Food Marketing Ethics - Assignment Example

?Introduction Written regulations cannot possibly cover all potential marketing abuses and existing laws may be difficult to enforce. However, beyondthe written laws and regulations, business is also governed by social codes and rules of professional ethics (Kotler & Armstrong, 2004). Enlightened companies encourage their managers to look beyond the dictates of the regulatory system and do the right thing. The concept of ethics is very important in the day to day operations of any particular business especially with regards to food marketing. There is need for socially responsible business to strike a fine balance between its profit making goals as well as the need to protect the long term interests of their consumers and the environment. The concept of ethics usually involves conflicting interests whereby people can disagree about the right course of action in a given situation. Marketers are therefore re-examining their connections with social values and responsibilities for the social and environmental impact of their actions. Corporate ethics and social responsibility have become hot topics for every business and only a few misguided companies can ignore these issues. As such, this essay seeks to critically analyse the role played by ethics in the process of marketing food. This essay is divided into three sections and the first part is concerned with outlining what is considered to be the most important ethical issues currently facing the food retail industry while the second section is concerned with describing how Tesco is tackling the issue of ethics in food marketing. The third part will look at economic and social trends within the European Union (EU) which may pose a conflict to the consumers with regards to ethics in marketing of food. Section A In recent years, it can be noted that the concept of ‘ethics’ has played an increasing role in food marketing. As a point of departure, it is imperative to begin by defining the concept of ethics so as to be able to gain a clear understanding of the whole concept. Business ethics refers to the values, principles and standards that operate within business and these attempt to make a distinction between something that is morally good from bad (Rossouw, 2004). In this regard, values can be described as the “essential and enduring tenets” that help define the company and are “not to be compromised for financial gain or short term expediency,” (DesJardins, 2006, p.5). Values are obtained from a cultural environment which is made up of institutions and other forces that affect the society’s basic values, perceptions, preferences and behaviour these beliefs incline us to act in one way rather than the other (Kotler & Armstrong, 2004). There are many types of values which include financial, political, historical as well as religious among others. In as far as marketing of food is concerned, ethics may relate to a number of areas, for example, the healthiness of food, the effect of the food chain on the environment, and social effects of the food chain such as worker employment conditions. There are many factors as going to be outlined below that are considered to be the most important ethical issues currently facing the food retail industry. It is the responsibility of the organisation to ensure that the food they sale does not endanger the health of consumers or others. There is need to ensure that the organisation observes the health needs of the targeted consumers in order for it to remain viable. Whilst companies are not charity organisations, they need to safeguard the interests of the consumers with regards to their health concerns. For instance, genetically modified organisms (GMO) can be used to make food. However, these have come under criticism as a result of their side effects on the consumers’ health. This is an issue of ethical concern given that the organisation in question will need to take the health interests of the people into consideration of which failure to do that will result in negative publicity of the organisation involved. One other important ethical issue affecting the food industry is the aspect of safeguarding the interests of the environment. Organisations involved in the food industry ought to put measures to ensure that they do not cause significant damage to the environment in production, use or disposal of the products they will manufacture. Another important ethical consideration is to avoid the use of materials derived from endangered species as this will pose a challenge to the environment. It is the responsibility of every organisation to ensure that they protect the environment since it affects all sectors of the economy and welfare of the people at large. There is every need for the organisations to ensure that their activities do not involve cruelty to animals as this will negatively impact on their day to day operations. Another important ethical issue affecting the food industry is the aspect of religion. The people’ eating habits are determined by their religion and consumption of certain food is not allowed in some sections of the society. Organisations which are concerned about the welfare of the employees and the people at large in the society ought to take into consideration the religious beliefs of different people. For instance, the Moslem religion puts more emphasis on Halaal whereby all the food they consume should meet the standards of this system. Thus, organisations involved in food production and manufacturing should strive to give priority to the societal requirements as some religions do not allow the consumption of particular types of food. When ethics is applied to business, there is a tendency by some organisations to give priority to the profit oriented goals which negatively affects the viability of business. There is a correlation between identifying and implementing standards of conduct that can ensure that the activities of business do not impact negatively on the interests of the stakeholders. The concept of religion is very important in the operations of the organisation whereby effort should be made to avoid violating the norms and values of the people that are often shaped by their religious beliefs. There is need to create a fine balance between the organisation’s need to make profits while at the same time upholding the principles that shape the religious needs of the people in different societies. Thus, the stakeholder approach to business ethics is very important during the contemporary period. The stakeholder approach is an analytical way of observing and explaining how different constituencies are affected and affect business (Bowie & Duska, 1991, as cited in Weiss, 1994). The stakeholder approach is mainly concerned with the ethical consideration that businesses are expected to act in the best interests of the stakeholders involved while at the same time upholding the principle of their moral rights. This approach helps the organisation so set direction for its operations as well as to monitor the ethical status of the company. This also helps the organisations to create mutual understanding with the consumers as well as the employees which can help them to gain a competitive advantage since the customers will trust the products offered. Research has shown that an organisation that does not stay in constant touch with its stakeholders is likely to fail in its operations. Another important ethical consideration is that businesses should ensure that their operations in the production of food do not adversely affect the well being of the other countries. In some instances, it has been observed that developed countries have a tendency of exporting sub standard food to the developing countries in particular. It is the duty of all the organisations involved in food production to ensure that they comply with the safety standards set by their respective countries as well as other international bodies. The success of supermarket chains that operate internationally can be attributed to the concept of best practice which seeks to accommodate the interests of the consumers as well as promoting equity and mutual understanding among all the stakeholders. The aspect of best practice has its roots in consistency in the operations of the organisation where it strives to pursue its principles in an accountable and transparent manner. Section B Tesco is a supermarket chain with various retail outlets across the European Union region. As such, this organisation does not operate in a vacuum as there are rules imposed by the EU with regards to the operations of business within its jurisdiction. This section of the paper seeks to critically discuss some of the current threats and opportunities posed to this supermarket chain by the issue of ethics. Thus, according to Datamonnitor (2004), “Tesco PLC is the largest food retailer in UK, operating around 2,318 stores worldwide. It operates around 1,878 stores throughout the UK, and also operates stores in the rest of Europe and Asia.” Tesco offers a range of products both online and offline and it is headquartered in Hertfordshire, UK.” The FAIRTRADE Foundation and the Competition Commission are some of the regulatory institutions that set operational standards that ought to be respected by all chain supermarkets in the UK. It can be noted that FAIRTRADE is gaining significant priority in UK and it plays a role with regards to the ethical practices of the organisations operating in EU. Tesco is also affected by the Fairtrade regime in as far as the ethical considerations of the organisation are concerned. Basically, “FAIRTRADE is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers and workers who have been economically disadvantaged or marginalized by the conventional trading system.” Information about FAIRTRADE can be accessed on its official website from < http://www.fairtrade.org.uk/what_is_fairtrade/fairtrade_certification_and_the_fairtrade_mark/default.aspx>. FAIRTRADE is a tool that is used to ensure that the previously disadvantaged farmers as well as employees get a better deal in their business through the effective use of the FAIRTRADE mark. FAITRADE was established in 1992 in UK and the first products to carry the FAIRTRADE mark were launched in 1994. The FAIRTRADE Labeling Organisations International (FLO) sets the international standards that should be met by the products before they are released into the market and all the supermarket chains such as Tesco are compelled to comply with these regulations in order for them to operate effectively. Since the aim of FAIRTRADE is to help the previously disadvantaged farmers, supermarket chains are compelled to pay premium prices for the raw materials they will buy directly especially from the farmers who were disadvantaged by the trading system that used to exist. For instance, Tesco procures its raw coffee from developing countries such as Brazil and Mexico and it has to comply with the dictates of the FAITRADE Foundation. It ought to pay premium prices for these raw materials sourced from the other countries and this has a bearing on its operations. It can be noted that this poses a challenge to the ethical considerations of the organisation as it has to meet the standards of trade set by the FAIRTRADE Foundation. FAIRTRADE is also concerned with ethical consumerism which is based on the autonomy possessed by the consumers in making the organisations accountable to their operations (Kotler & Armstrong, 2004). Under the dictates of FAIRTRADE, consumers may not consume products that are likely to put their health at risk, products that can cause environmental damage or consume products that do not meet the ethical standards obtaining in their respective societies. As such, information obtained from the official website of FAIRTRADE, three out of every five Britons are aware of FAIRTRADE and this has a bearing on the operations of supermarket chains including Tesco. Thus, positive ethical consumption of food products is primarily concerned with purchasing products that have positive benefits that can be derived such as FAIRTRADE organic food. The customers will know that moral standards will have been followed in the production process of the food offered. This is likely to pose a threat to the viability of Tesco if it fails to comply with the demands of these regulations. It can be noted that the supermarket industry in UK is comprised of fierce competition and there are rival competitors such as Sainsbury, ASDA as well as Morrison. According to the FAIRTRADE official website, Sainsbury is a leading retailer of organic coffee hence these ethical considerations have a bearing on Tesco’s competitiveness. Information obtained from the research that was conducted by Datamonitor (2004), “Tesco has launched a Fairtrade grocery range of 15 products and this move highlights the growing consumer demand for higher ethical standards from retailers and producers.” The customers are increasingly focusing on the need to derive both functional and emotional value from the products they consume. In UK and Europe at large retail chain supermarkets are guided by certain policies in their operations and there are anti monopoly laws that exist as well as competition laws that promote many actors to penetrate the industry should they wish. Ethically, Tesco is supposed to pay attention to the regulations set by the law in protecting the needs and interests of the consumers. The Competition Commission for instance suggests that a supermarket should not account for more than 25% of the national market and these are some of the ethical considerations set by the government with regards to the operations of chain supermarkets (Datamonitor, 2004). Whilst business ethics refers to the values, principles and standards that operate within business and these attempt to make a distinction between something that is morally good from bad, it can be noted that government policies have a bearing on the operations of the chain supermarkets in UK. Section C Research has shown that economic trends in the EU are influencing the consumers to buy cheap food which is Fairtrade and this may pose a conflict to the consumers with regards to the issue of ethics. From the example given below, it can be seen that the most significant economic consumer trends obtaining in EU are somehow relevant to ‘ethics’ in food marketing. Indeed, the supermarket industry in the UK is characterised by stiff competition and a good example can be drawn from Sainsbury’s operations which is ideal in illustrating this point. For instance, according to research entitled ‘Sainsbury’s Marketing communication planning 2008-2009,’ Sainsbury is currently the most trusted ‘own brand’ among supermarkets. It can be noted that almost half of the shoppers have trust in its products and statistics obtained from this research show that 47% of its shoppers have trust in its own products compared to 27% for Tesco, 17% for ASDA and 15% for Morrison’s. During the recent global economic crisis, it can be noted that Sainsbury successfully performed well and it even snatched more customers from its rival competitors given that many consumers changed their buying habits whereby they shifted their taste to lower priced and ethical owned brands. Whilst some supermarkets witnessed a decline in the sales of premium priced products, Sainsbury managed to capitalise on this situation where its lower priced ‘own brands’ fared well compared to other supermarkets. For instance, their advertising campaign featuring Oliver Jamie offering family meals for less than five pounds made the brand name become more popular with the customers. Though it was not affected negatively by the global economic recession, there is need for Tesco to constantly appeal to the needs of the customers while at the same time upholding the principle of ethical considerations in the operations of the organisation. If the customers develop mutual trust with the ‘own product’ offered by the supermarket, they will shift their taste to that particular product. What is more important in this case is the need for the supermarket to offer lower priced own products that conform to the dictates of ethical consumerism as discussed above. In the case of Tesco, there is need for the organisation to ensure that they offer their own products that will appeal to as many consumers as possible and these should reflect that they meet moral principles of the customers. In order for Tesco to adapt to these trends in the economy over the next two to three years to gain competitive advantage in the food marketing, there is need for the supermarket to create a fine balance between offering lower priced food which is in compliance with the ethical standards of the consumers. On the other hand, the operations of Tesco in UK and Europe at large are guided by various social aspects given that UK in particular is a multicultural country with a lot of people hailing from different cultural backgrounds. Trends reflected by the growing number of immigrants in UK has an impact especially on how these consumers perceive the food brands offered by Tesco. Whilst Tesco is renowned for selling products that are satisfactory to the majority of the customers, it can be seen that the customers in UK have different tastes and an ethical issue which is of concern is that the organisation will need to create a balance between the changing tastes of the consumers and ethical considerations in marketing food. There has been a sharp increase in the demand for fast foods as a result of the changing trends in people’s lifestyles and there ought to be a correlation between the products offered by Tesco and the need to uphold the ethical principles maintaining the moral needs of the customers with regards to the food they will consume. In order to keep pace with the changing tastes as well as the changing value beliefs of the customers as well as the competitive environment, marketing oriented organisations especially in food like Tesco ought constantly scan the environment so as to be better positioned to know the needs of the customers as well as the changes obtaining in the external business environment (Kotler, 1999). There is need to establish value chain which is mainly concerned with establishing what the people actually want and why they want it. Thus, marketing in this case will play a pivotal role in creating satisfactory products that will be purchased by the customers. In this case, there is need for Tesco to create value which will exceed the expectations of the customers while at the same time meeting their moral demands in as far as food consumption is concerned. Conclusion Over and above, it can be concluded that the concept of ethics is very important in the day to day operations of any business especially with regards to food marketing. There is need for a socially responsible business to strike a fine balance between its profit making goals as well as the need to protect the long term interests of the consumers and the environment. Beyond the written laws and regulations, business is also governed by social codes and rules of professional ethics (Kotler & Armstrong, 2004). Enlightened companies encourage their managers to look beyond the dictates of the regulatory system and do the right thing. It has been observed that there are different factors that affect Tesco’s operations with regards to food marketing. Some of these factors include the regulatory policies imposed by the EU to ensure that chain supermarkets conduct themselves in an ethical manner with regards to marketing of food. The Competition Commission and Fairtrade are some of the policies that have a bearing on the operations of Tesco in relation to the issue of ethics. On the other hand, economic as well as social trends also have a bearing on the ethical considerations of the operations of the organisation in question. There is need for Tesco to create a fine balance between the need to satisfy the consumers while at the same time upholding the principles of ethics in their operations. (Words 3250) References Barrientos, S. & Dolan, C. 2006. Ethical sourcing in the global food system. Earthscan: London. Bugela, M.J. 1996. Living ethics: Developing values in mass communication. Allyn and Bacon: Boston. DesJardins, J. 2006. An introduction to business ethics. (2nd Edition). McGraw Hill International Edition: Boston. Fairtrade. Official website 2011. [online]. Fairtrade. Available from: http://www.fairtrade.org.uk/what_is_fairtrade/who_needs_fairtrade.aspx [Accessed 21 March 2011]. Hiti, S. 1999. Fundamentalism and family values inside corporations: Visions of ethical business. Financial times, Prentice Hall in association with Price Water House Coopers. Isaak, R.A. 2005. How the rich get richer and the poor get left further behind: The globalisation gap. Prentice Hall: CT. Kotler, P. & Armstrong G. 2004. Principles of Marketing. Pearson Education International: NJ. Kotler, P. 1999. Kotler on Marketing: How to create, win and dominate Markets. Free Press: London. McCarthy, J.E & Perreault, W.D 1990. Basic Marketing. International student Edition. (10th Edition). Irwin: Boston McIntosch, M. & Smith, P. 1999. Visions of ethical business. Financial times, Prentice Hall in association with Price Water House Coopers. Oliver, R.W. 2004. What is transparency? McGraw Hill: NY. Rossouw, D. 2004. Business Ethics: (3rd Edition). Oxford: CT. Sainsbury’s Marketing communication plan 2008-2009. [Online]. Available from: http://www.oppapers.com/essays/Sainsburys-Marketing-Communications-Plan-2008-209/178779 [Accessed 21 March 2011]. Tesco PLC Company Overview 2011. [Online]. Available from: www.datamonitor.com [Accessed 21 March 2011]. Weiss, J.W. 1994. Business ethics: A managerial, stakeholder approach. International Thompson Publishing: California. Read More