1. Ethics and the Conduct of Business
Eighth edition
Chapter 10
Marketing and Advertising
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2. Modules (1 of 2) Introduction: Marketing and Advertising
10.1: Marketing Ethics Framework
10.2: Sales Practices and Labeling
10.3: Pricing and Distribution
10.4: Development and Research
10.5: Deceptive Advertising
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3. Modules (2 of 2) 10.6: Irrational Persuasion
10.7: Impact of Advertising
10.8: Internet Advertising
10.9: Social Advertising
Conclusion: Marketing and Advertising
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4. Learning Objectives (1 of 3)
10.1: Explain how principles of fairness, freedom, and well- being are challenged by marketing practices and why an ethical framework is necessary
10.2: Analyze unethical sales practices, the difficulties sales personnel face in avoiding them, and issues with the sufficiency of information on product labels
10.3: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets
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5. Learning Objectives (2 of 3)
10.4: Identify the ethical issues with product development and market research and how companies can conduct these essential marketing tasks responsibly
10.5: Describe the difficulties in defining what constitutes deceptive advertising and how it interferes with consumers’ ability to make rational choices
10.6: Recognize how different advertising practices use irrational persuasion techniques to influence consumers’ choices and the ethical arguments against these practices
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6. Learning Objectives (3 of 3)
10.7: Assess the potential harm advertising poses to individuals and society and the responsibility of companies to consider the consequences of their marketing efforts
10.8: Examine how Internet advertising and the online collection and use of personal information challenge the rights of individuals to privacy, autonomy, and fair treatment
10.9: Summarize the significance of social advertising and the ethical issues associated with it
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7. Introduction: Marketing and Advertising
Essential function of business
Advertising is an indispensible marketing tool
Four Ps of marketing
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8. 10.1: Marketing Ethics Framework
Objective: Explain how principles of fairness, freedom, and well-being are challenged by marketing practices and why an ethical framework is necessary
Fairness
Freedom
Well-being
Four point bill of rights
10.1: Marketing Ethics Framework:
Point 1- Fairness
Adequate information
Absence of force
Point 2- Freedom
Range of products
Freedom from manipulative practices
Privacy of personal information
Point 3- Well-being
Social impact
Product safety
Point 4- Four point bill of rights
The right to be protected from harmful products
The right to be provided with adequate information
The right to be offered a choice
The right to have a voice in marketing decision making
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9. Figure 10.1: Ethical Problems in Marketing
Ethical concepts
Requirements
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10. 10.2: Sales Practices and Labeling (1 of 2)
Objective: Analyze unethical sales practices, the difficulties sales personnel face in avoiding them, and issues with the sufficiency of information on product labels
10.2.1: Deception and Manipulation
Deception
Manipulation
10.2.2: Information Disclosure
Overview
10.2.1: Deception and Manipulation
Point 1- Deception
Giving false beliefs about products
Lying about a product
Examples – bogus clearance sales
Point 2- Manipulation
Taking advantage of consumer psychology
Example - bait and switch
10.2.2: Information Disclosure
Point 1- Overview
Information disclosure depends on what is sold and the difference in knowledge between the parties
Helps fair transaction
Helps customer make informed decision
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11. 10.2: Sales Practices and Labeling (2 of 2)
Objective: Analyze unethical sales practices, the difficulties sales personnel face in avoiding them, and issues with the sufficiency of information on product labels
10.2.3: Labeling
Information
How much information should be provided
GMO labeling
10.2.3: Labeling
Point 1- Information
Speaks for the product
Main contact between business and customer
Point 2- How much information should be provided
The Fair Packaging and Labeling Act
The Nutrition Labeling and Education Act
Point 3- GMO labeling
Remains in dispute
Individual interest is different from consumer rights
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12. 10.3 Pricing and Distribution (1 of 2)
Objective: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets
10.3.1: Anticompetitive Pricing
Anticompetitive marketing practices
10.3.1: Anticompetitive Pricing
Point 1- Anticompetitive marketing practices
Price fixing
Resale price maintenance
Price discrimination
Predatory pricing
Prohibited by four acts
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13. Table 10.1: Anticompetitive Marketing Practices
What is it?
What is the effect?
Anticompetitive Marketing Practices
Any marketing practice that reduces competition, raises prices, or reduces quality
A monopoly (or oligopoly) that can charge higher prices or offer lower quality than in a fair, competitive market
1. Price-Fixing
Two or more companies sell goods at a set, higher price, with or without an explicit or implicit agreement
Rival goods and companies can be driven out of the market, reducing supply and consumer choice.
2. Resale Price Maintenance
Products are sold on the condition that they be resold at a price fixed by the manufacturer or distributor
Retailers put more effort into promotion and services; products gain prestige from artificially higher prices.
3. Price Discrimination
Sellers give preferential treatment by charging different prices or offer different terms for the same goods to different buyers. Large buyers demand better prices and terms than others.
Same as price-fixing; consumers must shop at preferred retailers or deal with limited choices and higher prices elsewhere.
4. Predatory Pricing
Prices are reduced to unreasonably low or unprofitable levels to drive competitors out of business and then charge above-market rates.
Same as price-fixing; discourages new or other companies from entering the market.
Price fixing
Resale price maintenance
Price discrimination
Predatory pricing
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14. 10.3 Pricing and Distribution (2 of 2)
Objective: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets
10.3.2: Unfair Pricing
Price gouging
Misleading price
10.3.3: Distribution
Anticompetitive practices
Slotting allowances
Gray markets
10.3.2: Unfair Pricing
Point 1- Price gouging
Temporary shortage of important goods
Goods that are difficult to evaluate
Point 2- Misleading price
Deception
Customary pricing
Unit pricing
Hidden cost
10.3.3: Distribution
Point 1- Anticompetitive practices
Use of market power
Reciprocal dealing
Exclusive dealing
Tying arrangement
Point 2- Slotting allowances
Manufacturers pay retailers to secure store shelves
Trade promotion
Point 2- Gray markets
Selling goods through unauthorized channel
Diverting
Parallel importing
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15. 10.4 Development and Research
Objective: Identify the ethical issues with product development and market research and how companies can conduct these essential marketing tasks responsibly
10.4.1: Product Development
Ethical issues
10.4.2: Marketing Research
Overview
10.4.1: Product Development
Point 1- Ethical issues
Safety
Economic value of new product
Harms associated with new product
10.4.2: Marketing Research
Point 1- Overview 
Information collection
Analysis
Kinds of information collected
Means to collect information
Point 2- Ethical issues 
Purpose
Should not be deceptive, pushy, and coercive
Preserving integrity of research subjects
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16. 10.5 Deceptive Advertising
Objective: Describe the difficulties in defining what constitutes deceptive advertising and how it interferes with consumers’ ability to make rational choices
10.5.1: Defining Deceptive Advertising
Deceptiveness
Obstacles to definition
10.5.2: Applying the Definition
Case study
10.5.1: Defining Deceptive Advertising
Point 1- Deceptiveness
Falsity of the claim an ad makes
The impact of the ad on people
Point 2- Obstacles to definition
Deception due to the ad or person
Taking advantage of people’s ignorance
10.5.2: Applying the Definition
Point 1- Case study 
Campbell Soup Company
Soup ad created false belief
Hindered the consumer ability to make rational decision
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17. 10.6 Irrational Persuasion
Objective: Recognize how different advertising practices use irrational persuasion techniques to influence consumers’ choices and the ethical arguments against these practices
10.6.1: Threats to Free Choice
Subliminal advertising
Other advertising techniques
10.6.2: Dependence Effect
John Kenneth Galbraith concept
10.6.1: Threats to Free Choice
Point 1- Subliminal advertising
Manipulative
Acts without our knowledge and consent
Point 2- Other advertising techniques 
Product placement
Buzz marketing
10.6.2: Dependence Effect
Point 1- John Kenneth Galbraith concept 
Producers create wants
Wants depend on output
Advertisements create desires
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18. 10.7 Impact of Advertising 10.7.1: Impact on Persons
Objective: Assess the potential harm advertising poses to individuals and society and the responsibility of companies to consider the consequences of their marketing efforts
10.7.1: Impact on Persons
Overview
10.7.2: Impact on Society
10.7.1: Impact on Persons
Point 1- Overview
Ads shape our personality
Has an impact on cognitive and emotional development
Impacts of online advertising
Creates avid consumers
Affects people’s conception of themselves
10.7.2: Impact on Society
Point 1- Overview 
Ads have an impact on community
The consequences in context of all forces operating in the community should be considered
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19. 10.8 Internet Advertising 10.8.1: Online Placement
Objective: Examine how Internet advertising and the online collection and use of personal information challenge the rights of individuals to privacy, autonomy, and fair treatment
10.8.1: Online Placement
Google AdSense
Facebook
10.8.2: Ethics of Placement
Ethical issues
10.8.1: Online Placement
Point 1- Google AdSense
Allows to reach most receptive audience
Target specific group
SEO
Point 2- Facebook 
More targeted ad placement
Analytic software
10.8.2: Ethics of Placement
Point 1- Ethical issues 
Controlling data
Opt in versus opt out
Protecting identity
Native advertising
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20. 10.9 Social Advertising Overview
Objective: Summarize the significance of social advertising and the ethical issues associated with it
Overview
Point 1- Overview
Used to address social problems
Improve society
Ethical challenges
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21. Conclusion: Marketing and Advertising
Marketing ethics requires honesty and fairness
Pricing, labeling, and advertising can be done in ways unfair to consumers
Advertising has social consequences
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