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Introduction

There is a growing trend among academicians and professionals (Indian


Marketers and MNCs operating in India started realizing the importance of
CSR and ethics in marketing and their role in conducting the business which
takes care of the societys interest at the same time optimizing the profit of
their organizations.
Corporate social responsibility is the continuing commitment by business to
behave ethically and contribute to economic development while improving
the quality of life of the workforce and their families as well as of the local
community and society at large. Here society meaning customers and
people at large. It is an expression used to describe what some see as a
companys obligation to be sensitive to the needs of all the stakeholders in
its business operations. A companys stakeholders are all those who are
influenced by, or can be influenced by, or can influence, a companys
decisions and actions. These can include (but are not limited to): employees,
customers, suppliers, community organizations, subsidiaries and affiliates,
joint venture partners, local neighborhoods, investors and shareholders (or a
sole owner), Government and Media as per the Diagram-1. A variety of
terms are used sometimes interchangeably to talk about corporate social
responsibility (CSR): business ethics, corporate citizenship, corporate
accountability, sustainability. In its simplest terms it is: what you do, how
you do it, and when and what you say. Social responsibility and ethics are
blended together and applied in various discipline of management such as
HR, Finance, computer etc. Here the author is concentrating on CSR and
marketing ethics and its impact on the society. Ethics are a collection of
principles of right conduct that shape the decisions people or organizations
make. Practicing ethics in marketing means deliberately applying standards
of fairness, or moral rights and wrongs, to marketing decision making,
behavior, and practice in the organization. In a market economy, a business
may be expected to act in what it believes to be its own best interest. The
purpose of marketing is to create a competitive advantage. An organization
achieves an advantage when it does a better job than its competitors at
satisfying the product and service requirements of its target markets. Those
organizations that develop a competitive advantage are able to satisfy the
needs of both customers and the organization.
As our economic system has become more successful at providing for needs
and wants, there has been greater focus on organizations' adhering to ethical
values rather than simply providing products. This focus has come about for

two reasons. First, when an organization behaves ethically, customers


develop more positive attitudes about the firm, its products, and its services.
When marketing practices depart from standards that society considers
acceptable, the market process becomes less efficientsometimes it is even
interrupted. Not employing ethical marketing practices may lead to
dissatisfied customers, bad publicity, a lack of trust, lost business, or,
sometimes, legal action. Thus, most organizations are very sensitive to the
needs and opinions of their
Customers and look for ways to protect their long-term interests. Second,
ethical abuses frequently lead to pressure (social or government) for
institutions to assume greater responsibility for their actions. Since abuses
do occur, some people believe that questionable business practices abound.
As a result, consumer interest groups, professional associations, and selfregulatory groups exert considerable influence on marketing. Calls for social
responsibility have also subjected marketing practices to a wide range of
federal and state regulations designed to either protect consumer rights or to
stimulate trade. The Federal Trade Commission (FTC) and other federal and
state government agencies are charged both with enforcing the laws and
creating policies to limit unfair marketing practices. Because regulation
cannot be developed to cover every possible abuse, organizations and
industry groups often develop codes of ethical conduct or rules for behavior
to serve as a guide in decision making. The American Marketing
Association, for example, has developed a code of ethics .Self-regulation not
only helps a firm avoid extensive government intervention; it also permits it
to better respond to changes in market conditions. An organization's longterm success and profitability depends on this ability to respond.

Diagram-1 STAKEHOLDERS OF A FIRM

Marketing Alliances
At the outset, it is critical that we define what we mean by "marketing
alliances." A marketing alliance is a formal or informal arrangement between
organizations where each seeks through marketing activities gains that
would not be available to either without such an alliance. In our view, the
term alliances encompass two of the three types of marketing exchange
characterized by Gundlach and Murphy (1993). Also the concept of ethics
and social responsibility in marketing should be understood by the
institutions in the field of academic as well as industry. These authors
distinguish among transactional, contractual and relational exchanges. A
typical transactional exchange is a one-time event where, for example, A
sells to B. A contractual exchange is where A and B agree to a joint
undertaking for some fixed period of time, for example, where A and B
agree to carry out a six-month promotion of complementary product lines. A
relational exchange is one that theoretically has no limits, as when A and B
conduct a joint venture to market Product Y in Country Z. The last two may
be considered "alliances," differing mainly in their time frame and, by
extension, the attitudes, intentions and behaviors of the parties. In the
commercial sector and academic sector also such alliances may involve
equity investments by one or -- more typically --- all parties (cf. Varadarajan
and Cunningham 1995).

The concepts of Corporate Social Responsibility


(CSR)
CSR is viewed as a comprehensive set of policies, practices and programs
that are integrated into business operations, supply chains, and decisionmaking processes throughout the company wherever the company does
business and includes responsibility for current and past actions as well as
future impacts. The issues that represent a companys CSR focus vary by
business, by size, by sector and even by geographic region. In its broadest
categories, CSR typically includes issues related to : business ethics,
community investment, environment, governances, human rights, market
place and workplace .CSR goes beyond charity and requires that a
responsible company take into full account of the impact on all stakeholders

and on the environment when making decisions. This requires them to


balance the needs of all stake holders with their need to make a profit and
reward their shareholders adequately.
For the new generation of corporate leaders, optimization of profits is the
key, rather than the maximization of profit. Hence, there is a shift from
accountability to share holders to social responsibility to customers and
other stake holders. In todays competitive global marketing, ethics play a
vital role, because we are dealing with human values and beliefs. Business
spreads beyond boundaries. The marketer has to deal with cross country
culture. Many MNCS like Mc Donald and Nestle had faced lot of problems
because of neglecting ethical issues in their marketing practices. They have
incurred billions of dollars in monetary values and above all losing
thousands of valuable hybrid customers due to the adaptation of unethical
advertising & promotional strategies. According to experts, marketing is
viewed as human conduct and is subject to academic analysis and public
scrutiny. Ethics is the study of the moral principles that guide the conduct.
Historically, there have been two points of view on the study on ethics in
marketing. The firs is Let the buyer beware. From these points of view,
the rights of the seller are central. A company has little regard for
customers needs and wants. The other point of view is let the seller
beware. Here, customer satisfaction is taken to an extreme. No matter
what the customer does, it is ok. Which position is correct? How do we
resolve the inevitable conflicts brought by these competing viewpoints?

Corporate Social Responsibility (CSR)


and Ethics in Marketing:
Kotler and Levy, in their book, Corporate Social Responsibility define
corporate social responsibility as a commitment to improve community
well-being through discretionary business practices and contributions of
corporate resources.
Some of the benefits of being socially responsible include (a) enhanced
company and brand image
(B) Easier to attract and retain employees (c) increased market share (d)
lower operating costs and

(E) Easier to attract investors. A socially responsible firm will care about
customers, employees, suppliers, the local community, society, and the
environment. CSR can be described as an approach by which a company (a)
recognizes that its activities have a wide impact on the society and that
development in society in turn supports the company to pursue its business
successfully and (b) actively manages the economic, social, and
environmental and human rights. This approach is derived from the
principles of sustainable development and good corporate governance.
Marketing managers within different firms will see some social issues as
more relevant than others. The relevance of a given social issue is
determined by the companys products, promotional efforts, and pricing and
distribution policies but also by its philosophy of social responsibility.

Relationship Marketing and Ethics


Nowadays, most ethicists believe that Relationship Marketing is a
reasonable practice leading to positive relationships between buyers and
sellers. Relationship marketing requires that rules are not necessarily
contractual... Relationship marketing allows buyers and sellers to work
together. However, there are disadvantages to this approach- relationship
marketing requires time to develop a list of expected conduct or rules of
behavior. According to a recently published book on this subject, a shift in
emphasis in marketing ethics towards buyers interests and away from
sellers interests characterizes the new country. If this is true, new
challenges are presented for marketing ethics and professionals in the field
of marketing who want to conduct business in an ethical way.

Green Marketing and Ethical Issues

The next important area the marketer need to know about what is the
relevance of Social Marketing in order to protect the environment and to
improve the quality of life and are concerned with issues that include
conservation of natural resources, reducing environmental pollution,
protecting endangered species, and control of land use. The three Rs of
environmentalism are Reduce, Reuse, and Recycle. Many companies are
finding that consumers are willing to pay more for a green product. Toyota
has become quite successful with their hybrid cars. Green marketing refers
to the development and distribution of ecologically-safe products. It refers to
products and packages that have one or more of the following
characteristics: (1) are less toxic, (2) are more durable, (3) contain reusable
materials, or (4) are made of recyclable material. In short, these are products
considered environmentally responsible. To sight an example One
Canadian Executive stated that Any marketing executive who does not put
a green filter on their strategies is looking at losing market share. The
whole idea of disposal is going to become unacceptable. In West Germany
and Canada, Procter & Gamble has found high consumer acceptance of
pouches of liquid detergents and fabric softeners so consumers can refill
rather than discard large plastic bottles.

Cause Related Marketing and Ethics


Cause-related marketing should not be confused with social marketing. A
key difference is that a major purpose of cause-related marketing is to help a
business. It might be used to improve the image of the firm or to increase
market share. The technique involves associating a business with a cause.
Social marketing, on the other hand, is generally not associated with any
company and issued solely to help society by dealing with a social problem.
Cause-related marketing has to be done correctly or it can hurt a company. A
firm may look like it is exploiting a charity. It is important for the firm to be
transparent and honest about what it is doing. There should also be a fit
between the company and the cause. A good fit would be, for example,
might be a bottled water company and a cause, it deals with providing clean
water for poor people in Asia and Africa.

Social Marketing and Ethics


Social Marketing is defined as the use of marketing principles and
techniques to influence a target audience to voluntarily accept, reject,

modify, or abandon behaviour for the benefit of individuals, groups or


society as a whole. Social marketing is usually done by a non-profit
organization, government, or quasi-government agency. The goal is either to
steer the public away from products that are harmful to them and / or society
(e.g., illegal drugs, tobacco, alcohol, etc.) or to direct them towards
behaviors or products that are helpful to them and / or society (e.g., having
family meals, praying together, etc.).

Ethnic Marketing and Ethics


Another aspect the marketer has to know about Ethnic Issues while going for
global marketing and still take care of Ethics. Culture plays an important
role in defining ethical standards because dissimilar cultures socialize their
people differently, according to what is acceptable behavior. The potential
significance of ethnic groups for marketing justifies inquiry into the moral
judgments, standards, and rules of conduct exercised in marketing decisions
and situations arising from decisions whether or not to focus on individual
ethnic groups within an economy. Identifying and targeting ethnic groups for
marketing purposes are tasks fraught with many ethical difficulties. In a
multicultural society consisting of a dominant group and many diverse,
minority groups defined by ethnicity, these problems can be expected to
increase substantially. Consequently, marketers may include minority ethnic
consumers in their mainstream marketing programs. In itself, this has
ethical consequences. Alternatively, if marketers seek to target individual
minority ethnic groups within the same economy a further set of ethical
consequences needs to be considered. The international environment is
recognized as attracting more difficulties for marketers (Kotler et sl., 1998,
p. 833) because their ethics parameters may not match the notion of
good in the foreign country where they wish to operate. This is a problem
because it may compromise successful international market penetration, that
is, a firms ability to compete in the international market. To the extent that
international operations are part of an overall competitive strategy (either
because of a firms need to have a presence where its main customers
operate, or because the firm must/needs to follow its competitors) this also
can influence a firms ultimate survival in its domestic market. Ethical
concerns are thus clearly important both in the parent country and also in the
host country.. One possible approach to ethnic marketing ethics within one
country, understood as ethics applied to marketing practice targeting
minority ethnic groups, is to apply the same procedures that firms use to deal
with ethics problems in the international context (Kotler et al., 1998).
Ethnic minority consumers, particularly in their first time of settlement in a

new country, may be inexperienced in relation to what is available, where,


and for how much, as well as being unaware of market dos and donts. This
justifies their possible reliance on referral or recommendation by others they
trust, eventually their minority ethnic group of affiliation, particularly when
communication difficulties limit the number and range of accessible
secondary sources. Within such a scenario, ethnic minority consumers may
be perceived as disadvantaged because they are arguably more vulnerable to
be taken advantage of through deceptive practices (Kotler et al., 1998).
Targeting of minority ethnic consumers with ethically unsound strategies
may lead to alienation of the ethnic markets. Careful consideration needs to
be exercised before ethnic marketing strategies are developed and
implemented.

Ethical Norms and Values for


Marketers
Professional associations and accrediting bodies have identified guidelines
for ethics in marketing. According to one of those associations, the American
Marketing Association, the following rules guide marketing behavior. The
American Marketing Association commits itself to promoting the highest
standard of professional ethical norms and values for its members. Norms
are established standards of conduct that are expected and maintained by
society and / or professional organizations. Values represent the collective
conception of what people find desirable, important and morally proper.
Values serve as the criteria for evaluating the actions of others. Marketing
practitioners must recognize that they not only serve their enterprises but
also act as stewards of society in creating, facilitating and executing the
efficient and effective transactions that are part of the greater economy. In
this role Marketers should embrace the highest ethical norms of practicing
professionals and the ethical values implied by their responsibility toward
stakeholders (e.g., customers, employees, investors, channel members,
regulators and the host community).
Responsibility of the marketer. Marketers must accept responsibility for the
consequences of their activities and make every effort to ensure that their
decisions, recommendations, and actions function to identify, serve, and
satisfy all relevant publics: customers, organizations and society
Honesty, Integrity and Quality are far more important than quick profits
(Shel Horowitz)

Rights and duties in the marketing exchange process: - Participants should


be able to expect that products and services are safe and fit for intended
uses; that communications about offered products and services are not
deceptive; that all parties intend to discharge their obligations, financial and
otherwise, in good faith; and that appropriate internal methods exist for
equitable adjustment and / or redress of grievances concerning purchases
Organizational relationships: - Marketers should be aware of how their
behavior influences the behavior of others in organizational relationships.
They should not demand, encourage, or apply coercion to encourage
unethical behavior in their relationships with others.
Conduct your business so as to build long term loyalty. When you get a
customer, you want to keep that customer and build a sales relationship that
can not only last years, but also create a stream of referral business. (Shel
Horowitz)
Marketers must do no harm. This means doing work for which they are
appropriately trained or experienced so that they can actively add value to
their organizations and customers. It also means adhering to all applicable
laws and regulations and embodying high ethical standards in the choices
they make.
Marketers must foster trust in the marketing system. This means that
products are appropriate for their intended and promoted uses. It requires
that marketing communications about goods and services are not
intentionally deceptive or misleading. It suggests building relationships that
provide for the equitable adjustment and / or redress of customer grievances.
It implies striving for good faith and fair dealing so as to contribute toward
the efficacy of the exchange process.
Marketers must embrace, communicate and practice the fundamental ethical
values that will improve consumer confidence in the integrity of the
marketing exchange system. These basic values are intentionally aspiration
and include honesty, responsibility, fairness, respect, openness and
citizenship.

Education and Ethics


Ethics and values become an important concern in the US in the 80s. In US
there are about 500 courses offered in the field of Ethics by various
universities. Hayward Business School earmarked USD 30 Million in 1987

to focus on teaching Business ethics to MBAs. In India AICTE (The All


India Council for Technical Education ) recommended the inclusion of
Business ethics as a course in MBA curriculum in 1995. The aim of
teaching Ethics or Ethics in marketing particular is to provide the budding
marketing managers / managers to
a) Share knowledge, build skills and develop minds of the young
entrepreneurial managers of tomorrow
b) To provide and clarify and insights into concepts of business so that
young managers avoid Business misconduct, when they really go and
conduct the business.
c) To create High level of integrity moral and social awareness so that they
can decide when faced with business dilemma.
(These points substantiated researchers first objective). IIM Luck now has
started a course that seeks to provide students with an understanding of
changing relationship between business and environmental management (As
per February 2007, Economic Times). The budding managers should be
imparted with the knowledge of social responsibility and ethics. IIM-C is
already having a Management centre for Human Values, and they are
publishing a journal on Human values. They are also offering a course on
Ethics and Values in Business.

Role of Social Responsibility in Indian


companies:
In a global CSR study undertaken in 7 countries (viz. India, South Korea,
Thailand, Singapore, Malaysia, The Philippines and Indonesia) by the U.K.
based International Centre for CSR in 2003, India has been ranked second in
the list. This ideally shows the value that is important to customers in India.
Bharat Petroleum and Maruthi Udyog have been ranked as the best

companies in the country. The next comes in the list are Tata Motors and
Hero Honda. Canara Bank, Indal, Gujarat Ambuja and Wipro are involved in
community development work of building roads, running schools and
hospitals. ACC has been rendering social service for over Five decades.
They are setting up schools, health centers, agro-based industries and
improving the quality of rural life. BHEL is actively involved in the Welfare
of the surrounding communities is helping the organization to earn good will
of the local people BHEL is also providing drinking water facilities,
construction of roads and culverts, provision of health facilities, educational
facilities, and so on companies like ONGCs are encouraging sports by
placing good players on their pay rolls. TISCO, TELCO and HINDALCO
won the award for excelling in CSR, jointly given by FICCI and Business
world for the 2003. ONGC has also committed resources by adopting a few
villages to implement president Dr. Abdul Kalams idea of PURA (Provision
of Urban Amenities in Rural Areas). NTPC has established a trust to work
for the cause of the physically challenged people. Similarly in the private
sectors like Infosys, Wipro and Reliance are believed to be most socially
responsible corporations. In 1999 Kofi Annan of the United Nations invited
corporate leaders for a Global Compact to promote nine principles covering
three areas: human rights, labor rights, and sustainable development. Today,
India can be legitimately proud to have had the second largest number of
companies from any country subscribing to the Global Compact. Several
public sector companies have joined together to form the Global Compact
Society of India.

SOCIAL RESPONSIBILITY OF BUSINESS


BY MULTINATIONAL COMPANIES IN
INDIA
In the last twenty years, MNCs have played a key role in defining markets
and influencing the behavior of a large number of consumers. Globalization
and liberalization have provided a great opportunity for corporations to be
globally competitive by expanding their production base and market share.
Recent years have seen many progressive organizations in our country
keenly playing a social role. In some of these organizations the approach has
been to take up only business-centric activities, i.e., which are directly
relevant to their business. The guiding philosophy in these organizations is
that social reasonability is good only if it pays. This approach benefits both
the organization and the stake-holder. Thus, ITC has been afforesting
private degraded land to augment the supply of raw material for its paper

factory. Similarly, Hindustan Lever which requires good quality water for
the manufacture of its food products has been improving the quality of water
in many communities. Companies like Cadbury India, Glaxo and
Richardson Hindustan are helping farmers to grow crops which serve as raw
materials for them. Lipton in Eath district of Uttar Pradesh has started
veterinary hospitals in the region from where it buys milk. British Gas
(which sells compressed natural gas to India) has recently started teaching
unemployed youngsters how to become mechanics for gas-based autorickshaws in Delhi. In some other organizations the approach has been to
take up such philanthropic activities in which they can make a difference.

Case study:
Coca Cola
As one of the largest and most global companies in the world, Coca Cola
took seriously its ability and responsibility to positively affect the
communities in which it operated. The companys mission statement, called
the Coca-Cola Promise, stated: The Coca-Cola Company exists to benefit
and refresh everyone who is touched by our business. The Company has
made efforts towards good citizenship in the areas of community, by
improving the quality of life in the communities in which they operate, and
the environment, by addressing water, climate change and waste
management initiatives. Their activities also included The Coca Cola
Africa Foundation created to combat the spread of HIV / AIDS through
partnership with governments, UNAIDS, and other NGOs, and The Coca
Cola Foundation, focused on higher education as a vehicle to build strong
communities and enhance individual opportunity Coca Colas footprint in
India was significant as well. The Company employed 7000 citizens and
believed that for every direct job, 30 40 more were created in the supply
chain. Like its parent, Coke Indias Corporate Social Responsibility (CSR)
initiatives were both community and environment focused. Priorities
included education, where primary education projects had been set up to
benefit children in slums and villages, water conservation, where the
Company supported community based rainwater harvesting projects to
restore water levels and promote conservation education, and health..
QUESTION:
1. WHAT WAS THE REASON FOR COCA COLA TO TAKE SUCH A
MEASURE?
2. WHAT WAS THE MEASURE TAKEN BY THEM?
3. WHAT WAS THE EFFECTS AFTER ALL THESE MEASURE?

Ethical Conflict faced by the


Marketers:
Marketers must be aware of ethical standards and acceptable behavior. This
awareness means that marketers must recognize the viewpoints of three key
players: the company, the industry, and society. Since these three groups
almost always have different needs and wants, ethical conflicts are likely to
arise. Ethical conflicts in marketing arise in two contexts: First, when there
is a difference between the needs of the three aforementioned groups (the
company, the industry, and society) a conflict may arise. Second and ethical
conflict may arise when ones personal values conflict with the organization.
In either case, a conflict of interest is a possible outcome. An example of the
first type of conflict is the tobacco industry. Cigarettes have for many
decades been a lucrative business. So, cigarette and tobacco marketing have
been for companies and good for the tobacco industry. Many thousands of
people around the world are employed in the tobacco industry. So, the world
economy has been somewhat dependent on cigarettes and tobacco. However,
cigarettes are harmful to society. There is documented proof that cigarette
smoking is harmful to health. This is an ethical conflict for cigarette
marketers. An example of the second type of conflict, when ones personal
values conflict with the organizations occurs when a leader in the company
seeks personal gain (usually financial profit) from false advertising. Cures
for fatal diseases are one type of product that falls into this category of
ethical conflict: In their greed to make a profit, a marketer convinces those
who may be dying from an incurable disease to buy a product that may not
be a cure, but which a desperately ill person (or members of his or her
family) may choose to purchase in an effort to save the dying family
member suffering. Promoting and marketing such products

violates rules of marketing ethics. Ethical dilemmas facing marketing


professionals today fall into one of three categories: tobacco and alcohol
promoting, consumer privacy, and green marketing. Standards for ethical
marketing guide business in efforts to do the right thing. Such standards
have four functions: to help identify acceptable practices, foster internal
control, avoid confusion, and facilitate a basis for discussion.

Consumerism
Consumerism is concerned with broadening the rights of consumers. The
concepts of social responsibility and consumerism go hand-in-hand. If
every organization practiced a high level of social responsibility the
consumer movement might never have begun. Consumerism is a struggle
for power between buyers and sellers; specifically, it is a social movement
seeking to increase the rights and powers of buyers in relation to sellers.
Sellers rights and powers are presented in the following list: To introduce
any product in any size and style they wish into the marketplace, so long as
it is
not hazardous to personal health or safety or if it is hazardous, to introduce it
with the proper warnings and controls To price the product at any level
they wish, provided there is no discrimination among similar classes of
buyers To spend any amount of money they wish to promote the product,
so long as the promotion is not defined as unfair competition To formulate
any message they wish about the product provided that it is misleading or
dishonest in content or execution To introduce any buying incentive
schemes they wish In contrast, here are buyers rights and power: To refuse
to buy a product that is offered to them To except the product to be safe
To expect the product to essentially match how the seller represented it
To receive adequate information about the product It is in the best interest
of marketers to understand the level of consumer standards and the nature of

consumer perceptions, as well as what is required to foster realism and


accuracy among consumers.

Marketing and the Natural


Environment
Another significant area of social concern is the environment. Marketing is
ultimately dependent on the use of scarce resources to fulfill human needs,
without harming or unnecessarily using scare resources. Marketing
managers should help to determine which products are produced, and which
products are indirectly affecting the environment.

UNFAIR OR DECEPTIVE MARKETING


PRACTICES
Marketing practices are deceptive if customers believe they will get more
value from a product or service than they actually receive. Deception, which
can take the form of a misrepresentation, omission, or misleading practice,
can occur when working with any element of the marketing mix. Because
consumers are exposed to great quantities of information about products and
firms, they often become skeptical of marketing claims and selling messages
and act to protect themselves from being deceived. Thus, when a product or
service does not provide expected value, customers will often seek a
different source.
Deceptive pricing practices cause customers to believe that the price they
pay for some unit of value in a product or service is lower than it really is.
The deception might take the form of making false price comparisons,
providing misleading suggested selling prices, omitting important conditions
of the sale, or making very low price offers available only when other items
are purchased as well. Promotion practices are deceptive when the seller
intentionally misstates how a product is constructed or performs, fails to
disclose information regarding pyramid sales (a sales technique in which a
person is recruited into a plan and then expects to make money by recruiting
other people), or employs bait-and-switch selling techniques (a technique in
which a business offers to sell a product or service, often at a lower price, in

order to attract customers who are then encouraged to purchase a more


expensive item). False or greatly exaggerated product or service claims are
also deceptive. When packages are intentionally mislabeled as to contents,
size, weight, or use information, that constitutes deceptive packaging.
Selling hazardous or defective products without disclosing the dangers,
failing to perform promised services, and not honoring warranty obligations
are also considered deception.

OFFENSIVE MATERIALS AND


OBJECTIONABLE MARKETING
PRACTICES
Marketers control what they say to customers as well as and how and where
they say it. When events, television or radio programming, or publications
sponsored by a marketer, in addition to products or promotional materials,
are perceived as offensive, they often create strong negative reactions. For
example, some people find advertising for all products promoting sexual
potency to be offensive. Others may be offended when a promotion employs
stereotypical images or uses sex as an appeal. This is particularly true when
a product is being marketed in other countries, where words and images may
carry different meanings than they do in the host country.
When people feel that products or appeals are offensive, they may pressure
vendors to stop carrying the product. Thus, all promotional messages must
be carefully screened and tested, and communication media, programming,
and editorial content selected to match the tastes and interests of targeted
customers. Beyond the target audience, however, marketers should
understand that there are others who are not customers who might receive
their appeals and see their images and be offended.
Direct marketing is also undergoing closer examination. Objectionable
practices range from minor irritants, such as the timing and frequency of
sales letters or commercials, to those that are offensive or even illegal.
Among examples of practices that may raise ethical questions are persistent
and high-pressure selling, annoying telemarketing calls, and television
commercials that are too long or run too frequently. Marketing appeals
created to take advantage of young or inexperienced consumers or senior
citizens including advertisements, sales appeals disguised as contests,

junk mail (including electronic mail), and the use and exchange of mailing
listsmay also pose ethical questions. In addition to being subject to
consumer-protection laws and regulations, the Direct Marketing Association
provides a list of voluntary ethical guidelines for companies engaged in
direct marketing

ETHICAL PRODUCT AND


DISTRIBUTION PRACTICES
Several product-related issues raise questions about ethics in marketing,
most often concerning the quality of products and services provided. Among
the most frequently voiced complaints are ones about products that are
unsafe, that are of poor quality in construction or content, that do not contain
what is promoted, or that go out of style or become obsolete before they
actually need replacing. An organization that markets poor-quality or unsafe
products is taking the chance that it will develop a reputation for poor
products or service. In addition, it may be putting itself in jeopardy for
product claims or legal action. Sometimes, however, frequent changes in
product features or performance, such as those that often occur in the
computer industry, make previous models of products obsolete. Such
changes can be misinterpreted as planned obsolescence.
Ethical questions may also arise in the distribution process. Because sales
performance is the most common way in which marketing representatives
and sales personnel are evaluated, performance pressures exist that may lead
to ethical dilemmas. For example, pressuring vendors to buy more than they
need and pushing items that will result in higher commissions are
temptations. Exerting influence to cause vendors to reduce display space for
competitors' products, promising shipment when knowing delivery is not
possible by the promised date, or paying vendors to carry a firm's product
rather than one of its competitors are also unethical.
Research is another area in which ethical is sues may arise. Information
gathered from research can be important to the successful marketing of
products or services. Consumers, however, may view organizations' efforts
to gather data from them as invading their privacy. They are resistant to give
out personal information that might cause them to become a marketing target
or to receive product or sales information. When data about products or
consumers are exaggerated to make a selling point, or research questions are
written to obtain a specific result, consumers are misled. Without self-

imposed ethical standards in the research process, management will likely


make decisions based on inaccurate information.

DOES MARKETING OVERFOCUS ON


MATERIALISM?
Consumers develop an identity in the market place that is shaped both by
who they are and by what they see themselves as becoming. There is
evidence that the way consumers view themselves influences their
purchasing behavior. This identity is often reflected in the brands or products
they consume or the way in which they lead their lives.
The proliferation of information about products and services complicates
decision making. Sometimes consumer desires to achieve or maintain a
certain lifestyle or image results in their purchasing more than they need or
can afford. Does marketing create these wants? Clearly, appeals exist that
are designed to cause people to purchase more than they need or can afford.
Unsolicited offers of credit cards with high limits or high interest rates,
advertising appeals touting the psychological benefits of conspicuous
consumption, and promotions that seek to stimulate unrecognized needs are
often cited as examples of these excesses.

SPECIAL ETHICAL ISSUES IN


MARKETING TO CHILDREN
Children are an important marketing target for certain products. Because
their knowledge about products, the media, and selling strategies is usually
not as well developed as that of adults, children are likely to be more
vulnerable to psychological appeals and strong images. Thus, ethical
questions sometimes arise when they are exposed to questionable marketing
tactics and messages. For example, studies linking relationships between
tobacco and alcohol marketing with youth consumption resulted in increased
public pressure directly leading to the regulation of marketing for those
products.

The proliferation of direct marketing and use of the Internet to market to


children also raises ethical issues. Sometimes a few unscrupulous marketers
design sites so that children are able to bypass adult supervision or control;
sometimes they present objectionable materials to underage consumers or
pressure them to buy items or provide credit card numbers. When this
happens, it is likely that social pressure and subsequent regulation will
result. Likewise, programming for children and youth in the mass media has
been under scrutiny for many years.
In the United States, marketing to children is closely controlled. Federal
regulations place limits on the types of marketing that can be directed to
children, and marketing activities are monitored by the Better Business
Bureau, the Federal Trade Commission, consumer and parental groups, and
the broadcast networks. These guidelines provide clear direction to
marketers.

ETHICAL ISSUES IN MARKETING TO


MINORITIES
The United States is a society of ever-increasing diversity. Markets are
broken into segments in which people share some similar characteristics.
Ethical issues arise when marketing tactics are designed specifically to
exploit or manipulate a minority market segment. Offensive practices may
take the form of negative or stereotypical representations of minorities,
associating the consumption of harmful or questionable products with a
particular minority segment, and demeaning portrayals of a race or group.
Ethical questions may also arise when high-pressure selling is directed at a
group, when higher prices are charged for products sold to minorities, or
even when stores provide poorer service in neighborhoods with a high
population of minority customers. Such practices will likely result in a bad
public image and lost sales for the marketer.
Unlike the legal protections in place to protect children from harmful
practices, there have been few efforts to protect minority customers. When
targeting minorities, firms must evaluate whether the targeted population is
susceptible to appeals because of their minority status. The firm must assess
marketing efforts to determine whether ethical behavior would cause them to
change their marketing practices.

ETHICAL ISSUES SURROUNDING THE


PORTRAYAL OF WOMEN IN
MARKETING EFFORTS
As society changes, so do the images of and roles assumed by people,
regardless of race, sex, or occupation. Women have been portrayed in a
variety of ways over the years. When marketers present those images as
overly conventional, formulaic, or oversimplified, people may view them as
stereotypical and offensive.
Examples of demeaning stereotypes include those in which women are
presented as less intelligent, submissive to or obsessed with men, unable to
assume leadership roles or make decisions, or skimpily dressed in order to
appeal to the sexual interests of males. Harmful stereotypes include those
portraying women as obsessed with their appearance or conforming to some
ideal of size, weight, or beauty. When images are considered demeaning or
harmful, they will work to the detriment of the organization. Advertisements,
in particular, should be evaluated to be sure that the images projected are not
offensive.

Ethical Issues in International


Marketing

A. History of Ethics
Ethics is a branch of philosophy that studies morals and values. Interest in
ethics and ethical codes has been around for a long time. Centuries ago,
Aristotle referred to character, which he called ethos, as the most potent
means of persuasion (Lane Cooper, 1960). He also identified elements of
virtue as justice, courage, temperance, magnificence, magnanimity,
liberality, gentleness, prudence, and wisdom. In Roman times, the emperor
Justinian was the first to incorporate ethics into the legal system and to
establish schools to educate lawyers concerning ethics morality, and law.
Napoleon established a code of thirty-six statutes based on the concept that
all citizens, regardless of circumstances of birth or social stature, should be
treated fairly and equally. Indeed, every civilization has recognized the need
for establishing laws and codes to guide human relationship and behavior
(Metcalfe, 2003: 74).
Ethics studies the differences between right and wrong, and through these
studies philosophers have developed several theories. Some major ethical
theories are egoism, intuitionism, emotivism, rationalism, and utilitarianism.
Egoism is the belief that people should only look at how the consequences
of an action affect them. Intuitionism is the belief in an immediate awareness
of moral value. Emotivism is the belief that ethical decisions are expressions
of emotion. Rationalism focuses on the metaphysical aspects of ethics.
Utilitarianism in ethics considers how moral actions produce the greatest
overall good for everyone (www.questia.com).

B. Ethical Universals and National


Cultures

1. What Is Culture?
Academics and researchers have never been to agree on a simple definition
of culture. In the 1870s, the anthropologist Edward Taylor defined culture as
that complex whole which includes knowledge, belief, art, morals, law,
custom, and other capabilities acquired by man as a member of society
(Taylor, 1871). As other capabilities, we can include economic and political
philosophy, religion, language and education systems.
Especially, religion is very important in shaping ethical systems refer to a set
of moral principles, values, that are used to guide and shape behavior. Most
of the world`s ethical systems are the product of religions (Hill, ibid: 105).
Dutch Management Professor Geert Hofstede refers to culture as the
software of the mind and argues that it provides a guide for humans on
how to think and behave; it is a problem-solving tool (Hofstede, 1984: 21).
Business consultant E. Hall gives a better definition for international
marketers: The people we were advising kept bumping their heads against
an invisible barrier...We knew that what they were up against was a
completely different way of organizing life, of thinking and of conceiving
the underlying assumptions about the family and the state, the economic
system, and the man himself (Hofstede, ibid: 21).
Most traditional definitions of culture center around the notion that culture is
the sum of the values, rituals, symbols, beliefs and thought processes that are
learned, shared by a group of people, and transmitted from generation to
generation (Herskovitz,1952: 634). Values mean abstract ideas about what a
group believes to be good, right, and desirable. If we put it differently,
values are shared assumptions about how things ought to be (Mead, 1994:
7). On the other hand, values are rules and guidelines that prescribe
appropriate behavior in particular situations.

2. Ethical Perceptions and Culture


A research conducted by Armstrong reveals that there is a relationship
between the cultural environment (Australia, Singapore and Malaysia) and

the perceived ethical problems. In another study, Armstrong finds out the
most frequently cited problem of Australian International Business
Managers is gifts/favours/entertainment and that this problem may be related
to the culture where the international business is being conducted. And the
most important ethical problem to Australian international managers is largescale bribery (Armstrong, 1992).
Although, different cultural environments result in different ethical
perceptions in international marketing, for the sake of ethical consistency, it
is necessary to generate internationally applicable ethical rules and
regulations. As a matter of fact, a finding of an empirical research conducted
by Armstrong proposes that The Australian general managers disagreed that
it is necessary to compromise one`s ethics to succeed in international
marketing (Armstrong, ibid: 161).

C. Ethical Approaches in International


Marketing
Due to the globalization of markets and production, ever increasing number
of international marketing personnel have to deal with ethical issues in
cross-cultural settings. Murphy and Laczniak (1981: 58) asserted two
decades ago that as more firms move into multinational marketing, ethical
issues tend to increase.Actually, international marketers are often criticized
for ethical misconduct (Armstrong et al., 1990: 6-15). In a cross-cultural
environment, marketers are exposed to different values and ethical norms
(Nill, 2003: 90-104). Which ethical position should marketers take when
acting in a foreign culture? In other words, whose ethics do we use in
international marketing? is very important to be answered. DeGeorge
answers this question as our ethics; our ethical values are not like a coat
that we put on in certain seasons and places throw off elsewhere. We cannot
leave our ethics behind as we venture around globe. If we think we can, or if
we have no ethics, then, of course, the question is beside the point
(DeGeorge, Business Credit, 2000: 50).
In International Marketing, ethical decision- making process can be
influenced by many ethical approaches. These approaches can be classified
descriptive-prescriptive and communicative approach (Nill, 2003: 90), and
normative (prescriptive), and descriptive (positive) theory of marketing
ethics approach (Hunt and Vitel.1986: 5-15).

1. Descriptive Approach
Descriptive ethics describe the values and moral reasoning of individuals
and groups and attempt to provide an understanding of the ethical decisionmaking process (Schopenhauer, 1979). It is assumed that the ethical
decision-making process affected by a variety of individual, situational, and
contextual factors such as personal experiences, opportunity, the
organizational environment and the cultural environment (Nill, ibid: 91).

2. Normative Approach
Normative ethics suggest an answer to the general moral question of what
ought to do (Schlegelmilch, 1998; Murphy and Laczniak, 1981, Chonko,
1995). These researchers are concerned with the justification of moral norms
and ethical values. It has been debated for many years whether moral
responsibility can be attributed to business organizations. Some years ago,
ethics have nothing to do with international business; then, normative ethics
cannot be a concern for business corporations. Some scholars discuss that
business organizations cannot assume moral responsibility. Only individuals
acting on behalf of the corporation are morally motivated, have intensions,
and can be held accountable (Ranken, 1987: 633-37).
On the other hand, some scholars argue that some aspects of the organization
are not reconcilable with moral responsibility. Organizations serve a purpose
and in that sense are not entirely autonomous. Organizations can never ends
in themselves; they have been created for a specific purpose. The
organization cannot be held responsible for actions that go beyond or against
that purpose (Wilmot, 2001: 161-169).
Normative approaches can be classified as deontological theories and
teleological theories. One of the purposes of these theories is to develop
guidelines or rules to assist international marketers in their efforts to behave
in an ethical fashion (Hunt and Vitell, 1986: 5-15). Fundamental difference
between these theories is that deontological theories focus on the specific
actions or behaviors of an individual, whereas teleological theories focus on
the consequences of the actions or behaviors.

a. Deontological Evaluations

Deontologists believe that certain features of the act itself other than the
value it brings into existence make an action or rule right (Frankena, 1963).
Deontological views have a rich intellectual history dating back at least as
far as Socrates. For them the problem has been to determine the best set of
rules to live by. Examples proposed have been the golden rule of doing
unto others as you would have them do unto you (Sidgwick, 1907).
According to Laczniak; international marketers have certain duties, under
most circumstances, constitute moral obligations that include the duties of
fidelity, gratitude, justice, beneficence, self-improvement and noninjury.

b. Teleological Evaluation
Teleologists suggest that people ought to determine the results of various
behaviors in a situation and evaluate the goodness or badness of all the
consequences. A behavior is then ethical if it produces a greater balance of
good over evil than any available alternative (Nill, Ibid). Teleology can be
divided into two subcategories as egoism and utilitarianism (Ferrell et al.,
1989: 55-64).

(1). Egoism
Egoism defines rightness in terms of the consequences for the individual
(Meng, 1998: 333-352). It postulates that one should choose actions that
result in the maximum of good for oneself (Rosen, 1978).

(2). Utilitarianism
In contrast to the egoist,the utilitarian does not minimize bad or maximize
his/her own good in general. Ethical universalism (utilitarianism) holds
that an act is right only if it creates the greatest good for the greatest number.
Hobbes and Nietzsche were ethical egoists but such philosophers as G.E.
Moore and John Stuart Mill were ethical Universalists. If we explain these
theories with an example; deontologists do not tell a lie and they do not
consider the results of the action, on the other hand, teleologists could tell a
lie if they save a life, or when telling the truth hurts another person.

3. Dialogic Approach

As a third approach proposed by Nill and Shultz (1997: 4) is communicative


approach as an alternative ethical framework for macro marketers. Dialogic
idealism combines moral universalism with moral relativism by suggesting
universally valid rules that prescribe how an ideal dialogue is to be
conducted without imposing moral core values or hyper norms. Thus, the
actual outcome of the dialogue will depend on its participants. Only the way
in which the dialogue should be conducted can be seen as a universal
obligation for everyone who is truly motivated in participating in the
dialogue.
Depending on the nature of the ethical problem and specific situational
requirements a dialogic approach could be a helpful tool for marketers. Nill
(2003: 92-97) argues that more work is needed to find out how a
communicative approach can be implemented as a real-world corporate
ethical responsibility approach.

D. Ethical Problems in International


Marketing
The moral question of what is right or appropriate poses many dilemmas for
domestic marketers. Even within a country, ethical standards are frequently
not defined or always clear (Cateora and Graham: 142). The problem of
business ethics is infinitely more complex in international marketplace,
because value judgments differ widely among culturally diverse groups.
That which is commonly accepted as right on one country may be
completely unacceptable in another. Giving business gifts of high value, for
example, is generally condemned in the United States, but in many countries
of the world gifts are not only accepted but also expected (www.businessethics.org).
Upon examination of existing ethical frameworks in the field of international
marketing from a macro marketing perspective, it is argued that marketers
cannot always rely on universally accepted ethical norms, such as hyper
norms or core values that have been suggested by a deluge of marketing
literature (Dunfee, 1995; Dunfee, Smith, and Ross, 1999: 14; DeGeorge,
2000). Some basic moral values could be used in evaluating international
marketing ethical issues. Violations of basic moral values in international
marketing settings should be accepted as ethical problems.
After studying the literature related to international marketing, it is easily
seen that most of the marketing ethics studies involve the use of scenarios as

research instruments and relate to the following marketing sub-disciplines


(Armstrong, 1992: 167): market research, retail management, purchasing
management, advertising management, marketing management, industrial
marketing, and marketing education. Few studies relate to International
Marketing Ethics have been most prominent (Armstrong and Everett,
1991:61-71; Armstrong, Stening, Ryands, Marks, and Mayo, 1990: 6-15;
Armstrong, 1992). Major International Marketing Ethical Problems derived
from applied researches by Armstrong (Ibid) are presented with their short
definitions as follows:

Traditional Small Scale Bribery- involves the payment of small sums


of money, typically to a foreign official in exchange for him/her violating
some official duty or responsibility or to speed routine government actions
(grease payments, kickbacks).

Large Scale Bribery- a relatively large payment intended to allow a


violation of the law or designed to influence policy directly or indirectly (eg,
political contribution).

Gifts/Favours/Entertainment- includes a range of items such as:


lavish physical gifts, call girls, opportunities for personal travel at the
company`s expense, gifts received after the completion of transaction and
other extravagant expensive entertainment.

Pricing - includes unfair differential pricing, questionable invoicing


where the buyer requests a written invoice showing a price other than the
actual price paid, pricing to force out local competition, dumping products at
prices well below that in the home country, pricing practices that are illegal
in the home country but legal in host country (e.g., price fixing agreements).
Products/Technology - includes products and technology that are banned
for use in the home country but permitted in the host country and/or appear
unsuitable or inappropriate for use by the people of the host country.
Tax Evasion Practices - used specifically to evade tax such as transfer
pricing (i.e., where prices paid between affiliates and/or parent company
adjusted to affect profit allocation) including the use of tax havens, where
any profit made is in low tax jurisdiction, adjusted

Internet marketing ethics issues

There is great importance of the internet marketing or advertising ethical


issues. The ethics are the cultural values of the society. It is the internet
marketing in a society where legal and ethical limits are pushed to the max
and how the attitude pervades those around us that if there are no rules
against something then it is ok to do, why even ask about ethics and values
on the Web? Because, it affects you; The Internet is a growing and a
continually evolving creature that will live on in perpetuity. As such, it
would be wise to ponder the e business legal and Internet marketing ethical
issues.
Whatever is written and published online will be there forever. Imagine the
billions upon billions of text information pages that are and will be stored
for a long time. There is even a site where you can go Way Back to check
out archives of other websites and view pages that were created at the
beginning of their infancy. Additionally, video, films, movies, and audio in
various applications formats are also viewable. Now, with the new wireless
web mail from cell phones and other communication devices, the Internet
will be affecting more lives than ever before. Security and privacy concerns
along with e-business regulatory issues will become more prevalent.
It will become more difficult to figure out who you can trust online; with all
the unethical, illegal, and Internet marketing and online advertising frauds
and E-business email scams. If you are writing copy and maintaining a
client's e-business or ecommerce website consider the following consumer
privacy and legal matters: What you say when copywriting and publishing
for a client is a reflection of how they are viewed to the rest of the world.
Additionally, consider carefully what is published on blogs for short. A blog
is simply a website where daily, weekly, or monthly personal or corporate
thoughts, ideas, and happenings can be published and shared with others.
When dealing with ethics in a B2B company and B2C clients there is a
major degree of trust and responsibility that is imparted to a person or group
that maintains the Web site. There are many legal and web site regulatory
issues involved. Electronic copyright, e-commerce, credit/cash policies,
international trade, tariffs, privacy, digital media offers, and security are a
few of the items to be considered.

CONCLUSION
Because marketing decisions often require specialized knowledge, ethical
issues are often more complicated than those faced in personal life and
effective decision making requires consistency. Because each business
situation is different, and not all decisions are simple, many organizations
have embraced ethical codes of conduct and rules of professional ethics to
guide managers and employees. However, sometimes self-regulation proves
insufficient to protect the interest of customers, organizations, or society. At
that point, pressures for regulation and enactment of legislation to protect the
interests of all parties in the exchange process will likely occur. Several
forces are driving companies to practice a higher level of corporate social
responsibility: rising customer expectations, changing employee
expectations, government legislation and pressure, the inclusion of social
criteria by investors, and changing business procurement practices.
Companies need to evaluate whether they are truly practicing ethical and
socially responsible marketing. Business success and continually satisfying
the customer and other stakeholders are closely tied to adoption and
implementation of high standards of business and marketing conduct. The
most admired companies in the world abide by a code of serving peoples
interests, not only their own. The following are the suggestions that the
society must use the law to define, as clearly as possible, those practices that
are illegal, anti-social, or anticompetitive. Next, companies must adopt and
disseminate a written code of ethics, build a company tradition of ethical
behavior, and hold its people fully responsible for observing ethical and
legal guidelines. And, individual marketers must practice a social
conscience in their specific dealings with customers and various
stakeholders. The future holds a wealth of opportunities for companies.
Technological advances in solar energy, online networks, cable and satellite
television, biotechnology, and telecommunications promise to change the
world as we know it. As the same time, forces in the socioeconomic,
cultural, and natural environments will impose new limits on marketing and
business practices. Companies that are able to innovate new solutions and
values in a socially responsible way are the most likely to succeed. It is my
belief that good marketing is ethical marketing. Good marketing is about
satisfying and developing a long-term relationship with our customers.
Caring about your customers not only results in profits (or achieving your
organizations objectives if an organization is not-for-profit), it is the ethical

thing to do. Deceiving customers may help a firms profits in the short-run,
but is not the way to build a successful business. The same goes for social
responsibility. A firm has to care about all stakeholders: customers,
employees, suppliers and distributors, local communities in which they do
business, society, and the environment.

BIBLIOGRAPHY
The above all the information we got it from:

WWW.GOOGLE.COM

Vipul Prakashan

{SEM II}

BUSINESS ENVIRONMENT

PREFACE
WHAT IS ETHICS?
The terms ethics, refers to a code of conduct that guides an individual while
dealing with others. Ethics means the rules or principles that define right and
wrong conduct. It is a study of individual and collective moral awareness,
judgment, character and conduct. It relates to the social rules and cardinal
vales that motivate people to be honest in dealing with others. Such
ethical rules (code of conduct) are determined largely by customs traditions
and prevailing environment. Certain ethical vales such as honesty and
fairness are universal and stable over centuries. Ethical rules of conduct
provide guidelines for human behavior that will preserve a societys, a
groups or an individual persons notion of morality.
Ethics directs human behavior and also differentiates between good and bad,
right and wrong and between fair and unfair human behavior or actions. It
creates decency, decorum and discipline in the behavior of individuals and
also in the society.
The term Ethics is derived from the Greek word ethos which refers to
character. According to Webster dictionary ethical means conforming to
professional standard of conduct. Ethical action means an action which is
socially and morally good. Such actions are fair and not harmful to others.
According to Hurtly, ethics can be defined as a system of moral values. It is
concerned with that branch of philosophy which deals with values relating to
human conduct\behaviour.