Ethics

Ethics in an important aspect of marketing just like it is in all areas of business. There are certain ethical issues that marketers should be aware of. An ethical issue is an identifiable problem, situation, or opportunity that requires an individual or organization to choose from among several actions that must be evaluated as right or wrong, ethical or unethical. Let's take a look at some of the issues that may arise in marketing.

Product-related ethical issues - Generally arise when the firm fails to disclose risks associated with a product or information regarding the function, value, or use of a product. Ethical issues can arise in product design as pressures build to substitute inferior materials or product components to reduce costs. Similarly, ethical issues can arise when the firm fails to inform customers about changes in quality or quantity of product sold.

Pricing-Related Ethical Issues - Pricing is one of the most heavily watched and regulated of all marketing activities. Given that a difference in price can create such a significant competitive advantage, any effort to artificially give one company an edge over another is subject to legal or regulatory intervention.

Price discrimination occurs when firms charge different prices to different customers. In general, price discrimination is illegal, unless the price differential has a basis in actual cost differences in selling products to one customer relative to another.

Price fixing occurs when rival firms collaborate to set prices. The Justice Department has determined that, while following a competitor's lead in an upward or downward trend is acceptable, there can be no signaling of prices to competitors in this process.

Predatory pricing occurs when a firm charges very low prices for a product with the intent of driving competition out of business or out of a specific market. Predatory pricing is illegal; however, it is extremely difficult to prove in court.

Superficial discounting occurs when a firm advertises a sale price as a reduction below the normal price when it is not the case.

Supply Chain-Related Ethical Issues - Managing ethical issues in distribution and supply chain strategy is very challenging due to the complexity of most supply chains and the fact that supply chains today are global. Although companies often create a Supplier Code of Conduct, they are required to conduct regular audits to ensure that factories are following compliance standards-which in turn can incur significant costs to companies in both time and finances.

Managing supply chain ethics is important because stakeholders hold the firm responsible for all ethical conduct related to product availability and the integrity of the product.

Promotion-Related Ethical Issues - Marketing practices that are false or misleading can destroy customers' trust in an organization. Ethical issues also arise when firms use ambiguous statements, in which claims are so weak that the viewer, reader, or listener must infer the advertiser's intended message.

Two other issues to be concerned with are bribery and fraudulent activity.

Bribery occurs when an incentive (usually money or expensive gifts) is offered in exchange for an illicit advantage. Even a bribe that is offered to benefit the organization is usually considered unethical. Fraudulent activity has dramatically increased in the area of direct marketing, in which companies use the telephone and non-personal media to communicate information to customers, who then purchase products via mail, telephone, or the Internet.

Write an Ethics and Social Responsibility Strategy for Starbucks.