How Ethical Issues Can Affect Each Component

How Ethical Issues Can Affect Each ComponentThis report aims to describe, how honourable issues apprize tinct each component of the foodstuffing mix. The report starts of by introduction to the ethics in an organisation and the importance of business ethics in the society. The report in any case examines the various factors which have a impact on the ethical nature of the marketing decisions. Two well-known companies have been taken into account for better instinct and demonstration of the discussion.INTRODUCTIONA rose . By any some other name would smell as sweet. SHAKESPEARE, Romeo and JulietThere is an inevitable and universal cycle surrounded by consumers and marketers. The main aim of any marketer is to satisfy customer needs and wants. Marketing provides the exchange link between customers and marketers which would eventually help in change magnitude return on investment for shareholders. (Smith 1995 Dunfee, Smith, and Ross 1999)Both marketers and the consumers have di fferent mind set while selling or purchasing the results. The sole main of companies is to maximize their profit and consumers is to have a assess for money produce and go. This difference in thinking leads to conflicts on the basis of ethics. (Smith 1995, 1993)The basic ethical issues like, justice, rights, fairness and equivalence can be perceived in a different manner by consumer and the companies. (Dunfee, Smith, and Ross 1999)In some instances both(prenominal) consumers and the companies may believe on the alike(p) ethical grounds for e.g. in principle, providing a unique, value for money product and services. Whereas, research has shown that there is a wide gap between the ethical philosophies of both consumers as well as marketers, (Singhapakdi et al. 1999) which results in unethical behaviour by consumers including boycotts and protests.(Smith and Cooper-Martin 1997)IMPORTANCE OF ETHICSA CONTINGENCY APPROACH-The ethics era began around proto(prenominal) 1980s, when r esearchers and businesses started giving more than attention to the ethical side of the business. (Macchiette and Roy 1994 Smith 1995)Many theories have been proposed since then in establish to draw promote consumers rights and moral values. Including- fond contracts theory, moral decision-making theory (Laczniak and Murphy 1991), general theory of marketing ethics (Hunt and Vitell 1986) and social contracts theory (Dunfee, Smith and Ross 1999). These theories are basic and are developed anywhere from the old, classical theories including Kantian ethics and perspectives of rights, duties, and justice.The main aim of all these marketing ethics theories and even business ethics in modern world is to subjoin consumers confidence and develop trust for the companies and thus having customer loyalty. The business ethics in any case helps companies to gain competitive advantage in the market for instance- Anita Rodick- Body cuckold and Richard Bransons Virgin group. REFERENCE NEEDE DETHICAL ISSUES IN MARKETINGMarketing in any companies starts with the basic step of marketing research which is then followed by segmentation and targeting the market. Thought marketing research is followed to gain knowledge about the market and the competitors but some how- shrewdly or un-knowingly, companies tend to invade the screen of the consumers by following un-ethical method of gathering information. Even while conducting the research, researchers tend to stereotype among people in order to get the desired result which in turn results in wrong information about customer needs and demands.While sIn terms of targeting the market, companies also aim at the youthful children, who do not have the right knowledge, thus they choose the market audience of their choice knowing they will benefit the maximum. For instance- a chocolate ad will show a kid playing and eating melted chocolate but it never says, brush your teeth after having it.Now, to be more specific, we will look at the ethical issues related to the marketing mix- 4Ps.PRODUCT PRODUCT MIXThere are four major issues with products deceptive packaging, product safety, brand divisive and planned obsolescenceProduct safetySafety is first. A major impact is be make to make the product safe and take into custody for the consumers to use. Almost all the products in the market use some or the other form of technology which may or may be insalubrious for the consumers. It is the duty of the marketers to ensure the safety of the product before placing it in the market.For instance, according to BBC news, 2007, the biggest toy making company in China Mattel had recalled 9 cardinal products payable to danger from magnet and lead paint. This violates the consumers right to safety. BBC news, 2007Planned obsolescenceNothing lasts forever but the question is who and how is to decide the time frame for deciding when is the replacement required. Cars rust, frock fade or go out of fashion. If companies make efforts to increase the quality of the products, there are galore(postnominal) customers who would love to keep their cars for a longer gunpoint of time than they can. However, for the producers its a wear-out is positive as it results in increase in demand of their other goods and services/ repeat purchase. Some people argue that if the product has been planned to be obsolete form the market, it violates customers right to choose. The car manufacturers like Ford have recently come up with their latest cars having their body shells a good deal more resistant to rust proving a 3 years negligible guarantee.Ford, 2010Deceptive packagingThis is a very common practice, also known as s lack packaging followed by many companies as they show the product to be over sized by packaging effects giving customers an view of buying more for the resembling scathe than the competitor. Product such as- cereals, crisps or even soap powders are such examples.Packaging sometimes also includes de ceptive labelling. In terms of missing information on package about various ingredients or even a sentence which could be useful in consumers decision making process leads to violation of consumers right to information.Brands DivisiveBranding is something that is used by companies to differentiate their product than that of the competitors. The well known sports brand NIKE is vatic to be sport-wear of high quality, durability and is also proposed to be in the top segment in the market. Some people argue that Nike is a brand kinda than a product, much similar to the Apple ipod from Apple. Nike does not produce anything of its own. The entire production is outsourced to less developed countries like India and Indonesia. The retail price of a Nike today may be 100 on an average but according to a report from 2001, the full time wages for an employee were around the legal minimum of 17,000 Rupiahs (1.22/) per day.The problem with branding is that big brands like Nike, Apple have all the power, even though they get their products made in poor countries, wealth is unagitated in few hands solely. Working is Nike leads to a disproportion of profits and power on a global level due to which poor countries are left(a) with low margin production units.PRICE legal injury is something of value charged by the producers in exchange of his products or services. The various un-ethical pricing practices are equipment casualty fixingIt is a situation where the competitors agree to charge a fixed, raise or maintain price, in simpler terms manipulate price. Price fixing can be done for different reasons- to discriminate against small unfluctuatings, remove competition by fixing price in specific areas and enjoying monopolistic market. therefore in 1980, the Sherman Act was introduced to ensure fair pricing between both consumers and businesses.http//bizcovering.com/business-and-society/price-fixing/Bid rigging This is a situation or fraud where the commercial contracts are p romised to only one party even if there are other commandders present. Price rigging is a form of price fixing itself and is illegal in many countries. Usually occurs in big tenders for governments or private companies for construction. The ill-effects of price rigging fall on the local consumers tax payers as well as the agencies who seek to bid and thus effects the overall economy.Price discriminationIt is often referred to as price differentiation due to the fact that different price are being charged by companies for the same product or service to different customers depending on the market segment and rules set prior to the service, for instance in the strike industry a flight may charge $160 from destination A to B and the same flight may charge $200 to the same destination due travelling on a weekend. Another example can be if u book British Airways from A to B for neighboring day travelling you might end up paying almost double, what you could have paid if you would have booked in 2-3 months in advance.Price grazingMany companies follow price skimming strategies in order to gain more revenues before competitors enter the market. Apple iPhone could be the best example to explicate the skimming of prices. iPhone was launched with the buzz marketing and unique technology. They made sure that their target market will jump on the products whenever they launch. Having a high introductory price for one year, Apple gain the all the money and confidence of consumer of a superior product and later slashed the price to gain more markets. Price skimming is a temporary form of price discrimination allowing companies to recover their sunk cost.DumpingDumping or selling lower than the fair value is a situation/act where companies charge less in the foreign markets compared to that from the home markets for the same products. Dumping according to WTO is condemned but not prohibited promotionPromotion plays a very important role in welfare of the company and thus sometimes companies do anything possible to promote their offered product and services even by unscrupulous means. Advertisements tell the consumers what they would want to hear about the product. No company would ever promote or say negative aspects of their products. The Ads thus, lack in honesty and the complete truth about the features of the product.Some times while promoting certain products, companies need to make sure, they do their homework by knowing about the culture of the country in order to telecast any ad on the television as no person in Saudi Arabia would like to see women advertising about suits and fairness creams. Or no person would like to see promotion of beef burgers by McDonald in India. competitive ads sometimes can be shoddy and create controversy.Ads also have a Some Taste and controversy Negative advertisingFalse and misleading advertisingCreating demand for vice or unwholesome productsTobacco?Alcohol?Fattening foods?Pornography or sexually explicit ma terial?Intrusive promotions distanceSlotting allowances The fee charged to have their products placed on the shelves by the retailers to produce companies or manufacturers is called a slotting fee, slotting allowance, pay-to-stay, or fixed trade. It depends on factors such as the product, market conditions and the manufacturer of products and so varies greatly. For instance while the initial slotting allowance in a regional group of stores for a new product can be approximately $25,000 per item in high demand markets it can go as high as $250,000.Promotional, stocking and advertising fees are amongst the other fees that can be charged by the retailer. This practise, according to an FTC study, is widespread in the supermarket industry.Many grocers even earn more profit from agreeing to carry a manufacturers product than they do from very selling the product to retail consumers. subvertback / stock lift / lift-outGray market merchandise Generally, it is a single importer a manufactur er would work in a particular area to sell and support their products. The importer further has local dealers and distributors to whom he resells the imported products this results in a distribution channel. Gray Market, on the other hand, refers to use of methods other than these normal channels to sell and import merchandise. Items thus sold may not be meeting mandatory safety and enfranchisement codes, and so are not supported by the authorized importer and are not designed to be sold in a particular market. It also follows that as there is not a particular market for these items they may not function properly, or the authorized importer may not be equipt to provide service, support or software. OR the unofficial trading of securities that have not yet been formally issuedDiverted merchandise undivided geographic territoriesExclusive dealing agreementsTying contractsRefusal to dealEthics and the supply chainA claim to be an ethical firm would be hypocritical , if a firm turns a blind eye to the unethical practices of suppliers in a supply chain. In particularThe use of child labour and forced labour performance in sweatshopsViolation of the basic rights of workersIgnoring of health, safety and environmental standardsAn ethical producer has to be concerned with what is practiced by all firms (upstream and downstream) in the supply chain. instance STUDYOn July 4, 1977, a boycott was launched in United States against the Swiss based Nestle corporation over the companys marketing of its baby formula ( embrace milk substitute) particularly in less economically developed countries. Protesters claimed that the infant formula caused unnecessary death of suffering of babies, largely among the poor. The movement quickly spread throughout United States and expanded into Europe as well in the early 1980s.Professor Derek Jelliffe and his wife Patrice, who had contributed to establish the World Alliance for Breastfeeding Action (WABA), were particularly implemental in helping to coordinate the boycott and giving it ample visibility throughout the world.Did you know that the most efficient step in fighting infant deaths is breast milk? Breast milk works as natural vaccinations against many diseases. If all mothers in poor countries would breast feed their children for the first 6 months, and partially the next 6 months, millions of children would survive. They would develop a natural resistance against deadly diseases.Baby bottle disease, according to the finding by WHO, kills more than 1.5 million children every year. The cause of this is that the substitute for breast milk is made with unclean water and in an unhealthy environment. Even mothers with HIV would be better of breast feeding their children. In these countries breast milk substitute is lethal They are poisoning their own children to death This is murder This is child murderSo wherefore do these poor mothers give their children breast milk substitute?Nestle told them toNestle tells th em their own breast milk is unhealthyGives away free samplesBuy their way into hospitals to push their productAgainst the law uses direct advertise to mothers.Because companies like Nestl uses unethical methods to get mothers hooked on their products, World Health Assembly (WHA) made a resolution called the International Code of Marketing of Breast-milk Substitutes which Nestle and other manufacturers have signed. Still Nestle do not follow this code, and is reported every single year for violations. Primark tops list of unethical clothes shops in poll that shames high- roadway brandsby Jennifer Whitehead, 08-Dec-05, 1500LONDON Low-price fashion success Primark has been named the least ethical clothes brand in the UK, with Marks Spencer also scoring poorly, by a new survey highly critical of the way high street brands source their wares.The survey, which has been conducted by Ethical Consumer magazine, found that only five high street brands scored 10 or over out of 20 assessing t heir ethical standards.Primark was the switch offender, according to the survey, with a score of 2.5. It is followed by Mk One, at 3 points, with Marks Spencer, Debenhams and Gap filling out the bottom five.http//www.brandre exoteric.com/News/532319/Primark-tops-list-unethical-clothes-shops-poll-shames-high-street-brands/Child labourOn 23 June 2008, Panaroma, a BBC show, broadcasted a programme that showed unethical manufacturing practices in Primarks supply chain. Child labour practise was exposed by undercover reporters in cardinal of Indias garment factories sub-contracted by Primark. The BBC alerted Primark to their findings, to which Primark replied Under no circumstances would Primark ever knowingly permit such activities. Primark has since halted business with the mentioned suppliers, but this action by the company was criticised by child protection groups as being irresponsible and likely to cause additional hardship to the labourers. They argued ensuring better working c onditions would have been a better solution.http//en.wikipedia.org/wiki/Primark commentCONCLUSIONAll in all, it can be seen that in developing countries ethical issues in are highly sensitive to cultural, social and ethnical issues. Thus it is not just an issue of the orient versus the occident. The onus lies on the marketers themselves to not indulge in unethical practices and to respect local values and morals, in order to be a good ethical citizen in the marketing fraternity.Counterfeiting imitation, faking, pre-emption, prior registration.Consumer ethics warranty deception, mis-redemption of vouchers, returns of merchandise,recording of music and videos, software copying, false insurance claimsRECOMMENDATIONSWith public attention focused on ethics, there is a need for stricter controls in business practices, right from framing marketing strategies to finally delivering a product to the consumers.