Business

Study Notes

Ethical Marketing (GCSE)

Level:
GCSE
Board:
AQA, Edexcel, OCR, IB

Ethics are moral guidelines which govern good behaviour. So behaving ethically is doing what is morally right.

Behaving ethically in business is widely regarded as good business practice.

An important distinction to remember is that behaving ethically is not quite the same thing as behaving lawfully:

  • Ethics are about what is right and what is wrong
  • Law is about what is lawful and what is unlawful

An ethical decision is one that is both legal and meets the shared ethical standards of the community.

Specific issues in marketing ethics

Here are some examples of potential ethical issues in marketing:
Market research:

  • Invasion of privacy (e.g. obtaining research data without permission)
  • Stereotyping – drawing unfair or inappropriate conclusions

Target customers and market:

  • Targeting the vulnerable (e.g. children, the elderly)
  • Excluding potential customers from the market (e.g. discouraging demand from undesirable market sectors or simply refusing to sell to certain customers)

Pricing

  • Price fixing (see below)
  • Price wars
  • Price collusion (agreeing with other competitors to set prices in a market to the detriment of competition and consumers)

Advertising and promotion

  • Issues over truth and honesty
  • Issues with violence, sex and profanity
  • Taste and controversy
  • Negative advertising

Picking one of the above topics (price fixing), it is possible to see how the law acts to prevent or deter unethical marketing practices, in some cases.

Price fixing is illegal. It is considered to be anti-competitive as well as unethical. So a business cannot:

  • Agree prices with its competitors (e.g. it can't agree to work from a shared minimum price list)
  • Share markets or limit production to raise prices (e.g. if two contracts are put out to tender, one business can't agree that it will bid for one and let a competitor bid for the other)
  • Impose minimum prices on different distributors such as shops
  • Agree with competitors what purchase price it will offer suppliers
  • Cut prices below cost in order to force a smaller or weaker competitor out of the market

Advertising (promotion) is another marketing activity that is regulated in order to deter unethical practice.

Advertising in the UK is regulated by the Advertising Standards Authority, which regulates advertising across all media, including TV, internet, sales promotions and direct marketing. The ASA's role is to ensure ads are legal, decent, honest and truthful by applying the Advertising Codes. Visit their website to get some great examples of this regulation in action!

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