powerpoint for marketing

1. Chapter 7
Marketing, Advertising and Product
Safety

2. • “Marketing is a societal process by
which individuals and groups obtain
what they need and want through
creating, offering and freely
exchanging products and services of
value with others”
Philip Kotler

3. Introduction
 Marketing is important in any business
 The purpose of business is to create and keep a
customer
 Businesses must develop products and services that
customers want at prices they are willing to pay
 Marketing includes making decisions about
 what products or services to put on the market,
 who are potential customers for these goods
 How to reach the target markets & induce them to buy
 How to price the product or service to make it attractive to these
customers
 How to deliver the goods physically to the ultimate consumers

4. • An area of study that deals with ideas about what
is good and bad behavior and with moral duty and
obligation
• The rules and principles that define right and
wrong conduct
• It refers to well-founded standards of right and
wrong that prescribe what humans ought to do.

5. • Honesty
• Loyalty
• Integrity
• Keeping your
promises
• Fair
• Caring
• Respect
• Obeying the law
• Excellence
• Being a leader
• Morale

6. • Marketing ethics addresses principles and standards
that define acceptable conduct in the market place.
Marketing usually occurs in the context of an
organization, and unethical activities usually develop
from the pressure to meet performance objectives. Some
obvious ethical issues in marketing involves clear cut
attempts to deceive or take advantage of a situation

7. Introduction
 Marketing Mix – 4 Ps
 The decisions that marketing managers must make about
each of these Ps involve numerous ethical issues
 Product
 raises obvious concerns about product safety,
 alcohol and tobacco,
 unhealthy foods,
 gas-guzzling SUVs

8. Product Management
• Ethical issues surrounding the management of
products are central to marketing because the
marketing process generally begins with a
product (broadly defined to include goods,
services, or ideas).

9. Product Management
• The most common ethical concerns in this
area pertain to the safety of products are safe
"for their use as intended" is a basic consumer
expectation.

10. Product Management
• Another growing area of concern is product
counterfeiting(copy of original). Product
counterfeiting involves the unauthorized copy of
patented products, inventions, and trademarks or
the violation of registered copyrights (often for
the purposes of making a particular product look
like a more popular branded leader).
• Common examples of product counterfeiting
include fake Rolex watches, knockoff Levi jeans,
and illegally pirated video and audio tapes of
popular movies and music.

11. Introduction
 Price
 Predatory pricing (which undercuts the
competition unfairly)
 Price discrimination (charging more to some
customers than others)
 Misleading prices
 Price fixing (with other competitors)

12. Pricing
• Perhaps no area of managerial activity is more difficult to
assess fairly and to prescribe normatively in terms of morality
than the area of pricing.
• Price gouging is an example of an unethical pricing strategy. A
company may raise prices of items that are temporarily in
high demand. This is sometimes seen in the wake of
emergency situations when the price of plywood jumps after
a flood, even though there is enough plywood to repair
houses.

13. Pricing
• Predatory pricing, on the other hand, involves
pricing a product low enough to dampen
demand. This type of pricing is typically used to
end a competitive threat. The company lowering
the price is operating to protect market share
from moving to the competition.
• Selling counterfeit goods, such as watches,
handbags and designer athletic shoes at the same
high price as the "real" goods, is another example
of an unethical strategy.
• Price fixing, price skimming, price discrimination
are also the examples of it.

15. • Price Discrimination: It can be unethical if similar
buyers are charged different prices for the same based
on their ability to pay.
• Price fixing: It is an agreement among firms in an
industry to set up prices at certain levels. Two types of
price fixing:
1. Horizontal price fixing
2. vertical price fixing

16. Introduction
 Promotion is the most visible face of
marketing and for this reason it draws the
greatest moral scrutiny
 Promotion
 Sales techniques
 Deception and manipulation in advertising
 Direct marketing – spam

17. Introduction
 Distribution
 Anticompetition practices
 Controlling the channels of distribution
 Paying so-called slotting allowances for shelf space in
stores

18. Marketing
 Marketing affects everyone
 Marketers have strong incentive to sell products and
services
 Despite the doctrine of consumer sovereignty – the
notion that consumers are ‘kings’ in the economy
because they ultimately decide whether to buy a
company’s products – individual consumers are still
vulnerable given the vast power of companies to
determine what goods are offered and through
advertising, what consumers want

19. Marketing
 Because selling is so important for business
and such powerful means are available,
ethical problems are inevitable

20. A Framework for Marketing Ethics
 Most of the ethical problems in marketing
involve three ethical concepts: -
 Fairness (or justice)
 Freedom
 Well-being

21. A Framework for Marketing Ethics
 Fairness is a central concern because it is a
basic moral requirement for any market
transaction – and the result of successful
marketing is always a market transaction
 In a market transaction, each party gives up
something of value in return for something they
value more
 And such exchanges are fair (and mutually
beneficial) as long as each party acts freely and
has adequate information

22. A Framework for Marketing Ethics
 The requirement of acting freely rules out
exchanges in which there is coercion or
manipulation or when one party lacks
competence (children or elderly) and the
adequate information requirement excludes
the making of false or deceptive statements

23. A Framework for Marketing Ethics
 The need for information in a fair market
transaction is problematic
 A seller does not have an obligation to
provide ALL relevant information to a buyer,
and a buyer has some obligation to become
informed about what is being bought

24. Traditional Doctrines in Marketing

25. A Framework for Marketing Ethics
 In practice, the responsibility is divided
between buyers and sellers
 Buyers have good economic reasons to be
informed (to protect themselves)
 Sellers – to provide information to attract the
buyers

26. A Framework for Marketing Ethics
 Generally, consumer laws require only the
disclosure of information that buyers need to
make rational purchasing decisions

27. A Framework for Marketing Ethics
 Freedom is at issue in marketing with respect to having a
range of consumer options
 Freedom is denied when marketers engage in deceptive
or manipulative practices and take advantage of
vulnerable populations such as children, the poor and
the elderly
 Large retailers have been accused of using their power
to force small suppliers into accepting unfavourable
agreements
 Larger suppliers can similarly take advantage of size to
disadvantage small retailers

28. A Framework for Marketing Ethics
 These 3 principles of FAIRNESS, FREEDOM
and WELL-BEING can be expressed in the
four-point bill of rights for consumers that
President JF Kennedy proclaimed in 1962: -
 (a) The right to safe products,
 (b) The right to be informed about all relevant aspects
of a product,
 (c) The right to be heard in the event of a complaint,
and
 (d) The right of consumers to choose what they buy.

29. A Framework for Marketing Ethics
 These rights are now embodied into
consumer protection legislations like
 The Consumer Product Safety Act 1972
 The Fair Packaging and Labeling Act 1966
 The Magnuson-Moss Warranty Act 1975

30. Sales Practices and Labeling
 Most transactions – personal selling
 Personal selling done through sales personnel
 Sales personnel are typically put under great
pressure to sell by such means as commissions,
quotas and others
 They may be led by this pressure to lie to
customers, conceal information, make unrealistic
promises, criticize the competition and oversell
(pushing products the customer does not need)

31. Sales Practices
 Others
 Agreeing to pay kickbacks or outright bribes with or
without the company’s knowledge
 No close supervision
 Misrepresent their work
 Pad their expense account
 Cheat their employers

32. Sales Practices
 Salesperson – moral obligation to facilitate a fair
transaction
 Allow the consumer to act freely
 Provide adequate information
 Main unethical sales practices – deception and
manipulation

33. Sales Practices
 Deception: -
 Consumers are led to hold false beliefs about
a product
 Knowingly make a false statements

34. Sales Practices
 Examples: -
 ‘Special sale’ ends today but fail to add that another ‘special
sale’ will begin the next day
 Markdowns from ‘suggested retail price’ that is never charged
 Introductory offers
 Bogus clearance sales in which inferior goods are brought in for
the ‘sale’
 Packaging and labeling - size or shape of a container, a picture
or description
 ‘Economy size’
 ‘new and improved’
 Warranties that cannot be easily be understood by the average
consumer

35. Sales Practices
 Manipulation: -
 No false or misleading claims
 Taking advantage of consumer psychology to make a
sale

36. Sales Practices
 Examples: -
 “bait and switch”
 A consumer is lured into a store by an advertisement for a
low-cost item and then sold a higher-priced version
 Often the low-cost item is not available

37. Sales Practices
 Manipulation takes place when salesperson use
high-pressure tactics
 Deception to gain entry to the homes of prospects by
claiming to be conducting advertising research

38. Labeling
 Many consumer purchasers occur without any
contact with a salesperson
 When a consumer merely takes a product off a
shelf, the main contact between that consumer
and the manufacturer is the print on the package
 The label becomes a means not only for selling
a product but also informing the consumer
 Label - important

39. Labeling
 If no information on a box, a consumer has no
practical means for determining the size,
ingredients used, the nutritional content or the
length of time the product has been sitting in the
self
 Health-conscious consumers are especially
disadvantages by claims about low fat and salt
content and the unregulated use of words such
as ‘light’ and ‘healthy’

40. Labeling
 The more information consumers have, the
better they can protect themselves in the
marketplace
 The ethical questions are: -
 How much information is a manufacturer obliged to
provide?
 To what extent are consumers responsible for
informing themselves about the products for sale?

41. Labeling
 Thus, legislation plays an important role here in
ensuring that the manufacturers provide the
necessary information about the product to the
consumers

42. Labeling
 Reasons given by manufacturer for not proving
information: -
 Secret recipe
 Unnecessary cause consumers to panic
 Misunderstood by consumers
 Reject older goods which are still good

43. Pricing
 Anti competition pricing
 Price fixing
 Resale price maintenance
 Price discrimination
 Predatory pricing

44. Pricing
 Unfair pricing
 Unconsciously high prices (price gouging)
 Misleading prices

45. Distribution
 Slotting allowances to gain access to shelf space in
stores
 Parallel importing
 Direct marketing

46. Distribution
 Three illegal abuses of powers in distribution: -
 Reciprocal dealing
 Require to buy something in return
 Exclusive dealing
 Not allowed to sell other brands
 Tying arrangements
 One is sold with condition another is purchased as well
 Full-line forcing
 Forced to carry a manufacturer’s full line of products

47. Q&A