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Marketing and Ethics: a way for Sustainable Growth?

Good Growth Insights
Marketing and Ethics: a way for Sustainable Growth?
By The Good Growth Academy • Issue #3 • View online

Marketing and Ethics
Marketing and Ethics
As I write this, it appears that many countries may finally have a vaccine-led way out of the Covid pandemic. There will, inevitably, therefore, be more focus on the marketing function to help companies capitalize on rising demand levels. 
However, as marketing once more assumes a more significant business role, concerns about the ethicality of marketing will increase. We had seen this already before the pandemic arrived. In the past few years, several measures to protect the consuming public have been introduced to counter the danger of exploitative marketing practices. Thus, children are seen as a vulnerable target throughout the world, and so there is often legislation to protect them from unfair practices. For example, there are advertising standards authorities in many countries to help regulate the advertising industry; consumer protection legislation often exists to prevent organizations from making false claims about their products or conspiring to fix prices. The long-running debates like the ones about the promotion and selling of tobacco and alcohol products promoted opposition amongst several people and interest groups. 
Despite these, concern about unethical trading practices and irresponsible marketing remains. These have been amplified by many significant events over the first part of the 21st Century to a large extent. Thus, it is increasingly accepted that ‘global warming is a problem exacerbated by carbon emissions. In response, and with great difficulty, nations have agreed that if they are to be viewed as responsible, they have a role in helping to reduce these emissions. Simultaneously, the notion of responsible governance has assumed a higher profile as corporate scandals such as Enron in 2001, followed by the collapse of Lehmann Brothers and RBS in 2008, have focused attention on ethical trading practices. In particular, the 'banking crisis’ of 2008 caused by decisions to reduce lending standards for mortgages leading to excessive sub-prime mortgages and unwarranted risk levels for banks have reinforced the need to monitor the way businesses create market products and services. 
Other stories that have kept the debate going include: 
  • The accusation by some advocacy groups that Nestlé inappropriately promotes its infant formula over breast milk in several developing countries 
  • Greenwashing – the marketing tactic of misleading consumers about a product or service’s environmental friendliness. 
  • Dannon having to pay up to $35 million in damages to consumers who said they’d been tricked into buying Activia for its purported nutritional benefits; when it was pretty much the same as every other kind of yogurt. 
  • The mis-selling of PPI (Payments Protection Insurance) to UK mortgage applicants
To behave ethically, an organization and its members need to adhere to a collection of principles of right or moral conduct that shape their decisions. Ethical marketing is about whether a firm’s marketing decisions are morally right or wrong. Practicing ethics in marketing means deliberately applying fairness or moral rights and wrongs to marketing decision-making and the organization’s resultant behaviors and practices. A marketing decision’s morality can encompass any aspect of marketing, from advertising to the pricing of their product or service or the sourcing of their raw materials. 
The American Marketing Association promotes ethical conduct by advocating that professional marketing managers be careful to:
  1. Do no harm. 
By consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make.
  1. Foster trust in the marketing system. 
By striving for good faith and fair dealing to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, and delivery of distribution.
  1. Embrace ethical values. 
By building relationships and enhancing consumer confidence in marketing’s integrity by affirming these core values: honesty, responsibility, fairness, respect, transparency, and citizenship. 
Marketing is criticized for playing on people’s weaknesses
The range of criticism that is brought against marketing is that it can (and sometimes does):
  • Play on people’s imperfections such as envy, fear, uncertainty, and doubt to persuade consumers that they must use a particular brand of washing powder or own that brand of mobile phone
  • Deliberately hide practices that would devalue a product or service’s image, such as the use of child labor, poorly sourced ingredients, or excessive and unnecessary packaging
  • Inappropriately use stereotypes that reinforce prejudices or societal divisions; or that play on sexual imagery to sell a product
  • Employ ‘high-pressure sales techniques to sell to consumers or to pressure vendors to buy more than they need and pushing items that will result in higher commissions for the salesperson even though they are not right for the customer
  • Infringe people’s privacy by using overly invasive market research or holding data about individuals they do not want to be held. While data protection legislation provides safeguards, people do not always know about the data-bases they are on
  • Promote excessive materialism by making products and services appear attractive by associating them with traits that people desire or think they have. Besides, the over-promotion of credit, it is argued, encourages people to consume more than they need
  • Use 'Dark Patterns’ that exploit psychological attributes such as a tendency to scan read terms and conditions or information pages or pursue the path of least resistance. This is particularly relevant to internet site user-interface design where the designers make: the default for an extra (insurance or special delivery) is ‘opt-in’ rather than ‘opt-out’; extras are automatically added to one’s ‘basket’; it is easy to sign up but challenging to get out of or return a purchase
  • Move from information and persuasion into manipulation; so that people purchase something they don’t want.
All these can be supported with recent examples and some with long-standing standards. However, they imply that consumers’ powers of perception are limited and that their intelligence is sufficiently low that they will be ‘fooled’ forever. In the longer run, no matter what `marketing’ is performed, the consumer will always be sovereign as long as they are free to make choices – either choices between competing products or the option not to buy at all. Indeed, it could be argued that by extending product choices and the range of techniques used to sell products, marketing is enhancing consumer sovereignty rather than eroding it. 
It should be noted, too, that although ‘clever’ marketing activity may persuade an individual to buy a product or service for the first time, it is unlikely to be the influential factor in subsequent purchases unless there is real value in the product. Thus, many customers complain about the methods used by some budget airlines to boost their revenue on the back of meager cost ticket prices but stick with them because they see them as value for money despite their poor customer service and suspect marketing practices.
It also suggested that skillful marketing can create needs. The argument to support this would be that nobody wanted an Apple iPhone before it was invented and that marketing has made it as a ‘must-have’ product that has provoked many competitive ‘look-alikes.’ This, however, confuses needs and wants. Nobody specified an iPhone before it was invented, but there has always been a need for portable communications, entertainment, and practical applications. Previously, these needs had been met by some separate devices such as mobile phones, digital audio players, sat-navs, newspapers, games consoles, and so on. Now technology has made available a means of satisfying these needs using one device. Creating further applications and greater functionality has produced something that consumers find very useful. It is common to see people extolling the virtues of this product simultaneously as they admit to not wanting one before they experienced it. At the time of writing, similar views can be found about tablet computers and e-book readers.
In these examples, marketing’s contribution was to identify in as much detail as possible what a customer needed and then to persuade him or her that a specific product or brand would provide the most effective means of satisfying the latent and expressed needs. The key is in providing a unique set of benefits that match real needs.
Underlying this view of marketing is the belief that consumers seek satisfactory solutions to their buying problems; first, they acquire information about available goods and services and their attributes and, eventually, by choosing that product that comes closest to solving their problem.
Most criticism is leveled at advertising
Much of the criticism leveled at marketing is, in fact directed at one aspect of it: advertising. Advertising practitioners themselves are fully conscious of these criticisms. These include the ideas that advertising:
  • Makes misleading claims about product or services
  • Uses hidden, dangerously powerful techniques of persuasion
  • By encouraging undesirable attitudes, has adverse social effects
  • Works through the exploitation of human inadequacy.
Advertisers themselves would point to the fact that advertising in all its forms is heavily controlled in most Western societies and cannot by itself achieve sustained patterns of repeat purchase.
The debate about marketing ethics also often confuses marketing institutions with the people who work in them. There are dishonest business people who engage in activities that are detrimental to their fellow-citizens. However, it seems a grave error to criticize marketing institutions because of a small number of unethical marketers’ practices. It is clear, for example, that there are advertisers who engage in deceptive practices designed to mislead and possibly defraud consumers. Nevertheless, the institution of advertising can be used to inform consumers about potentially beneficial new products, such as new energy-saving technologies and promote non-profit community services, such as theatres and state education. This argument can, of course, be applied to all marketing activities.
Consumerism and Marketing
Ironically, consumerism is pro-marketing
Closely connected with the issue of ethics in marketing is the issue of consumerism. This can be defined as the process of fostering an emphasis on, or preoccupation with, the acquisition of consumer goods. The consumerist movement seeks to moderate this process by promoting such practices as honest packaging and advertising, product guarantees, and improved safety standards. In this sense, it is a movement or a set of policies aimed at regulating products and services, and standards in manufacturing, selling, and advertising in the interests of the buyer. 
Ironically, consumerist movements’ aims are pro-marketing in that what they want is for marketing in business to be implemented in a sincere rather than cynical spirit. Cynical implementation of marketing practices, which consumerists claim has been all too common, is no better than high-pressure salesmanship or misleading puffery. The sincere implementation of a marketing approach entails respect for each individual customer served. An interpretation of the consumerist desire is that the relationship between a manufacturer and a customer, say, a capital goods market should be created in consumer markets. In so far as that is both economically feasible and what the consumer really wants, marketers should also want a more satisfactory relationship between organization and customer.
Customer, consumer and company objectives can all be satisfied by good marketing practice
The marketing of children’s toys provides an example of how customers, consumers and company objectives can all be satisfied by careful business practice. Today’s successful toy companies inform parents that their products are not potentially dangerous, not coated with lead paint, and not destroyed the hour after they are first pressed into active service. At the time of writing, Fisher-Price is still one of the most successful toy manufacturers. Since 1968 it has eschewed child-manipulative promotion, carefully tested its products with children for durability, safety, and purposeful play, and charged the prices necessary to make and market `good’ toys. The consequent sales and profit margins have been impressive. 
On the other side of the coin, McDonald’s, one of the strongest brands in the world, has been forced to make its food offering healthier to comply with changing customer tastes and the demands of consumer lobbyists.
In the end, the difference between ethical and unethical marketing is in the intent. The judgment about the ethicality of the plan is, however, down to the individual. In this, the extremes of intent never create problems; it is the grey or middle ground that is hard. To be an ethical marketing manager, it is therefore important to be ‘honest with yourself as well as others as to motivations and the moral codes you have decided to adhere to. Good intent should therefore support Good Growth and a more ethical economic recovery.
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