Lecture 8 Ethics in Production Marketing (2024)
Ethics of Consumer Production and Marketing
Lecture by Manuel G. Velasquez & Joseph Weiss.
Consumer as Stakeholders
Importance of consumer support: Essential for the ongoing success of organizations.
Role of consumers: Buyers of goods/services; they enable sellers to recoup investments in knowledge, skills, and resources.
Moral issues for sellers: Concerns about quality, quantity, safety, health, and service related to products.
Key Duties of Manufacturers
Product Suitability and Value
Responsibilities include producing products that address human needs.
Manufacturers are accountable for product development to ensure market readiness through conceptualizing, testing, and refining.
Research and Development
Investments in R&D are crucial for innovation, improving functionalities, and integrating new tech.
Product Safety and Innovation
Safety Standards: Manufacturers must ensure compliance with safety regulations to protect consumers from hazards.
Ongoing Innovation: Continuous improvement of existing products and introduction of new ones are essential to meet consumer preferences.
Risks to Consumers
Consumers face daily risks from faulty products and unethical marketing practices:
Dangerous products
Deceptive selling practices
Poorly constructed goods
Unhonored warranties
Misleading advertising
Consequences include potential injury, death, and financial costs.
Buyers’ Rights
Fundamental Rights
Right not to buy: Consumers can choose not to purchase products based on their needs and preferences.
Right to safety: Expectation that products are safe and adhere to safety standards.
Right to performance: Products should perform as advertised and claims must be substantiated.
Right to be informed: Clarity and accuracy of product information including ingredients and risks.
Right to protection: Safeguards against deceptive marketing practices.
Right to influence: Consumers can drive improvements in product quality and practices through choices and feedback.
Market Approach to Consumer Protection
Market safety should not be mandated by the government; it will be provided effectively when consumers demand it.
Prices reflect safety levels determined by consumer demand and manufacturer's cost.
Criticism of Market Approach
Critics argue that ideal market conditions rarely exist.
Lack of perfect information and rationality among buyers.
Markets may not be competitive leading to monopolies or oligopolies.
Theories on Ethical Duties of Manufacturers
Contract View: Puts greater responsibility on consumers.
Due Care View: Holds manufacturers more responsible for ensuring consumer safety.
Social Cost View: Manufacturers should bear costs for defects even with due care.
Contractual Duties
Founded on Sales Contracts
Duties arise to meet express and implied claims made about product reliability, service life, and safety.
Duty to Comply: Fulfill claims made during the sale.
Duty of Disclosure: Clear communication about product risks and defects.
Duty not to Misrepresent: Avoid intentionally misleading consumers about products.
Duty not to Coerce: Avoid exploiting consumer's fears or emotional states to close sales.
Due Care Theory
Indicates that manufacturers must prioritize consumer safety by thoroughly testing and researching product risks, ensuring safe design and production practices.
Shifted from Caveat Emptor (buyer beware) to Caveat Venditor (seller beware).
Social Costs Theory
Manufacturers should be liable for any product-related injuries, regardless of care taken during production.
Responsibility includes costs of injuries which are non-preventable to ensure fair pricing and resource use.
Examples of strict liability scenarios: Defective SUVs, hazardous coffee makers, etc.
Product Liability
Concerns with injuries resulting from defective products under tort liability, focusing on physical damages and strict liability principles.
Criticism of Social Costs Theory
Argues against compensating unpreventable injuries, citing potential for increased consumer carelessness and costs to manufacturers.
Ethics in Marketing
Addresses acceptable marketing conduct, impacted by organizational objectives and competitive pressure.
Key Ethical Issues
Product: Quality, safety, planned obsolescence, and packaging fairness.
Pricing: Deceptive pricing, discrimination, and illegal price fixing.
Promotion: Misleading advertising, false claims, and targeting vulnerable groups.
Distribution: Ethical considerations in selling practices and vendor relations.
Importance of Ethics in Marketing
Ethical organizations foster positive perceptions, trust, and better stakeholder relationships.
Ethical Challenges in Marketing Research
Issues include privacy invasion, inadequate participant consent, and biased information collection.
Product & Packaging Concerns
Emphasis on safety, accurate labeling, and environmental impact of packaging.
Pricing Ethical Concerns
Addressing deceptive pricing strategies and discrimination against consumers.
Advertising Ethics
Legal and ethical considerations regarding misleading information and manipulation of vulnerable populations in advertisements.
Dark Patterns in Advertising
Definition: Deceptive design practices aimed to mislead consumers into unwanted actions.
Common examples include bait-and-switch tactics, hidden costs, and forced continuity.