A2.5 MM Chapter 1 - VRG
A2.5 MM Chapter 1 - VRG
5 Marketing Management
1. Introduction to Marketing
Meaning of Marketing:
Marketing derived from the word Market. A market is a place where buyers and
sellers come together and exchange products and services. Marketing is a process of
determining the needs and wants of consumers. It helps the customers to provide them
with those products that they are looking for. It helps the company to find out new
customers.
Marketing is a wide term embracing all resources and economic activities needed to
direct the flow of goods and services from producers to consumers. It is a distribution
process so far as businessmen are concerned.
“A total system of interacting business activities designed to plan, price, promote and
distribute want-satisfying products and services to present and potential customers” —
William J Stanton.
It is a modern activity that has developed about the middle of the 20th century as a
scientific process and organised activity and a body of knowledge.
Nature :
“Marketing is the social process by which individuals and groups obtain what they need
and want through creating and exchanging products and value with others." This
definition has less of a focus on profit making organisations and places greater emphasis
on the exchange process.
Nature of Marketing:
1. Marketing is an Economic Function
Marketing embraces all the business activities involved in getting goods and services,
from the hands of producers into the hands of final consumers. The business steps
through which goods progress on their way to final consumers is the concern of
marketing.
According to this approach the emphasis is on how the individual organisation processes
marketing and develops the strategic dimensions of marketing activities.
Marketing is a never-ending task. Marketing concerns itself with a arranging all the
resources in a way that meets the needs of the customers. The following points will bring
forth the nature of marketing.
1. Marketing is customer oriented: Marketing begins and ends with the customer.
Marketing concerns itself not only with the satisfaction of the customer but also objects
to delight him/her. All the organizational activities must be targeted and focused towards
the customer. Customers must be allowed to decree product specifications and standards
regarding quality. And for this, customer’s needs must be examined continuously.
3. Marketing is network of relationships: The focal point of all marketing activities is the
customer. The term relationships marketing came into light in1990’s. According to Philip
Kotler, “Relationship Marketing is the practice of building long-term satisfying relations
with key parties like customers, suppliers and distributors in order to retain their long
term preference and business.” So, the marketers should aim at maintaining long term
relationships by delivering high quality products, better services and fair prices than
their competitors.
4. Marketing is business: All activities start from marketing i.e. through knowing
customer’s needs and wants and ends on the customer i.e. providing after sales service
and knowing customer dissonance. The entire business revolves around marketing.
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Scope:
Marketing has a very wide scope it covers all the activities from conception of ideas to
realization of profits. Marketing is pervasive in scope; any type of entity which is of
value to a market segment can be marketed.
Marketing is a process designed to plan, price, promote and distribute want satisfying
products and service. If covers three main activities—concentration, dispersion and
equalization. Marketing confines itself to channels of distribution, marketing functions,
flow of goods and management.
Starting with research to know customer demand through market analysis and
investigation, the scope of marketing extends itself to the employment of resources of
men, money, materials and management with a view to satisfying customer demand.
In today’s world marketing has become almost indispensable for the success of an
organization. Therefore, it is of utmost importance to study the scope of marketing. The
spectrum of marketing covers the following:
1. Marketing Research: Market Research is a tool used for decision making about the
marketing mix’s elements. Research has to be carried out in order to identify the
customer’s needs, their tastes and preferences, their interests, economic position, their
paying capacity and effectiveness of certain advertisements.
For this purpose, data is collected, tabulated, codified, analyzed, and presented
through knowledgeable techniques crafted to reveal what customers will buy, why they
will buy it, and how much they will pay for it. Market research aims at adapting products
to the desires of buyers. Often a questionnaire is used to obtain feedback from the
customers. Marketing managers must play an active role in the research process if the
input is to be useful to them.
3. Advertising and Sales Promotion: In this era of tough competition, the sales promotion
and advertisements have become almost an inbuilt part of the marketing. It helps to make
the customer aware about the product, makes him curious about the product and thus
promotes sales. There are ample sources of sales promotion and advertisements taking
the decision about which source to be selected is also an imperative part in the sphere of
marketing management. Through advertising marketers are able to position their
products in the minds of the customer using various media like newspapers, magazines,
television, radio, hoardings, window display and internet etc. Marketing managers must
blend the methods of 1) face-to-face personal selling, 2) mass selling to large numbers of
customers through advertising and 3) sales promotion, to inform the target market about
the "right" product.
4. Channels of Distribution: Bringing together the buyer and seller and facilitating their
exchange is the essence of marketing. Distribution channels are an integral part of a
complex system that has evolved from cultural and social patterns in order to facilitate
exchange transactions. Marketers must decide what methods are best for distributing
their particular products. There are various media of distribution like the retai lers, the
wholesalers, department stores, chain stores, super markets etc.
Marketers may choose to sell directly to the customers, to the customers through
sales agents, to jobbers, directly to retailers, or to retailers through sales representatives.
They must also determine as to how much long shall be its channel of distribution. A
number of factors have to be borne in mind while selecting the medium of distribution
like perishability, price of the product, size and weight, after sales service etc.
6. After-Sales Service: The furnishing of after sales service is very critical for the
satisfaction of the customers. The free repairs, the return or exchange of the product
during the guarantee period if the product proves defective or worthless, etc. are included
in after sales service.
Importance:
To sum up, marketing discusses certain benefits that are vital to the economy of
any country—developed and under-developed. It links agriculture with industry
— both farms and factories are benefited. It helps continuous flow of goods from
farm to the farm assuring farmer’s real price for their work and consumers a
steady supply of goods at competitive price.
Introduction
In today's world of marketing, everywhere you go you are being marketed to in
one form or another. Marketing is with you each second of your walking life. From
morning to night you are exposed to thousands of marketing messages everyday.
Marketing is something that affects you even though you may not necessarily be
conscious of it.
Definition of Marketing
According to American Marketing Association (2004) - "Marketing is an
organisational function and set of processes for creating, communicating and
delivering value to customers and for managing relationships in a way that benefits
both the organisation and the stakeholder."
AMA (1960) - "Marketing is the performance of business activities that direct the
flow of goods and services from producer to consumer or user."
According to Kotler (2000) - "A societal process by which individuals and groups
obtain what they need and want through creating, offering, and freely exchanging
products and services of value with others."
This discipline centers on the study of market and consumer behaviors and it
analyzes the commercial management of companies in order to attract, acquire,
and retain customers by satisfying their wants and needs and instilling brand
loyalty.
Evolution of Marketing:
Evolution of marketing means slow and gradual development of marketing over
the years. The fact that marketing is virtually everywhere in today’s free-market
economies is a dramatic change from a few decades ago. Marketing emerged as a
discrete discipline in the early 1900s, but it didn’t affect most companies right
away. Many businesses went through distinct phases on their way to becoming
marketing oriented.
Marketing has changed over the centuries, decades and years. The production
centered system systematically changed into relationship era of today and over
the period; the specializations have emerged such as sales versus marketing and
advertising versus retailing.
The overall evolution of marketing has given rise to the concept of business
development. Marketing has taken the modern shape after going through various
stages since last the end of 19th century. The Production oriented practice of
marketing prior to the twentieth century was conservative and hidebound by
rules-of-thumb and lack of information. Science & technology developments and
specially the development of information technology have now changed the way
people live, the way people do business and the way people sell and purchase.
Following is a short summary of the various stages of evolution of marketing.
Contents -
• Production Orientation Era
• Product Orientation Era
• Sales Orientation Era
• Marketing Orientation Era
• Relationship Marketing Orientation Era
Marketing Orientations :
An organisation focus (and subsequently its marketing) is centred around five key
categories, classified into the following orientation groups: Production orientation,
product orientation, sales orientation, societal orientation and market orientation.
These approaches dictate the priorities and processes existent within the
organisation, and perhaps more importantly, the manner in which the
organisation takes its core offering to market and how it empowers its marketing
teams.
Here’s a look at each in more detail.
PRODUCTION ORIENTATION
A production orientated organisation commonly operates a mass production
model and streamlines this production process for its product offering. This
orientation approach assumes that its customers value price, and therefore, it
focuses on lowering production costs to meet such price needs of this customer
base.
This price is believed to form the main value proposition of the production
orientation organisation’s key offering, focusing its resources towards operations
and positioning its key marketing communications on price-based messages.
This assumption that price is king, however, isn’t always indicative of the needs
and wants of the target audience as the approach does not require learning
anything about the customer base. It assumes that its customers want the
cheapest product available and will strive to realise this price.
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PRODUCT ORIENTATION
It is sometimes assumed that a product orientation approach is similar to a
production orientation approach. But it is exactly the opposite. This approach to
business concerns its products and continually improving and refining them so
that the product can always be superior to that of its competitors. So, as the
previous orientation was centred around price, product orientation is centred
around quality, which often increases the price.
Premium products fall into this category, but the approach does not always offer
what its target audience actually wants or considers the factors that the audience
uses to form its purchasing decision.
Quality – and therefore a product orientated organisation – often does not
consider external factors, and focuses on manufacturing a high-quality, premium
product that is superior within the market it operates and competes within.
Advantages: Focus on quality, innovation, skills development/outsourcing.
Disadvantages: Potential missed market opportunities, obsolescence.
SALES ORIENTATION
A sales orientated organisation focuses the majority of its resources on selling its
products and services to its target audience. In a way, it does prioritise its
customers but not in a sense of listening to their needs and wants – it simply wants
to sell to them.
Existing products are usually given to the sales and marketing teams and they are
tasked to finding buyers to those products, wherever and whoever they may be.
Many organisations will feel they are not selling enough of their products and will,
therefore, adopt sales orientated techniques to focus the organisation on selling
more and building on its profit margins.
Disregarding customer needs in this way, and adopting aggressive outbound sales
techniques, is an approach that rarely works in the long term. This is especially
the case now that the general “customer” (regardless of industry) is more
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empowered than ever and appreciates relationships within the sales processes,
especially within the B2B pharma sectors. That said, this isn't to say that
organisations cannot be successful with this approach. The inbound
sales/marketing approach has emerged as attractive in modern-day sales
orientated organisations.
Advantages: Immediate short-term sales are generated.
Disadvantages: Risks customer confidence, costs, not always sustainable.
SOCIETAL ORIENTATION
As people generally become more aware of their environments, the world and the
societies they live within, the societal orientation approach has emerged, giving
organisations a new organisational philosophy.
The societal orientation organisation, considering its product, process and its
marketing, to an extent, focuses on the impact its organisation and products has
within the societies it operates within, as well as the wider environment. Ethical
considerations in this manner have become highly popular within the
pharmaceutical and life science industries.
In competitive markets, however, this approach can be challenging to sustain –
especially for small to medium size organisations where profits and customer
satisfaction can affect how it can execute the environmental and societal
orientation approach.
Advantages: Image is enhanced, appeals to upcoming markets, ethical.
Disadvantages: Marketing message is sometimes distorted, limited budget.
MARKET ORIENTATION
A market orientated organisation looks at the market and its target audience first,
before any production or sales activities takes place, to learn what potential
customers want from organisations. The product or service offering is therefore
created with the customer in mind, resulting in a true customer-first approach.
Market orientation, in marketing strategy terms, commonly revolves around
culture, values and other internal behaviours focused on satisfying customer
needs that are usually well-researched prior.
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Although this clearly has its benefits, it can also come at a cost to organisations as
it usually puts organisations on the back foot, always reacting to customer
demands rather than predicting or shaping them with innovative products and
services. This said, most markets are moving more towards a market-orientated
approach as customers have more and more access to information about what
they are looking to buy.
Advantages: Customer satisfaction, loyalty, continual investment in research.
Disadvantages: Reactive, not always innovative, market always changing.
Summary
• Market orientation is a marketing approach wherein the processes of
product development and creation are focused on satisfying the needs of
consumers.
• Marketing orientation is the business approach that dictates all the
processes within that organization. It comes in several types: sales
orientation, market orientation, production orientation, and societal
orientation.
• Market orientation offers several advantages, including product
differentiation and increased consumer satisfaction.
The strategy must be focused on values, culture, and other behavioral traits of the
consumer base. Thus, the development efforts of the organization are focused on
characteristics that are most widely demanded. This enables companies to adapt
to different markets and enhance competitiveness.
1.3. Marketing Process, Developing the Marketing Mix, The role of marketing mix in
planning and strategy
Marketing Process:
Marketing process includes ways in which value can be created for the customers to
satisfy their requirements. It is an endless series of actions and reactions between the
customers and the companies making attempt to create value for and satisfy the needs of
customers.
In marketing process, the situation is examined to identify opportunities, the strategy is
formulated for a value proposition, tactical decisions are taken, plan is executed, and
results are monitored.
Given their wants and resources, people demand products with benefits that add to the
most value and satisfaction.
The more loyal to the company’s profitable customers, the higher are the customer
equity. Customer equity may even be a better way to measure its performance than
market share or current sales.
Marketers cannot create customer value and build customer relationships by themselves.
They need to work closely with other company departments and with partners outside
the firm.
In addition to being good at customer relationship management, they also need to be
good at partner relationship management.
Final Words Managing Marketing Process
The last step of the marketing process is arranging resources necessary to carry out the
marketing plan, putting the plan in action, and exerting control.
For the implementation of the marketing plan, the firm needs to build a marketing
organization.
This type of organization consists of many specialists responsible for carrying out
marketing research, advertising, product development, customer service, etc.
Such an organization calls for setting up a department called the marketing department
headed up by a Vice-President/Director/GM. He usually performs three types of tasks.
First, he coordinates activities performed by different personnel in the marketing
department.
Second, he must closely work with other key personnel charged with other
responsibilities, such as personnel, finance, etc.
Third, he must perform several operative and technical functions as selecting, training,
directing, motivating, and evaluating his department’s personnel for better performance
by each of them.
When the plan is implemented, management must make sure that everything is going
fine. He can ensure this by receiving feedback and taking corrective action if necessary,
i.e., controlling.
Once a firm has defined its target market and identified its competitive advantage, it can
create the marketing mix, which is based on the 4Ps discussed earlier, that brings a
specific group of consumers a product with superior value. Every target market requires
a unique marketing mix to satisfy the needs of the target customers and meet the firm’s
goals. A strategy must be constructed for each of the 4Ps, and all strategies must be
blended with the strategies of the other elements. Thus, the marketing mix is only as good
as its weakest part.
The marketing mix in marketing strategy: Product, price, place and promotion
The marketing mix is the set of controllable, tactical marketing tools that a company
uses to produce a desired response from its target market. It consists of everything that
a company can do to influence demand for its product. It is also a tool to help marketing
planning and execution.
The marketing mix can be divided into four groups of variables commonly known as the
four Ps:
3. Place (or distribution): The activities that make the product available to
consumers.
4. Promotion: The activities that communicate the product’s features and benefits
and persuade customers to purchase the product.
Marketing tools
Each of the four Ps has its own tools to contribute to the marketing mix:
Marketing strategy
For example, an excellent product with a poor distribution system could be doomed to
failure. An excellent product with an excellent distribution system but an inappropriate
price is also doomed to failure. A successful marketing mix requires careful tailoring.
For instance, at first glance you might think that McDonald’s and Wendy’s have roughly
the same marketing mix. After all, they are both in the fast-food business.
But McDonald’s targets parents with young children through Ronald McDonald, heavily
promoted children’s Happy Meals, and in-store playgrounds.
Wendy’s is targeted to a more adult crowd. Wendy’s has no playgrounds, but it does have
flat-screen TVs, digital menu boards, and comfy leather seating by a fireplace in many
stores (a more adult atmosphere), and it has expanded its menu to include more items
for adult tastes.
Product Strategy
Marketing strategy typically starts with the product. Marketers can’t plan a distribution
system or set a price if they don’t know exactly what product will be offered to the market.
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Marketers use the term product to refer to goods, services, or even ideas. Examples of
goods would include tires, MP3 players, and clothing.
Marketers view products in a much larger context than is often thought. They include not
only the item itself but also the brand name and the company image. The names Ralph
Lauren and Gucci, for instance, create extra value for everything from cosmetics to bath
towels. That is, products with those names sell at higher prices than identical products
without the names. Consumers buy things not only for what they do, but also for what
they mean.
Once you have identified your target audience and the competition, the next thing on your to-
do list should be developing a marketing mix.
Every business needs its very own marketing mix to appeal to its customers. The marketing
mix definition, its importance, the elements of marketing mix and how to develop an effective
marketing mix for your product or service.
Developing an effective marketing mix starts with setting the right goals. Establish what you
want to achieve with your marketing plan; is it to grow sales? Acquire more customers? Build
brand awareness?
Once you have set realistic and measurable goals, determine how much you are willing to spend
on achieving your objectives.
In order to build a product or service that your customers would want to buy, you need to know
who they are.
Find different segments in your target audience and create separate customer profiles for each.
Refer to these when you are developing your strategies.
Clarify what your unique selling proposition is through customer surveys, interviews, focus
groups etc.
Here you will identify the benefits your product or service will bring to your customer, and
how you are better than anyone else in solving their problems.
Carry out a competitor analysis to understand the different strategies and tactics used by your
competitors. This knowledge will be especially helpful when you are creating your pricing
strategy.
List down the unique qualities and the value of your product. You can build on these when you
are marketing it to your customers.
Using the competitor research, you have done, build a pricing strategy. Make sure that you
have not overpriced or under-priced your product.
Choose the channels you will be distributing your product through based on the type of your
product or service and your target customer.
And select the promotional techniques you want to choose based on your budget, and again the
customer and your product.
As a learning tool
While one of the limitations of the traditional 4P’s marketing mix is that it is quite
simplistic, that means it is also an excellent approach to learning the scope of marketing.
Marketing students are typically introduced to the concept of the traditional marketing
mix in their introductory marketing studies – it is usually one of the first concepts taught.
For many years, marketing was primarily associated with simply advertising and
promotion. The 4P’s marketing mix structure, however, clearly highlights that promotion
is simply one of the four elements. At the centre of the marketing mix is product – for
without a product offering, it is impossible for an organization to offer any value to an end
consumer and it is impossible for the firm to create profitability for itself.
A handy checklist
The marketing mix is handy as a top-level checklist of the key components of any
integrated marketing program. When a marketer is developing their marketing strategy
and documenting their marketing plan, the marketing mix can act as an overall checklist,
or control, to ensure that they have considered the broader aspects of marketing.
The components of the original marketing mix (Product, Price, Place, Promotion) need to
be mixed in an appropriate proportion so the organization meets its marketing
objectives. In this situation, the marketer becomes a “mixer of ingredients” constantly
engaged in building a creative mix of marketing procedures and instruments in order to
render the organization profitable.
Philip Kotler has stated that “the marketing mix is the set of controllable variables
that the firm can use to influence the buyer’s response". Therefore, the marketing
mix is an useful tool for any marketer by helping him keep in focus all the variables
involved in this particular process.
Marketing mix in combination delivers the marketing strategy
The marketing mix helps a marketer to realize that the four main components work
together and should be regarded as a unit. Very often, decisions made regarding one
variable may influence the choices of another element. By seeing the marketing mix as an
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integral tool, marketers will be able to build an effective strategy and attach the right
tactics for its accomplishment. Selecting the right marketing mix will take a lot of effort
before finding the right balance of the elements involved.
By following the 4 components (Product, Price, Place, Promotion) of the marketing mix,
an organization will be able to create value for its customers and communicate through
in an integrated approach. Customers will perceive this value in the quality of the product,
its associated price and discounts, through the quality of the distribution and placement
and finally by its advertising campaigns.
Flexible options
There is no perfect marketing mix, due to the infinite combinations of the elements
involved. The same product may have different marketing mixes for different target
markets. Also, no marketing mix is constant; it should be adapted to the requirements
and changes of the environment it concerns. But one thing is certain, the different
elements of the mix should not pull the organization in different directions, they should
consolidate a single position within a certain market segment.
What Is Ethical Marketing? Before we dive into the examples, let’s take a moment to
clarify what ethical marketing means.
Ethical marketing refers to the process by which companies market their goods and
services by focusing not only on how their products benefit customers, but also how they
benefit socially responsible or environmental causes.
To put this another way, ethical marketing isn’t a strategy; it’s a philosophy. It includes
everything from ensuring advertisements are honest and trustworthy, to building strong
relationships with consumers through a set of shared values. Companies with a focus on
ethical marketing evaluate their decisions from a business perspective (i.e. whether a
particular marketing initiative will deliver the desired return) as well as a moral
perspective (i.e. whether a decision is “right” or morally sound).
ETHICS IN MARKETING
Ethics are a collection of principles of right conduct that shape the decisions people or
organizations make. Practicing ethics in marketing means deliberately applying
standards of fairness, or moral rights and wrongs, to marketing decision making,
behavior, and practice in the organization.
In a market economy, a business may be expected to act in what it believes to be its own
best interest. The purpose of marketing is to create a competitive advantage. An
organization achieves an advantage when it does a better job than its competitors at
satisfying the product and service requirements of its target markets. Those
organizations that develop a competitive advantage are able to satisfy the needs of both
customers and the organization.
As our economic system has become more successful at providing for needs and wants,
there has been greater focus on organizations' adhering to ethical values rather than
simply providing products.
Ethical issues in marketing arise from the conflicts and lack of agreement on particular
issues. Parties involved in marketing transactions have a set of expectations about how
the business relationships will take shape and how various transactions need to be
conducted. Each marketing concept has its own ethical issues-
Marketing refers to activities of a company associated with buying and selling a product
or service. Marketing through advertising, selling and delivery of products to potential
customers, is vital for the success of any business. Since it has the potential to influence
attitudes, behaviours and priorities, ethical considerations are part and parcel of
marketing.
3. Objectivity: The concern for objectivity is a vital issue in marketing. The lack of
objective research on part of the market researcher may legitimize profiting from
poverty, cultural stereotypes and racial tensions.
10. Use of brand ambassadors: Ambassadors endorsing products they don’t use or
whose authenticity they don’t cross check, making profits out of public’s reverence
of a person, high cost of celebrity eventually extracted from public, puts newer and
smaller brands at a disadvantage hurting fair competition.
1. Regulation: More than external regulation, marketing needs internal controls and
self-regulation. The organisations are expected to develop principles of ethics to
guide the marketing process. The establishment bodies such as Advertising
Standards Council of India (ASCI) can be seen as a step in this direction.
Marketing ethics, regardless of the product offered or the market targeted, sets the
guidelines for which good marketing is practiced. To market ethically and effectively one
should be reminded that all marketing decisions and efforts are necessary to meet and
suit the needs of customers, suppliers, and business partners. A company must have
ethical marketing policies to guide their pricing, advertising, research, and competitive
strategies.
Ethical issues in marketing arise from the conflicts and lack of agreement on particular
issues. Parties involved in marketing transactions have a set of expectations about how
the business relationships will take shape and how various transactions need to be
conducted. Each marketing concept has its own ethical issues, which we will discuss in
this chapter.
Market research has experienced a resurgence with the widespread use of the Internet
and the popularity of social networking. It is easier than ever before for companies to
connect directly with customers and collect individual information that goes into a
computer database to be matched with other pieces of data collected during unrelated
transactions.
The way a company conducts its market research these days can have serious ethical
repercussions, affecting the lives of consumers in ways that have yet to be fully
understood. Further, companies can be faced with a public backlash if their market
research practices are perceived as unethical.
Unethical practices in marketing can result in grouping the audience into various
segments. Selective marketing may be used to discourage the demand arising from
these so-called undesirable market segments or to disenfranchise them totally.
Examples of unethical market exclusion may include the industry attitudes towards the
gay, ethnic minority, and plus-size groups.
In the early days of existence of corporations, especially during 1940s and 1950s, tobacco
was advertised as a substance that promotes health. Of late, an advertiser who does not
meet the ethical standards is considered an offender against morality by the law.
• Some select types of advertising may strongly offend some groups of people even
when they are of strong interest to others. Feminine hygiene products are
sometimes seen by some as a method of promoting promiscuity that is
undesirable and strongly condemned in various societies.
Delivery Channels
Some common examples include TV and Telephonic commercials and the direct mail.
Electronic spam and telemarketing also push the limits of ethical standards and legality
in a strong manner.
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Example − Shills and astroturfers are the best examples of ways for delivering a
marketing message under the appearance of independent product reviews and
endorsements, or creating supposedly independent watchdog or review organizations.
Fake reviews can be published on Amazon. Shills are primarily for message-delivery, but
they can also be used to drive up prices in auctions, such as EBay auctions.
Deceptive marketing policies are not contained in a specific limit or to one target market,
and it can sometimes go unseen by the public. There are numerous methods of deceptive
marketing. It can be presented to consumers in various forms; one of the methods is one
that is accomplished via the use of humor. Humor offers an escape or relief from various
types of human constraints, and some advertisers may take the advantage of this by
applying deceptive advertising methods for a product that can potentially harm or
alleviate the constraints using humor.
Anti-Competitive Practices
There are various methods that are anti-competitive. For example, bait and switch is a
type of fraud where customers are "baited" through the advertisements for some
products or services that have a low price; however, the customers find in reality that the
advertised good is unavailable and they are "switched" towards a product that is costlier
and was not intended in the advertisements.
This business practice demands the initial investor or the "captain" to enroll other people
for a fee to them who again will further enroll more people in order to be paid by the
company.
Pricing Ethics
There are various forms of unethical business practices related to pricing the products
and services.
Bid rigging is a type of fraud in which a commercial contract is promised to one party,
however, for the sake of appearance several other parties also present a bid.
Several product-related issues raise questions about ethics in marketing, most often
concerning the quality of products and services provided. Among the most frequently
voiced complaints are ones about products that are unsafe, that are of poor quality in
construction or content, that do not contain what is promoted, or that go out of style or
become obsolete before they actually need replacing. An organization that markets poor-
quality or unsafe products is taking the chance that it will develop a reputation for poo r
products or service. In addition, it may be putting itself in jeopardy for product claims or
legal action. Sometimes, however, frequent changes in product features or performance,
such as those that often occur in the computer industry, make previous models of
products obsolete. Such changes can be misinterpreted as planned obsolescence.
Ethical questions may also arise in the distribution process. Because sales performance
is the most common way in which marketing representatives and sales personnel are
evaluated, performance pressures exist that may lead to ethical dilemmas. For example,
pressuring vendors to buy more than they need and pushing items that will result in
higher commissions are temptations. Exerting influence to cause vendors to reduce
display space for competitors' products, promising shipment when knowing delivery is
not possible by the promised date, or paying vendors to carry a firm's product rather than
one of its competitors are also unethical.
Research is another area in which ethical issues may arise. Information gathered from
research can be important to the successful marketing of products or services.
Consumers, however, may view organizations' efforts to gather data from them as
invading their privacy. They are resistant to give out personal information that might
cause them to become a marketing target or to receive product or sales information.
When data about products or consumers are exaggerated to make a selling point, or
research questions are written to obtain a specific result, consumers are misled. Without
self-imposed ethical standards in the research process, management will likely make
decisions based on inaccurate information.
Consumers develop an identity in the marketplace that is shaped both by who they are
and by what they see themselves as becoming. There is evidence that the way consumers
view themselves influences their purchasing behavior. This identity is often reflected in
the brands or products they consume or the way in which they lead their lives.
these wants? Clearly, appeals exist that are designed to cause people to purchase more
than they need or can afford. Unsolicited offers of credit cards with high limits or high
interest rates, advertising appeals touting the psychological benefits of conspicuous
consumption, and promotions that seek to stimulate unrecognized needs are often cited
as examples of these excesses.
Children are an important marketing target for certain products. Because their
knowledge about products, the media, and selling strategies is usually not as well
developed as that of adults, children are likely to be more vulnerable to psychological
appeals and strong images. Thus, ethical questions sometimes arise when they are
exposed to questionable marketing tactics and messages.
The proliferation of direct marketing and use of the Internet to market to children also
raises ethical issues. Sometimes a few unscrupulous marketers design sites so that
children are able to bypass adult supervision or control, or sometimes they present
objectionable materials to underage consumers or pressure them to buy items or
provide credit card numbers. When this happens, it is likely that social pressure and
subsequent regulation will result. Likewise, programming for children and youth in the
mass media has been under scrutiny recently.
In the United States, marketing to children is closely controlled. Federal regulations place
limits on the types of marketing that can be directed to children, and marketing activities
are monitored by the Better Business Bureau, the Federal Trade Commission, consumer
and parental groups, and the broadcast networks. These guidelines provide clear
direction to marketers.
The United States is a society of ever-increasing diversity. Markets are broken into
segments in which people share some similar characteristics. Ethical issues arise when
Unlike the legal protections in place to protect children from harmful practices, there
have been few efforts to protect minority customers. When targeting minorities, firms
must evaluate whether the targeted population is susceptible to appeals because of their
minority status. The firm must assess marketing efforts to determine whether ethical
behavior would cause them to change their marketing practices.
As society changes, so do the images of and roles assumed by people, regardless of race,
sex, or occupation. Women have been portrayed in a variety of ways over the years. When
marketers present those images as overly conventional, formulaic, or oversimplified,
people may view them as stereotypical and offensive.
Examples of demeaning stereotypes include those in which women are presented as less
intelligent, submissive to or obsessed with men, unable to assume leaders hip roles or
make decisions, or skimpily dressed in order to appeal to the sexual interests of males.
Harmful stereotypes include those portraying women as obsessed with their appearance
or conforming to some ideal of size, weight, or beauty. When images are considered
demeaning or harmful, they will work to the detriment of the organization.
Advertisements, in particular, should be evaluated to be sure that the images projected
are not offensive.
CONCLUSION
Because marketing decisions often require specialized knowledge, ethical issues are
often more complicated than those faced in personal life—and effective decision making
requires consistency. Because each business situation is different, and not all decisions
are simple, many organizations have embraced ethical codes of conduct and rules of
professional ethics to guide managers and employees. However, sometimes self-
regulation proves insufficient to protect the interest of customers, organizations, or
society. At that point, pressures for regulation and enactment of legislation to protect the
interests of all parties in the exchange process will likely occur.
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