Unethical Behavior in the Marketing - Term Paper Example

Marketing system: - Marketing system has been prepared to offer benefits to organizations, society. Its basic business function always closely relates to public. A marketing system should recognize, provide, and satisfy the needs of its consumers and help them to improve the quality of life. This close relationship demands for moral values in practicing the different functions of business. However, some marketers have taken several actions that are not in the benefits of society. This is where they have been criticized about their actions. Marketers must be aware of the ethical and social values demanded in the functions of marketing. Marketing ethics & social responsibilities include ethics in the marketing as the means to apply values of equality, ethical demands, behavior, and practices of marketing decision-making process in the organization. Gradually, many companies are reacting to the need to offer policies and guidelines to help the marketing managers to deal with the requirement of marketing ethics. Marketing ethics are defined as “Moral principles that define right and wrong behavior in marketing (Ferrel, 2001)”. Many law and regulations of ethical values have been issued to match the standard of society. At the very least, marketers are expected to follow these laws and regulations. On the other hand, social responsibility means “an obligation of the organization to maximize its positive impact and to minimize its negative impact on society”. (Ferrel, 2001) Ethical behavior in the marketing is so important, that it will lead to develop customer positive attitude towards the organization, its products, and its services. If any organization is not applying any kind of ethical code of conduct, it will not only lead them to less competent to satisfy its customer. As a result, many of the marketing organizations are very responsive to follow the code of conduct to meet the needs and wants of customer and to protect their own long-term interests. However the question of the ethics arises in the distribution of the products in the market. Sales person pressurize the vendor to buy more products more than they need. Applying pressure on the vendors, cause them to reduce the display space for a competitor, which is unethical. Criticism on Marketing:- As marketing is the business function that is closely related to the society, so everything in it directly influences the society. Marketing has been criticized by the society for some social and individual reasons. By considering these criticisms, managers can respond well in the positive way. These criticisms are following: 1. Primary criticism 2. General criticism Primary criticism:- These primary criticisms are on the basis of the impact of marketing functions on the individual consumers. It includes: (Michele 2006) Deceptive practices High Prices High pressure selling Poor quality or unsafe products Planned obsolescence Poor services to consumers Deceptive practices:- Deceptive practices can be in the form of falsification, errors and misleading practices. Marketing practices can be deceptive when a customer is considering that they will get more value from a product and service than they in reality receiving. As consumers are aware of great number of information about organization and its products, so they are unconvinced and doubtful of advertising and they try to protect themselves from its deception. As result, they search for alternatives. Deceptive pricing can make the customer to consider that “the price they pay for some unit of value in a product or service is lower than it really is” (enotes). It also includes practices such as falsely advertising “factory” or “wholesale” prices or a large price decrease from a fake high retail list price. These deceptive practices can also take the form of false price comparison, offering misleading selling prices, or providing low price offers when customer will also purchase other items of the company. Many companies are misstating the quality and performance of their products in the promotion program on the TV. In these programs, they hire professional experts to mislead to the consumer about the functions and performance of the product. It encourages the consumers to purchase their products. In real, the product is far away from the quality standards that were shown on the TV. Packaging deception includes exaggerating package contents through subtle design, using misleading labeling, or describing size in misleading terms. Selling hazardous or defective products without disclosing the dangers, failing to perform promised services, and not honoring warranty obligations are also considered deception. (Michele 2006) High Prices:- Managers also have to endure critics because of the higher prices of the products and services. These higher prices are because of high costs of distribution, high advertising & promotion costs and excessive markups. Critics say that the intermediaries charge the markup prices beyond the value of their services. “Critics charge that there are too many intermediaries, that intermediaries are inefficient, or that they provide unnecessary or duplicate services. As a result, distribution costs too much, and consumers pay for these excessive costs in the form of higher prices” (Michele 2006) Resellers disagree with that notion. They says that the markups reflect services that consumers themselves wants, like larger stores and assortments, more service, longer store hours, return privileges etc. According to them, the competition in retailing is so severe that margins are relatively low. If they charge high then their competitors will come with low prices to attract the customer. Intense advertising and product promotion is also pushing the products and services prices up. The money that is spending on the advertising also adds cost to the product price. Marketers argue that it also adds value by informing the prospective customer about the accessibility and qualities of a product. Also, intense advertising and promotion may be essential for a firm to match competitors’ efforts. At the same time, companies are cost-conscious about promotion and try to spend their money wisely. (Baker 2000) Critics also blame that various companies mark up goods extremely. They point to the drug industry, where a pill costing 5 cents to make may cost the consumer $2 to buy. Marketers respond that most businesses try to deal reasonably with consumers because they want to construct customer relationships and repeat business. Marketers also respond that consumers often don’t understand the reasons for high markups. (Baker 2000) High pressure selling:- Salespeople are occasionally blamed of high-pressure selling that convinced people to buy goods they had no thought of buying. Marketers know that buyers often can be talked into buying useless or unnecessary things. Salespeople are trained to convey soft, canned talks to attract purchase. High-pressure selling can arise because of the competition among the salespersons to win the prizes for top sellers. But high-pressure selling is not good for long-term relationships. Such tactics will not lead to loyal customers and, as a result, is unlikely to lead to long term success. Laws require door-to-door and telephone salespeople to announce that they are selling a product. Buyers also have a “three-day cooling-off period” in which they can cancel a contract after rethinking it. In addition, consumers can complain to Better Business Bureaus or to state consumer protection agencies when they feel that undue selling pressure has been applied. Poor quality or unsafe products:- The internet and TV shopping was very popular. But now it is losing its charm. Because the products shown are of very fine quality and the functions performed by them are highly satisfied. After the purchase of the product, the customer came to know that they are of low quality and barely perform those functions that were described by the marketer. They lack the needed quality; many products are not made well. Second complaint by the customers is that many products deliver little benefit, or that they might even be harmful. Product safety has been a problem for numerous reasons, including company unresponsiveness, increased product complexity, and poor quality control. Mainly companies want to produce quality goods. The way a company deals with product quality and safety problems can damage or help its reputation. Companies selling poor-quality or unsafe products risk damaging conflicts with consumers. (James 2006) Planned obsolescence:- Marketing practice whereby products are designed to become out of date long before they actually need replacement. Planned obsolescence capitalizes on such things as material wear-out, style changes, or functional changes and is said by its critics to increase waste, resource shortages, and environmental pollution. (Denison, McDonald 1995). Some marketers intentionally hold back attractive functional features, then introducing them later to make old model obsolete. Like Mobile phones and other electronic things become obsolete when there new version is introduced with new functions and features. Marketers responds that the consumers demand change, they want new style and look that is much different of the old one. Like in electronics, clothes, cars etc. Companies that hold back new features run the risk that competitors will launch the feature first and steal the market. Poor services to consumers:- Lastly, the American marketing system has been blamed of serving disadvantaged consumers disappointingly. For example, critics argue that the urban poor frequently have to shop in smaller stores that hold second-rate goods and charge higher prices. Clearly, better marketing systems must be built to service disadvantaged consumers. Furthermore, disadvantaged consumers clearly need consumer protection. The FTC has taken action against sellers, who advertise false values, sell old merchandise as new, or charge too much for credit. The commission is also trying to make it harder for sellers to win court judgments against low-income people who were persuaded into buying something. (Alvesson 1994) General criticism:- A set of criticisms is aimed at the marketing function by society in general. Criticism from this bigger public body comprises comments on creating following (Michele 2006): False wants and too much materialism Cultural pollution Marketing’s Impact on Other Businesses False wants and too much materialism:- Critics have charged that the marketing system promoted too much significance of material assets. People are evaluated by what they own rather than by who they are. The critics do not view this interest in material things as an ordinary condition of mind but relatively as a matter of artificial wants created by marketing. Therefore, marketing is seen as creating artificial wants that promote industry more than they do well to consumers. Cultural pollution:- The marketing system is creating cultural pollution. Our minds are being continuously battered by advertising. These disturbances repeatedly contaminate people’s minds with messages of materialism, authority, or class. Although most people do not find advertising overly annoying, some critics call for sweeping changes. Marketers react against the charges of “commercial noise” with these arguments (Luck, Ferrell 265). First, they anticipate that their ads reach mostly to the target audience. But because of mass-communication channels, some ads are bound to reach people who have no interest in the product and are therefore fed up or irritated. Second, ads make much of television and radio free to users and keep down the costs of magazines and newspapers. Many people think commercials are a small price to pay for these benefits. (Luck, Ferrell 265). One of the loudest complaints against marketing concerns its impact on the environment through: The use of excessive, non-biodegradable packaging (e.g., use of plastics, placing small products in large packages, etc.) The continual development of resource consuming products (e.g.,construction of new buildings, golf courses, shopping malls, etc.) The proliferation of unsightly and wasteful methods of promotions (e.g., outdoor billboards, direct mail, etc.). Marketing’s Impact on Other Businesses:- Critics blamed that any company’s’ marketing practices can reduce competition and can also harm the other companies. Here three problems are involved: acquisitions of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices. Critics claim that firms are harmed and competition reduced when companies expand by acquiring competitors rather than by developing their own new products. Acquisitions can sometimes be good for society. The acquiring company may achieve economies of scale that direct to lower costs and lower prices. A well-managed company may take over a poorly managed company and improve its efficiency. Critics have also charged that marketing practices block new companies from entering an industry. Large marketing companies can use patents and heavy promotion spending, and can tie up suppliers or dealers to drive out competitors. Finally, some firms have in fact used unfair competitive marketing practices with the intention of hurting or destroying other firms. They may set their prices below costs, threaten to cut off business with suppliers, or discourage the buying of a competitor’s products. Various laws work to prevent such predatory competition. It is difficult, however, to prove that the intent or action was really predatory. (Brownlie, Wensley, Saren 1999) Microsoft sued over Windows Vista marketing:- A lawsuit alleges that Microsoft Corp. engaged in deceptive practices by letting PC makers sponsor computers as "Windows Vista Capable", even if they couldn't run the new operating system's "signature" features. The company "conducted a very broad and unprecedented effort" to help PC makers, retailers and consumers "understand the hardware requirements to run the various flavors of the Windows Vista operating system,". Among other things, Microsoft created the additional designation of Windows Vista "Premium Ready" to indicate that a machine was capable of running the operating system's advanced features, meeting premium hardware requirements including a full gigabyte of system memory. However, the distinction wasn't made in the general "Windows Vista Capable" stickers. Consumer has suit alleges that it was deceptive to include that logo on machines not capable of running all the features Microsoft was touting as capabilities of Windows Vista in general. The suit also claims that Microsoft Chairman Bill Gates contributed to the company's "deceptive marketing" during a Jan. 29 appearance on the "Today" show, when he said that PC users could upgrade to Windows Vista for less than $100. (TODD BISHOP) Conclusion:- As a whole, many companies are promoting their products and services using deceptive marketing practices. The power of business to create needs, wants fro things that they don’t need, is leading the consumer to the materialism. There are always hidden charges, extra features on higher prices. However, people have strong resistance against advertising and other marketing tools. Effectiveness of the marketers can be seen by how they appeal to existing wants rather than when they attempt to create new ones. Furthermore, people inquire about information when making important purchases and often do not rely on single sources. Finally, the high failure rate of new products shows that companies are not able to control demand. On the other hand, wants and values are influenced by the family, groups, religion, peers and education. Marketing is most criticized because of its deceptive practices. Specialized knowledge and ethical issues are different in personal and working life. Consistency is needed for effective decision making. Marketers must advertise those features that are in the products and services. Making the product out of this world is not good for long term relationship with customers. All or one of the given information is the reason of marketing criticism. Review of marketing fundamental messages, positioning and brand image and identity can help the marketers to eliminate the criticism. References:- Ferrel, O.C. (2001), Marketing ethics and social responsibility marketing: Concepts & Strategies, Houghton Mifflin: Boston, pp. 755–779. Michael John Baker, (2000). Marketing Theory: A Student Text. Page 247 Enotes. www.enotes.com Karen James, 2006. Marketing and social responsibility. pp 146 T Denison, M McDonald (1995). The role of marketing past, present and future. Journal of Marketing Practice: Applied Marketing Science M Alvesson (1994). Critical theory and consumer marketing - Scandinavian Journal of Management. David Johnston Luck, O. C. Ferrell (1985). Marketing Strategy and Plans: Systematic Marketing Management - pp 265 Douglas T. Brownlie, Robin Wensley, Michael Saren, Richard Whittington (1999). Rethinking Marketing: Towards Critical Marketing Accountings TODD BISHOP. www. Settlepi.com/businessnews By P-I REPORTER Read More