Business Ethics in Marketing & Consumer Protection

Typical threats: deceptive advertising, poor product quality, un-honoured warranties, safety defects.
High-profile recalls highlight persistent hazards, showing market mechanisms alone may not safeguard consumers.

Pure free-market stance: safety is a purchasable attribute supplied when demanded; state intervention deemed distortionary.
Main objections to this stance:
- Limited competition (monopolies/oligopolies).
- Consumers often misjudge risk and probability.
- Information asymmetry, especially with complex products.
Conclusion: legal frameworks and voluntary corporate actions are necessary complements to market forces.

Firm–customer relation treated as a voluntary sales contract.
Core moral duties: comply with claims, disclose relevant facts, avoid misrepresentation, refrain from coercion.
Critiques: real-world purchases rarely involve direct, equal contracts; burden of proof can cut both ways; power imbalance favours firms.

Recognises information and expertise imbalance.
Firms must actively prevent harm through prudent design, production, and marketing.
Limits: unclear standard of “how much” care, allocation of costs for unforeseeable injuries, paternalistic overtones.

Extends responsibility: firms should absorb costs of any product-related injury, even when due care was exercised.
Utilitarian support: internalises externalities, incentivises safety, spreads losses across all users via price.
Objections: seen as unjust if harm was unforeseeable, may encourage consumer negligence, alleged inflation of litigation and insurance costs.

Purpose: create desire and persuade belief that product satisfies it.
Critics highlight three adverse social impacts:
- Psychological: fosters materialistic values, manipulates desires, treats people as means.
- Waste: allocates resources to persuasion rather than utility-enhancing production.
- Market power: entrenches brand dominance, hindering competition.
Ethical assessment criteria: truthfulness, relevance, potential manipulation, respect for autonomy.
Rising concern: data-driven targeting blurs line between persuasion and exploitation, challenging consumer privacy.

Four primary problem areas:
- Excessive (gouging): charging beyond a fair level when consumers lack alternatives.
- Price fixing: collusion among rivals to maintain artificially high prices.
- Predatory pricing: temporarily undercutting rivals to drive them out, then raising prices.
- Deceptive pricing: obscuring true cost through hidden fees, bait-and-switch tactics, or misleading discounts.
Each practice undermines consumer rights to fair prices and informed choice.

Consumer protection requires balancing market dynamics with ethical and legal safeguards.
Ethical duties evolve from minimal contract compliance to full assumption of social costs.
Advertising and pricing strategies must respect autonomy, honesty, and fairness to sustain legitimate market relationships.