption that consumer dignity should be respected, and that sellers have a duty
to treat consumers as ends in themselves, and not only as means to the end of the seller.

But

• Contentious debate over what constitutes ‘fair’ treatment

• In the past, consumer rights based on caveat emptor (Buyer Beware!) under efficient market
hypothesis
• However the principle of Caveat emptor has been eroded by changing expectations &
consumer laws concerning social and consumer justice and sustainability in a globalised world.
Ethical issues and the consumer
Ethical Issues, Marketing & the
Consumer
Area of Marketing Some common ethical problems Main rights involved

Right to safe and

Product Policy Product safety, fitness for purpose
efficacious products

Deception, misleading claims, intrusiveness,

Rights to honest and
promotion of materialism, creation of artificial
Marketing communications fair communications
wants, perpetuating dissatisfaction, reinforcing
Marketing stereotypes
and right to privacy
Management
Excessive pricing, price fixing, predatory
Pricing Right to fair prices
pricing, deceptive pricing

Right to make a fair

Distribution Buyer-seller relationships, gifts and bribes, etc
choice
Right to be free from
Targeting vulnerable consumers, consumer discrimination and right
Marketing Strategy exclusion to basic freedoms and
amenities
Market Research Privacy Issues Right to privacy

Source: Crane et al Business Ethics (2019)

Ethical issues in marketing management - product policy

• At the most basic level, consumers have a right to products and

services which are safe, efficacious, and fit for the purpose for
which they are intended
• Manufacturers ought to exercise due care in establishing that
all reasonable steps are taken to ensure that their products are
free from defects and safe to use (Boatright, 2009: 295)
• Consumers’ right to a safe product is not an unlimited right
• Safety also a function of the consumer and their actions and
precautions taken
Ethical issues in marketing management
-
marketing communications (I)

Criticisms of advertising can be directed at two levels

• The Individual level

• Concerned with misleading or deceptive practices that seek to create false
beliefs about specific products or services or companies in the individual’s
consumers’ mind (perceptions)
• The Social or Societal level
• Concerned with the aggregate social and cultural impacts, such as promoting
materialism
 Ethical issues in marketing management
– marketing communications (II)
Accusations of Misleading and Deceptive Practices.
Marketing communications aimed at:
• Informing consumers about goods and services
• Persuading consumers to purchase specific products, services or brands
• Deception occurs when the ability of people to make rational
consumer choices is interfered with by marketing communications that
rely on false beliefs(Boatright, 2012)
• The UK’s Advertising Standards Authority says ads should be “legal,
decent, honest and truthful”
 Ethical issues in marketing management
– marketing communications (III)
The Social and Cultural impact on society
Objections that marketing communications:
• Are intrusive and unavoidable
• Create ‘artificial’ wants
• Reinforce ‘consumerism and materialism
• Create insecurity and perpetual dissatisfaction
• Perpetuate social stereotypes
Such criticisms have been frequent for at least the last 30 years
 Ethical issues in marketing
management - Pricing
Pricing issues are central to the notion of a fair exchange between the
two parties, and the right to a fair price - key rights of consumers as
stakeholders
• 4 types of pricing practices where ethical problems may arise:
• Excessive pricing
• Price fixing
• Predatory pricing
• Deceptive pricing
Ethical issues in marketing management
–
Logistics and Distribution
Related to the relationship between manufacturers and firms, and firms
and market
• Primary concern is product/service supply chain
• Example: retailers demanding ‘slotting fees’ from manufacturers in
order to stock their products
• Impact of Brexit and Covid 19 Pandemic
• Sustainability and ‘source local’ campaigns
• Curbing carbon footprints and alternatives to internationalised supply
chains
Ethical issues in marketing strategy –
consumer vulnerability
There have been criticisms when there is a perceived violation of the consumers right to be
treated fairly (the principle of the duty of care):
The unfair targeting vulnerable consumer market segments
• Some consumers may be considered especially vulnerable because;
• Lack sufficient education or information
• Easily confused or manipulated due to old age, ill health, etc
• Are in exceptional physical or emotional need
• Lack the necessary income
• Too young or inexperienced
• Perceived ‘harmfulness’ of the product
Examples: cigarettes and alcohol and some unhealthy foodstuff, promotion of certain lifestyles
Witness the shift from consumer (human?) rights/duties to consequences faced through
exploitative or harmful marketing strategies and campaigns (Nestle and baby formula)
 Ethical issues in marketing strategy –
consumer exclusion
Exclusion can take a variety of alternative forms
• Access exclusion
• Condition exclusion
• Price exclusion
• Marketing exclusion
• Self-exclusion
 Some ethical issues associated with
marketing research
Central issue is possible threats posed to the consumer’s right to privacy
(remember table 7.3 Chapter 7, Craven et al (2019)
• Recent areas of concern:
• Continuous collection of data by tech giants
• for example, data collection via peoples’ smartphones (data mining)
• Use of genetic testing results by insurance companies for actuarial
purposes,
• predicting likelihood of an individual’s genetic predisposition to certain medical
conditions and illnesses
• ‘genetic discrimination’?
• Social media data used to calculate individual creditworthiness
Globalization and consumers
The challenge of conducting international business ethically in
globalized consumer goods market
Ethical issues derived from conducting marketing across global
market segments

Globalization has generated a whole new set of problems and issues applicable to
consumer stakeholders needs, wants and demands, including:

The adoption of different standards of consumer protection across geographical

markets:
• Consumer protection varies widely in terms of government regulation and company
standards
• Example of tobacco, GM foods, fewer restriction on marketing in some developing
countries
Exporting consumerism and cultural homogenization :
• Global brands’ huge success has led to increasing concerns over standardization and
uniformity
• Considerable debate around role of advertising in promoting consumerism in emerging
and transitional economies
 The role of markets as a means of addressing income
inequalities (poverty) and economic development

Globalization raises prospect of firms targeting products at low income

consumers
• The ‘Bottom of the pyramid’ concept
• Examples of successful initiatives:
• Microcredit institutions (e.g. Bangladesh, Muhammad Yunis - Grameen Bank)
• High nutrition yoghurt company (Bangladesh)
• One Laptop Per Child
• Criticism
• Bottom of the pyramid is a mirage: profit opportunities limited
• Social purpose and CSR probably more important than profit motive in
developing inclusive markets
 Some Challenges Associated with
Microfinance Initiatives
•Hindering poverty alleviation efforts – through diversion of attention and
resources from other means

•Difficulty in balancing business and social goals

expensive practice due to large numbers of small transactions
• The exploitation of microlenders
banks charging high interest rates and public shaming

Can you think of any other potential unintended consequences associated with the
‘boom’ in microcredit finance initiatives? What are the ethical implications of these
unintended consequences?