Ethical Issues in Marketing, Advertising & Product Safety

BMJN 5402

Consumers’ Rights

Employee Rights

Product safety

Information

Right to choose

Right to be heard

Environmental right

Educational right

Indonesia’s Consumer Protection Act

Released on April 1999

Protection against unethical promotion, advertising & marketing practices

Supported by Advertising Ethical Code by Indonesian Advertising Association

Responsibility to Provide Safe Product

1

•Contractual theory (”caveat emptor”)

2

•Due care theory (“caveat emptor & caveat venditor”)

3

•Social cost theory (“caveat venditor)

Contract Theory

Business must ensure that product can work properly during the lifetime, can be maintained & fixed and safe

Challenges :

• Theory assumes that producer & consumer are at the same level

• Depend on direct relationship between producer & consumer

• Not sufficient to protect consumer

Due Care Theory

Put consumer in weaker position

Norms

Challenge :

• Do not manipulate consumer (deontology/ right based)

• Do not cause loss to consumer (utilitarian)

• Justice theory• Due care is not easily

defined• Producer also has

limitation in the product knowledge

Social Cost Theory

Producer is fully responsible for the products

Challenge :

Other Responsibilities

1•Product quality implicit & explicit warranty

2 • Price

3 •Packaging & Labeling

Price

Can’t be the result of pure market mechanism

• No perfect mechanism to dictate price

• Customer is often put in weak position

• High fluctuation

Ethical issue of un-fair pricing :

• Conspirational price fixing

• Unawareness

• Misuse of power

• Emotional manipulation

Ethics of Sales, Advertising & Product Placement

1

• Ethically commendable ways : persuading, asking, informing, advising

2• Unethical ways : threat,

coercion, deception, manipulation, lying

Some Examples…

http://boycottnestle.blogspot.com/

Manipulation

1 •Guiding or directing someone’s/ something’s behavior

2 •Grey area, less clear than deception & outright lies

3 • Strongest objection from deontological ethics, erode bonds of trust & respect between persons

4 •Ethically improper : appeal to fear, anxiety, other non-rational motivation

Deceptive/Unfair Sales & Advertising

Impact• Consumer might end up paying for higher

prices• Competitors are cheated out of chance to

compete fairlyApproach of regulators :

• Seek for intention to deceive• Focus on effect

Too strong & too weak a standard

Consumer’s BehaviorAdvertising might not control consumers’ behavior, but autonomous desire

Interaction between first and second order desires

Two conditions of autonomous desires :

• Consumer does not renounce or repudiate purchase• Consumer has the capacity to critically reflect on desire

and accept it as their own

Targeting The Vulnerable

Vulnerable : susceptible to some harm

Conditions :

• Unable in some ways to participate as fully informed & voluntary participant in market exchange (i.e. : children)

• Harm is other than financial harm of unsatisfactory market exchange

Deception in Sales

Sales person deals with individual customer instead of general population

Any form of deception is always intended

Thank You