ANALYZING REGULATION AND

MARKETING ETHICS

INDUSTRY REGULATIONGovernment regulation of an entire industry.

The most common industry regulation has been in airline, railroad, trucking, banking and television broadcasting.

The objective is for a regulatory agency to keep a close eye on an industry’s prices and products to ensure that they don’t start a monopoly and take advantage of consumers.

DEREGULATION

The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.

Chaos of Industry Deregulation

A regulated market, by definition restrains and controls competition; it imposes order.

When a market is deregulated, the players are allowed to attack each other’s market share, change pricing strategies and undertake competitive product differentiation and advertising.

The Fruits and Thorns of Deregulations

The businesses are left to themselves to determine their operational processes and strategic imperatives w/o the government interfering in their working.

Can focus on their core competencies w/o having to submit themselves to constant scrutiny and constant pressure from the government.

Consumers might be hit with the side effects of too much liberalization in the form of businesses having more power than before leading to arrogance towards the consumers especially those who cannot pay more for products because of their socioeconomic condition.

PRODUCT REGULATIONPackaging requirementsInformation labelingInstructions labelingUsage warningsMinimum quality or performance

standardsMandatory warrantiesProduct ratingsProduction and marketing licenses amd

permits

Patent Regulation

The U.S patent system is the result of a balance achieved between competing economic forces and the judiciary in order to maximize what is judged to be the most benefit to society.

Patent also provide a nice example of the problems inherent in implementing marketing law: the law adapts to changes in the economy and specific markets

Consumer and Environmental Protection

.Much of U.S. consumer and environmental protection legislation has come about as the result of horrific cases in w/c companies marketed dangerous foods, medications, cosmetics, or machines that eventually killed or maimed users or polluted the environment. We all need to be protected against dangerous products, but how much protection do we need?

Environmental Principles of waste Management, Inc.

Environmental Protection and Enhancement

Waste reduction, Recycling, Treatment and Disposal

BiodiversitySustainable use of Natural

ResourcesWise use of EnergyComplianceRisk Reduction

Research and DevelopmentPublic PolicyPublic EducationParticipation in Environmental

OrganizationsMonitor and Report Environmental

MattersAnnual Report

PRICE REGULATIONSThe laws apply to pricing are

primarily aimed at preventing unfair and deceptive practices.

Avoiding price competition and charging different buyers different prices for the same products.

Price deception occurs when an actual selling price turns out to be more than was claimed.

Price-Fixing

Best known illegal marketing tactic.

Establishing the price of a product or service, rather than allowing it to be determined naturally through free-market forces.

Price Signaling

Everyone agrees that a market is more efficient and competitive when suppliers and consumers have information about market prices.

Discriminatory Pricing

A supplier is allowed to respond to changes in demand by charging various prices for a product or service in different situations and at different times

Charging 2 customers diff. prices for exactly the same type and amount of goods in the same situation & time period is not allowed.

Resale Price Maintenance

Although manufacturers are required to sell their products at the same wholesale prices to diff. retailers, they are not allowed to enforce standard resale prices.

Predatory Pricing

is a pricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.

DISTRIBUTION RELATIONSHIP REGULATIONS

Franchising and Exclusive Relationship

- is a long-term trading contract or partnership w/ another party.

Tying Contractual Relationship- you cannot use demand for

one product to sell another

Restricting Intrabrand Competition

-although the courts may frown on the exclusive franchising of existing distributors, they have allowed manufacturers to deliberately restrict their number of product resellers in a particular market, be it a regional territory or a group of customers.

SELLING REGULATIONS to protect consumers when they shop

online or enter into other contracts at a distance from the supplier,

The rationale for giving consumers special protection in such deals is that the consumers does not have the benefit of meeting face-to-face w/ the supplier & inspecting the goods or services offered for sale.

ADVERTISING REGULATIONS

The major concern of the government regulation of advertising is the control of deceptive practices.

DECEPTIVE – considered deceptive if the claim was related to an important product characteristics and was not literally true.

Substantiation of ClaimsSuperlatives in advertising,“the best” “the cheapest” and “the easiest to use’’

Positive claims were long considered acceptable, bec. advertisers were expected to praise their product.

MARKETING ETHICS

is an area of applied ethics which deals with the moral principles behind the operation and regulation of marketing.

Law is a Minimum Ethical Standardgenerally considered to be only a

min. Ethical standard.the law often does not work the

way it should.

THEORIES OF MARKETING ETHICS

Competition, Ethics, and EfficiencySocial Darwinism is the idea that the

laws of natural selection and survival of the fittest apply to the marketplace.

competition makes the market efficient.when ethics do not exist, markets fail

and gov’t regulation must be present to ensure that competition works honestly and openly.

The Shifting Sands of Situational Ethics

Principle of utility◦the right action is that which produces the most good for the most people in a specific situation.

one action is judged against another instead by an absolute standard.

Categorical Imperative

offers an alternative to situational ethics.

it asks whether the proposed action would be right if everyone did it.

Religious Foundations of Marketing Ethics

marketplace ethics have a religious basis

exercise of different religious beliefs and values increases the variability in the ethics that we are likely to observe in the marketplace.

predominant religion’s values used as a common core for our society’s ethics to enable us to anticipate the likely behaviors of other parties in the market.

ETHICAL SCREENING PROCESS

For market decision making behavior, an individual’s mental model is used to ethically screen suggested product market goals, strategy ideas, and implementation programs.

 

Personal Ethics Checklist for Marketers

1. Am I violating the law? If yes, why?2. Are the values and ethics I am applying in business

lower than those I use to guide my personal life? If yes, why?

3. Am I doing to others as I would have them do to me? If not, why not?

4. Would it be wrong if everyone did what I propose to do.? Why?

5. Am I willfully risking the life and limb of consumers and other by my actions? If yes why?

6. Am I willfully exploiting or putting at risk children, the elderly, the illiterate, the mentally incompetent, the naive, the poor, or the environment? If yes, why?

7. Am I keeping my promises? If not, why not?8. Am I telling the truth, all the truth? If not why not?

9. Am I exploiting a confidence or a trust? If yes, why?

10. Am I misrepresenting my true intentions to others? If yes, why?

11. Am I loyal to those who have been loyal to me? If not, why not?

12. Have I setup others to take responsibility for any negative consequences of any actions? If yes, why?

13. Am I prepared to redress wrongs and fairly compensate for damages? If not, why not?

14. Are my values and ethics as expressed in my strategy offensive to certain groups? If yes, why?

15. Am I being as efficient in my use of scarce resources as I can be? If not, why not?

The Legal and Ethical Constraints on Marketing

Market Strategy

Company code of ethics

Legal constraints

Professional code of ethics

Personal code of ethicsMaximum standards

Minimum Standards

Free will

Enforcement