The Ethical Aspect of Marketing

THE ETHICAL ASPECT OF MARKETING MYRON S. STA. ANA

WHAT IS ETHICS IN GENERAL? Ethics refer to moral principles defined by social standards that guide people and groups’ concept of right and wrong.

HOW ABOUT MARKETING ETHICS?  Marketing Ethics refers to the manner in which a business presents its products to the consumers.  Refers to principles and standards that define acceptable conduct in the marketplace.

WHY DO WE HAVE TO KNOW MARKETING ETHICS?

BASES OF MARKETING ETHICS

The individuals affected The values violated The section of marketing focused on Bases of Marketing Ethics Who has more power or control over the other

STAKEHOLDERS THAT ARE AFFECTED BY OR BENEFIT FROM MARKETING  Consumers  Consumers’ rights  Society  Environment  Employees

STAKEHOLDERS THAT ARE AFFECTED BY OR BENEFIT FROM MARKETING  Suppliers  Regulators  Company  Management  Media

FIVE P’S OF MARKETING  Product Safety - compliance to both advisory and compulsory standards that ensure the safety of products and services  Product Liability - a company’s accountability for any form of injury caused by a product or a service.  Packaging - enclosing, protecting, and presenting products or services for distribution, storage, sale, and use.

FIVE P’S OF MARKETING  Product Impact - a product or service’s effect on the stakeholders.  Pricing - a company’s distinct process of determining what will be received as gross and net profits in exchange for products and services.

FACTORS THAT INFLUENCE ETHICAL JUDGMENT  Society’s culture and norms  Business or corporate culture  Industry’s practices  Personal moral philosophy

MARKETING USUALLY BECOMES UNETHICAL WHEN:  When consumers’ right to make own choices (selfdetermination) is infringed.  When competitors’ right to fair competition is infringed.  When consumers’ personal and social values are manipulated.  When the environment is adversely affected.

MARKETING USUALLY BECOMES UNETHICAL WHEN:  When companies fail to deliver the supply goes against the demand or the customers’ needs.  When companies fail to deliver on promises.  When companies conduct greedy and short-term profiteering as opposed to adding long-term value.

CATEGORIES OF MARKETING WHERE ISSUES OF UNETHICAL MARKETING ARE PRESENT  Marketing Research  Invasion of Privacy  Absence of Transparency  Stereotyping  Market Audience Determination  Selective Marketing or Market Exclusion  Targeting of the Vulnerable

CATEGORIES OF MARKETING WHERE ISSUES OF UNETHICAL MARKETING ARE PRESENT  Pricing  Bid rigging – a bidding is just for formality’s sake but the bid had already been awarded to a party.  Dumping – exporting of a product at a price below what it’s charged in the home market.  Predatory Pricing – setting a price very low to drive away competitors.  Price Discrimination – assigning different prices to similar products in different markets.  Price Gouging – pricing products at a level much higher than usual or what is considered reasonable.

CATEGORIES OF MARKETING WHERE ISSUES OF UNETHICAL MARKETING ARE PRESENT  Pricing  Price Fixing – is pegging products or services at a fixed price by controlling the demand and supply.  Price Skimming – setting products at a relatively high price at first but eventually lowers it.  Price War – repetitive cutting down of prices below others in the competition until the others give up and exit the market.  Supracompetitive Pricing – is pricing above what can be sustained in the market.  Variable Pricing – constant changing of prices.

CATEGORIES OF MARKETING WHERE ISSUES OF UNETHICAL MARKETING ARE PRESENT  Content  Puffery – marketing statements and claims that communicate subjective views and should not be taken literally.  False Advertising  Controversial Advertising – use of sexual or erotic imagery, violence, or perceived religious blasphemy.  Negative Advertising – directly or indirectly attacks competitors by highlighting their disadvantages.  Legal Disclaimers

CATEGORIES OF MARKETING WHERE ISSUES OF UNETHICAL MARKETING ARE PRESENT  Delivery Channels  Electronic SPAM/Unsolicited Emails  Telemarketing/Cold Calling  Shilling – is pretending to be a stranger or unrelated to the person who is marketing just to help in the campaign  Astroturfing – is concealing the sponsors of a message to make it appear as though it originated from the grassroots participants.  Native Advertising  Advertising to Children

KNOWN UNETHICAL MARKETING PRACTICES  Bait-and-Switch – is a fraudulent form of marketing in which merchants lure customers with a promise of a low price but suddenly reveal that the goods are out of stock and resort to cross-selling to other similar items that are priced higher.  Use of child labor  High-pressure selling – use of relentless psychological pressure to gain a fast sale.  Overbilling clients

KNOWN UNETHICAL MARKETING PRACTICES  Deceptive Sales Methods  Fraud  Antitrust – any illegal business or marketing practice purported to monopolize.  Price Fixing

TWO ACTIONS TO COMBAT UNETHICAL MARKETING  PROACTIVE APPROACH  REACTIVE APPROACH

PROACTIVE APPROACH 1. Form, understand, communicate, and inculcate values of INTEGRITY, HONESTY, TRANSPARENCY, RESPONSIBILITY, FAIRNESS, RESPECT, AND CITIZENSHIP among marketers and marketing managers. 2. These values must be integrated with leadership and management strategies and employee performance. 3. Monitor performance and balance positive reinforcement and discipline.

REACTIVE APPROACH 1. Delay production - Review production to: - put controls - send people to training - have people sign on a code of ethics 2. Continue production 3. Stop production

ORGANIZATIONS THAT GOVERN ETHICAL MARKETING IN THE PHILIPPINES Philippine Marketing Association The principal purposes of the association are to promote marketing as a science and as a profession guided by universal principles of ethics, corporate citizenship and corporate social responsibility and to serve as a policy-making and recommendatory arm of the government on marketing-related issues.

ORGANIZATIONS THAT GOVERN ETHICAL MARKETING IN THE PHILIPPINES Trade Marketing Association of the Philippines Provides multiple venues for learning about trade marketing best practices and developments and for promoting supplier-retailer collaboration to trade marketing professionals, our key trade partners, and other organizations involved in the practice and study of trade marketing.

ORGANIZATIONS THAT GOVERN ETHICAL MARKETING IN THE PHILIPPINES Bank Marketing Association of the Philippines Is an organization of banking institutions, which seeks to upgrade the practice of bank marketing in the country.

ORGANIZATIONS THAT GOVERN ETHICAL MARKETING IN THE PHILIPPINES Internet and Mobile Marketing Association of the Philippines IMMAP members—professionals and practitioners of the industry— grouped together in 2007 to address the need to push the wonders of the internet and mobile. As an association, IMMAP sees these opportunities, and recognizes the urgency of harnessing its potential for economic development, not just for the industry, but for the national economy as well. IMMAP has embarked on working towards educating and providing the necessary digital tools for advertising and integrated marketing professionals to make better communication decisions.

ORGANIZATIONS THAT GOVERN ETHICAL MARKETING IN THE PHILIPPINES Sales and Marketing Institute Philippines Is the premiere professional body of sales and marketing practitioners in the Philippines. Through its global network and affiliates, the SMI Philippines provides a dynamic forum for sales and marketing professionals to advance their careers through certifications, research, professional development, networking, and advocacy of the highest ethical and practice standards. The SMI Philippines aims to deliver world-class support to empower its members with the knowledge and skills they need to excel in the profession.

“I notice increasing reluctance on the part of marketing executives to use judgment; they are coming to rely too much on research, and they use it as a drunkard uses a lamp post for support, rather than for illumination.” David Ogilvy – The Father of Advertising

REMEMBER THIS, ―Your intelligence and competencies may you take far but it is INTEGRITY that will take you THERE.‖ Myron Sta. Ana www.facebook.com/MyronStaAnaTCS @MyronStaAna