Marketing Ethics and Consumer Psychology

Overview of Marketing Ethics and Deception

• Discussion has typically focused on intentional deception in marketing, particularly considering vulnerable groups like children and the elderly.

• Intentional falsehoods or withholding vital information are core concerns (e.g., Madoff’s schemes).

• This article explores marketing practices that, while generally truthful, can deceive the average rational consumer.

The Concept of Predictable Irrationality

• Dan Ariely's assertion: Most people are "Predictably Irrational"; we often act against our own self-interest.

• Marketers may exploit these irrational behaviors.

• Questions raised about the ethics of taking advantage of consumer foibles—should it be treated with the same moral weight as deception aimed at children?

Case Study: Art Van Furniture

• Art Van is a large furniture chain in Michigan known for regular sales events (e.g., anniversary, inventory reduction, “three day only” sales).

• Prices are rarely full price; the constant sales create a perception of saving.

• Despite knowing the tactics, consumers feel validated in their purchases due to emotional and psychological marketing triggers.

Psychological Attraction to Sales

• Constant sales attract more customers than consistent pricing without sales.

• The reasonable person standard—does the marketing deceive a rational individual?

• Art Van’s strategies are persuasive, leveraging psychological biases to drive sales.

Behavioral Economics Insights

• Traditional economic theories presume rational decision-making; behavioral economics challenges this assumption.

• Example of the decoy effect—MIT students preferred subscriptions based on included options, despite some being irrelevant.

• The presence of a higher price (e.g., bread maker comparison) creates a reference point, enhancing perceived value of cheaper alternatives.

• The “free” offer phenomenon—human preference for free items can lead to irrational purchasing decisions.

Morality of Marketing Strategies

• Advertisers often position themselves as fulfilling consumer desires, while critics like Galbraith argue that advertising shapes wants.

• The morality debate encompasses the impact of advertising on consumer spending patterns, particularly on public goods versus private luxury goods.

• Adult consumers are generally considered capable of rational decision-making, which raises accountability questions on both sides (marketers vs. consumers).

Standards of Evaluation in Marketing

• Rational Person Standard: Assumes that typical consumers can assess marketing tactics reasonably.

  • Ethical concerns arise about the exploitation of vulnerable demographics (e.g., children, less educated).

• Ignorant Person Standard: Recognizes that marketing can deceive ill-informed consumers and should be constrained to protect them.

• Reflective Rational Person Standard: A proposed model recognizing that consumers can reflect on their decisions post-purchase; thus they can accept some levels of deception when they feel informed and entertained.

The Role of Consumer Reflection

• Consumers may derive pleasure from engaging with marketing, acknowledging their irrational decisions as part of the experience.

• Return policies and consumer rights play a significant role in allowing reflective consumer decision-making.

Conclusion and Recommendations

• Marketing can and does deceive, but within limits that can still keep consumers satisfied and entertained.

• The balance in marketing ethics lies in avoiding falsehoods and excessive deception while allowing for the inherent irrational tendencies of consumers.

• A thoughtful approach to consumer protection is essential, particularly for vulnerable populations, while recognizing the complexities of consumer psychology and the desire for entertainment in marketing.

References

• Ariely, D. (2009). Predictably Irrational: The Hidden Forces That Shape Our Decisions.

• Galbraith, J. K. (1976). The Affluent Society.

• Levitt, T. (1974). "The Morality of Advertising." Harvard Business Review 48.

• Velasquez, M. (2006). Business Ethics: Cases and Concepts.