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Ethical Issues in Marketing Relationships - Coggle Diagram
Ethical Issues in Marketing Relationships
The Changing Nature of Ethical Criticism of Marketing over time
Ethical Relationship Marketing
Customers have expectations that the company will be honest, fair and transparent with them.
Relationship Marketing
- is the ongoing process of engaging in collaborative activities and programs with immediate and end-use customers to create or enhance mutual economic, social and psychological value, profitability.
Ideal relationship focuses on generating customer satisfaction, trust and long-term commitment.
Franchising
This is a business arrangement where an organisation (the franchisor) contracts with other firms/individuals/groups (franchisees) to offer products and services under its brand names.
Retailing and Personal Selling
Transaction based sales situation - emphasis is on completing a specific transaction with no consideration of the implications for future sales opportunities.
Unethical activities due to managerial pressures to meet sales or financial targets, coupled with low levels of supervision and a lack of training, particularly for part-time staff.
Implications for Sales Management
Sales Management issues such as how sales performance is measured, levels of supervision and importantly, how ethical standards are not only communicated, but also enforced.
Ethical Issues in Specific Sales Sectors
Pharmaceutical Marketing - Detailing
Detailing
- the direct marketing or promotion of pharmaceutical products to doctors or other medical professionals.
Ethical Issues involves overstating the advantages of a medication compared to other options or the suppression of negative infomration.
Direct to Consumer Advertising (DTCA) of Prescription Medications
Involves to promotion of medication direct to the consumer through mass media.
Mass media includes:
television
radio
newspaper
consumer magazines
Business-to-Business Marketing (B2B)
B2B sales staff will deal with individuals or groups of individuals from the buyer firm with sales being of high value and repeat business being the seller's aim.
Close relationships = unethical
Ethical Issues in Supply Chain Management Relationship
Retailer Dominance
Supermarket retail chains are frequently criticised for aggressive negotiations with suppliers to drive purchase prices down and to thus generate greater profits for themselves.
Retailers have significant control on products and can dictate/enforce suppliers to wither purchase for their company or they won't find anything similar or of the same quality.
Slotting and Promotional Allowances
Slotting allowances are lump sum payments made by manufacturers to retailers, especially, but not restricted to, the fast-moving consumer goods (FMCG) sector in return for shelf space.
Slotting fees drive up prices for the consumer as the manufacturer seeks to recover the costs.
Supply Chains
- the various producers and distributors involved from the point of production of raw materials through all stages of conversion to a final product available for purchase by consumers.
Focus on Environmentally Conscious Supply Chain Management (ECSCM) where all the environmental effects of products and production processes are tightly controlled to minimise any adverse environmental effects such as the disposal of waste.
Multi-Level Marketing and Pyramid Selling
Multi-Level Marketing
MLM evolved from door-to-door selling approaches that were common until the middle of the 20th C.
Agents at a high level in MLM distribute products to lower-level agents in return for commission or other forms of payment.
Ethical Issues arise in relation to the cost of purchasing stock at different levels within the structure and the level of fees or commission agents may be required to provide
Pyramid Selling
Pyramid selling is unethical and in many countries illegal.
It involves people making a financial investment in return for a license to recruit others to the scheme, with the promise of high financial returns.
Fair Trade
The Origins and Intentions of the Fair-Trade Movement
The fair trade movement was established in order to better trading conditions for small producers and workers in developing countries.
A guaranteed minimum price is paid to producers to cover to cost of sustainable production and to provide a living, with advance payments being available before a crop is harvested.
Fair Trade Principles and Implementation Expectations
Direct Trade - provides direct access to the market for producers' products avoiding, to the greatest possible extent, middle-men and speculators.
Fair Price - a price that covers the costs of more sustainable production and living, with a social premium to allow producers to invest in development,
Long-Term Commitment - stable business partnerships established with producers via long-term contracts that facilitate long-term production planning and sustainable production practices.
Credit - pre-financing to provide producers with the necessary resources to complete an order without falling into debt,
Labour Standards - producers must uphold standards involving rights to association, collective bargaining, freedom from discrimination and unequal pay, no forced or child labour, minimum social and labour conditions and working conditions.
Environment - producers must uphold basic environmental goals, encouraging biodiversity, preventing soil erosion and water pollution, controlling pesticide and fertilizer use, and reducing waste.
Capacity Development and Information - alternative trade organisations assist marginalised produced to build up management and production efficiency to enable them eventually to access mainstream export markets.
Fair Trade Extension into Mainstream: Potential Ethical Issues with Dominant Retailers
Big retailers have a leverage over smaller ones as their buying power is better meaning that these retailers are becoming increasingly powerful forces in coffee production as well as consumption, i.e., influencing every stage of the supply chain.
The first is the potential for fair washing where retailers ‘convey a (sometimes false) image of the company as a responsible purchaser’ and thus oversell their commitment to Fair Trade principles.
A second issue is the behaviour of some supermarket chains who are reported to behave towards Fair Trade suppliers as they do to other suppliers (see the section on retailer dominance above), without considering Fair Trade principles.
A third concern is that the social premiums do not always filter back to the communities in which the producers live.
Controversial Tactics
Gifts and Incentives
This is not the only market sector in which payments and gifts have frequently been used. In the medical sector, it is still debatable as to whether even small gifts such as pens and notepads that contain branded medication names are mere reminders that promote positive relationships between the pharmaceutical sales representatives and doctors or whether they have a stronger influence on actual prescribing.
Ethical Issues with 'Bait and Switch' and Loss Leader Tactics
Bait and Switch Tactics
Have been used when a specific product is offered at a low price, but when potential buyers try to make a purchase, the advertised product is not available and they are offered more expensive alternatives instead.
These tactics attempt to deter potential purchases from conducting a detailed price comparison that would include competitors' products and other retailers.
Online bait and switch tactics are a relatively new phenomenon. Consumers making internet searches for a specific brand name or company are presented with promotional material for a competitor.
Loss Leader Tactics
Loss leader practices involve selling a specific product at or below cost price in order to draw in customers who will purchase other full price products.
Data Mining
Ethical issues as they relate to the use of data for marketing purpose.
There is a chance of unauthorised access to, and use of data, there is also at least one instance where a cloud computing service provider withdrew provision and access to the stored electronic information.
Ethical problems can arise if the profiling of purchase activity results in discrimination such as on the basis of ethnicity, gender, religion or sexual preference.
Pricing Strategies
When prices increase above the expected level, the perceived motive of the firm may lead to negative reactions. These may be sufficiently strong that potential purchases will avoid making future purchases from offending firms.
This revenge-seeking behaviour may result in the purchase of less than optimal choices from competitor products rather than purchasing from the organisation – manufacturer or retailer – that is perceived to have transgressed. These aggrieved former customers may also spread negative word of mouth.
