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Wk 3&4 Business EthicsFocus on Marketing


Learning Coach Dr. Mohan Lal Agarwal Professor, Marketing IMT Dubai Email:magarwal@imtdubai.ac.ae Mobile: (055) 6589767

Ten Ethical Issues in Marketing


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Causes people to buy more than they can afford. Overemphasizes materialism. Increases the costs of goods and services. Perpetuates stereotyping. Offensive advertisements. Advertisements linked to bad habits and intimate subjects. Use of unfair tactics. Deceptive and misleading advertisements. Advertising of professional services. Advertising to children.

Social Criticisms of Marketing


Marketings Impact on Society as a Whole

Ethical Issues in Business Research


How should we treat the people on whom we conduct research?

Cultural Pollution
Complaint: Response: Marketing and advertising are planned to reach only a target audience, and advertising makes radio and television free to users and helps to keep down the costs of newspapers and magazines. Todays consumers have alternatives to avoid marketing and advertising from technology.

Marketing and advertising create cultural pollution

Are there activities in which we should or should not engage in our relations with them?

Harm to Participants
1. It is the responsibility of the researcher to carefully assess and minimise the possibility of harm to research participants 2. Issues relating to confidentiality and anonymity should be negotiated and agreed with potential research participants 3. In quantitative research, it is often easier to anonymize records and report findings so that individuals cannot be identified 1. e.g. with the use of pseudonyms 4. The issues of confidentiality and anonymity raise particular difficulties for many forms of qualitative research 1. e.g. sample sizes in specialized areas may be very small to the point where employees themselves could be identified 2. employees should be informed of the risks at the beginning of interviews and given the opportunity to withdraw

Lack of Informed Consent


As Homan (1991: 73) has observed, implementing the principle of informed consent `is easier said than done'. At least two major points stand out here: It is extremely difficult to present prospective participants with absolutely all the information that might be required to make an informed decision about their involvement. In ethnographic research, the researcher is likely to come into contact with a wide spectrum of people, and ensuring that absolutely everyone has the opportunity for informed consent is not practicable, because it would be extremely disruptive in everyday contexts.

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Invasion of Privacy
This relates to the issue of the degree to which invasions of privacy can be condoned Privacy is very much linked to the notion of informed consent The research participant does not abrogate the right to privacy entirely by providing informed consent Covert methods are usually deemed to be violations of the privacy principle The issue of privacy is invariably linked to issues of anonymity and confidentiality in the research process

Data Protection Legislation


The 1998 Act states that personal data must be: 1. processed fairly and lawfully

2. obtained only for one or more specified and lawful purposes and not further processed in any manner incompatible with that purpose or those purposes 3. adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed 4. accurate and, where necessary, kept up to date 5. not be kept longer than necessary

The Difficulties of Ethical Decisionmaking


Some members of social settings may be aware of the researcher's status and the nature of their investigation Manuals about interviewing are full of advice about how to entice interviewees to open up about themselves Researchers using Likert scales reword items to identify yeasayers and naysayers Interviewers frequently under-represent how long an interview will take Women may use their identity as women to influence female interviewees in in-depth interviews Qualitative research questions are often loose or unspecified, so ethnographers may not be able to inform others accurately about the nature of their research Some interviewees may find the questions we ask unsettling or find the cut and thrust of a focus group discussion stressful

#1: When Is Price Ethical?


Level 1 2 The Exchange is Ethical When The price is paid voluntarily And based on equal information Implication/Proscription
Let the buyer beware.

No sales without full disclosure (used car defects, risks of smoking)

And not exploiting buyers essential needs

No excessive profits on essentials such as life-saving pharmaceuticals

And justified by costs

No segmented pricing based on value. No excessive profits based on shortages, even for nonessential products

No exchange for personal gain. Give as And provides equal access to goods regardless of ones ability to cover cost able and receive as needed.

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#3b: Clayton Act as amended by Robinson-Patman Act


Many people consider profit maximizing pricing unethical, even when it is perfectly honest and reflects actual value of the product offered. They argue that, while business people are entitled to a "fair" return on investment, it is wrong for them to earn "excessive" profits pricing above what is necessary for a fair return They would argue it is a "consumer rip-off." Do you agree or disagree? Why?

It shall be unlawful for any person engaged in commerce to discriminate price between purchasers of commodities of like grade and quality . . . Where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce.
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#3c: Legal Defenses under the Clayton Act


Cost Defense Meeting Competition Defense

#4: Price Fixing and Predatory Pricing


a. Horizontal Price Fixing:

Collusion, parallelism, or conspiracy among competitors in trade


b. Vertical Price Fixing:

Collusion or conspiracy by sellers and buyers to restrict, control, or maintain price.


c. Predation:

Potentially illegal if used to substantially limit competition

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#4a: Pricing Agreements and Exchanges of Information


a. Explicit Agreements: An agreement to set the same prices or to price according to the same formula, and are per se illegal. b. Non-explicit Agreements Parallel behavior is legal if it is done exclusively in the self-interest of the firm and avoids any hind of agreement. c. Tie-In Sales and Requirements Contracts Products with tie-ins due to unique technological design are legal. d. Exchanges of Information Not illegal so long as no attempt to limit competition or to agree on prices.
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What is the legal status of the following pricing-related decisions that your company might make? Begin each answer by labeling the practice "ILLEGAL" if it is per se illegal; "LEGAL" if it is definitely legal; or "GRAY" if it may or may not be legal depending on the circumstances. 1. A company that makes frozen dinners is interested in continuing to purchase aluminum trays from you but claims to have received a bid from another company to supply the trays for $9.00 per thousand less. They insist that you meet that price to retain the business. The price that you have been charging this company is the same price that you charge other manufacturers of TV dinners. Since this buyer is your largest account and you do not want to lose the business, you agree to match the lower bid.

Thank You!
2. You develop a new letter-quality printer that you intend to sell for only $99, a price that includes very little profit. You plan to profit handsomely, however, from sales of ink cartridges for the printer. You have priced the ink cartridges at $29 each although they cost you only $1.50 to make.

Dr. Mohan Lal Agarwal Professor, Marketing IMT Dubai Email:magarwal@imtdubai.ac.ae Mobile: (055) 6589767

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