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MGT301 - Principles of Marketing - Lecture Handout 43

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Lesson overview and learning objectives:

This Lesson examines the social effects of private marketing practices. A marketing system should sense, serve, satisfy consumer needs and improve the quality of consumers’ lives. In working to meet the consumer’s needs, marketers may take some actions that are not approved of by all the consumers or publics within the social sector. Marketing managers must understand the criticism that the marketing function may encounter. By understanding the criticism, the manager is better
prepared to respond to it in a proactive manner. Some of the criticism is justified; some is not. After this Lesson students should be able to Identify the major social criticisms of marketing. Describe the principles of socially responsible marketing. Explain the role of ethics in marketing.


Responsible marketers discover what consumers want and respond with the right products at right price to give good value to buyers, and profit to the producer. The marketing concept is a philosophy of customer satisfaction and mutual gain. Its practice leads the economy by an invisible hand to satisfy the many and changing needs of millions of consumers. Not all marketers follow the marketing concept; however private transactions may involve larger questions of public policy (i.e., the illustration of the sale of cigarettes). Two major issues in marketing are ethics and Social responsibilities which we will be discussing today.

A. Social Criticisms of Marketing

Marketing receives much criticism. Some of this is justified and some is not. Social critics claim that certain marketing practices hurt individual consumers, society as a whole, and other business firms.

a. Marketing’s Impact on Individual Consumers:

Consumers have many concerns about how well the marketing system serves their interests. There are six primary criticisms leveled at the marketing function by consumers, consumer advocates, and government agencies.

  1. Harming consumers through high prices.
  2. Deceptive practices.
  3. High-pressure selling.
  4. Shoddy or unsafe products.
  5. Planned obsolescence.
  6. Poor service to disadvantaged consumers.

i. Harming consumers through high prices:

Many critics charge the marketing system causes prices to be higher than need be. Some factors to which these critics point are as follows:

  • High costs of distribution. Greedy intermediaries mark up prices beyond the value of their services. There are too many intermediaries and they duplicate services. Resellers have responded by saying that: the work performed by the intermediaries is necessary and takes away the responsibility from the consumer or the manufacturer, the rising markup is really the result of improved services, operating costs are driving up prices, in reality, profit margins are low because of intense competition. Strong retailers pressure their channel members to keep prices low.
  • High advertising and promotion costs. Marketing is accused of driving up promotion and advertising costs. Marketers respond by saying that: consumers want more than the merely functional qualities of products, they want psychological benefits, branding, even though it may cost more, gives buyers confidence, heavy advertising is needed to inform millions of potential buyers of the merits of a brand, Heavy advertising and promotion may be necessary for a firm to match competitors’ efforts. Companies are cost-conscious and try to spend their promotional dollars wisely.
  • Excessive markups. Critics charge that some companies mark up goods excessively. This charge is responded by the marketers respond by saying as: most businesses try to deal fairly with consumers because they want the repeat business, most consumer abuses are unintentional, When shady marketers do take advantage of consumers, and they should be reported to the authorities, Consumers often do not understand the reason for the high markup.

ii. Deceptive Pricing:

Marketers are sometimes accused of deceptive practices that lead consumers to believe that they will get more value than they actually do. Three groups exist with respect to these alleged practices:

  1. Deceptive pricing includes such practices as falsely advertising “factory” or “wholesale” prices, or a large reduction from a phony high list price.
  2. Deceptive promotion includes such practices as overstating the product’s features or performance, luring the customer to the store for a bargain that is out of stock, or running rigged contests.
  3. Deceptive packaging includes exaggerating package contents through subtle design, not filling the package to the top, using misleading labeling, or describing size in misleading terms.

Deceptive practices have led to legislation and other consumer protection actions. Marketers argue that most companies avoid deceptive practices because such practices harm their business in the long run. According to some experts, some puffery, however, will always occur.

iii. High-pressure selling:

High-pressure selling is another criticism of marketing. Laws require door-to-door salespeople to announce that they are selling a product. Also, buyers have a “three-day cooling-off period” in which they can cancel a contract after rethinking it.

iv. Shoddy and Unsafe products:

Shoddy or unsafe products are another criticism leveled against marketers. Complaints include: 1). Complaints about products not being made well or services were not performed well. 2). Products deliver little benefit. 3). Product safety has been a problem for several reasons:

  1. Manufacturer indifference.
  2. Increased production complexity.
  3. Poorly trained labor.
  4. Poor quality control.

Responses to these complaints from marketers are positive. Marketers in general want to make beneficial and safe products.

v. Planned obsolescence:

Planned obsolescence is a strategy of causing products to become obsolete before they actually need replacement and is a criticism leveled by consumers. Fashion is often cited as an example. Marketers respond that consumers like lifestyle
changes; they get tired of old goods and want a new look. Much of so-called planned obsolescence is actually the normal interaction of competitive and technological forces in a free society.

vi. poor service:

In contemporary society poor service to disadvantaged consumers is another criticism against marketing. Clearly, better marketing systems must be built in low-income areas. Critics believe the poor have been exploited by marketers.

b. Marketing’s Impact on Society as a Whole

Some criticisms have also been leveled at marketing because of its perceived negative impact on society as a whole. Criticisms include marketing creating:

  1. False wants and too much materialism. People are judged by what they own rather than who they are. This criticism perhaps overstates the power of business to create needs. Our needs are influenced by other forces than just marketing needs. Some even see materialism as a positive force.
  2. Producing too few social goods. There needs to be more of a balance between social (public) and private goods. Options are the government could require more safety be built into products (autos for example), or make consumers pay social costs.
  3. Cultural pollution. Constant assaults on privacy by advertising and noise clutter. Marketing answers by saying: Marketers hope that their ads reach primarily the target audience; ads make much of television and radio free to users and keep down the costs of magazines and newspapers.
  4. Too much political power.
    companies do promote and protect their own interests. They have a right to. Counter forces are in place to offset business promotional and political power.

c. Marketing’s Impact on Other Businesses

Critics charge that a company’s marketing practices can harm other companies and reduce competition. Three problems are involved:

  1. Acquisitions of competitors. There may be too many of these according to some acquisition is a complex subject, however, and sometimes acquisition may be good for society.
  2. Marketing practices that create barriers to entry. Patents and heavy promotional spending are often cited
  3. Unfair competitive marketing practices. Predatory competition is dangerous to the overall well-being of the economy. To distinguish between what is predatory and what is healthy competition is often difficult.

B. Marketing Ethics

Marketing Ethics are marketers’ standards of conduct and moral values. People develop standards of ethical behavior based on their own systems of values and that may differ from employer’s organizational ethics, which produces conflicts Conscientious marketers face many moral dilemmas. Companies need to develop corporate marketing ethics policies—broad guidelines that everyone in the organization must follow. Areas of concern include:

  1. Distributor relations.
  2. Advertising standards.
  3. Customer service.
  4. Pricing.
  5. Product development.
  6. General ethical standards.

The finest guidelines cannot resolve all the difficult ethical situations a marketer faces. What principle should guide companies and marketing managers on issues of ethical and social responsibility? Two general philosophies are used:

  1. Issues are decided by the free market and legal system. Under this system companies and their managers are not responsible for making moral judgments. Companies can do whatever the system allows.
  2. Issues are the responsibility of individual companies and managers. This approach says that the company should have a “social conscience” that guides action. This is a more enlightened philosophy.

Each company and marketing manager must work out a philosophy of socially responsible and ethical behavior. Remember that written codes do not ensure ethical behavior. The issue of ethics provides special challenges for international marketers. Bribery may be socially acceptable in one country and completely illegal in another. Companies must commit to a single ethical standard that can be applied worldwide. Many industrial and professional associations have suggested codes of ethics; many companies are now adopting their own codes. Companies are developing programs to teach managers about important ethics issues and help them find the proper responses. Still, written codes and ethics programs do not ensure ethical behavior. Given the challenges of this century, companies that are able to create new values in a socially-responsible w ay will have a world to conquer.

a. Consumerism:

Business firms have been the target of organized consumer movements Traditional sellers’ rights include:

  1. Right to introduce any product in any size and style, provided it is not hazardous to personal health or safety; or, if it is, to include proper warnings and controls.
  2. Right to charge any price for the product, provided no discrimination exists among similar kinds of buyers.
  3. Right to spend any amount to promote the product, provided it is not defined as unfair competition.
  4. Right to use any product message, provided it is not misleading or dishonest in content or execution.
  5. Right to use buying incentive schemes, provided they are not unfair or misleading.

Traditional buyers’ rights include:

  1. Right not to buy a product that is offered for sale.
  2. Right to expect the product to be safe.
  3. Right to expect the product to perform as claimed.
  4. Right to be well informed about important aspects of the product.
  5. Right to be protected against questionable products and marketing practices.
  6. Right to influence products and marketing practices in ways that will improve the “quality of life.”

Consumers have the right but also the responsibility to protect themselves instead of leaving this function to someone else.

b. Environmentalism

Environmentalists are concerned with marketing’s effects on the environment and with the costs of serving consumers needs and wants. Environmentalism is an organized movement of concerned citizens and government agencies to protect and improve people’s living environment. Environmentalists are not against marketing and consumption. They simply want people and organizations to operate with more care for the environment. The marketing system’s goal should be to maximize “life quality.” Companies are adopting policies of environmental sustainability developing strategies that both sustain the environment and produce profits for the company. The challenge is to develop a sustainable global economy. Environmental sustainability has several strategies:

  • Pollution prevention—this involves more than pollution control (cleaning up waste after it has been created). It means eliminating or minimizing waste before it is created. Green marketing programs have helped.
  • Product stewardship—minimizing not just pollution from production but all environmental impacts throughout the full product life cycle a]. Many companies are adopting design for environment (DFE practices, which involve thinking ahead in the design stage to create products that are easier to recover, reuse, or recycle.
  • New environmental technologies—new technologies.
  • Sustainability vision—serves as a guide to the future. It shows how the company’s products and services, processes, and policies must evolve and what new technologies must be developed to get there. Environmentalism creates special challenges for global marketers because environmental policies vary widely between countries. There are no uniform standards.

C. Enlightened Marketing

Enlightened marketing is a philosophy holding that a company’s marketing should support the best long-run performance of the marketing system. It has five principles:

  1. Consumer-oriented marketing. A principle of enlightened marketing which holds that the company should view and organize its marketing activities from the consumer’s point of view.
  2. Innovative marketing. A principle of enlightened marketing that requires that a company seek real product and marketing improvements.
  3. Value marketing. A principle of enlightened marketing which holds that a company should put most of its resources into value-building marketing investments.
  4. Sense-of-mission marketing. A principle of enlightened marketing that holds that a company should define its mission in broad social terms rather than narrow product terms.
  5. Societal marketing. A principle of enlightened marketing which holds that a company should make marketing decisions by considering consumer’s wants, the company’s requirements, consumer’s long-run interests, and society’s long-run interests. A societal oriented marketer wants to design products that are pleasing and beneficial. Products can be classified according to their degree of immediate consumer satisfaction and long-run consumer benefit. Degree of satisfaction might include:


  • Deficient products are products that have neither immediate appeal nor long-term benefits. Example: bad-tasting medicine.
  • Pleasing products are products that give high immediate satisfaction but may hurt consumers in the long-run. Example: cigarettes.
  • Salutary products are products that have low appeal but may benefit consumers in the long-run. Example: seat belts and air bags.
  • Desirable products are products that give both high immediate satisfaction and high long-run benefits. Example: a tasty and nutritious food.

Key Principles for Public policy towards Marketing:

Key Principles for Public policy towards Marketing

Certain public policy principles can be used to make the marketing more effective these principles include full consumer and producer freedom, potential harms should be eliminated, producers should meet the basic needs of the consumers, there should be economic efficiency consumers and producers both should be on beneficent in practicing the exchange process, producer should ensure the innovation , consumer should be provided full knowledge about the products and should be protected against any sort of unethical and illegal practices by the producers,

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