Ethical Issues in Marketing Assignment

Ethical Issues in Marketing Assignment Words: 1522

Ethical issues in marketing The importance of ethics in marketing is growing. Recognition and respect for ethics, covering a wide range of issues can be used as USP (unique selling point) for a company. Each society will have it own unwritten code of behavior. However view of matter will change over time. Due to this societal marketing concept has emerged which requires that marketer adhere to socially responsible and ethical practices in the marketing of their goods and products. Below is the definition of ethics. Ethic: A principle of right of good conduct, or a body of such principle.

In the coming pages two companies have been taken into consideration in regards to whether their behavior is ethical towards their stake holders. 1. The Body Shop ( A cosmetic products producer and retailer) 2. Green Mountain coffee roasters ( a coffee retail company). An August 1996 edition of Marketing Success briefly covered some issues of ethics which might be of relevance to marketers, using the 4Ps of the marketing mix as a framework. Below we discuss the response of the above mentioned two organizations to ethics in marketing. | | |Body Shop |Green Mountain Coffee Roasters(GMCR) | | |GMCR is one of the leader in specialty coffee industry, and has | |The body Shop has successfully manufactured an image of being a |been recognized by Forbes Magazine for the past four years as one| |caring company that is helping to protect the environment and |of the “200 Best Small Companies in America. The company | |indigenous people, and prevent the suffering of animals ??? whilst |contributes at least five percent of its pre-tax profit annually | |selling ‘Natural Products’. |to support socially responsible initiatives, many of which have | | |been supported for the past ten years. In 2003 three Business | | |ethics magazine ranked GMCR on 8th position fir its efforts. |Product | | | | |The Body Shop gives the impression that their products are made |GMCR promises to deliver high quality coffee. As a result it has | |from mostly natural ingredients.

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Like all big cosmetic companies |been recognized the by Forbes Magazine as one of the ” 200 Best | |they make wide use of non-renewable petrochemicals, synthetic |Small Companies in America”. The Companies products are Fair | |colors, fragrances and preservatives, and in many of their |Trade Certified, which means it pays fairly to its supplier of | |products they use only tiny amounts of botanical-based |coffee beans, for which they get high quality coffee and in turn | |ingredients.

Studies by some experts have shown that body shop |the consumer get a fine product for their money. | |products contain chemicals which are harmful for the human skin. |Effects on environment: GMCR and National Wildlife Federation had| |For example, Zia Wesley-Hosford(a consumer advocate and cosmetic |made a joint effort in promoting the benefits shade grown | |expert) stated” I selcted seven basic skin and body care items[of|certified organic Fair Trade coffee to US consumers.

To | |body shop] and found all of them contain two or more of the |inaugurate this effort, GMCR and NWF has unveiled two co-branded | |following ingredients: isopropyl myristate, mineral oil, |shade-grown certified organic Fair Trade Coffees that will be | |petrolatum, sodium lauryl sulfate and triethanolamine. These |marketed by both organizations: Cafe Verde and Cafe Verde Decaf. | |ingredients are of no benefit to the skin. Infact , they can |The small scale farmers who produce coffee for GMCR in Mexico and| |sensitize, irritate, strip the skin and cause breakouts. Peru are excellent stewards of land, use organic techniques that | |Effect on the Environment: The Body Shop continuously irradiates |have been passed from generation to generation and therefore | |certain products to try to kill microbes ??? radiation is generated|produce the best quality coffee. | |from dangerous non-renewable uranium which cannot be disposed of | | |safely, therefore the manufacture may involve unacceptable | | |environmental cost. | | | | | | | | | | |Pricing | | | | |Body Shop claims that they sell Natural Products, free of any |Unfortunately Green Mountain has adopted the all too common | |chemicals which might damage skin; therefore they make the |industry trend of cutting back their bag size.

Currently their | |customer pay a higher price for their products. They have |coffees are offered in 10oz bags, both of these being between $7 | |branded their products of high quality and different from what |and $8 per bag on their website. This equates to around $12/lb | |other cosmetic companies have to offer and thus charge more from |which, while not unreasonable, is a premium price for coffee. | |the consumer. Women’s Wear Daily quoted a consultant who sniffed |Part of this is undoubtedly due to the coffee being Fair Trade, | |that Body Shop products are “low-end… at a premium price. ” |the end result of which is the farmer seeing more of this money. |Promotion | | | | |Advertising should be legal, honest, decent, truthful and |GMCR is regarded as one the most ethical company and has been | |tastefulness of imagery should be considered (eg violence, sexual|recognized by the media for its ethical practices. GMCR promotes | |stereotyping. |itself as a fair trade company. They persuade people to buy their| |Although the body shop maintain that they are against animal |products because by doing so the consumers will be helping those | |testing, they do not always make clear that many of the |farmers who are growing GMCR’s coffee.

This advertising has | |ingredients in their products have been tested on animals by |proven to be true as GMCR regularly takes its employees and | |other companies. They accept ingredients tested on animals before|consumers who volunteer as well as media personnel on trips to | |1991, or those tested since then. Some Body Shop items contain |Mexico and Peru where coffee has been grown and then brought to | |gelatin (crushed bone). For example, a company internal memo in |GMCR. | |may 1992(produced by the monitoring officer of the Body Shop) | | |stated that 46. % of ingredients had been tested on animals | | |[private eye report of body shop / channel 4 court case. ] In | | |1989, the Body Shop changed its slogan from “Not Tested on | | |Animals” to “Against testing on Animals”. Concurrent to the | | |change, the Body Shop was successful prosecuted by the German | | |Government for misleading advertising.

The court ruled that since| | |all cosmetic companies use ingredients tested on animals by third| | |parties, claims that products were not “not tested on animals” | | |were misleading [Higher Regional Court Dusseldorf case | | |34-0-202/89. In 1996, the EU’s department of trade and industry | | |announced that Body Shop’s "against animals testing ” and symbols| | |such as tortured rabbit (used frequently in their arketing ) | | |deceive consumers should be banned so as to avoid any misleading | | |claims. | | | | | |The cosmetic industry which includes Body Shop, tries to make | | |women ??? and increasingly now also men ??? feel in adequate about | | |their bodies, and pushes the message that people need | | |beautifying.

Women especially are often put under pressure to | | |conform to the impossible physical ideals set by the money | | |oriented industries. | | |Place | |Ethical concerns regarding relationship with intermediaries can |GMCR is a highly profitable organization. It has maintained it’s | |involve the use of power, or delays in payment. Body Shop remains|profitability by maintaining a good relationship both with | |a mostly franchised operation.

Only 29% of its 1,954 stores are |supplier’s as well as distributors. | |in company hands. Body Shop International pocketed a chunk of | | |each franchisee’s start-up investment, which, in the U. S. , now | | |ranges from $318,700 to $774,750 (U. S. ) per shop. In addition, | | |franchisees are locked in as buyers of Body Shop’s cosmetics and | | |sundries, and pay royalties of 5% on sales.

Such costs have been | | |a daunting, sometimes insurmountable hurdle in the low-profit | | |business of running storefront franchises. | | | | | | | | Identification and description of implications of ethical issues on marketing activities. Product:

If the consumer is paid a high price for a low quality product or he is misinformed about a product, he can easily switch to a different product and therefore the organization might lose their business to their competitor. Not only this but it will be a negative advertisement for the company as the consumer might also advise friends and family on the quality of the product he has had firsthand experience of the product. Pricing: One of the most important aspects in marketing ethics is price fixing. If price fixing is involved the demand for the product might fall. Consumers may switch to substitute products. Promotion: Advertising should be legal, honest. Passing wrong information about the products of the company could result into legal action taken against the company. Also instead of promoting the product, dishonest advertising will do the opposite. Place:

Ethical concerns regarding relationships with intermediaries can involve the use of power, or delays in payments. An organization my not pay their suppliers a good amount for their products which could result in the product quality going down. Some big organizations have franchisees, if they supply them a lower quality product or charge them hefty amounts then their profitability may be short lived as the existing ones might close down and new ones will not open. Bibligraphy a) Internet i) http://www. lifeaftercoffee. com/2006/12/17/green-mountain-coffee-roasters-coffee-review/ ii) http://www. jonentine. com/articles/bodyflop. htm b) Class notes and lectures c) HND business course book: Business and Marketing