Ethical Issues in Today’s Marketing

Marketing and psychology are extremely interconnected in modern world. It takes some knowledge of basic psychology and human behavior to succeed in marketing. But using psychological methods is not only the single connection. There is also another side: morals and ethics. Morals direct people as they make decisions in their personal and professional lives. Ethics help create boundaries regarding what is acceptable and what is not, since these behaviors are related to moral feelings about right and wrong.

Over the years advertising and marketing communication messages have created a lot of debatable ethical issues, due to the public belief that advertisements nowadays deeply affect the way people perceive themselves and the world surrounding them, including crucial actions and behaviours. Ethics issues in marketing are important, given the fact that marketing is expected to identify, predict and satisfy customer requirements profitably.

That question has never had a satisfactory answer, but in recent years it has become a hot button issue. The world was suffering through a crippling economic downturn made worse by unscrupulous business practices. The vast disparity between corporations and their customers has made ethical business practices an extremely relevant issue. Companies realize the importance of acting in more ethical way, and broadcasting this transformation to their customers. One of the easiest ways to achieve this is through their marketing practices. If a company makes an effort to advertise more ethically, it reflects positively on every area of that business.

What is ethical marketing?

Ethical marketing is less of a marketing strategy and more of a philosophy that informs all marketing efforts. It seeks to promote honesty, fairness, and responsibility in all advertising. Ethics is a notoriously difficult subject because everyone has subjective judgments about what is “right” and what is “wrong.” For this reason, ethical marketing is not a hard and fast list of rules, but a general set of guidelines to assist companies as they evaluate new marketing strategies.

There are distinct advantages and disadvantages to ethical marketing. Unethical advertising is often just as effective as it is unethical. And since unethical behavior is not necessarily against the law, there are many companies who use unethical advertising to gain a competitive advantage.

Many people buy diet pills even though they are rarely, if ever, effective. This is because some diet pill companies use exaggerated and manipulative claims to essentially trick customers into buying these products. If that same company committed to using ethical advertising they would probably go out of business. However sneaky their business model may be, it is not illegal and it is keeping their doors open.

The role of marketing ethics has been studied from two perspectives: The normative approach – which prescribes the ethical standards and offers guidelines with regard to marketing practice; and the Positive approach – describes and understands ethical practices through empirical work.

Principles of ethical Marketing

• All marketing communications share the common standard of truth.
• Marketing professionals abide by the highest standard of personal ethics.
• Advertising is clearly distinguished from news and entertainment content.
• Marketers should be transparent about who they pay to endorse their products.
• Consumers should be treated fairly based on the nature of the product and the nature of the consumer (e.g. marketing to children).
• The privacy of the consumer should never be compromised.
• Marketers must comply with regulations and standards established by governmental and professional organizations.
• Ethics should be discussed openly and honestly during all marketing decisions.

Who employs ethical marketing?

Every company has the opportunity to engage in ethical marketing. Any business, from the smallest mom and pop store to the biggest multinational corporation can choose to be open, honest, and fair when they advertise to their customers. When done in a thoughtful way, ethical marketing can be an economical and effective form of advertising. Similarly, unethical advertising doesn't guarantee higher sales or lower advertising costs.

Some companies operate according to lofty personal principles. For these companies, advertising in an ethical way is a natural and necessary extension of their corporate character. Corporate responsibility can be a major selling point to consumers who are interested in more than just price and quality. Companies that are known for treating workers fairly, sourcing sustainable materials, environmental stewardship, and charitable donation have to reflect these principles in their marketing efforts.

For other companies, ethical marketing will be little more than an opportunity to boost their credibility. Domino's pizza, for example, carried out a well known advertising campaign in which they showed consumers pictures of real Domino’s pizzas without the studio photography that makes them look so perfect. This was a refreshing look behind the artifice of much advertising, but this did not signal a more open and honest relationship between Domino's and the pizza buying public. The campaign was considered an attention seeking stunt at best.

5 Common Unethical Marketing Practices

1. Misleading advertising.

Misleading ads are more than just unethical—they’re illegal. The Federal Trade Commission (FTC) regulates “truth in advertising,” mandating that businesses make accurate statements in their advertising campaigns and, when possible, back their claims with scientific evidence. However, it’s common for advertisers to exaggerate certain features and downplay others in order to make their products look as attractive as possible, so the line becomes somewhat blurry. The ethical line here is when your claims start to be unprovable; for example, tobacco cigarettes were originally advertised as “healthy.” A more recent example is Nutella, a sugary hazelnut spread that was pitched as part of a nutritious breakfast for children—the company was sued, ultimately reimbursing up to $20 to anyone who bought Nutella products for this reason.

2. Black-hat link building.

Media exposure is almost always a good thing for businesses, and earning inbound links to your company website is the single best way to boost your organic search rankings. There are ethical ways to build links and increase mentions of your brand; the most common is to use guest posting opportunities to write high-quality content for your target audience that cites one of your brand’s pieces of original research. However, using black-hat link building techniques, such as by spamming people’s comment sections, forum threads, or even going as far as hacking websites to put a self-serving link somewhere in them screams of a lack of ethics.

3. Contacting people without consent.

Have you ever thought about buying a list of email addresses so you can bulk up your company’s subscriber list? You’re not the first one. Many businesses have used this tactic to contact people who they otherwise wouldn’t have known. Remember our friends at the FTC? They also enforce a law called the CAN-SPAM act, and under it, you’re legally allowed to email people without their consent—but for one time only. Even that single contact can start irritating people, making your uninvited communication do more harm than good for your brand image, so don’t push the limits here. You’re better off building your contact lists organically.

4. Insensitive controversy.

Stirring up a bit of healthy controversy can be an effective way to get more attention; you can stand out as a thought leader by presenting an unpopular opinion, and cultivate discussion among your readers. However, when you venture into a world of controversy haphazardly, you’ll probably end up making more enemies than new fans. Pepsi made this mistake recently when they tried to use an ad to introduce their product into a Black Lives Matter protest—and while the ad tried to evoke a positive tone, their intentional attempt to get political backfired in a big way.

5. Emotional exploitation

One of the most effective ways to advertise a business is to call to people’s emotions. Making them laugh or evoking a sense of nostalgia helps consumers forge a small bond with your brand. However, when you intentionally evoke rage or sadness in a tasteless way, you could be seen as exploiting emotions, rather than sympathizing with them. Rather than a single example here, I’m going to reference a chain of advertisements that attempted to exploit the 9-11 terrorist attacks as a way to earn customer sympathy. These ads often seem well-intentioned, showing respect for surviving family members, firefighters, and New Yorkers, but the facts that these messages are being used to hock products are what make them offensive and unethical.

How is an ethical marketing plan developed and implemented

Ethical marketing doesn’t refer to a plan in and of itself, but offers tools for companies to evaluate the marketing strategies they use in the past, present, and future. If a company decides that an ethical marketing strategy can increase their profits or advance their public image, they can take steps to revise their existing marketing. In some cases this involves minor changes; in others it will require entirely new ad campaigns.

Any ethical marketing effort will begin with a careful analysis of the company, its customers, and the markets it operate within. Ethical marketing has many advantages, but few companies would undertake an ethical marketing strategy if it reduces profits. Careful research is the best way to predict the effects of a change in strategy. If ethical marketing proves to be cost prohibitive, many companies will abandon the effort.

A company will then decide which features of their advertising to perform in ethical ways. As previously mentioned, the field of ethics is notoriously abstract. What is right to one may be wrong to another. Marketing professionals must reach an agreement about how they want to deliver their campaigns. They might decide to focus on making honest claims, avoiding marketing to children, or falsely criticizing competitors. A delicate balance has to be struck between the truth of the ad and its ability to persuade the customer.

Finally, ethical marketers need to make difficult choices about how to leverage the capitol of their ethical decisions. For most companies, the simple knowledge that they are doing the right thing will not be enough of a motivating factor. Ethical marketing often highlights the ethical choices a company has made in order to improve their public reputation. This can be a powerful way to connect with customers, but it also runs the risk of seeming self congratulatory. Any effort at ethical marketing has to balance a company’s self interest with their social responsibility.

One company which embodies the spirit of ethical marketing is The Body Shop, a worldwide chain of bath and body stores. Since their inception they have been committed to treating workers fairly, avoiding animal testing, using organic products, and promoting healthy body images. These values are often at the center of their marketing efforts. The ethical nature of the company is highlighted as a way to differentiate themselves from their competitors in the cosmetics industry.

Skeptical customers

Most consumers approach advertising with a healthy degree of skepticism. Even the least informed consumer knows that not every claim made by every advertiser is true. The chart below, compiled from data from an AdWeek Media poll, shows just how skeptical consumers really are. Fewer than 20% of respondents believed in advertising even most of the time. It is clear that consumers have become cynical about the ads they see. Ethical marketing can be an effective way to restore some of the trust that has been lost between consumers and advertisers.

The Advantages of Ethical Behavior in Business

In a business setting, being ethical means applying principles of honesty and fairness to relationships with coworkers and customers. Ethical individuals make an effort to treat everyone with whom they come in contact as they would want to be treated themselves.

Build Customer Loyalty

Consumers may let a company take advantage of them once, but if they believe they have been treated unfairly, such as by being overcharged, they will not be repeat customers. Having a loyal customer base is one of the keys to long-range business success because serving an existing customer doesn’t involve marketing cost, as does acquiring a new one. A company’s reputation for ethical behavior can help it create a more positive image in the marketplace, which can bring in new customers through word-of-mouth referrals. Conversely, a reputation for unethical dealings hurts the company’s chances to obtain new customers, particularly in this age of social networking when dissatisfied customers can quickly disseminate information about the negative experience they had.

Retain Good Employees

Talented individuals at all levels of an organization want to be compensated fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work they do and not on favoritism. They want to be part of a company whose management team tells them the truth about what is going on, such as when layoffs or reorganizations are being contemplated. Companies who are fair and open in their dealings with employees have a better chance of retaining the most talented people. Employees who do not believe the compensation methodology is fair are often not as dedicated to their jobs as they could be.

Positive Work Environment

Employees have a responsibility to be ethical from the moment they have their first job interview. They must be honest about their capabilities and experience. Ethical employees are perceived as team players rather than as individuals just out for themselves. They develop positive relationships with coworkers. Their supervisors trust them with confidential information and they are often given more autonomy as a result. Employees who are caught in lies by their supervisors damage their chances of advancement within the organization and may risk being fired. An extreme case of poor ethics is employee theft. In some industries, this can cost the business a significant amount of money, such as restaurants whose employees steal food from the storage locker or freezer.

Avoid Legal Problems

At times, a company’s management may be tempted to cut corners in pursuit of profit, such as not fully complying with environmental regulations or labor laws, ignoring worker safety hazards or using substandard materials in their products. The penalties for being caught can be severe, including legal fees and fines or sanctions by governmental agencies. The resulting negative publicity can cause long-range damage to the company’s reputation that is even more costly than the legal fees or fines. Companies that maintain the highest ethical standards take the time to train every member of the organization about the conduct that is expected of them.

Conclusion

All things considered, 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.