Promotion and Ethical Issues Marketing I Competency #94- Describe ethical issues related to promotion

What is meant by “ethical issues”? Moral principles that guide behavior Decent human conduct Professional standards Ethics is prime concern in marketing

5 Examples of Unethical Marketing Practices: Making false, exaggerated, or unverified claims Why Used: to compel potential and existing customers to buy their products or services Use of false statements, exaggerated benefits, or make unverifiable claims about their offers Common in the weight loss industry, where marketers convince potential buyers that a particular product can help them shed pounds within two weeks without exercise or dieting!

5 Examples of Unethical Marketing Practices: Distortion of facts to mislead or confuse potential buyers Typical Example: Food processing company claims that its products are sugar-free or calorie-free when indeed they contain sugar or calories Company is trying to mislead potential buyers, since they are unlikely to buy the products if it is made known that they contain sugar or calories

5 Examples of Unethical Marketing Practices: Concealing dark sides or side effects of products or services Typical Example Commonly used in the natural remedies industry Most manufacturers deceive potential buyers that their products have NO SIDE EFFECTS They are “made from natural products” -But in reality, most of these products have been found to have side effects, especially when used over a long period. In fact, there’s no product without side effects—it’s just that the side effects might be unknown. It’s better to say, “There are no known side effects” than to say “there are no side effects.”

5 Examples of Unethical Marketing Practices: Using fear tactics Typical Example Common unethical marketing practice among snake oil salespersons. You will hear them saying something like: “This price is a limited-time offer. BUY NOW – price won’t last!”  Used to prompt the potential buyer to make a decision on the spot. Why subject someone to undue pressure because you want to make money off him or her?

5 Examples of Unethical Marketing Practices: Spamming Typical Example when the company sends unsolicited emails to potential customers Encourages them to buy your products or services This is the most common unethical marketing practice done online The number of times the company sends such emails doesn’t matter. Whether you send them once, or on occasions, or frequently, you remain a spammer

Consumer Protection Agency The Federal Trade Commission: FTC-The largest federal agency that handles consumer complaints regulate unfair or deceptive trade practices.  In addition, every state has enacted consumer protection statute Federal Trade Commission Act (15 U.S.C.A. § 45(a)(1))  These acts allow state attorneys to commence lawsuits over false or deceptive advertisements or other unfair and injurious consumer practices 

Consumer Protection Agency Consumer Product Safety Commission: In 1972, Congress established the Consumer Product Safety Commission (CPSC). It is the job of the CPSC to protect consumers from faulty or dangerous products by enacting mandatory safety st andards for those products  The CPSC has the authority to: Ban Recall In recent years, the CPSC has fallen victim to Federal Budget cuts Reductions in the agency's legal staff have prompted the CPSC to rely more and more on manufacturers to voluntarily recall the ir defective or hazardous products When manufacturers do not cooperate - the CPSC must commence a legal action that may take years to resolve Unfair or Deceptive Trade Practices

Are These Tactics Ethical? Bait and Switch- advertise significant discount on item but intentionally only stock a few- then “switch” to inferior product to meet supply for customers Candy distributors place “end cap” in grocery store near check-out at eye level of children

Case Studies In a group Read the case study and answer the questions Provide a brief overview and analysis of how to respond to this issue in an ethical way.