Ethical Issues in Marketing, Advertising & Product Safety BMJN 5402

Consumers’ Rights Consumer’s Rights Product safety Information Right to choose Right to be heard Environmental right Educational right

Indonesia’s Consumer Protection Act Released on April 1999 Protection against unethical promotion, advertising & marketing practices Supported by Advertising Ethical Code by Indonesian Advertising Association

Responsibility to Provide Safe Product 1 Contractual theory (”caveat emptor”) 2 Due care theory (“caveat venditor”) 3 Social cost theory ( extreme “caveat venditor)

Contract Theory Business must ensure that product can work properly during the lifetime, can be maintained & fixed and safe Challenges : Theory assumes that producer & consumer are at the same level Depend on direct relationship between producer & consumer Not sufficient to protect consumer

Put consumer in weaker position Due Care Theory Put consumer in weaker position Norms Challenge : Do not manipulate consumer (deontology/ right based) Do not cause loss to consumer (utilitarian) Justice theory Due care is not easily defined Producer also has limitation in the product knowledge

Producer is fully responsible for the products Social Cost Theory Producer is fully responsible for the products Challenge : Unfair : consumer’s responsibility is taken out High cost economy : producer must pay for high insurance premium Significantly increase prices

Other Responsibilities 1 Product quality  implicit & explicit warranty 2 Price 3 Packaging & Labeling

Price Can’t be the result of pure market mechanism No perfect mechanism to dictate price Customer is often put in weak position High fluctuation Ethical issue of un-fair pricing : Conspirational price fixing Unawareness Misuse of power Emotional manipulation

Ethics of Sales, Advertising & Product Placement 1 Ethically commendable ways : persuading, asking, informing, advising 2 Unethical ways : threat, coercion, deception, manipulation, lying

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Manipulation 1 Guiding or directing someone’s/ something’s behavior 2 Grey area, less clear than deception & outright lies 3 Strongest objection from deontological ethics, erode bonds of trust & respect between persons 4 Ethically improper : appeal to fear, anxiety, other non-rational motivation

Deceptive/Unfair Sales & Advertising Impact Consumer might end up paying for higher prices Competitors are cheated out of chance to compete fairly Approach of regulators : Seek for intention to deceive Focus on effect Too strong & too weak a standard

Consumer’s Behavior Advertising might not control consumers’ behavior, but autonomous desire Interaction between first and second order desires Two conditions of autonomous desires : Consumer does not renounce or repudiate purchase Consumer has the capacity to critically reflect on desire and accept it as their own

Targeting The Vulnerable Vulnerable : susceptible to some harm Conditions : Unable in some ways to participate as fully informed & voluntary participant in market exchange (i.e. : children) Harm is other than financial harm of unsatisfactory market exchange

Deception in Sales Sales person deals with individual customer instead of general population Any form of deception is always intended

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