MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics

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Principles of Marketing MGT301

Lesson 43

Lesson overview and learning objectives:

This Lesson examines the social effects of private marketing practices. A marketing system should

sense, serve, satisfy consumer needs and improve the quality of consumers' lives. In working to

meet the consumer's needs, marketers may take some actions that are not approved of by all the

consumers or publics within the social sector. Marketing managers must understand the criticism

that the marketing function may encounter. By understanding the criticism, the manager is better

prepared to respond to it in a proactive manner. Some of the criticism is justified; some is not.

After this Lesson students should be able to Identify the major social criticisms of marketing.

Describe the principles of socially responsible marketing. Explain the role of ethics in marketing.

MARKETING AND SOCIETY

Responsible marketers discover what consumers want and respond with the right products at right

price to give good value to buyers, and profit to the producer. The marketing concept is a

philosophy of customer satisfaction and mutual

gain. Its practice leads the economy by an

invisible hand to satisfy the many and changing needs of millions of consumers. Not all marketers

follow the marketing concept; however private transactions may involve larger questions of public

policy (i.e., the illustration of the sale of cigarettes). Two major issues in marketing are ethics and

Social responsibilities which we will be discussing today.

A. Social Criticisms of Marketing

Marketing receives much criticism. Some of this is justified and some is not. Social critics claim

that certain marketing practices hurt individual consumers, society as a whole, and other business

firms.

a. Marketing's Impact on Individual Consumers:

Consumers have many concerns about how well the marketing system serves their interests. There

are six primary criticisms leveled at the marketing function by consumers, consumer advocates,

and government agencies.

Harming consumers through high prices.

ii. Deceptive practices.

iii. High-pressure selling.

iv. Shoddy or unsafe products.

v. Planned obsolescence.

vi. Poor service to disadvantaged consumers.

Harming consumers through high prices: Many critics charge the marketing system

causes prices to be higher than need be. Some factors to which these critics point are as

follows:

· High costs of distribution. Greedy intermediaries mark up prices beyond the value of

their services. There are too many intermediaries and they duplicate services. Resellers have

responded by saying that: the work performed by the intermediaries is necessary and takes

away the responsibility from the consumer or the manufacturer, the rising markup is really

the result of improved services, operating costs are driving up prices, in reality, profit

margins are low because of intense competition. Strong retailers pressure their channel

members to keep prices low.

· High advertising and promotion costs. Marketing is accused of driving up promotion

and advertising costs. Marketers respond by saying that: consumers want more than the

merely functional qualities of products, they want psychological benefits, branding, even

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though it may cost more, gives buyers confidence, heavy advertising is needed to inform

millions of potential buyers of the merits of a brand, Heavy advertising and promotion

may be necessary for a firm to match competitors' efforts. Companies are cost-conscious

and try to spend their promotional dollars wisely.

· Excessive markups. Critics charge that some companies mark up goods excessively. This

charge is responded by the marketers respond by saying as: most businesses try to deal

fairly with consumers because they want the repeat business, most consumer abuses are

unintentional, When shady marketers do take advantage of consumers, and they should be

reported to the authorities, Consumers often do not understand the reason for the high

markup.

ii. Deceptive Pricing: Marketers are sometimes accused of deceptive practices that lead

consumers to believe that they will get more value than they actually do. Three groups

exist with respect to these alleged practices:

1). Deceptive pricing includes such practices as falsely advertising "factory" or "wholesale"

prices, or a large reduction from a phony high list price.

2). Deceptive promotion includes such practices as overstating the product's features or

performance, luring the customer to the store for a bargain that is out of stock, or running rigged

contests.

3). Deceptive packaging includes exaggerating package contents through subtle design, not

filling the package to the top, using misleading labeling, or describing size in misleading terms.

Deceptive practices have led to legislation and other consumer protection actions. Marketers argue

that most companies avoid deceptive practices because such practices harm their business in the

long run. According to some experts, some puffery, however, will always occur.

iii. High-pressure selling: High-pressure selling is another criticism of marketing. Laws

require door-to-door salespeople to announce that they are selling a product. Also, buyers

have a "three-day cooling-off period" in which they can cancel a contract after rethinking

it.

iv. Shoddy and Unsafe products: Shoddy or unsafe products are another criticism leveled

against marketers. Complaints include: 1). Complaints about products not being made

well or services were not performed well. 2). Products deliver little benefit. 3). Product

safety has been a problem for several reasons:

a). Manufacturer indifference.

b). Increased production complexity.

c). Poorly trained labor.

d). Poor quality control.

Responses to these complaints from marketers are positive. Marketers in general want to make

beneficial and safe products.

v. Planned obsolescence: Planned obsolescence is a strategy of causing products to become

obsolete before they actually need replacement and is a criticism leveled by consumers.

Fashion is often cited as an example. Marketers respond that consumers like lifestyle

changes; they get tired of old goods and want a new look. Much of so-called planned

obsolescence is actually the normal interaction of competitive and technological forces in

a free society.

vi. poor service: In contemporary society poor service to disadvantaged consumers is another

criticism against marketing. Clearly, better marketing systems must be built in low-income

areas. Critics believe the poor have been exploited by marketers.

b. Marketing's Impact on Society as a Whole

Some criticisms have also been leveled at marketing because of its perceived negative impact on

society as a whole. Criticisms include marketing creating:

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False wants and too much materialism. People are judged by what they own rather than

who they are. This criticism perhaps overstates the power of business to create needs. Our

needs are influenced by other forces than just marketing needs. Some even see materialism

as a positive force.

ii. Producing too few social goods. There needs to be more of a balance between social

(public) and private goods. Options are the government could require more safety be built

into products (autos for example), or make consumers pay social costs.

iii. Cultural pollution. Constant assaults on privacy by advertising and noise

clutter. Marketing answers by saying: Marketers hope that their ads reach primarily the

target audience; ads make much of television and radio free to users and keep down the

costs of magazines and newspapers.

iv. Too much political power.

companies do promote and protect their own interests. They have a right to. Counter forces are in

place to offset business promotional and political power.

c. Marketing's Impact on Other Businesses

Critics charge that a company's marketing practices can harm other companies and reduce

competition. Three problems are involved:

1). Acquisitions of competitors. There may be too many of these according to some

acquisition is a complex subject, however, and sometimes acquisition may be good for

society.

2). Marketing practices that create barriers to entry. Patents and heavy promotional spending

are often cited

3). Unfair competitive marketing practices. Predatory competition is dangerous to the

overall well-being of the economy. To distinguish between what is predatory and what is

healthy competition is often difficult.

B. Marketing Ethics

Marketing Ethics are marketers' standards of conduct and moral values. People develop standards

of ethical behavior based on their own systems of values and that may differ from employer's

organizational ethics, which produces conflicts Conscientious marketers face many moral

dilemmas. Companies need to develop corporate marketing ethics policies--broad

guidelines

that everyone in the organization must follow. Areas of concern include:

1). Distributor relations.

2). Advertising standards.

3). Customer service.

4). Pricing.

5). Product development.

6). General ethical standards.

The finest guidelines cannot resolve all the difficult ethical situations a marketer faces. What

principle should guide companies and marketing managers on issues of

ethical and social

responsibility? Two general philosophies are used:

1). Issues are decided by the free market and legal system. Under this system companies and

their managers are not responsible for making moral judgments. Companies can do whatever the

system allows.

2). Issues are the responsibility of individual companies and managers. This approach says

that the company should have a "social conscience" that guides action. This is a more enlightened

philosophy.

Each company and marketing manager must work out a philosophy of socially responsible and

ethical behavior. Remember that written codes do not ensure ethical behavior. The issue of ethics

provides special challenges for international marketers. Bribery may be socially acceptable in one

country and completely illegal in another. Companies must commit to a single ethical standard

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that can be applied worldwide. Many industrial and professional associations have suggested codes

of ethics; many companies are now adopting their own codes. Companies are developing

programs to teach managers about important ethics issues and help them find the proper

responses. Still, written codes and ethics programs do not ensure ethical behavior. Given the

challenges of this century, companies that are able to create new values in a socially-responsible

way will have a world to conquer.

a. Consumerism:

Business firms have been the target of organized consumer movements Traditional sellers'

rights include:

1). Right to introduce any product in any size and style, provided it is not hazardous to

personal health or safety; or, if it is, to include proper warnings and controls.

2). Right to charge any price for the product, provided no discrimination exists among

similar kinds of buyers.

3). Right to spend any amount to promote the product, provided it is not defined as unfair

competition.

4). Right to use any product message, provided it is not misleading or dishonest in content

or execution.

5). Right to use buying incentive schemes, provided they are not unfair or misleading.

Traditional buyers' rights include:

1). Right not to buy a product that is offered for sale.

2). Right to expect the product to be safe.

3). Right to expect the product to perform as claimed.

4). Right to be well informed about important aspects of the product.

5). Right to be protected against questionable products and marketing practices.

6). Right to influence products and marketing practices in ways that will improve the

"quality of life."

Consumers have the right but also the responsibility to protect themselves instead of leaving this

function to someone else.

b. Environmentalism

Environmentalists are concerned with marketing's effects on the environment and with the costs

of serving consumers needs and wants. Environmentalism is an organized movement of concerned

citizens and government agencies to protect and improve people's living environment.

Environmentalists are not against marketing and consumption. They simply want people and

organizations to operate with more care for the environment. The marketing system's goal should

be to maximize "life quality." Companies are adopting policies of environmental sustainability

developing strategies that both sustain the environment and produce profits for the company. The

challenge is to develop a sustainable global economy. Environmental sustainability has several

strategies:

· Pollution prevention--this involves more than pollution control (cleaning up waste after it

has been created). It means eliminating or minimizing waste before it is created. Green

marketing programs have helped.

· Product stewardship--minimizing not just pollution from production but all

environmental impacts throughout the full product life cycle a]. Many companies are

adopting design for environment (DFE practices, which involve thinking ahead in the

design stage to create products that are easier to recover, reuse, or recycle.

· New environmental technologies--new technologies.

· Sustainability vision--serves as a guide to the future. It shows how the company's

products and services, processes, and policies must evolve and what new technologies must

be developed to get there. Environmentalism creates special challenges for global

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marketers because environmental policies vary widely between countries. There are no

uniform standards.

C. Enlightened Marketing

Enlightened marketing is a philosophy holding that a company's marketing should support the best

long-run performance of the marketing system. It has five principles:

a. Consumer-oriented marketing. A principle of enlightened marketing which

holds that the company should view and organize its marketing activities from the

consumer's point of view.

b. Innovative marketing. A principle of enlightened marketing that requires that a

company seek real product and marketing improvements.

c. Value marketing. A principle of enlightened marketing which holds that a

company should put most of its resources into value-building marketing

investments.

d. Sense-of-mission marketing. A principle of enlightened marketing that holds

that a company should define its mission in broad social terms rather than narrow

product terms.

e. Societal marketing. A principle of enlightened marketing which holds that a

company should make marketing decisions by considering consumer's wants, the

company's requirements, consumer's long-run interests, and society's long-run

interests. A societal oriented marketer wants to design products that are pleasing

and beneficial. Products can be classified according to their degree of immediate

consumer

satisfaction and long-run consumer benefit. Degree of satisfaction

might include:

· Deficient products are products that have neither immediate appeal nor

long-term benefits. Example: bad-tasting medicine.

· Pleasing products are products that give high immediate satisfaction but

may hurt consumers in the long-run. Example: cigarettes.

Salutary products are products that have low appeal but may benefit

consumers in the long-run. Example: seat belts and air bags.

· Desirable products are products that give both high immediate satisfaction

and high long-run benefits. Example: a tasty and nutritious food.

Key Principles for Public policy towards Marketing:

Certain public policy principles can be used to make the marketing more effective these principles

include full consumer and producer freedom, potential harms should be eliminated, producers

should meet the basic needs of the

Consumer and

Pr oducer Free dom

Producer Free dom

consumers, there should be economic

efficiency consumers and producers both

Curbiing Pottenttiial

Cur bn g Po en al

Harm

should be on beneficent in practicing the

Meettiing Bas iic

Mee ng Bas c

exchange process, producer should

Ne eds

ensure the innovation , consumer should

Ke y Priinciiplle s

Econom iic

Econom c

Ke y Pr nc p e s

Effffiiciency

E cien cy

for a Publliic Polliicy

for a Pub c Po cy

be provided full knowledge about the

Tow a rd Ma rke tiing

Tow a rd Ma rke t ng

IInnovattiion

n nova o n

products and should be protected against

any sort of unethical and illegal practices

Consumer

Educattiion

Educa on

by the producers,

Consumer

Prottecttiion

Pr oe c o n

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