Influence: Ethical considerations - truth and accuracy, products that damage health, Good taste in advertising engaging in fair competition, sugging Flashcards
Ethical considerations overview
In marketing, as with all business practices, there are ethical and legal dilemmas involved. Although the many laws regulating marketing strategies prescribe legal standards, ethical standards are more difficult to define.
Truth and accuracy
False or misleading advertising is not only unethical, it is also illegal. However, there are many grey areas and loopholes that allow the use of terms such as ‘special’, ‘great value’, ‘low fat’, ‘light’ and ‘once in a lifetime offer’ to be used. This is because they can be interpreted in many different ways. If the marketer uses these words, attempting to knowingly mislead customers, this would be classified as unethical behaviour.
Untruth due to concealed facts - The unethical practise of concealed facts - pisces of information purposefully omitted from an advertisement
Vague statements - Statement using words so ambiguous that the consumer would assume the advertises intended message. Weasel world allows the market to deny any claims of intention to mislead or deceive
Exaggerated claims - Referred to as puffery - can’t be proved. E.g. a certain shampoo is superior to all other products and worlds greatest
Good taste in advertising
What constitutes good taste in advertising is subjective. i.e. some consumers might find an advertisement offensive, whilst others may not. In Australia, the Advertising Standards Bureau (ASB) self-regulates advertising to ensure that acceptable advertising standards are followed.
How?
The ASB does this by administering a national system of advertising self-regulation through the Advertising Standards Board and the Advertising Claims Board.
What do they do?
Both of these boards are part of the dispute resolution mechanism that deals with consumer complaints about most forms of advertising.
Limitations?
The critics believe that advertising standards should be regulated by the government; otherwise there may be a temptation by marketers to ignore industry-established guidelines.
CASE STUDY
Toyota dealers in Australia are openly advertising brand-new, in-demand hybrid models at wildly inflated prices by moving them across to their used-car departments – or discreetly selling them to wholesalers or friendly rival dealers – as thousands of customers in the queue wait months and in some cases years.
Products that damage health
Laws apply to some products like cigarettes. Other products that may damage health include junk food (obesity), premixed alcoholic drinks (binge drinking) and gambling.
Nutritionists argue that the self-regulatory advertising codes, such as the Responsible Children’s Marketing Initiative and the Quick Service Restaurant Code (which allow fast food companies to advertise certain products in children’s television programs only if they meet specific nutritional guidelines) aimed at reducing junk-food marketing, are not working.
For example, only advertisements screened during designated children’s programs or ‘designed for children’ are covered by the code of nutritional guidelines. It does not, however, cover television programs popular with children, such as Neighbours and Home & Away, and fast food companies. As well as industry established codes, the federal government sets restrictions on children’s advertising. In Australia, no advertising is allowed during programs for pre-school children.
The proliferation of social-networking sites provide marketers with new and largely unregulated ways of advertising junk food to children. This form of advertising raises new ethical issues.
CASE STUDY
Do you have sugar free gelato? No, sorry. All our gelato and sorbet contain sugar. There’s no beating round the bush. Treat yo self, really means treat yourself. - No sugar free gelato
31.1 of grams sugar
-18.6 fat
-cocoa solids
-Invert sugar syrup
Dextrose monohydrate
maltodextrin
Ingredients of Dulce de leche Gelato
Sugar is fine for you in small amounts, but too much can lead to weight gain, acne, type 2 diabetes, and can increase your risk of several serious medical conditions.
Engaging in fair competition
The amount of competition in the marketplace can be intense so there is a temptation for some businesses to engage in unfair marketing strategies. For example, businesses should be fair when referring to their competitors in their marketing and their advertisements should not insult or make false assertions towards their competitors.
The Competition and Consumer Act 2010 requires businesses to compete fairly and contains provisions relating to fair competition. Part IV of this Act aims to deter certain anti-competitive behaviour by businesses that limit or prevent competition.
Examples of anti-competitive conduct which are illegal under the CCA include:
Cartel conduct: a cartel exists when businesses agree to act together instead of competing against one another. For example, it is illegal for competitors to agree to fix, control or maintain prices.
Misuse of market power: this prohibits corporations who have substantial market power from taking advantage of that market power for the purpose of damaging a competitor or preventing a business from entering the market.
Exclusive dealing: this occurs when one business trades with another and then imposes restrictions on them.
CASE STUDY
Toyota respects free trade and market competition and market competition to obtain customer satisfaction all over the world and endeavorers to engage in fair competition ( statement )
Sugging
Sugging, selling under the guise of a survey, is a sales technique disguised as market research. Although this technique is not illegal, it does raise several ethical issues, including invasion of privacy and deception.
Consumers are asked general questions on a range of topics, such as ‘Where would you like to go for a holiday?’ and ‘Would you like to be a millionaire in two years?’ From the responses the interviewer is able to determine the needs of the consumer and suggest products offered by the business that cater to these needs.
