Unethical Practices In Marketing

Unethical practices in marketing - examples • • • • • • • • • • •

Pricing lack of clarity in pricing Dumping – selling at a loss to increase market share and destroy competition in order to subsequently raise prices Price fixing cartels Encouraging people to claim prizes when they phoning premium rate numbers “Bait and switch” selling - attracting customers and then subjecting them to high pressure selling techniques to switch to an more expensive alternative High pressure selling - especially in relation to groups such as the elderly Counterfeit goods and brand piracy Copying the style of packaging in an attempt to mislead consumers Deceptive advertising Irresponsible issue of credit cards and the irresponsible raising of credit limits Unethical practices in market research and competitor intelligence

Unethical practices relating to products - examples • • • • • • • •

Selling goods abroad which are banned at home Omitting to provide information on side effects Unsafe products Built in obsolescence Wasteful and unnecessary packaging Deception on size and content Inaccurate and incomplete testing of products Treatment of animals in product testing

Ethics and the supply chain - It would be hypocritical to claim to be a ethical firm if it turned a blind to unethical practices by suppliers in the supply chain. In particular: • • • •

The use of child labour and forced labour Production in sweatshops Violation of the basic rights of workers Ignoring of health, safety and environmental standards

An ethical producer has to be concerned with what is practiced by all firms (upstream and downstream) in the supply chain. Bribery This is a key ethical issue in business • • •

It first needs to be stated that bribery to secure a contract (especially a contract with a public sector body) is against the law and severe penalties can result However, it is sometimes seem (wrongly) as a victimless crime and is often rationalised in terms of “if we don’t offer a bribery, others will” From a moral or ethical perspective it should be approached not in terms of “can we get away” with it but is it right to offer a bribe to secure a contract

Institute of Business Ethics Suggestions for Good Practice The Institute recommends that organisations issue statements of ethical practice in respect of:

• • • • • • • • • • •

Relations with customers Relations with shareholders and other investors Relations with employees Relations with suppliers Relations with the government and the local community The environment Relations with competitors Issues relating to international business Behaviour in relations to mergers and takeovers Ethical issues concerning directors and managers Compliance and verification

What is an Ethical code? - This is a set It is likely to cover: • • • •

of

principles

governing

morality

and

acceptable

behaviour

Personal behaviour e.g. when dealing with customers and suppliers Corporate behaviour e.g. when negotiating deals Behaviour towards society e.g. when recruiting Behaviour towards the environment e.g. when deciding on process

Ethical audit - This is an audit of all the firms activities Purpose: • • •

To check that ethical principles are being pursued To check the extent to which actions are consistent with the organisation’s stated ethical intentions And to establish action plans if they are not