2. ETHICS
The word ETHICS is derived from a Greek
word “ETHIKOS” which means customs or
character.
Ethics are the moral principles and values that
govern the actions and decisions of an individual
or group.
3. PERFECT COMPETITION
Under perfect competition, "no buyer or seller has the power to significantly
affect the prices at which goods are exchanged."
Seven features of perfectly competitive markets:
• There are numerous buyers and sellers, none of whom has a substantial
share of the market.
• All buyers and sellers can freely and immediately enter or leave the
market.
• Every buyer and seller has full and perfect knowledge of what every other
buyer and seller is doing, including knowledge of prices, quantities, and
quality of all goods being bought and sold.
• The goods being sold in the market are so similar to each other that no one
cares from which each buys or sells.
• The costs and benefits of producing or using the goods being exchanged
are borne entirely by those buying or selling the goods and not by any
other external parties.
• All buyers and sellers are utility maximizes. Each tries to get as much as
possible for as little as possible.
• No external parties(such as government) regulate the price, quantity, or
quality of any of the goods being bought and sold in the market.
4. MONOPOLY
A market in which a single firm is the only seller in the
market and which new sellers are barred from entering.
MONOPOLY MARKET CHARACTERISTICS:
• One Seller
• High Entry Barriers
• Quantity below Equilibrium
• Prices above equilibrium and Supply Curve
• Can extract monopoly profit.
5. OLIGOPOLY
A market shared by a relatively small number of large firms that together can
exercise some influence on process.
• The firms under oligopoly are interdependent in making decision. They are
interdependent because the number of competition is few and any change
in price & product etc by an firm will have a direct influence on the fortune
of its rivals, which in turn retaliate by changing their price and output.
• Price rigidity refers to a situation in which price tends to stay fixed
irrespective of changes in demand and supply conditions. Firms use other
methods like advertising, better services to customers, etc. to compete
with each other.
• The main reason for few firms under oligopoly is the barriers, which
prevent entry of new firms into the industry. Patents, requirement of large
capital, control over crucial raw materials, etc, are some of the reasons,
which prevent new firms from entering into industry.
6. To determine whether a payment is ethical, there are three
relevant points to consider:
1. Is the payment initiated by the payer, or is the payment
demanded by the payee? If the former, it is a bribe; if the latter,
it is extortion, which diminish the moral responsibility of the
payer.
2. Is the payment attempting to induce behaviour that is
contrary to duty illegal? If so, it is a bribe; if the behaviour being
induced is not contrary to duty or illegal, the payment may be
morally neutral.
3. Are the nature and purpose of the payment common local
practice? If so, the payment may be a local custom that does
not represent a market barrier, and therefore not a bribe.
7. The following list identifies practices that are clearly unethical:
• Price Fixing-when companies agree to set prices artificially high.
• Manipulation of Supply-when companies agree to limit production.
• Exclusive Dealing Arrangements-when a company sells to a retailer only on
condition that the retailer will not purchase products from other companies
and/or will not sell outside a certain geographical area.
• Tying Arrangements-when a company sells a buyer certain goods only on
condition that the buyer also purchases other goods from the firm.
• Retail Price Maintenance Agreements-when a company sells to a retailer
only on condition that they agree to charge the same set retail prices.
• Price Discrimination-when a company charges different prices to different
buyers for the same goods or services.
8. • The law and regulations are generally designed
to protect the consumer from unethical
practices by businesses
• These law and regulations recognizes that
consumers have certain basic rights in the
market place
• Each marketer must relay on his/her own value
system to determine what is and is not ethical
9. Why ETHICS ?
• When an organization
behaves ethically,
customers develop
more positive attitudes
about the firm, its
products, and its
services.
10. Marketing Ethics:
Marketing ethics as a right or wrong action
Marketing ethics means a standard by which a
marketing action may be judged “RIGHT” or
“WRONG”.
11. Marketing Ethics
• is the area of applied
ethics which deals with
the moral principles
behind the operation
and regulation
of marketing. Ethics in
marketing applies to
different spheres such as in
product, pricing,
Placing(Distribution),
promotion & advertising
etc...
12. Why we need Ethics in Marketing?
We can give many reasons but will notify some:
• When an organization behaves ethically, customers develop more
positive attitudes about the firm, its products, and its services.
• To create Values or trust with key stakeholders
• To build good image about the organization in the minds of customer,
employees, shareholders and the society.
13. Ethical Issues in Marketing:
We discuss Marketing issues by using 4P’S OF
MARKETING:
• PRODUCT & PACKAGING
• PRICE
• PLACING (DISTRIBUTION)
• PROMOTION (ADVERTISING & BRANDING)
18. PLACING: DISTRIBUTION
Product distribution (or place) is one of the
four elements of the Marketing MIX.
Distribution of product or service is
transporting them from manufacture to
stockiest, wholesalers, retailer and then to
consumers.
19. Ethical issues in distribution
• Ethical questions may also arise in the distribution process.
• Because sales performance is the most common way in which marketing
representatives and sales personnel are evaluated.
• performance pressures exist that may lead to ethical dilemmas. For
example: pressuring vendors to buy more than they need and pushing
items that will result in higher commissions are temptations.
20. ADVERTISING
&BRANDING
• Promotion is one of the four elements of
marketing mix (product, price, promotion, place).
It is the communication link between sellers and
buyers for the purpose of influencing, informing,
or persuading a potential buyer's purchasing
decision.
• To present information to consumers as well as
others
• To increase demand
• To differentiate a product
21. Ethical Issues in Advertising
• Puffery
• Advertising to Children
• Promoting Unhealthy Products
• Subliminal Advertising
• Deceptive Advertising
