Ethics in Marketing

Unethical behavior significantly increases the cost of doing business.

Ethics in Marketing Ethics in Marketing

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Table of contents

    - Frank Sonnenberg

    Ethics is not always the first thing that comes to mind when discussing marketing strategies. Yet, it is one of the main pillars of sustainable marketing. Without good ethics, companies are unlikely to survive in the long run. In this explanation, you will learn why ethics is essential and which ethical issues businesses tend to face. Let's dive right in.

    Marketing Ethics Definition

    Marketing ethics is about being honest, fair and respectful when selling products or services. It means not lying or tricking people into buying things and treating them with respect and dignity. Unethical marketing not only harms customers and society in the long run but also ruins the company's reputation and puts its existence under threat.

    Marketing ethics refers to the principles and values that guide the behavior of marketers, emphasizing honesty, responsibility, fairness, and respect for consumers and society.

    What is Ethical Marketing?

    While marketing ethics refers to the principles and values that guide the behavior of marketers, ethical marketing specifically relates to promotional ethical marketing practices. An example of ethical marketing is fair pricing and advertisements that do not exaggerate the benefits of the promoted product. Unethical marketing practices may include sharing customer information without consent, making untrue claims about the product, or targeting emotionally vulnerable customers.

    A company that produces organic, environmentally-friendly cleaning products claims on its website that all its ingredients are natural and non-toxic and that the packaging is biodegradable. This is an example of ethical marketing because the company provides consumers with truthful information.

    It's important to note that the line between ethical and unethical marketing is not always evident. Some marketing messages may seem highly relevant to a target group but offend others. Also, not all corrupt marketing practices are considered illegal. Maintaining ethics depends more on the company's social conscience than state rules and regulations.

    A company's ethical marketing principles are also known as a Code of Ethics. Codes of Ethics vary among companies and industries. For example, Apple's ethical principles include honesty, respect, confidentiality, and compliance, while BMW values responsibility, mutual respect, and trust.

    Ethical Marketing Principles

    Ethical marketing follows five main principles:

    • Transparency - An ethical marketing campaign will reveal all truths about the products to the customer, including ingredients, components, and production processes.

    • Customer data protection - Ethical marketers don't disclose customer information without consent. The information collected is only used to benefit the customers, e.g. recommending products that match their previous purchases.

    • Human rights compliance - Marketing campaigns should not offend certain population groups by criticizing their mistakes or flaws.

    • Sustainability - With environmentalism on the rise, companies should show how their products are sustainable and ethically produced in marketing campaigns.

    • Customer value - Ethical marketing should aim to bring as much value to the customer as possible while limiting societal risks.

    Benefits of Ethical Marketing

    By conducting marketing ethically, companies can gain many benefits. Let's take a look at them in more detail.

    Improve Sales

    Customers are more likely to return and make more purchases if the product has fair pricing and good quality, resulting in recurring income for the company. They will also recommend friends and family who might become the business's potential customers.

    Build Customer Loyalty

    People are averse to lies and trickery. A company can make fraudulent claims to get more sales, but as soon as customers realise they are being lied to, they will turn against the business and never purchase from it again. The only way to win customer loyalty is to be authentic by delivering the exact products and services as advertised.

    Attract and Retain Talents

    Businesses associated with good causes and social issues are more appealing to jobseekers as people not only look for a job with a good salary but one that makes the world a better place. Companies that maintain marketing ethics also have a higher retention rate, as their employees don't experience the guilt of lying to customers.

    Maintain Interest of Stakeholders

    Ethical marketing practices increase employees', shareholders', and partners' confidence in the business and convince them to continue investing in or maintaining the relationship with the company.

    Importance of Ethics in Marketing

    The importance of ethics in marketing lies in the fact that it helps avoid legal and reputational risks. Additionally, it builds customer trust and credibility, leading to increased loyalty, customer retention, and brand reputation. Ethical marketing can also contribute to the well-being of society and the environment by promoting sustainable practices and supporting social causes, which can ultimately enhance the long-term sustainability and profitability of the business.

    Unethical marketing practices, conversely, can have serious consequences for companies, such as lawsuits, fines, loss of customers, and damage to brand image. In today's digital age, where consumers have access to a wealth of information and can easily share their experiences online, companies that engage in unethical marketing practices are likely to face negative publicity and backlash, which can quickly spiral out of control and cause irreparable harm to the brand.

    Ethical Marketing Examples

    Ethical marketing is the application of the ethical principles of the company to its marketing strategy. It involves promoting products and services honestly, fairly, and socially responsibly. Consumers today are increasingly aware of social and environmental issues and are more likely to support companies that align with their values. Here are some examples of ethical marketing campaigns

    Patagonia "Dont Buy This Jakcet" Campaign

    Patagonia, an outdoor clothing and gear company, built its brand around sustainability and social responsibility. Patagonia's marketing campaigns emphasize its commitment to environmental protection, fair labor practices, and transparency in its supply chain.

    In 2011, Patagonia ran an advertising campaign that urged customers not to buy their jackets unless they really needed them as a way to promote sustainable consumption. The company was honest with its customers about the environmental impact of its products and encouraged them to consider the true cost of their purchases.5

    Levi Strauss & Co's "Water<Less" and "WashLess" Campaigns

    Levi Strauss & Co launched the "Water<Less" and "Wash Less" campaigns to raise awareness about the environmental impact of denim production. The company was transparent about the fact that it takes about 3,800 liters of water to produce one pair of jeans and encouraged customers to wash their jeans less frequently and in cold water to conserve water.

    The Body Shop's "Forever Against Animal Testing" campaign

    The Body Shop launched the "Forever Against Animal Testing" campaign in 2017, which aimed to end animal testing in the cosmetics industry. The company was open about the fact that many cosmetic ingredients are still tested on animals, despite the availability of alternative methods. The campaign encouraged customers to sign a petition to ban animal testing in the industry and raised awareness about the issue.6

    Ethical Issues in Marketing

    Many ethical problems can arise as companies carry out their marketing campaigns. Here are some common examples:

    Unethical Marketing Research

    Unethical marketing research refers to gathering information from consumers or competitors without their knowledge or consent. It can include practices such as spying, lying, or misleading participants, leading to ethical and legal issues for companies that engage in such behavior.

    Nowadays, technology allows businesses to collect, store and use customer information in marketing campaigns. While this helps match the right product with the right customer more quickly, individual freedom might be violated.

    A company that produces a new beverage hires a market research firm to conduct a taste test study. The research firm pays participants to taste the beverage and give their feedback but doesn't disclose that the beverage contains a high level of caffeine, which can cause negative side effects. This is an example of unethical marketing research because the research firm didn't provide informed consent to the participants and deliberately misled them to obtain biased feedback on the product.

    There's also the problem of stereotypes when companies conduct preliminary research and make general assumptions about their customers - such as women prefer cooking or men enjoy watching sports. This no longer fits today's culture and can cause frustration among audiences who don't belong to these categories.

    Deceptive Advertising

    This is the case where companies make certain claims about a product or service that they can't live up to. Deception in marketing often leads to severe consequences.

    ethics in marketing ethical issues fyre example studysmarterFig 1. Fyre Media CEO Bill McFarland and Rapper Ja Rule at Web Summit 2016

    Fyre Festival was a fraudulent luxury music festival developed by the con artist Bill McFarland to promote his company's music talent booking app. To create hype for the festival, the company filed their social media pages with images of celebrities and social media influencers having the time of their life on an exotic private island. The marketing campaign was so successful that the tickets ranged between $1,000 and $12,000 and sold out within record time.1 One could never have guessed what was waiting for attendees. The guests arrived on commercial airplanes instead of the promised private jets. They had to sleep in tents filled with soaked mattresses instead of luxurious accommodation and survive on cheese sandwiches whilst not experiencing any music shows they bought tickets to. The event was eventually cancelled, and the Fyre Media CEO was sentenced to 6 years in jail.2

    Forceful Selling

    Forceful selling exploits human emotions to make a sale. Marketers only care about getting the product sold, regardless of customers' needs.

    Websites with pop-ups such as "No, I don't want to save time" and "I'm smart already and don't need this resource" are prime examples of forceful selling. By triggering emotional guilt, they dissuade visitors from clicking the close button or leaving the page without subscribing.

    Marketing Ethics in Consumer Behavior

    While not all unethical marketing is outlawed, companies should maintain a 'good conscience' by complying with cultural norms and standards. They should avoid advertisements that promote undesirable customer behavior or hurt, confuse, and mislead consumers.

    Here are practices to ensure marketing ethics:

    • Reveal all details of the product to customers,

    • Refrain from disclosing customer information without their consent,

    • Avoid deceptive advertisements,

    • Only promote products that are safe for customers to use,

    • Offer fair pricing,

    • Abide by the state laws.

    Ethics in Marketing - Key Takeaways

    • Marketing ethics refers to the company's moral principles and values during marketing communications.
    • Companies should always keep a 'good conscience' and avoid advertising that confuses, hurts, or misleads customers.
    • Ethical marketing characteristics include transparency, customer data protection, sustainability, human rights compliance, and customer value maximization.
    • Maintaining ethics in marketing can allow businesses to increase sales, build customer loyalty, attract and retain talents, and keep stakeholders' interest.
    • Many ethical issues still exist in marketing, including forceful selling, deceptive marketing, invasion of privacy and stereotype marketing.
    • An example of ethics in advertising is Patagonia's "Don't Buy This Jacket" or Levi's "WaterLess" campaigns.
    • An example of unethical marketing is the marketing campaign of Fyre Festival.

    References

    1. BBC News, Fyre Festival ticket-holders proposed payout slashed, https://www.bbc.com/news/business-57770564, 2021.
    2. Colin Stutz, Fyre Festival Founder Billy McFarland Released From Prison to Halfway House, https://www.billboard.com/business/legal/fyre-festival-billy-mcfarland-released-prison-halfway-house-1235073128/, 2022.
    3. Fig 1: Web Summit 2016 (https://en.wikipedia.org/wiki/File:Web_Summit_2016_-_MusicNotes_-_Nov_10_-_Day_3_DSC0839_(30810709661)_(cropped).jpg) by Web Summit (https://creativecommons.org/licenses/by/2.0/deed.en)
    4. Patagonia, Don’t Buy This Jacket, Black Friday and the New York Times, https://www.patagonia.com/stories/dont-buy-this-jacket-black-friday-and-the-new-york-times/story-18615.html
    5. Ganguly Shramana, Levi wants consumers to wash their jeans less: Michael Kobori, Levi's, https://economictimes.indiatimes.com/opinion/interviews/levis-wants-consumers-to-wash-their-jeans-less-michael-kobori-levis/articleshow/46858479.cms?from=mdr
    6. Bodyshop, Forever Against Animal Testing, https://www.thebodyshop.com/en-gb/about-us/activism/faat/a/a00018
    Frequently Asked Questions about Ethics in Marketing

    How do ethical issues influence legal issues in marketing?

    Legal standards are written laws, while ethical standards are what is perceived as right or wrong. Ethical issues in marketing do not necessarily lead to legal consequences. However, they can hurt the brand image, reputation and customers' trust. 

    What is an example of ethical marketing?

    An example of ethical marketing is a company that shows how its products are sustainably and sustainably made in a marketing campaign. 

    What are ethics in marketing?

    Ethics in marketing are moral principles and values that a company follows while conducting marketing campaigns. Ethical marketing is based on human rights or wrongs rather than legal standards. 

    What are the types of marketing ethics?

    Types of marketing ethics include: 

    • Transparency, 
    • Customer data protection, 
    • Human rights compliance, 
    • Sustainability, 
    • Customer value. 

    Why are ethics important in marketing?

    Ethics is important in marketing as it can increase customer loyalty and thus drive sales. Companies that maintain good ethics also have an easier time retaining talents and keeping stakeholders' interests. 

    What is ethical marketing?

    Ethical marketing refers to the practice of promoting products or services in a manner that is honest, transparent, and fair to all parties involved, including the customers, the company, and the wider society. It involves adhering to moral standards and avoiding manipulative tactics.

    Test your knowledge with multiple choice flashcards

    Code of Ethics is always the same for every company and industry. 

    Sharing customer information without consent is not unethical. 

    What is NOT an ethical marketing practice?

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