1. Ethical Issues in Marketing, Advertising & Product Safety
BMJN 5402

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

3. 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

4. Responsibility to Provide Safe Product1
Contractual theory (”caveat emptor”) 2
Due care theory (“caveat venditor”) 3
Social cost theory ( extreme “caveat venditor)

5. 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

6. 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

7. 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

8. Other Responsibilities1
Product quality  implicit & explicit warranty 2
Price 3
Packaging & Labeling

9. 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

10. Ethics of Sales, Advertising & Product Placement1
Ethically commendable ways : persuading, asking, informing, advising 2
Unethical ways : threat, coercion, deception, manipulation, lying

11. Some Examples…

12. 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

13. 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

14. 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

15. 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

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

17. Thank You