Ebook: Ethics And International Marketing : Research Background And Challenges

Contextualising ethical issues in marketingMarketing ethics has developed in the context of business ethics that reflects theinterests of various stakeholders in the exchange process. Baumhart (1961) andTzalikis and Fritzsche (1989) suggest that the moral issues in marketing areparticularly important as marketing is expected to identify, anticipate and satisfycustomer requirements profitably, thus creating and sustaining the interface betweenconsumer preferences and companies’ market aspirations. Some of the problems inachieving a general consensus on ethics in marketing stem from the lack of uniformphilosophical arguments of what is “good” and “ethical” and whether “good” and“ethical” have identical meaning.Kant’s (1788) views on ethics are utilitarian and deontological based on reason,intention and duty. According to him duties cannot be associated with self-interestexpressed in expected pay-offs or rewards. Thus companies should exist to satisfy theneeds of the society and firms have a duty, a moral obligation to deliver benefits to thesociety. Such an argument places organisational gains as a function of the socialwealth and development they create and the consumer satisfaction they deliver.Consequently the social cause is paramount in a company’s conduct. Taking Kant’sethical concept as a reference point it can be argued that it pays off for companies toappear ethical; their expectations of increased sales, market share and profitability toappear as motivated by objectives other than self-interest (Yeo, 1988). Such anapproach can bring higher pay-offs for a firm because consumers will perceive its operations as ethical. Therefore, if companies appear to be ethical following ethicalcodes and norms regulating their self-interest they will (hopefully) be rewarded by theconsumers. The real issue is whether companies want to appear ethical or truly committo a marketing behaviour that will place consumer and social welfare before theirself-interest.John Mill’s ideas on ethics (Mill, 1998) are utilitarian based on the consequences ofaction indicating that business ethics should maximize the total amount of pleasure inthe world and minimise the total amount of pain thus augmenting the scope ofbeneficiaries. Mill’s understanding of ethics is intrinsically associated with thecommon “good” rather than a company’s self-interest. According to Nantel and Weeks(1996) of all functional business areas marketing management represents the mostdisputed area in terms of utilitarian ethics. They argue that the implementation ofethics in marketing is a paradox in itself as the definition of marketing, which ispredominantly utilitarian, provides marketing managers with a justification for ethicalconduct when they ensure that the consequences of their behaviour are moral.However, the utilitarian views do not always result in ethical marketing conduct. Mill’snotion questions whether marketing activities are to be limited to an increase in themarket share or profitability of a single company, should they deliver benefits to agreater number of people not involved in a company’s decision-making processes.The problem is that the common “good” has various interpretations and its scope isvague if at all explicit. Should the common “good” be applied to a target marketsegment, to the mass market, to various social groups or society as a whole? Moreover,in international marketing the issue becomes even more complex and acute as thecommon “good” should transcend country borders and nationalities. Will the common“good” reflect the “good” for home and host countries, for companies that engage ininternational marketing activities and for consumers in their domestic andinternational markets? Mill’s response to such questions would probably be thatnational, geographical and political categories are not an objective basis for ethicalvalues. The greatest happiness principle, on the other hand, builds upon values that areuniversal to everyone – pleasure and pain. So the only consistent general moralprinciple must be “Seek the greatest good for the greatest number”. The difficultyarises when companies need to decide what “the greatest good” is, what “the greatestnumber” is and how marketing could really deliver “the greatest good” to “the greatestnumber”.The marketing concept implies that companies need to satisfy various consumerpreferences that are based on their needs and wants and should also generate profit.The idea of a company’s self-interest in profitability is apparently difficult to justify inKant’s view but is acceptable in Mill’s understanding of utility. The application ofthe marketing concept should, therefore, “put the customer first” and deliver benefitsto the individual consumer, the society as a whole and the company itself.Ethical relativists (Crane and Matten, 2004) accept that moral absolutes do not existand therefore the definition of what is moral is based on the social norms of the societyin which they are practiced. Hence there are no universal moral standards applied to allpeoples at all times. In marketing terms ethical relativism can justify different ethicalstandards applied to various countries and evolve over time. Such an interpretation ofmorality does allow for various interpretations of ethical norms that reflect a diversityof cultures and practices. Moreover this creates a need for marketing adaptation within a particular market over time as the societal culture, knowledge, and technologychange across markets at a given point of time. If moral relativism is accepted as abasis for the international marketing activities of companies there can be no commonframework for resolving moral disputes or for reaching agreements on ethical mattersbetween companies and different societies. It can only nurture flexibility, which createsrather complex relationships with consumers in the home and foreign markets withno common reference point. Thus the arguments for its implementation into themarketing of companies create unease and question the core universal values thattranscend national borders.Do marketing ethics matter?According to Fineman (1999), marketers such as Beardshaw and Palfreman (1990)present marketing as “an ethically neutral system or management tool serving anunequivocal market good”. Apart from the occasional lapse such as guns orpornography, marketing serves society’s needs with few ethical strings attached.However, others Fineman argues, suggest that marketing is more profoundly valueladen (Smith, 1995; Laczniak, 1993), and manipulates the consumer in anything but aninnocent and friendly way. The following quotation from Haug (1986) emphasises thisview,. . . every real or potential need of the sensuous human being is “a weakness which will temptthe fly onto the limetwig”. Wherever there is a want, a need, a demand, there is a producerwho offers his “labour of love” with the most “glittering illusion” – and presents the bill. Justbecause it is completely inessential from the standpoint of exchange-value, the sensuousbeing of those with money is preyed upon, sustained and attended to in all its fancies, moodsand whims, as the industrial capitalist caters for “his neighbour’s” most depraved fancies,panders to his needs, excites unhealthy appetites in him and pounces on every weakness.Rather than consumer satisfaction being the main aim, Fineman (1999) argues that themain moral imperative is the “sale”. He quotes Gabriel and Lang’s (1995) notion ofthe “unmanageable consumer” who upsets the applecart of business rationality. Theunpredictability of the consumer is the difficulty faced by marketers whose task is toplot “predictability”. The act of purchase and exchange is what interests marketers; itis an end in itself, remote from its “relationship to others’ interests or concerns – likeprivacy, pollution, or resource scarcity” (Fineman, 1999). Thus marketing gets“unhinged” from its “imperial position in contributing to the apparent good life”(Fineman, 1999), and becomes guilty of contributing to the destructive and wastefulside of consumerist society. This conflict within the marketing community has givenrise to the scholarly debate surrounding marketing ethics.What has evolved since the 1960s is that groups of marketing scholars andpractitioners have exploded the myth of benevolent marketing being practiced onco-operative consumers. There is now acceptance within marketing circles that not allmarketing does create a satisfactory outcome for consumers if one broadens thedefinition of consumers to include the wider stakeholder group of society as a whole.What is desired by consumers may not necessarily be good for them (e.g. tobaccoproducts), and although a marketer may create a happy customer in the short term, inthe long run both consumer and society may suffer as a direct result of the marketers’actions in “satisfying” the customer (Kotler, 1972). Kotler believes it is theresponsibility of marketers to generate new products that provide both immediate customer satisfaction and protect the long-term welfare of the consumers.More recently he has stated,The most radical implication for marketing is the shift from being an agent of the seller tobeing an agent of the buyer, from being a marketer of goods and services to being a customerconsultant . . . (Achrol and Kotler, 1999).In latter years marketing thought has focused upon the subject of marketing ethics,and in the 1980s there was a flurry of activity by marketing scholars who attempted toevaluate conceptually the nature and role of marketing ethics. Benchmark work wascarried out by Laczniak and Murphy (1993) who examined ethical issues inadvertising, personal selling, marketing research, pricing and multinational marketing.Hunt and Chonko (1984) conducted their survey on ethical dilemmas for marketingmanagers, and the ethical problems faced by marketing researchers. Laczniak’s (1983)framework was a move to analyse marketing ethics, and Ferrell and Gresham (1985)developed their contingency framework to evaluate ethical decision-making in amarketing organisation. Robin and Reidenbach (1987) examined the challenge ofintegrating ethics and social responsibility into strategic marketing, while Garrett(1987) looked at the growing phenomenon of consumer boycotts, an early signpost ofthe growing consumerist movement (Sheth et al., 1988).At the early stages the activist school (Sheth et al., 1988) tended to take the rathernarrow view that unethical practices were being perpetuated by cynical and greedymarketers, but as the subject has evolved in marketing writing it has become clear thatthis is too simplistic a view. What is beginning to emerge is a more complex view ofmarketing ethics which acknowledges that unethical acts can be committed by themost honest and responsible individuals given a particular set of circumstances. Thereis now a core of marketing academics researching and writing in the field of marketingwhose work has contributed to the ethics debate over the years, and continues to do so.Laczniak and Murphy (1993) remain at the forefront of the development of marketingethics with their work in the broader field, and particularly in advertising ethics(Murphy, 1998; Laczniak, 1998) when responding to Vatican criticism of ethics inadvertising. Other key scholars in advertising ethics in recent years include Hymanet al. (1994) who demonstrate that advertising ethics is now a key field of advertisingresearch, and Zinkhan (1994) who debates whether societal well-being is enhanced bythe actions of advertisers. Marketing research ethics is well documented in the work ofSparks and Hunt (1998) who question the ethical sensitivity (i.e. according to Hunt andVitell (1992), the ability to recognise the presence of an ethical issue) of researchers,Pallister et al. (1999) in their investigation of the role of codes of conduct in ethicalresearch, Castleberry et al. (1993) who examine the moral reasoning of marketingresearch practitioners, and Malhotra and Miller’s (1998) integrated model for ethicaldecisions in marketing research. Researchers are also actively researching thedilemmas faced by multinational marketers when dealing with marketing ethics incross-cultural settings (Rawwas et al., 1995; Singhapakdi et al., 1999); ethical sourcing(Kolk and van Tulder, 2002); ethical issues in relation to particular industries (Diaconand Ennew, 1996; Davis, 1994); ethical activism (Strong, 1996; Friedman, 1996) and thefactors influencing the ethical judgement of the final consumer (Creyer and Ross, 1997;Boulstridge and Carrigan, 2000; Muncy and Vitell, 1992; Folkes and Kamins, 1999;Szmigin and Carrigan, 2005). It is clear that the scope of marketing ethics is rather broad. There have always beenethical problems in marketing, even as far back as the “snake oil” merchants of thepioneer days. Cigarettes in their time have been marketed for their health benefits inclearing the lungs; so the existence of dubious marketing activities and outrageousproduct claims within the industry is nothing new. But what we are seeing today is notjust interest in highlighting poor ethical behaviour and vilifying those who perpetratethe crimes, but a desire to try to establish acceptable ethical guidelines and practice, anddisseminate that within the industry. Regulation is a key issue, but communication isalso part of the ethical movement in marketing. Rather than be defeated by the continuedlack of answers to the many questions which continue to be posed by the challengespresented by marketing ethics, as researchers we should be enthused at the prospect ofsuch uncharted territory. It is probably true to say that developments in the field ofmarketing ethics, in theory and practice, have not moved as quickly as those earlyscholars might have desired or predicted.However, Zaltman (1999) noted that “one of themost reliable forecasts we can make about the future is that change never arrives asquickly as people say it will, and when it does arrive we’re never ready for it”.Smith (1995) argues that we are now living in the “ethics era”, whereby society’sexpectations of marketers have changed and we face challenges to basic marketingassumptions. Consumers are better informed, more educated and awareness is greaterof consumer rights and product requirements at least in western society. Legislationhas also played a part in raising consumer expectations of marketing behaviour. In thepast, “caveat emptor” was justification for marketing practices that hitherto consumerswere willing to accept. As consumer rights become more important, this should nolonger be the case. The move towards “caveat venditor” in some situations ischallenging many basic marketing tenets according to Smith, and marketing managersnow have to respect and care about the welfare of those affected by their marketingdecisions. In the developed economies marketers were being forced to recognise andconfront the issues surrounding societal marketing. For example, advertisers and printmedia have had to face responsibility for their role in promoting “glamorous” anorexicbody images (e.g. the Accurist “put some weight on” campaign; UK governmentanti-drug advertisements); food manufacturers and marketers have had to defend andamend the nutritional content of their products (e.g. McDonalds; Sunny Delight);cigarette firms have had to admit the carcinogenic qualities of their products(e.g. Phillip Morris). Today Zaltman’s homily is apparent as teachers, researchers andpractitioners of marketing are recognising that they must incorporate marketing ethicsinto what they do if they are to remain at the leading edge of marketing theory andpractice.International marketing activities and the importance of ethicsThe need for addressing the issues of international marketing ethics arises from theincreased internationalisation of multinational companies (MNCs) and the process ofglobalisation of business (Hoffman et al., 1986; De George, 1986). Mainstream researchon marketing ethics has been mostly focused on developed economies while emergingmarkets have received rather limited attention (Donaldson, 1985; Rogers et al., 1995).As in business-to-consumer markets consumer support is of crucial importance for thesuccess of marketing activities and companies’ profitability ethical conduct towardsconsumers in diverse national markets is the most critical area of business ethics (Crane and Matten, 2004). Big and powerful MNCs often have bargaining powergreater than that of national governments. Companies such as Coca-Cola, Nokia,General Electric, Citigroup, Wal-Mart, Microsoft, General Motors, Pfizer, RoyalDutch/Shell, HSBC, BP, Toyota, and many others appear to have turnover and valueadded greater than the GDP of many developing economies. For example, the size ofExxonMobil with an estimated value-added of USD 63 billion in 2000 was bigger thanthe GDP of economies such as Pakistan or Peru (Onkvisit and Shaw, 2004).International markets and especially those of developing countries can be vulnerableand rather exposed to unethical marketing because of their economic potential, lowbargaining power, lack of legal framework and law enforcement to protect domesticcompanies, consumers and the society as a whole. This makes consumers less likely tobenefit from marketing ethics. Moreover, Friedman (1970) argues that the goal ofbusiness and hence marketing activities should be to maximise profit within the law.If the driving force of a company is to generate and maximise profit, its behaviour inthe marketplace should also be based on universal ethics for ensuring benefitsfor the society at large. How can we define what the limits of ethical behaviour are? Thequestion is whether profits should be maximised in environments where law protectionis weak or non-existent. In such an environment the legal framework for regulatingcompany-consumer interface is usually asserted on the conception of a company’sinterest for profit maximisation subject to legal constraints. While in developedeconomies consumers have become powerful, those in developing countries have fewrights of moral treatment by MNCs that are legally safeguarded. MNCs expand intoemerging international markets seeking untapped market growth potential, creatingnew market segments and penetrating existing ones, extending the product life cycle ofoutdated products, introducing new goods, acquiring and upgrading existing localbrands thus offering more choice to consumers and satisfying existing and unmetneeds and wants. Previously published in: International Marketing Review, Volume 22, Number 5, 2005