Marketing Ethics Fall 2024 2 PDF

Marketing Ethics OCTOBER 9, 2024 GEORGE BOBINSKI What are the differences between these terms? 2 ◈ Morality – personal ◈ Ethics - community ◈ Laws – structured rules Ethics is about… 3 ◈ Expectations ◈ Reputation ◈ Long-term The Golden Rule 4 ◈ What is the “Golden...

Marketing Ethics OCTOBER 9, 2024 GEORGE BOBINSKI What are the differences between these terms? 2 ◈ Morality – personal ◈ Ethics - community ◈ Laws – structured rules Ethics is about… 3 ◈ Expectations ◈ Reputation ◈ Long-term The Golden Rule 4 ◈ What is the “Golden Rule?” ◈ It appears in some form in almost all major religions of the world ◈ Is it applicable in modern business? 5 Ethics Tests 6 Peale & Blanchard: Warren Buffet: 1. Is it legal? “Front page of the 2. Is it balanced? newspaper” test 3. How does it make me feel? Ethics Tests (continued) 7  The “Mama Test”:  “Do no harm”:  Peter Drucker  Physicians’ Oath, Google Shareholder Theory  The shareholders own the firm  They elect a Board of Directors  The BoD appoints a CEO  The CEO and the Top Management Team must seek to maximize profit that is to be distributed to the shareholders 8 Stakeholder Theory  Primary obligation of management: increase wealth of shareholders and provide them with reasonable return  Secondary obligation of management: consider interests of stakeholders 9 Stakeholders  Shareholders  BoD, CEO and Management  Employees  Suppliers, Subcontractors, Alliance Partners  Lenders, Government  Community  Environment 10 Foundations of Marketing  All consumers do not have the same wants and needs  Marketing research is used to identify the target market (segment) and its wants/needs  Marketers develop products/services to serve (profitable) markets 11 What are the Ethical Issues in Marketing?  Do marketers create demand (also promote consumption and waste)?  Does marketing manipulate consumers? Does advertising manipulate us to purchase things we don’t need?  Does advertising create a materialistic culture or does it simply reflect it?  Is it always ethical to cater to a segment (even if legal), e.g., targeting the vulnerable such as children or the elderly?  What about segments that are not profitable – who serves them? 12 Marketing Ethical Issues (Continued)  Does advertising perpetuate stereotypes?  Can marketing promote a hyper-competitive atmosphere, e.g., put small businesses out of business?  Does marketing promote invasion of privacy? 13 Marketing Mix Dimensions marketers modify include:  Product  Price  Promotion  Place (Distribution) 14 Product Issues  Planned obsolescence  Using consumer inferences to manipulate consumers  Potentially harmful products (safety of the product)  Socially controversial products 15 Price Issues  Price fixing  Price skimming  Predatory pricing and price wars  Pricing differently in different countries/Dumping  Price gouging/surge pricing/dynamic pricing  Deceptive pricing choices  Decoy Pricing 16 Decoy Pricing 16%/0%/84% vs. 68%/32% 17 Decoy Pricing If offered only small or large serves, priced at $3 or $7, the majority purchased the small popcorn. If offered three sizes, small for $3, medium for $6.50, and large at $7, a much higher number went for large, why? 18  Delving into Pricing Specifics 19 ◈ Number 9 boosts sales by almost 25% (on average) even “wins” over lower prices. ◈ Reference points or context sets perception: ◈ $2.50 (80%) vs. $1.80 (20%) compared to $2.50 (20%) vs. $1.80 (80%) vs. $1.60 (0%) Promotion  False claims or misleading comparisons  Use of misleading images  Bait and switch  Exaggerated claims, e.g., health  Perpetuating stereotypes  Children’s advertising  Failing to reveal the side effects of a product  Sexual innuendo  Subliminal advertising 20 Puffery Advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts are allowed ◦“Nestle makes the very best chocolate” ◦Bayer aspirin “the wonder drug that works wonders” ◦Greatest, best, finest 21 Comparisons Lanham Act – to win false advertising lawsuit: ◦False statements made about either product ◦Ads deceived or have potential to deceive substantial segment of the audience ◦Deception must be meaningful ◦Falsely advertised goods are sold in interstate commerce ◦Suing company has been or is likely to be injured 22  Must not mislead the consumer 23 Incomplete False Promises: Misleading Description: “Use of Listerine Comparisons: “Fresh Horizons prevents colds "Ocean Spray Bread. Required and sore throats” has more food to state source of energy than fiber is wood or orange juice” contains fiber from the pulp of trees  Must Not Mislead Customer 24 Reinforcement of Bait and Switch False Beliefs: Offers: Crystals in laundry Sears and others detergent  Demonstrations (continued) 25 Partial Implied Claims: “Free”: Disclosures:  Letegram  Must really be  Stating what a (debt free product can do collection  Also purchased and not what agency) product must be it cannot do at its lowest price in 30 days  Free less than half of the year Advertising Controversial Products  Tobacco  Alcohol  Unhealthy products  Prescription drugs 26 Distribution (Place)  Dealer relations and termination  Anticompetitive practices 27 What are your views? 28