unethical consumer behaviour

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Unethical Consumer Behaviour in Marketing

Consumer Behaviour Term Paper


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Introduction

Consumer Behaviour deals with the buyer side of exchange process. A vast research on marketing

ethics has been carried out in recent years which focussed mainly on the supplier side of exchange

process; however the buyer side remains un-researched or less researched. Consumers are one of the

major stakeholders in any marketing activity however a limited research activity has been performed

to understand the ethics of a consumer and his buying/decision making behaviour which is closely

associated with ethics. The current era is an ethics era where a companys marketing and

promotion activities should also take into consideration the ethics side of the consumers to avoid

falling prey to the different unethical gimmicks i.e. consumer misconduct by which he gains at the

expense of the seller, played by the consumer. Thus understanding the ethics of consumers is must to

avoid any potential losses that the company might face because of the unethical consumer behaviour.

In this paper we will focus on finding out the different factors that lead to the unethical behaviour

being frequently observed among the consumers. Based on the factors identified we will look into

what measures companies can take to prevent occurrence of such incidents and at the same time how

marketers can predict the unethical consumer behaviour. Also we can suggest the companies based on

the observed factors if the current measures being followed are sufficient to address the issue of

unethical consumer behaviour or it needs some modification which will help in addressing this

challenge faced by the sellers. This phenomenon of unethical consumer behaviour is being observed

very frequently in recent years thereby making conditions worse for the seller in an already highly

competitive market setting.

Objective

The objective of the term paper is to find out the reasons behind the unethical consumer behaviour

being observed more prominently in recent years. In other words the paper will address the why

question behind the unethical consumer behaviour. A limited research has been carried out while

unearthing the factors that lie behind the consumers unethical behaviour. This paper will focus on

finding the major factors that lead to unethical behaviour. The identified factors will act as a major

source of information for sellers thereby helping them in designing the marketing and promotional

activities to avoid consumers from taking undue advantage of them. Once the why part of unethical

consumer behaviour is identified this can help in designing a mechanism that will help address this

issue which is currently haunting majority of suppliers in various industries.


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Literature Review

The majority of literature available on marketing ethics deals with the seller side where as the buyer

side research is new and limited research has been carried out in this area. Consumer behaviour is

identified as a new topic in the area of consumer research which also includes among others the

unethical consumer behaviour (Hirschman, 1991; Holbrook, 1994; Mick, 1996). A significant amount

of literature has emerged around consumer ethics since the pioneering studies carried out by Muncy

and Vitell (Muncy & Vitell, 1992; Vitell & Muncy, 1992). Unethical consumer behaviour is prevalent

in everyday life and has several severe consequences for the sellers. So The understanding of

consumer ethics is crucial to todays marketers and policy makers (Chan et al., 1998, p.1163).

Personal characteristics of the consumer play a pivotal role in determining the consumer behaviour. A

lot of research has been carried out on the personal and psychological factors of the consumer

whereas the consumers basic value system, his ethical beliefs which are very helpful in determining

the consumer behaviour remains less researched.

Prior to 1990 the research was focussed mainly on seller side ethics however after 1990s the research

started focussing on the buyer side. There existed some research before 1990s which focussed on

buyer side and can be classified into 5 categories:

Some authors have concentrated mainly on a single component of unethical consumer behaviour.The investigated areas mainly included shoplifting, ecologically related consumption and

consumer views on games like gambling and lottery.

Some concentrated on providing normative guidelines for sellers and buyers on issues related toethics. This involves laying out of code of ethics for buyers as well as chalking out strategies to

tackle the abuses by the buyer.

Some examined the double standards that exist between consumer perception of acceptableconsumer behaviour and customers belief of acceptable business practices.

Some developed theoretical models for getting a better understanding of ethical decision makingprocess in marketing

While some authors focussed specifically on different unethical consumer practices.However post 1990, an increase in consumer ethics research has been observed and it focused on

various consumer behaviour topics thereby leading to formulation of different frameworks and

models that correctly captured the factors leading to either ethical or unethical behaviour of the

consumers. Based on the work of Wilkes (1978), Muncy and Vitell developed the Consumer Ethics

Scale which has been the most common tool in the consumer ethics literature to date; Also Forsyths

ethical ideology and the Machiavellianism trait have been identified as most important determinants

of ethical discrepancies between individuals; and extensive empirical work has been conducted to

investigate the influence of cultural environment and personal characteristics on consumer ethics.


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Ethical Decision Making Frameworks for Consumers

1. Ethical Decision Making ModelThe research literature talks about three theoretical models of decision making in the situations which

involve ethical issues in the field of marketing (Ferrell & Gresham, 1986; Hunt & Vitell, 1986, 1993;

Trevino, 1986). Each of these three models has similarities in terms that each of it identifies the

triggering construct which initiates the ethical decision making process and also identifies behaviour

of the buyer as the outcome of this process. These models also highlight the relative importance of

various factors that lie behind the decision making process.

Along with the similarities mentioned above there are several differences among these models. The

Trevino model and the Ferrell-Gresham model present the individual decision making as a single

factor leading to buyers behaviour, whereas the Hunt-Vitell model explains the individual decision

making process, the various philosophical theories (deontology and teleology) which explain a

decision makers (buyers) ethical judgments. Hunt-Vitell model is the only model that can be applied

in individual contexts such as consumer behaviour by eliminating the parameters of organizational,

professional and industry environment. This explains that Hunt-Vitell model is best suited for

understanding the consumer ethics and can guide well in determining the major reasons for a buyers

unethical behaviour. So we will now look into the Hunt-Vitell model as it best suits our needs.

2. Hunt-Vitell ModelThe perception of an ethical problem by an individual decision maker in a situation is accompanied

with the perception of various alternatives that can be used to address the problem. Once these various

alternatives are arrived at, two major ethical evaluations can take place namely a deontological

evaluation and teleological evaluation.

The deontological evaluation emphasizes on certain actions and behaviours of the individual

consumer whereas teleological evaluation focuses on the outcome of these behaviours. While making

a deontological evaluation, the individual consumer evaluates the inherent rightness versus wrongness

of various actions and behaviours. According to this model, the deontological evaluation includes acomparison of perceived alternatives with the established deontological norms that depict the

individual consumers personal values.

In teleological evaluation, a particular behaviour or the alternative chosen is considered most ethical if

the consequences lead to a superiority of good over bad than any other alternative being perceived by

the individual consumer. This evaluation contains more major constructs:

Perceived consequences of each alternative for various stakeholder groups Probability that each consequence will occur to each stakeholder group Desirability or lack of desirability of each consequence


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Importance of each stakeholder groupThe individual consumers teleological evaluation is influenced by these constructs and the output of

this evaluation is the individuals beliefs about the relative good versus bad produced by each of the

possible alternative.

In most of the situations faced by an individual consumer, the ethical judgements are a function of

both deontological and teleological evaluation. However a recent test of Hunt-Vitell model revealed

that consumers rely mainly on deontological norms and less on teleological norms while forming the

ethical judgements.

Once a consumer chooses behaviour for a situation there is an evaluation of the consequences that can

result from the behaviour. These consequences act as a feedback to an individuals personal

experiences when compared to the expected consequences.

The Hunt-Vitell model consists of several background factors that influence the decision making

process. Out of the various factors only the culture and personal characteristics are important for

consumer ethics.

Figure 1: The Hunt-Vitell modelConsumers ethical decision-making framework

3. Consumer Ethics ScaleMost of the research on the topic of consumer ethics is done by Vitell and Muncy. Based on the work

of Wilkes (1978), Vitell and Muncy came up with the Consumer Ethics Scale which examines the

extent to which consumers believe that a certain questionable consumer situation is either ethical or

unethical. Vitell and Muncy used a sample of 569 heads of the household to establish a four factor

structure of ethical beliefs denoting the consumers ethical judgementswhich are determined by:

Whether or not the consumer has actively or passively benefited from the activity Whether the activity can be perceived as legal or illegal

The degree of harm to the seller


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The first category of the scale actively benefiting from an illegal activity consists of actions that are

initiated by the consumer and that are universally perceived as illegal. In the second category of the

scale passively benefiting at the expense of othersconsumers do not initiate any action specific to

receiving the benefit however they do take advantage of the mistakes committed by the seller. In the

third category of the scale actively benefiting from a questionable behaviour the consumer might be

involved in an action that might not be perceived as illegal (e.g. using an expired coupon). In the

fourth category of the scale consumers believe that their actions are not causing any harm to the seller

(e.g. recording a music album instead of buying it)

The study of the sample revealed that consumers believed that it was more unethical to gain benefit

from actively involving in an illegal activity than getting passively involved. The reason behind this

may be that as long as they are not initiating the activity they are not doing as wrong as active

involvement. At the same time deceptive practices were not considered to be as unethical as passively

benefiting from the illegal activity. Some of the activities were not considered by consumers as

unethical at all, many of the consumers indulged in these activities like copying of intellectual

property.

The Consumer Ethics scale has been proven to be useful in many scenarios even in the case of cross-

cultural societies. This can be found in the works of Al-Khatib et. Al. (2004), Rawwas et.al. (2005)

and Swaidan et. al. (2003). Al-Khatib et. al. (2004) used this scale to investigate Romanian

consumers. Rawwas et. al. (2005) used the scale to compare the ethical beliefs of Turkish and

American consumers and Swaidan et. al. (2003) used the scale to explore the ethical beliefs of African

Americans.

The consumer ethics scale is represented as follows:


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Figure 2: Four factor structure of consumers ethical beliefs by Muncy and Vitell


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Factors Responsible for Ethical/Unethical Consumer Behaviour

1. Moral PhilosophyThis refers to the guiding ideology that the individuals apply while judging a situation whether it is

right or wrong. According to Forsyth (1980, 1992) moral philosophies can be classified into idealism(extent to which an individual believes that the right action leads to the desirable outcome i.e.

deontological perspective) and relativism (extent to which an individual rejects universal moral rules

in favour of the subjective or situational approaches i.e. teleological perspective).

Based on these two uncorrelated constructs described above, Forsyth classified people in four

different ethical types namely subjectivist, situationist, exceptionist and absolutist. This is

demonstrated in the figure below.

Figure 3: Frosyths four ethical types

2. Machiavellianism

This personality construct is another important antecedent of consumers for ethical decision making.Hunt and Chonko (1984) have described Machiavellianism as a negative epithet indicating an

immoral way to manipulate others to accomplish ones own purpose. A Machiavellian personality can

be described as emotionally detached. Machiavellian individuals are more likely to accept ethical

questionable consumer practices because of their emotional detachment with others. The empirical

evidence from several studies carried out till date suggests that highly Machiavellian consumers are

little concerned for conventional morality and therefore are more likely to engage in unethical

consumer behaviour when their self-interest is involved.


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3. Cultural EnvironmentHunt-Vitell model includes cultural environment as one of the vital factor leading to the ethical

decision making process. This has led the research on consumer ethics to be culturally diverse i.e.

spread across two or more countries. These studies indicate that cultural differences exist between

consumers ethical ideology due to difference in economic development, degree to which a country

holds its international identity, difference in Hofstedes cultural dimension for the country,

geographical conditions, war and terrorism.

4. Personal CharacteristicsThese are also included in the Hunt-Vitell model as a factor leading to ethical decision making

process. The personal characteristics include socio-demographic variables, individual differences,

attitudinal characteristics, moral development and religion.

4.1Socio-Demographic VariablesAge has a positive effect on the ethical beliefs of the consumer. More is the age more is the

likelihood of rejecting questionable consumer practices.

There has been mixed results when gender is taken into consideration. Some of the studies carried

out have found out that women are more concerned with ethical issues than men. While some of

the research has failed to support the effect of gender on unethical consumer behaviour.

Education is also one of the socio-demographic variables which can be taken into consideration. It

has been found that the less educated consumers are more ethical as compared to the consumers

who have higher level of education. This effect has been attributed to the different ways a highly

educated consumer employs to get benefit from the seller because of good knowledge and

information.

When income is considered, it has been observed that there is a negative effect between income

and unethical behaviour by consumers.

When marital status is taken into consideration, it has been observed that married people have a

tendency to accept questionable practices as compared to the single individuals. However there is

no uniformity in the research findings.

4.2Attitudinal CharacteristicsThe study carried out by Vitell and Muncy (1992) states that attitude towards illegal activities and

attitude towards business have significant correlation with the ethical beliefs of the consumers.

Consumers who are negative towards business are less inclined to consider the different consumer

practices as unethical.


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4.3 Individual DifferencesIt has been observed that consumers with high propensity for risk and are autonomous, innovative

and aggressive tend to be less ethical. Similarly consumers with higher need for closure tend to

have ethical beliefs. An alienated consumer is less likely to follow norms and therefore is more

likely to accept the ethically questionable consumer behaviour. There is a negative relationship

between materialism and the ethical beliefs of the consumer. A value conscious consumer is more

likely to engage in unethical consumer practices like purchasing pirated goods.

4.4ReligionReligion plays a very important role in determining ethical beliefs of consumers. Religiosity has a

negative relationship with unethical consumer behaviour.


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Analysis of Unethical Consumer Behaviour in Indian Context

An Indian consumer is highly cost conscious and is very demanding when he goes for shopping. So it

is very difficult for a seller to understand the complex needs of the consumers and make them

satisfied with their offering. Also the existence of huge competition in the market leads every seller toindulge in practices that will help attract maximum consumers. In this process seller introduces

various offers and different promotional activities to increase his sales. It is generally assumed that

consumers will behave ethically and would not indulge in practices that will benefit them at the cost

of the seller. However based on the various factors identified above it is clear that a value conscious

consumer like an Indian consumer is more likely to indulge in unethical consumer practices. So while

designing the promotional activities the seller should take into consideration the ethical aspect of

consumers so that the consumers do not take an undue advantage of him.

It has also been observed that people of India are greedy when money comes into picture. They have a

tendency to gain maximum advantage at the lowest cost. To cater to such a customer, the seller needs

to be extremely cautious and at the same time customer-centric to garner more sales. Also the level of

education in the country is increasing thereby leading to consumers getting information on various

issues readily available. From the factors mentioned above it has been observed that the more the

information with the consumer more likely that he will indulge in unethical consumer practices

thereby gaining at the expense of the sellers.

The sellers now-a-days have started implementing various mechanisms that help them in addressing

this issue however a lot of areas are still an area of concern for them. However if they implement lot

of measures to address the issue it will affect the sales as consumer also want some liberty and

comfort while shopping. Thus it is a double-edged sword and a perfect mix of consumer comfort and

regulatory mechanism for unethical consumer behaviour needs to be arrived at for a win-win situation

for both the consumers and suppliers.


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Conclusion

The seller has to keep in mind that consumers ethical ideology which is closely related with the

ethical judgements is an important factor while formulating various customer friendly initiatives. The

ethical ideology of a consumer largely influences the behaviour of the consumer which in turn helpsthe sellers to either gain or lose from his current operations in the market. The various factors leading

to unethical consumer behaviour will act as a vital source of information for the seller as it will help

them in bridging the gap if any that exists in the current mechanism in place. Also it will help in

designing a new mechanism that will address these factors in a more effective manner. Along with

addressing these factors companies can come up with a course of action including rewarding ethical

behaviour, prosecuting the unethical consumers and also stand on their ground when they believe that

the consumer is behaving unethically. The reason behind the growth of unethical behaviour is also the

attitude of suppliers of ignoring and excusing the occurrences of unethical events. The suppliers also

need to be stern when they know that they are correct and should stop worrying about the customer

power as they are correct in this scenario. Suppliers should understand that if they let go the unethical

behaviour then they are no better than the unethical consumers themselves.


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unethical consumer behaviour

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