Ethical marketing is about making marketing decisions that are morally
right. The morality of the marketing decision can encompass
any part of marketing including sourcing of raw materials, staff employment and product advertising and pricing. Each person's view of morality is different, it is based on personal values and experiences. This creates a challenge for companies who want to pursue ethical marketing in a manner that will appeal to customers.
Examples of marketing decisions that involve ethics
Does the firm exaggerate the benefits of its products on its packaging? Are claims overstated? Many firms make bold claims to help sell their products. Are such claims morally wrong or merely "advertising puff".
Is it morally wrong to adopt high pressurised selling techniques or focus on customer groups that are vulnerable e.g. pensioners? Vulnerable customer groups have needs? Can you get customer's to buy without pressurised selling?
Firms need to make profits, a reduction in production costs increases profit margins. Is it morally wrong to negotiate tough contracts with suppliers to reduce production costs when it will reduce the supplier's profit margin?
Is it morally wrong to disregard the impact of business activities on the environment. To find out more about environmental marketing click here.
Why do businesses want to adopt ethical marketing?
Some businesses are set up because the founders feel strongly about an issue and they would like to deal with issue through the business. Whilst other businesses pursue ethical marketing because they feel that is what customers expect from them. Some consumers buying
products and services because they feel that the products, services (or organisations
responsible for them) are ethical. In response to this consumer demand
organisations have increased their focus on ethical marketing. The UK
Co-operative bank is good example of an organisation that tries to follow
a ethical principal, based on what their customers feel strongly about.
How do companies begin the ethical marketing process?
After a company has decided to implement ethical marketing it will
need to make the following decisions:
1. Define what is ethical.
2. Decide which branch of ethics it will subscribe to.
3. How will the ethical approach to marketing be implemented.
4. In which areas of the firm’s operations will ethical marketing
be implemented e.g. employees, suppliers, consumers/clients, production
techniques, distribution or the whole value chain.
5. Complete an analysis of how much ethical marketing will cost and compare this against the likely benefits of ethical marketing. This will help them decide whether they would like to pursue ethical marketing.
Challenges of Ethical Marketing
Ethical marketing requires marketing strategies that are ethical and reflect consumer and market expectations. It is not easy to define the term ethical or identify which ethical decisions cater to market expectations. An individual’s view of ethics and morality is influenced by a variety of things including their culture, background, experience, upbringing/family, peers, community, religion and country.
Balancing ethics and remaining competitive can be difficult. If ethical marketing involves considering the needs and welfare of suppliers, employees and customers it could add to business costs. For example Fair trade products provide producers with a minimum price. When business costs increase profit margins reduce or the costs are passed onto customers through price increases. However if firms can adopt ethical marketing which reflect market expectations, it may make them more appealing to customers and therefore create a competitive edge.
Ethics can form one element of a firm's marketing strategy or the whole strategy can be based around ethical marketing. It all depends on what the business is trying to achieve and what they feel is expected by the public, customers, legislation, shareholders and the target market. Ethical marketing can increase business costs or create a competitive edge.