Transcript Marketing, Advertising and Product Safety

Lecture
7
Marketing, Advertising and
Product Safety
BBA361
Business Ethics and Corporate Governance
Chapter 6, “Ethics and the Conduct of Business”,John R.
Boatright
Charmaine Chan,
Department of Business Administration
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1. Marketing Ethics
Ethical framework for marketing in American society
(bill of rights for consumer):
• Fairness: The right to be provided with adequate
information about products
• Freedom: The right to have a voice in the marketing of
major marketing decision;
•Well-being:The right to be protected from harmful products
•Freedom & well-being: The right to be offered a choice
that includes the products that consumers truly want.
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2. Marketing Ethics in Hong Kong I
Consumer rights in Hong Kong:
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The
The
The
The
The
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The
The
right
right
right
right
right
right
right
right
to
to
to
to
to
to
to
to
satisfaction of basic needs;
safety
be informed
choose
be heard
redress
consumer education
a healthy and sustainable environment
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2. Marketing Ethics in Hong Kong II
http://www.consumer.org.hk/website/ws_en/competition_issues/model_code/2006
100401.pdf
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Trade Practice Rules
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Complaint Handling Rules
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Fair Competition Rules
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2. Marketing Ethics in Hong Kong II
I) Trade Practice Rules
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Misleading or Deceptive Conduct
False or Misleading Representations
Unconscionable Conducts
Undesirable Advertising and Selling Techniques
Unfair Selling Practices
Conditions and Warranties in Consumer Transaction
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2. Marketing Ethics in Hong Kong II
II ) Handling Consumer Complaints
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Independency and Impartiality
Transparency
Visibility
Affordability
Speed and Timeless
Competence of Appropriate Officers
Accessibility/ Ease of use
Security
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2. Marketing Ethics in Hong Kong II
III ) Fair Competition Rules
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Conduct substantially lessening Competition
Abuse of Dominant Position
Public Benefits that Outweight Market Competition
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3. Ethics in Sales Practice, Labeling Pricing
I ) Sales Practice
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Salesperson’s moral obligation is to facilitate the
conditions for a fair transaction where consumers act
freely and with adequate knowledge;
Deceptive statement: E.g.“suggested retail price” which
never charged; last day for the sale but everyday is the
last day;
Manipulation: Taking advantage of consumer psychology
to make a sale. E.g. “bait and switch”—Consumers lured
into a store by an ad for a low-cost good but sold a higher
priced version.
High-pressure tactics, particularly to students, elderly and
the poor;
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3. Ethics in Sales Practice, Labeling Pricing
II ) Labeling
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Correct and adequate information on the label
(Ethical question: how much information is a
manufacturer obligated to provide?)
2. Fair packaging: Package list the identity of product, name
and location of manufacturer packer, net quantity, the
number of per serving, etc;
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3. Ethics in Sales Practice, Labeling Pricing
III ) Pricing
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Predatory Pricing: Reducing prices to unreasonable low to
drive competitors out of business, e.g. to become
monopoly position
2. Unfair Pricing: Such as unconscionably high prices,
misleading prices (which happens in herbal shops in HK)
3. Hidden costs
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3. Ethical problems in Advertising
Criticism on Advertising
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Exaggerated claims and outright falsehoods
Lack of taste, irritating repetition
Offensive character
Morality of ad such as alcohol/tobacco;
excessive sex/ violence, negative stereotypes of
certain groups
Role of advertising on creating culture of
consumerism, potentiality of behavior control;
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3. Ethical problems in Advertising
1.Deceptive Advertising
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Deceptiveness of an ad not only depends on
the truth of the claims it makes, but also on the
impact on people who see/hear it. E.g. Tire: the
smoothest, safest ride; Pain reliever: the
quickest, gentlest relief;
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E.g. 1991, Campbell Soup was charged by Federal
Trade Commission for ads stressing low fat, low
cholesterol content which made consumers associated
with reduced risk of heart disease; The ads failed to
mention the high in sodium which increases some form
of heart disease.=> Consumers who try to avoid heart
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disease end up easily get heart disease.
3. Ethical problems in Advertising
2. Irrational Persuasion
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Techniques of advertising and its influence on
human desires for security, acceptance, selfesteem
E.g. inducing fear
Laudable, sinister, exploits deep seated
emotions
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4. Product Safety
“ The right of consumers to be protected
from harmful products”
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4. Product Safety
Due Care Theory:
manufacturers have an obligation to exercise
due care -- they should take all reasonable
precautions to ensure products on market are
free of defects.
–Design
–Materials
–Production
–Quality Control
–Packaging
–Notification
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