Marketing - Marketing consist of the performance

of business activities that direct the flow of

good s & services from producer or
manufacturer to consumer or user. The distinct
elements coming under marketing includes :
-product development
-distribution
-pricing
-promotion
-sales etc
 ETHICS AND MARKETING
Marketing Ethics & Consumer Rights
The American Marketing Association has
established a codes of ethics to provide
guidelines for ethical conduct. It says in part that
Marketers shall uphold & advance the integrity,
honor,& dignity of the marketing profession by
being honest in serving consumers, clients,
employees, suppliers, distributors,& the public.
AMA has outlined responsibilities for each
component of the marketing mix
Marketing Mix
Products & services- marketers have the
responsibility to ensure product safety to disclose
all product risks & to identify any factor that
might change product performance.
Advertising- marketers must avoid deceptive &
misleading communications must repeat high
pressure sales tactics,& must avoid manipulating
consumers to buy.
Distribution
Suppliers should not coerce their intermediaries
in to taking unwanted products ,they should
not create false shortages to drive up prices
for their products.
Pricing
Marketers must not engage in price
fixing/predatory pricing & must disclose all
prices associated with the purchase including
service ,installation & delivery.
Reasons for unethical practices in Marketing
-Competition –cut through competition in the
Similar industries will undoubtedly induce the
mkt’s to adhere to unethical practices
-Prevailing practices in the industry, firm,
department etc….which the org are not able
to adhere due to the play of their own
interest.
 Ethics & Advertising
An advertising Enables the consumers-
- Understanding process
- increasing their ability to make a better
choice
Marketer's use this for-
- creating awareness
- Developing interest
- Stimulating demand for various products &
services
Common Deceptive /unethical practices in
Advertising
-false & misleading presentation of facts
- Deliberate omitting of required information
- implying a benefit that hardly exist
- Trade puffing & exaggerations
- using unnecessary ,unwanted technical
jargons
- creating cultural degeneration
-Creating ambiguities in the minds of consumers
-creating fear in consumers
-Plagiarism taking another's writing as his own
-open critism of competitors.
Ethics & Regulation In Pricing
Acts that are in action for controlling unethical
pricing are
- FTC Act (Federal Trade commission Act)
- Robinson Patman Act
Four unethical areas of pricing includes
 Deceptive pricing which includes bait & switch
pricing -a low price offer intended to lure a
customer in to a store ,where as sales person
try to influence them to buy a high priced item.
For eg : Audi in USA was accused of Bait & switch
tactics in 1998.It offered rebates on a
product ,which was phased out & was often
unavailable, leaving customers to consider
other products without rebates.
Inflated pricing –to offer a discount off an inflated
discount, the consumer is not actually getting a
discount.
Eg In India buy one sari & take two sari's free ;
the price would have been jacked upon the
first sari covering the prices of the other two
 Unfair pricing pricing practices to drive
competitors out of business
-Predatory pricing decrease in prices even below
cost when competition are driven out ,the
company then raises the prices back to their
normal level.
 Price Discrimination –involves selling the
same product to buyers at different prices
with out any cost justification.
 Price fixing
It is an agreement among firms in an industry to set
prices at certain levels .The Sherman Act prohibits it
because such actions restrict price competition .Two
types of price fixing are
-Horizontal price fixing -agreements amg competitors to fix
price at artificially high levels
-Vertical price fixing- price fixing agreement btw
manufacturers & retailers or between manufacturers &
distributors. This involves an agreement that a product
will be sold at the manufacturers suggested price &
will not be discounted by whole salers /retailers
Eg : Panasonic was accused of vertical price
fixing by forcing its retailers to raise prices by
5-10 % .Retailers who are not cooperative
were threatened
Ethics &Product Packaging & Labeling
Two important Acts that controls packaging are
-Fair Packing & Labeling Act 1996 to enable
consumers to make meaning full value
comparisons
-Nutrition Labeling & Education Act 1990
Nutrition Labeling & Education Act of 1990
(NLEA) states that the labels on the packaged
food products contain information abt certain
ingredients expressed by weight & as a
percentage of the recommended daily diet in
a standard serving size.
Ethics & International marketing
-doing business in certain countries regarded as
having unethical political policies ,such as the
policy of apartheid in south Africa,
Most US companies have withdrawn from
south Africa at the urging of US govt
.However Mobil remains in south Africa
arguing it is better to continue & support
blacks economically through higher wages.
-Some companies from industrialized nations
sell products to underdeveloped third world
countries that have harmful effect on
consumers or take unfair economic
advantage of them.
Eg In 1970’s serious health problems amg babies in
underdeveloped countries being fed Nestle’s infant
formula products.
Four Pragmatic Reasons for Behaving Ethically by the
Marketing Executives
To protect the image of the org
- Buyers often form an impression of an entire org
based on their contact with one person .That
person represents the marketing functions. He
should build up the image of the entire company
acting in a dignified way. He should be highly ethical.
To retain the power granted by the society
Marketing executives wield a great deal of social
power as they influence markets & speak out
on economic issues. There is responsibility
tied to that power. If marketers do not use
their power in a socially acceptable manner
,that power will be lost in the long run.
To reverse declining public confidence in
marketing-
We hear sometimes abt misleading package
labels, false claims in adds ,phony list prices &
infringements of well established trade marks.
Due to this reputation of all marketers are
damaged, Business leaders must demonstrate
convincingly that they are aware of ethical
responsibility & fulfill it. Mgt’s interest is to be
concerned with the well being of the consumers
as the latter are the life blood of business.
To avoid increases in govt regulations
Most of the govt limitations on marketing are as
a result of mgt’s failure to live up to its ethical
responsibilities at one time or another. Once
some form of govt control is introduced it is
rarely moved.
 Unethical Marketing Behavior wrt Important
Elements of Marketing
Product
-Shoddy goods- products that cannot withstand
ordinary wear & tear.
-Inadequate warranties- warranties with
insufficient time or parts coverage
-Environmental pollution- manufacture of non bio
degradable plastic products
-Mislabeled Products- flavored sugar water sold as
apple juice for babies.
-Bribery of FDA officials to secure agency
approval of generic pharmaceuticals
-Manufacturing unauthorized substitutions in
general drugs after FDA approval.
-Brand Knock offs –counterfeit branded good s
sold as originals.
Price
-Excessive mark ups
-Price fixing
-Price discrimination
Promotion
-Exaggerated claims
- Tasteless advertising -using vulgarity in
advertising
- Inappropriate targeting
- Deceptive advertising
- Persuasive role models for inappropriate
products.
- Naïve audience -promoted to a segment totally
ignorant abt that specific product. (Selection of
wrong target mkt)
Captive audience –Mandatory viewing of TV
commercials by students in schools .
Distribution
-Fraudulent sales
-bait & switch tactics –luring consumers with adds
for low priced merchandise for the purpose of
switching them to high priced models
-direct marketing- as per agreement mkting to be
carried out by distributors but violating it the
manufacturers directly mkt the product.
Packaging
Deceptive quantities go for decreasing the
product qty while maintaining the same price
& traditional package size.
Unethical consumer Practices
-Shop lifting
-Returning cloths that has been worn
-Abusing the products & returning them as
damaged goods
-Redeeming coupons that are expired
-Returning products bought at sale & demanding
the full price refund
-Stealing belts from store clothing
-Returning partially used products for full store
credit
-Abusing warranty or unconditional guarantee
privileges
-Damaging merchandise in a store and then
demanding a sales discount.
-Copying copy righted materials ( books ,video
tapes, computer software with out permission.)
Product Liability
The right of consumers to be protected from
harmful products raises a number of
problems for manufacturers as products can
injure & even kill People.
There exist three theories which are common in
use to determine when a product is
defective & what is owed to the victims of
accidents caused by defective products.
1The Due Care Theory- Manufacturers ought to
exercise due care. Their obligation is to take
all reasonable (due) precautions to ensure
that products they put on the market are free
of defects likely to cause harm. It is based on
Aristotelian principle of compensatory justice
,the contractual theory ,on freedom of contract
& strict liability, largely on utilitarian
considerations. The disadvantage of this theory
is the difficulty of deciding what constitutes
due care & whether it was exercised.
The Due Care standards
-Design –designed in accordance with govt &
industry standards
-Materials –Materials specified in the design
should meet Govt & industry standards
-Production- Due care should be taken in
fabricating parts to specifications & assembling
them correctly.
-Quality control-A systematic program me to
inspect products at the operations end to
ensure that they are of sufficient quality
2The contractual Theory
The responsibility of manufacturers for harm
resulting from defective products is that
specified in a sales contract. The seller & the
buyer relation is viewed here as a
contractual relation ,which is subject to the
terms of a contract. Even in the absence of an
explicit written contract ,there may be an
implicit understood contract between the two
parties that is established by their behavior.
3The Strict Liability Theory
Here Law is considered to be strict liability ,a
manufacturer need not be negligent nor be
bound by any implied /express warranty to
have responsibility. Despite the absence of a
fault is arguably the best theory. It provides a
powerful incentives for manufacturers to take
extreme precautions & creates a workable
legal frame work for compensating consumers
who are injured by defective products.
Rights & Duties of parties in the marketing
Exchange process
General things to be kept in consideration by
parties to the marketing exchange process
-products & services offered are safe & fit for
their intended uses
-communication about offered products &
services are not deceptive
-All parties intend to discharge their obligation
s,financial & otherwise in good faith
In the area of product development & mgt
-disclosure of all substantial risks associated
with product or service usage.
-identification of any product component
substitution that might materially change
the product /impact on buyers purchase
decisions.
-identification of extra cost added features
In the area of promotion
-Avoidance of false & misleading advertising
-Rejection of high pressure manipulations or
misleading sales tactics
-Avoidance of sales promotions that use
deception /manipulations
In the area of Distribution
-not manipulating the availability of the
product for the purpose of exploitation
-not using coercion in the marketing channels
-not exerting undue influence over the
resellers choice to handle a product.
In the area of pricing
- Not engaging in price fixing
- Not practicing Predatory pricing
- Disclosing the full price associated with any
purchase.
In the area of marketing research
-Maintaining research integrity by avoiding
misrepresentation & omission of pertinent
research data.
-Treating outside clients & suppliers fairly
Marketers & org relationship
-Apply confidentiality & anonymity in professional
relationships with regard to privileged
information
- Meet their obligations & responsibilities in
contracts & mutual agreements in a timely
manner
- Avoid taking the work of others, in whole or in
parts & represent this work as their own or
directly benefit from it without compensation
or consent of originator /owner
-Avoid manipulation to take advantage of
situation to maximize personal welfare in a
way that unfairly deprives or damages the
org .
Most Common Type of Advertisement
Corporate
-Encourages customers to buy the firms
products
-tries to establish or change the image of the
company
-take a position on an issue that is important
to the company
Cooperative
Manufacturers offers retailers an allowance to
advertise their stores at the local level
Brand
Designed to increase the market share of a
brand by getting users of competitive brands
to use the companies brand
Product
Designed to increase the demand for a product
Category.
Ethical consumerism
Should be about using our purchasing power to
make the world better place. It is
characterized by 3 almost religious
convictions:
 multinationals are inherently bad
 the natural & organic are inherently superior
 science & technology are not trusted.
Code of Ethics For Professional Groups-
Codes of Medical Council of India
The code covers 33 principles:
General principles
Duties to patients
Duties to profession
Doctor to doctor relationship
Ethics for Chartered Accountants in Chartered
Accountant’s Act
Some misconducts are
-if a person allows any person to practice as CA if he is
not one
-if a person advertises or solicits work
-if he accepts a position held by another CA without
communicating with him.
-if a CA discloses confidential information abt his client
-If CA certifies a statement without adequate scrutiny
The Engineer’s Code
The National Society of Professional Engineers
has a code ,which requires professional to
-Dissociate themselves from org that are of a
questionable character
-Further the cause of public good
-Avoid engineeringly unsafe ventures
-Maintain confidentiality
-Advice clarity, the consequences, if a technical
opinion is overruled by a non technical person.
Code For Marketing Mgr’s
-Basic guidelines
-Honesty & fairness
-Follow the well understood principles of rights &
duties in the process of exchange:
-product development
-promotion
-distribution
-Pricing
-Market research
-Organizational behavior
The code of Ethics for Public Relations Practitioners:
-The core philosophy of the code is to uphold the
universal declaration of Human rights of the UNO
-It uphold the free flow of information
-To develop the confidence of those who come in
contact with them whether clients or employers.
-The practitioners must avoid ambiguous language &
maintain loyalty to the clients & employers
-They must protect the interest of the org they
serve & the general public
-they must never compromise on the truth due
to other requirements
-they must manipulate to create subconscious
motivations
-they must never impair human dignity &
integrity
Code of Ethics of Association for computer
Machinery (ACM)
-Act with integrity at all times
-Strive to increase his own competence &
competence & prestige of the profession
-Accept responsibility for his work
-Act with professional responsibility
-Use his knowledge & skills for the
advancement of human welfare.
Code of Advertisers issued by the
Advertisement Council of India
-Moral & religious sentiments should not be
offended
-Advertisements should not directly & adversely
compare products with those of the
competitors
-Rhetoric like offering to refund money, if the
product is not good should be avoided.
Improving Ethical Climate

Ethics
Effective
Programs & Ethics Audit
Communication
Officers

Realistic
Objectives
Top
Management Ethics Training
Leadership
Ethical Decision-
making Processes

Codes of Discipline of Whistle-blowing

Conduct Violators Mechanisms
(“Hotlines”)
 Ethics Training
In all disciplines and areas, business firms train
their employees. More corporate are providing
training in ethics also. The training programmes
acquaint employees with:
Official company policy on ethical issues.
Simulated case studies based on actual events
in the company used to illustrate how to apply
ethical principles on the job problems of
everyday.
• Arrange workshops for
employees frequently and to make
aware of company commitment to
ethics.
• Carefully designed and
administered ethics training
programmes can bring positive
contribution to the company.
 Ethics Training Programs Should...
• reflect organizational size, culture, values,
management style & employee base
• improve employee understanding of ethical
issues
• influence the organizational culture, significant
other aspects, & opportunity in the ethical
decision making process
• overall, provide for recognition of ethical issues,
understanding of culture & values, and influence
ethical decision making
12/07/2021 godveda@jmmc&ri 51
 Ethics In Finance
Two important visible aspects of finance
includes:
-Financial services -which includes commercial
banks, investment banks, mutual funds,
insurance company, both pvt as well as public
sector those financial institutions who are
engaged in providing financial service to both
individual as well as institutional investors
Financial Mkts – Primary & secondary markets
Less visible aspects includes the financial
activities carried out by CFO with in corporate.
Ethics & Financial services
Financial services largely operates through
personal selling by stock brokers, insurance
agents, financial planners, tax advisors,&
other finance professionals etc….Personal
selling make way for whole lot of
misconduct& adherence to unethical
practices from the part of intermediaries
Three objectionable practices in selling financial
services to clients are:
-1Deception - Deception is the intentional hiding
of relevant information with regard to a
financial product or service by an intermediary.
For example while explaining abt a MF the
intermediary may mislead the prospective
buyer by increasing it’s strong points &
minimizing weakness..Again it may be in the
form of not revealing the entire relevent
information wrt a product /service.
2 Churning - It is defined as excessive or inappropriate
trading for a clients account by a broker who has
control over the account with the intent to generate
commissions rather than to benefit the client.
For example, for an actively traded mutual fund, the
entire assets of the fund will be involved in buying and
selling transactions once every six to twenty-four
months. In churning cases, the entire assets of the
investor are often traded once a month, or even more
frequently. As a commission is paid on each trade,
commissions can substantially destroy the value of an
investment account in a very short period of time.
The Legal definition of churning contains three
elements
-The broker controls the account
-The Trading is excessive for the character of
the account
-The broker acted with intent
In churning the brokers doesn’t conduct the
trade in the client’s best interest.
3 Suitability-In general brokers ,insurance
agents,& other sales people have an
obligation to recommend only suitable
securities & financial products.
The most common causes for unsuitability's
are:
-referring unsuitable types of securities
-unsuitable grades of securities
-unsuitable diversification, which leaves the
portfolio vulnerable to changes in the mkt.
-unsuitable trading techniques which create
greater volatility & risk.
-unsuitable liquidity- which provide non liquidity
for customers who may need to liquidate their
assets.
In short in recommending to a customer the
purchase sale or exchange of any security, a
member shall have reasonable grounds for
believing that the recommendation is suitable
for such customer upon the basis of the facts,
if any disclosed by such customer as to his
other security holding & as to his financial
situations & needs.
 Ethics& Financial Markets
Ethics in financial markets are influenced by the
following:
1Equity & efficiency
Efficiency is to achieve maximum output provides abundance of
is an with minimum input goods & services

Ethical value hence considered promotes the

general welfare
2Unfairness in mkts which in turn are
influenced by the following:
*Fraud & manipulation-if the company fails
to report proper information is considered to
be committing fraud. While manipulation
involves the buying or selling of securities in
order to create a false or misleading
impression abt the direction of their prices so
as to induce the other investors to buy or sell
securities.
 *Equal information- if all the investors have
equal information abt the stock mkt aspects it
is said to be equal information .It is termed as
Level Playing Field
every one plays by same rule
Level means equally equipped to compete
playing field equal information : process same
info
equal access to info
same information
Level playing field
Possession of unequal information is said to be
unfair, insider trading is one such aspect which
leads to unfairness in information
* Equal bargaining power-The fairness of
bargained agreements assumes that the
parties have relatively equal bargaining
power. A trader who negotiates for a futures
contract that results in great loss has only
himself or herself to blame
Unequal bargaining power is influenced by the
following
Resources – wealth does matters the rich/ big
investors are better able than the poor /small
to negotiate over a transaction
Processing Ability –Even with equal access to
information, people vary enormously in their
ability to process information & to make
informed judgments.
Vulnerability – The investors being human
beings are susceptible to weaknesses that
can be exploited .The legal duty of brokers &
investment advisers to recommend only
suitable investments & to warn adequately of
the risk of any security, provides a further
check on peoples greedy impulses.
*Efficient Pricing – Fairness in financial mkts
includes efficient prices that reasonably
reflect all available information.
-Inefficient pricing can bring great harm to the
investors .Individual investors are harmed by
buying at too high a price or selling at too
low price during periods of mispricing.
-volatility also affects the mkts by reducing
investors confidence & driving them away
.The loss of confidence depresses stock prices
 Insider Trading
Insider trading is defined as trading in stock of
publicly held corporations on the basis of
material ,non public information by insiders of
a corporate viz CEO BOD or even employees of
that corporate and some times the outsiders
too get involved in this aspect when :
-Printers who was able to get information wrt
several take overs from legal documents that
were being prepared
-Stock broker who tipped off a client who was
the relative of CEO of that company etc…
-a financial analyst who uncovered a huge fraud
at a high flying firm & advised his clients to sell
-lawyer advising a client planning a hostile take
over.

ethical
Worse effects of insider trading on stock
markets
-tends to decline the liquidity of the stock
-an increase in the variability of stock prices
-a decline in markets ability to spread risk
-a decline in mkt efficiency due to reduce
number of buyers or sellers
-a decline in utility gains available to traders
In short Insider trading could be defined as
A person who trades on material ,nonpublic,
information when
(1) The trader has violated some legal duty to a
corporation & its shareholders (2) The source
of information has such a legal duty & the
trader knows that the source is violating that
duty.
Arguments against insider trading can be represented as
follows:

property rights
- Those who trade on material,
nonpublic information stealing
property that belongs to the corporation
In support of
a law against main rationales are
insider trading Fairness
- Traders who use inside
information have an
unfair advantage over the other investors
-The stock market is then not a level playing field
Ethics & financial statements
Accounting is a system of principles applied to
present the financial position of a business &
the results of its operations & cash flows.
Adherence to these principles will result in
fair & accurate reporting of this information.
 Accountant Independent Certified Public
Accountant

Responsibility works for the com hired by the com as outsider

counselor
salaried employee he comes to perform the audit for
the benefit of public

Nature of the audit may or may not work independent

independently/may be
guided by corporate executives
The ethical issues associated with accounting
practices are
-under reporting income
-falsifying documents
-allowing or taking questionable deductions
-illegally evading income tax s & otherwise
engaging in fraud
To prevent such unethical issue the following
methods have been adopted
-American institute of CPA’s publishes their
professional rules
-Financial Accounting standards Board governs
accounting practices & establishes the Generally
Accepted Accounting principles (GAAP)
-Accountants are also governed by The American
institute of certified Public Accountants which
has a code of professional conduct.
Transparency International
TI is organised as a group of some 100 national
chapters, with an international secretariat in
Berlin, Germany. Originally founded in
Germany in May 1993 as a not-for-profit
organisation, TI is now an international non-
governmental organisation, and claims to be
moving towards a completely democratic
organisational structure.
"Transparency International is the global civil
society organisation leading the fight against
corruption. It brings people together in a
powerful worldwide coalition to end the
devastating impact of corruption on men,
women and children around the world. TI's
mission is to create change towards a world
free of corruption."
• Since 1995, TI has issued an annual
Corruption Perceptions Index (CPI); it also
publishes an annual Global Corruption Report, a
Global Corruption Barometer and a
Bribe Payers Index.
• TI does not undertake investigations on single
cases of corruption or expose individual cases.
It develops tools for fighting corruption and
works with other civil society organisations,
companies and governments to implement
them
• TI's biggest success has been to put the topic
of corruption on the world's agenda.
International Institutions such as the
World Bank and the
International Monetary Fund now view
corruption as one of the main obstacles for
development, whereas prior to the 1990s this
topic was not broadly discussed.
• TI furthermore played a vital role in the
introduction of the
United Nations Convention against Corruption
and the OECD Anti-Bribery Convention.
Steps in Induction program me/training
Introduction-the employee s been acquainted
with the company policies ,introduce them to
key personnel, the training opportunities and
career prospects are explained clearly.
Socialization- is the process through which a
new recruit begins to understand & accept he
values ,norms & beliefs held by others in the
org.Hr dept representative helps the new
recruit to internalize the way things are done
in the org.
Follow up despite the best efforts of
supervisors certain dark areas may still remain
in the orientation programme. New hires may
not have understood certain aspects so to
cover up those gaps the supervisors use a
check list & find out whether all aspects have
been covered or not.
Programmed Decision making and Unprogrammed
Decision making in Management
A decision that is fairly structured or recurs with
some frequency is termed as programmed
decision making.
-problems are routine & repetitive
-solutions are offered in accordance with some
habit, rule or procedure
-the conditions for programmed decisions are
highly certain
-Made by lower level people
Non programmed decisions
A decision made in response to a situation that
is unique ,is poorly defined & largely
unstructured & influences important
consequences of the org.
-problems are unique & novel
-there are no pre -established policies or
procedures to rely on . Each situation is
different & needs a creative solution.
-The conditions for non programmed decisions
are highly uncertain
-Top mgt responsibility
This concept of decision making is been put
forth by a person called Herbert Simon