ETHICS AND INTERNATIONAL MARKETING

BY: Assem SharafSub. To:

Dr: Passent Tantawi

• Abstract• Purpose: The aim of this paper is to present an overview of

historical and current trends focusing on IM ethics.• Methodology: The paper examines how ethics in IM have evolved

and progressed towards the current “ethics era”• Resources: Emerald Group Publishing Limited,vol.22 No. 5. 2005 Birmingham Business School , UK. Admap Magazine. July/August 2009, Issue 507. Principles of Marketing, Philip Kotler& Gary Armstrong 12e •

• Findings: Essentially the paper argues that marketers should creatively embrace the complex challenges of the international marketplace by rethinking their approach to marketing ethics.

Contextualizing ethical issues in Marketing

IME are important as marketing is expected to satisfy customer needs profitably, thus creating the interface between customer preferences and companies market aspiration.

Kant’s (1788) duties can’t be associated with self-interest , thus companies should exist to satisfy needs and firms have a duty to deliver benefits to the society they’re motivated by objectives rather than self interest and hopefully rewarded.

Mill (1998) Ethics should maximize pleasure and minimize pain based on “common good rather than self interest”. Would it be applied to target market or whole market? What about international good? He replied;Pleasure and pain principle are universal.

Crane & Matten (2004): Moral is based on social norms of the society , no universal moral standards, marketing adaptation, no common framework for ethics agreements.

Do Marketing ethics matter?

• Fineman(1999): Marketing is more value laden, and manipulates consumers in anything but an innocent and friendly way, what is desired by consumers may not necessarily be good for them (tobacco) and it may hurt them in the long run.

• Kotler (1972) believes that marketers responsibility is to find products that provide satisfaction and long term welfare shifting the roll of marketers from being a seller agent to buyers agent.

• Sheth et al(1988) unethical acts can be committed by the most honest and responsible individuals in some circumstances.

• The problem is to establish acceptable guidelines and practice and disseminate that within the industry.

International Marketing activities and the importance of Ethics (MNCs)• The need for addressing the issues of IME arises from increased

internationalization of MNCs which have greater bargaining power over local governments.

• Developing countries can be vulnerable to unethical marketing because of their economic potential, low bargaining power, lack of legal framework and law enforcement to protect local companies. this makes consumers less likely to benefit from marketing ethics.

• Tax competition Multinational corporations have played an important role in globalization.

Countries and sometimes subnational regions must compete against one another for the establishment of MNC facilities, and the subsequent tax revenue, employment, and economic activity. To compete, countries and regional political districts sometimes offer incentives to MNCs such as tax breaks.

• Market withdrawal Because of their size, multinationals can have a significant impact on gov. policy, primarily

through the threat of market withdrawal. For example, in an effort to reduce health care costs, some countries have tried to force pharmaceutics companies to license their patented drugs to local competitors for a very low fee, thereby artificially lowering the price. When faced with that threat, multinational pharmaceutical firms have simply withdrawn from the market, which often leads to limited availability of advanced drugs.

• Lobbying Multinational corporate loppying is directed at a range of business concerns, from tariff

structures to environmental regulations. Multinational corporations such as Wal-mart and McDonald‘s benefit from government zoning laws, to create barriers to entry.

Many industries such as General Electric and Boeing lobby the government to receive subsidies to preserve their monopoly

• Patents Many multinational corporations hold patents to prevent competitors from arising in the

same time they offer low prices until local competitors withdraw.• Local Political influence Massive corporate campaign contributions in democratic elections, and endless global

news stories about corporate corruption

MNCs works in one direction from developped countries to developing countries: International marketers control more than the elements of the marketing mix; they

play a crucial role in changing social structures and competitiveness, in shaping politicalpower, knowledge transfer, and even determining economic development structures.

• Consumers in developed countries have low individual bargaining power but a relatively high degree of consumer sovereignty thus being able to exercise much more power on companies’ marketing ethics.

• The role of experience, education and income in assessing consumer vulnerability in developing countries is of a much greater importance.

• The roll of local community: you may heard about MADD(mothers against drunk driving) to face kids and teens needs, and DAD (dads and daughters) use their relationship with each other to strengthen the local cultural values.

Philip Kotler:• The best guidelines cannot resolve all the

difficult ethical decisions that individuals and firms must make but there are some principles that marketers can choose among:

• One: such decisions should be decided by free market and legal system.

• Second and more enlightened one put the responsibility in hands of firms and managers.

The situation may get better in recession

• The effect of tech.• The need for honesty&

reliability• What they really need.• Turning to natural food.• People power.• One global community.

Facing the challenge

• In Gaski’s (1999) “Without doubt, the ethics of one day may be the law of the next”.

• As Sheth and Sisodia (1999) state, the context of marketing is changing in fundamental ways. The acceptance of law-like generalisations is having to be, as they suggest, “either enhanced or modified”. The old opinion of marketing ethics as “an oxymoron”, or that “marketers do not have ethics” is being re-thought.

Today, as the field of marketing develops a stronger ethical profile, academically and professionally , marketers are finding that it is harder to ignore the “ethics gap” between what society expects and what marketing professionals are delivering (Laczniak, 1993).

We don’t really know if all this research activity on marketing ethics has affected the ethical climate of marketing practice, and some practices such as deceptive pricing or manipulative advertising may never disappear (Laczniak, 1993).

However, that does not mean that marketing scholars should not strive to improve the ethical climate in which marketing business is conducted.

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