It raises the ethical issue of manipulating customers and thereby exploiting.
Products like tobacco, gutka, pan masala, junk food, or machinery that can injure a person, as well as pesticides, poisons, firearms, and explosives pose safety risks. Caveat emptor does not apply in case of cars, computers, cellphones, or medicines we buy. In case of Chinese goods, the marketer gives no warranty, what to talk of guarantee. Marketers must exercise due care in their production and marketing of a product.
Though environment is neither a customer nor it has any voice, yet the impact on it by the products can be significant. Impact on the environment in the form of pollution and consumption of resources may last generations. In many cases the product can’t be reused, because it will be costlier than buying a new one.
Thus, we throw the products, which are made of scarce materials that are toxic and may reach into groundwater or toxic fumes may endanger people’s lives. Marketers must adopt integrated marketing. They must consider the problems at the outset rather than after the product has been designed, produced, and advertised.
Communication of Contents:
Ethical issue arises when packaging is used as a form of deception. It may hide undesirable aspects of the product like rotten fruit or vegetables placed at the bottom of the package; and putting small quantity in big packaging as if the customer is buying something big. Similarly, breast implantation or the augmentation of lips, calves, or biceps may be regarded as deception if the facts did not come out.
The marketers are ethically responsible for insuring that the product bought by customers is not only the one they believe they are buying, but also one that has not been altered in ways that will harm them. Second, the children who might be able to get hold of a product, such as drugs or poisons, and do harm to themselves through ingesting or using it.
Once the product gets in use and the packaging is thrown away, the packaging might be wasteful and harmful to environment. Is that much packaging really required? People frequently do not properly dispose of the packaging that comes with the product. In India, it is very common to see near Railway stations and Bus Terminuses the plastic tea cups littered around.
Relevant and desirable information must be given and the information should be given in a manner that illiterates can also understand. It is a mistake to think that more the information better it is. However, on certain products which may immediately harm the customer (like poisons, eatables, a particular way of using a product), the information must be given. Products, genetically modified or organic products, do require information.
When marketers use special terms, omit certain details, or make it difficult to find the requisite information on, the customers make judgment according to their own capabilities. The words light, lite, new, supper light, low fat are quite confusing. If people are in a hurry and don’t read the small print on the labels that indicate that the product is different than what they think. The underlying issue is of deception.
Pricing is the easiest way to go in for unethical decisions. Elimination of competition through firms’ collusion is quite common. Simultaneous price rise can be seen in India in case of cement companies, milk prices, petrol and diesel through cartelisation. Other important unethical areas are:
Often the seller, once the price has been agreed upon, adds many other charges, thus the customer does not know of real price. When a hotel room is agreed upon, then the hotel may add room service charges, A/C charges, communication charges, and so on. Sometimes information for extra is written on the invoice in very small print. For example, while buying a tier, the dealer may charge extra for fitting. Indian Oil’s dealers’ delivery boys never give the balance money.
It is quite common. Small customers are charged more. Though discriminatory pricing is based upon competition, but any pricing which restricts completion is unethical.
Another unethical pricing practice is known as price gouging. Most of private airlines in India are blamed for increasing the fare to Goa during the year end due to increase in demand.
Product Acquisition & Placement:
It is not uncommon to see that retailers ask the manufacturers to provide Gift and entertainment if they want to sell the products to retailers. Retailers also ask for slotting fee (fees in exchange for agreeing to stock the company’s products on valuable shelf space) from manufacturers. Both the practices can’t be described as ethical.
Pricing Issues within companies:
Lobbying should be transparent. Products should be priced according to the market, and the value added in the countries in which they are produced, and not on the basis of external conditions. Transfer pricing is unethical.
Pricing Issues with Competitors:
Financial harm may be done to competitor. Predatory Pricing is one such practice. In the international trade, dumping may be done to harm local manufacturers.
Use of Child labour and low wages to people are ethically wrong and it is more wrong not to pass on the benefit to the consumer.
Often there are conflicts among different types of channels and it requires coordination of the members of a channel, and role of trust in channels. Other issues are:
Tying and exclusivity arrangements
Social Aspects of Distribution Channels:
Cost of travel, cost of the goods to be purchased, and social and cultural impacts of their outlets
Often celebrities endorse the products which they never use. In the ad it should be made clear whether Mr Amitabh Bachchan uses ‘Navratna’ oil, and whether Mr Shah Rukh Khan uses Hyundai ‘Santro’ car? In a recent judgement by a Delhi Court, Nestle has been charged in a seventeen-year-old complaint – that the company through their products: Lactogen and Cerelac had violated several sections of the Act by not printing the notice ‘mother’s milk is best for your baby’ in Hindi and also by not printing the warning that ‘infant milk substitute or infant food is not the sole source of nourishment for an infant’ on the container. The court also found that the warning was not printed in the size prescribed and all the mandatory information was not present in advertisements issued in five magazines.
Truth in advertising:
It has often been seen that false claims are made without any proof and Puffery is used with a desire for deception, like Heinz while making a claim that Children who drink Complan become taller. Piramal Healthcare makes ad for Pill 72, without talking about the after-effects.
Because of what people do in the ads, the viewers also do and the result is death, especially of children. About some years back, a young man had jumped from a building attempting to imitate Akshay Kumar’s dare-devilry stunts shown in Thums Up’s ad. In September, 2010, an eleven year old child killed himself allegedly under the influence of ad done by a Heinz India drink, ‘Complan’, claimed to make children ‘taller’.
Some value or norm is violated but marketers hardly bother about it. The new Series of 13 TV ads promoting Tata Docomo’s network connectivity with a tagline ‘no getting away’ – released across national channels – is being criticized for “showing class bias”, “cozying up to harmful social prejudices” and being indecent. A mad finds a mobile phone while cleaning the house and hides it inside her blouse. But just as she is about to exit, the phone rings and her employer gets to know.
It is not uncommon to see ads containing the phrase ‘Conditions apply’ and “Up to…%”. Most of the budget airlines used to advertise Delhi to Mumbai for Re 1, but when buying the ticket other conditions, i.e., other charges will come into play. Sale are often announced as discount up to 50%. It is nothing but bait and switch pricing, where let consumer come to the store and at a very unusual piece will be offered at 50% discount, and the customer will be asked to buy a product where discount is only 10%. Often products are placed in movies and gullible public feels that they are very good, that is why they are being shown in the film.
Product Acquisition and Placement:
The unethical practices include – retailer asking for gifts and entertainment, and asking for slotting fees to place manufacturer’s goods on store shelves.
The Product, Honesty in sales, the selling situation, Privacy in retailing-The information gathered on customers, the use of collected information are the issues in ethics.
Retailers exercising different kinds of pressures to sell the product are an encroachment on the freedom of customers.