Ethical Leadership Week 7

Ethical Issues in Marketing

Conditions for Ethical Transactions

Truly Voluntary Transactions

• Real Alternatives Must Be Available: Consumers should have a genuine choice among products and services to make informed decisions without coercion.

• Stress-Free Environment: The conditions under which transactions occur should allow consumers to feel secure and free from undue pressure or manipulation.

Issues Arising:

• Price-Fixing: Collusion among competitors to set prices at a fixed level, harming fair competition.

• Monopolies: Dominance by a single entity that stifles competition and innovation, leading to higher prices and reduced choice.

• High-Pressure Selling: Tactics that induce consumers to make purchases they might not feel comfortable agreeing to.

Informed Consent Required

• Information Availability: All parties involved in a transaction must have access to full and accurate information about products or services.

• Clarity and Comprehensibility: Information should be presented in a straightforward manner, avoiding jargon and complex terms that can confuse consumers.

Issues Arising:

• Deception: Misleading advertising or false claims about products can deceive consumers into making uninformed decisions.

• Complex Information: Issues arise when critical information is hidden in fine print or legal jargon, leading to misunderstandings.

• Marketing to Vulnerable Groups: Targeting sensitive populations such as children, the elderly, or economically disadvantaged individuals can exploit their vulnerabilities.

Mutual Benefit from Transactions

• Products Must Provide Benefits: Ethical marketing practices require that products or services offer more benefits than potential harms to consumers and society at large.

• Ethical Legitimacy of Transactions: All marketing practices should abide by standards of fairness and justice, avoiding practices that exploit consumers.

Issues Arising:

• Unsafe Products: Selling products that pose risks of injury or illness can lead to significant public health issues, resulting in legal repercussions and loss of trust.

• Illicit Markets: Markets dealing in illegal products, such as drugs, endangered species, or child exploitation materials, raise profound ethical concerns regarding human welfare and legality.

Customers as Stakeholders

• Importance of Trust: Building trust is essential for long-term customer relationships, particularly in an era of increased skepticism regarding marketing claims.

• Correlation with Business Success: Ethical treatment of customers often results in enhanced brand loyalty, positive word-of-mouth, and ultimately increased profits.

Ethical Abuses and Reputation Issues

• Ongoing Abuses: Despite a growing emphasis on ethical behavior, there are still numerous instances of unethical marketing practices that tarnish the reputation of the entire industry.

• Reputation of Marketing Professionals: The image of marketers and sales professionals often suffers due to a few bad actors who engage in deceptive practices.

Product Safety and Liability

Consumer Rights

• Expectations of Safety: Consumers have the right to expect that products are safe for use, effective, and suitable for their intended purposes.

• Manufacturers' Responsibilities: It is the obligation of manufacturers to ensure that their products are free from defects and safe for use under normal conditions.

• Shared Responsibility for Safety: Safety also involves consumer behavior; consumers should familiarize themselves with product instructions and warnings to use them safely.

Case Study: Samsung Galaxy 7

• Product Safety Issues: The Samsung Galaxy 7 faced significant scrutiny due to battery issues that led to overheating and fires, raising questions of market responsibility and corporate liability.

Globalisation Issues

Ethical Challenges Arising from Globalisation

• Variances in Protection Standards: Disparities between consumer protection standards, such as those established in the EU, can lead to ethical dilemmas for multinational corporations.

• Differences in Regulations: Regulations surrounding sensitive topics such as adoption, abortion, organ transplants, and end-of-life choices vary greatly across countries, leading to ethical conflicts for businesses operating globally.

• Concerns of Cultural Homogenization: The rise of global platforms like TikTok can lead to a loss of local cultures and practices, prompting questions about the ethical implications of cultural influence.

• Misplaced Consumerism: Issues may arise when consumers travel abroad for procedures like bariatric surgery, raising questions about medical ethics and the commercialization of healthcare.

Opportunities from Globalisation

• Corporate Responsibility Possibilities: Globalization offers an avenue for companies to engage in social responsibility, expanding their product offerings while addressing global issues.

• Expanding Economic Base: Multinational corporations should focus on widening their economic reach and addressing inequalities in wealth distribution globally.

• Nurturing Local Markets: Companies should prioritize the well-being of local cultures and markets to foster sustainable growth and ethical practices.

Questions for Discussion:

• How can organizations ethically contribute to the Bottom of the Pyramid (BoP), ensuring their practices are responsible and fair?

• What potential ethical pitfalls may arise when serving the BoP while trying to meet corporate social responsibility (CSR) goals?

For Next Week

Upcoming Tasks

• Discussion Week 7 Participation: Engage with peers to provide thoughts and reflections on the assigned documentary.

• Quiz Preparation: Complete the quiz on "The Corporation" and the Velshi article by midnight Saturday.

Brief Review of Decision-Making

Decisional Framework Components

• National/Professional Culture and Values

• Organizational Culture and Values

• Rules and Regulations

• Contract Law

Process for Ethical Decision-Making

Steps to Follow:

1. Identify key questions and ethical dilemmas involved.

2. Gather relevant facts and consult established guidelines, engaging all stakeholders in the process.

3. Generate a range of decision options.

4. Assess the consequences of each option for all stakeholders involved.

5. Score each option on a scale from -5 to +5 based on a set of ethical criteria.

6. Determine which option has the highest score.

7. Make a decision based on which option represents the most ethical choice.

Stakeholder Analysis

• Create a chart to evaluate how decisions affect various stakeholders, rating their satisfaction with proposed options on a scale from -5 to +5, to ensure a holistic view of the ethical implications of decisions.