DBA-RM-Chapter 8

8/7/2019 DBA-RM-Chapter 8

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Contentsy Ethical criticism of marketing in general

y Consumerism and social responsibility

y Ethics definition and different ethical school of thought

y The role of ethics with specific reference to characteristicsof Relationship Marketing


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Ethical criticism of marketing

Marketers have been criticized for their activities on

numerous occasions.

y

Charging high prices (due to too many intermediaries)y Deceptive practices in promotion, pricing and

packaging

y High pressure selling of unsafe products

y Planned obsolescence (Kotler et al 2001)


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In recent years:-

y Insider dealings in shares

y Mis-selling of personal pensions

y Mis-selling of endowment mortgages

y Excess payment to top directors (fat-cats)

y Alleged use of child labor in Asia and elsewhere (e.g.

Nike and Adidas)


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y When the criticism have been strong and widespread, government intervened through legislation

y There has been growing trend towardsconsumerism in last couple of decades

y Services have attempted to gain competitive advantageby subscribing to ethical policies


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Consumerism & buyers right

Consumerism refers to :

y the organized movement of citizens and

government agencies to improve the rights andpower of buyers in relation to the sellers.

Traditional rights of buyers are:

y

Not to purchased a products that is offered for saley To expect the product to be safe

y To expect the product to perform as claimed by the seller


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Additional right that are sought by the movement

y To be well informed about important aspect of the

product offered for sale.y To be protected against products and marketing

practices which are questionable

y To improve the quality of life through influencing

products and marketing practice (Kotler et al 2001)



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y The concept of social responsibility is partly aresponse to consumerism.

y It can be identified as organization's obligation to:maximize its positive impact and minimize itsnegative impact on society.

y Ethical issues are a dimension of the concept of social

responsibility


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y Marketing ethics refer to moral codes of behavior inconducting marketing activities

y In marketing, ethics = moral principles that guidemarketing decision

Ethics

Pollution of air and water

Depletion of earths natural resources

Animal testing on cosmetics

Bribery

Misleading advertisement

Issues related to

Social

Responsibility

and ethics


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Ethical school of thoughts:y Relativism

y The right and wrong can different for each individualy each situation (decision) is judged according to its own merit, no

universal standard

y Universal standards cannot be applied to judge the morality ofdecision.

y when in Rome do as the Romans do

y Universalism/deontology

y The successful results do not justify a decision that is basically

unethical.y Result does not justify unethical decision

y The ends dont always justify the means

y Ex: Keeping of promises as an indisputable duty even if it meansgoing beyond the legal requirement


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Ethical school of thoughts:

y Utilitarianism

y Moral merits lie in whether decision serves greatest number ofpeople (majority)

y Action which promote happiness are right, unhappiness are wrong

y Right or wrong always depends on the consequences

y Maximize the overall good

y Ex: keeping promises is not obligatory if breaking promise will beto the advantage of most people involved in the situation.

y The virtue theory

y Pay less emphasis on which rules people should follow

y act in the true spirit of virtuousness, go beyond duty and selfinterest


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Ethics and Relationship Marketing

y RM relies on communication and two-way dialogue.

y Essential RM characteristics:

y Keeping promisesy Generation of trust

y Long term commitment

y Achievement of mutual objectives


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RM and ethical issues in Communication

y Successful RM strategy requires ethical behavior of allthe parties involved (customer / supplier)

y Essential that organization act ethically andhonestly

y Main ethical issues in communication:

y Frequency of information gathering /contact

y The nature of the information gathered

y Methods of gathering information

y The purpose for which the information is used

y Privacy of information


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RM and ethical issues in

Communicationy Dyadic relationship between customer and supplier is based on the

exchange of up-to-date information.

y The type of information gathered must be strictly necessary for theconduct and continuation of the relationship between the customer

and the organization. Unnecessary questions should not been asked.y The purpose for which the information is gathered must be notified

to the customer and subsequently not used for other purposes andnot shared with other organizations without the customers consent.

y Customers provide information to suppliers with whom they are in a

relationship on the understanding that the information will be keptsafe, private and not been seen by those who do not need to see it.

y Not respecting customers need for the privacy and security of theinformation which they provide would be tantamount to basing therelationship on rocky grounds with a short lifespan because trust

would be broken.


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RM and ethical issues in

Communication

y Customers also have a duty not to divulge informationabout suppliers which they have acquired of long term

relationships, to competitors or others in such a way asto cause a disadvantage to those suppliers.


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Long Term Commitmenty Supplier have a duty to help customers achieve the objective for

which they have invested in the relationships. Supplier should nottaking the customer for granted.

y In the case of customer complaints Supplier ought to be givenopportunity to put matters right before EXIT.

y

Customers have a duty to respect the time and resources investedin the relationship by suppliers and should refrain formopportunistic behaviour and consider exiting from therelationship only after their complaints or requests have not beenattended to satisfactorily.

y The supplier ought to be given the opportunity to put mattersright just as the customer has the right to seek redress.


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The legal implications of unethical RM

y Consumer ri t protection Data rotection ct 1998

y ct places important obli ations onor anization icol informationon customer

y i t principle of ood information andling:y airly and la ful processed

y Processes for limitedpurposes

y de uate, relevant andnot excessive

y ccuratey ot eep longer t annecessary

y Processed according to consumer rights

y Secured

y Not transferred to countries ithout ade uate protection


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Ethical Considerations inRelationship Marketing

y In Malaysia, there has been growing trendtowards consumerism for the few years

y There are also trend towards organisedmovement of consumers, organisation /

NGOs to improve the rights and powers ofconsumersy Government intervention is inevitable

through various legislation and channels

y RM relies heavily on creating trust and

commitment between customers andsuppliers / sellers. As such, it is essential thatsuppliers / sellers act ethically and honestly


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Ethical Considerations inRelationship Marketing

Introduction of Anti-Monopoly Act, 2008

Originated from US Anti-Trust Law, 1968

Objectives;

- Govern fair pricing to consumer- Prohibit Oligopoly/Monopolized Industry- Promote level playing fields for all player

Key Governance;- Prohibit pricing fixing and collaborations- Prohibit supply fixing and collaborations

- Prohibit market demarcations- Prohibit monopolized industry control

Main benefit to consumers are fair competition

by suppliers that enhance service and end price


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S

ummaryy There has been growing trend towards

consumerism in last couple of decades

y RM relies heavily on trust and commitment

y Successful RM requires ethical behavior of all theparties involved in the relationship (customer and

suppliers, employees and intermediaries)


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DBA-RM-Chapter 8

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