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ANALYZING

REGULATION AND
MARKETING
ETHICS

INDUSTRY REGULATION
Government

regulation of an entire industry.

The

most common industry regulation has


been in airline, railroad, trucking,
banking and television broadcasting.

The

objective is for a regulatory agency to


keep a close eye on an industrys prices and
products to ensure that they dont start a
monopoly and take advantage of
consumers.

DEREGULATION
The

reduction or elimination of
government power in a particular
industry, usually enacted to
create more competition within
the industry.

Chaos of Industry Deregulation


A

regulated market, by definition


restrains and controls competition; it
imposes order.

When

a market is deregulated, the


players are allowed to attack each
others market share, change pricing
strategies and undertake
competitive product differentiation
and advertising.

The Fruits and Thorns of


Deregulations
The

businesses are left to


themselves to determine their
operational processes and strategic
imperatives w/o the government
interfering in their working.

Can

focus on their core


competencies w/o having to submit
themselves to constant scrutiny and
constant pressure from the

Consumers

might be hit with the


side effects of too much
liberalization in the form of
businesses having more power
than before leading to arrogance
towards the consumers especially
those who cannot pay more for
products because of their
socioeconomic condition.

PRODUCT REGULATION
Packaging

requirements
Information labeling
Instructions labeling
Usage warnings
Minimum quality or performance
standards
Mandatory warranties
Product ratings
Production and marketing licenses amd
permits

Patent Regulation
The

U.S patent system is the result of a


balance achieved between competing
economic forces and the judiciary in
order to maximize what is judged to be
the most benefit to society.

Patent

also provide a nice example of


the problems inherent in implementing
marketing law: the law adapts to
changes in the economy and specific
markets

Consumer and Environmental


Protection
.Much

of U.S. consumer and


environmental protection legislation
has come about as the result of horrific
cases in w/c companies marketed
dangerous foods, medications,
cosmetics, or machines that eventually
killed or maimed users or polluted the
environment. We all need to be
protected against dangerous products,
but how much protection do we need?

Environmental Principles of waste


Management, Inc.
Environmental

Protection and

Enhancement
Waste reduction, Recycling,
Treatment and Disposal
Biodiversity
Sustainable use of Natural
Resources
Wise use of Energy
Compliance

Research

and Development
Public Policy
Public Education
Participation in Environmental
Organizations
Monitor and Report Environmental
Matters
Annual Report

PRICE REGULATIONS
The

laws apply to pricing are


primarily aimed at preventing
unfair and deceptive practices.
Avoiding price competition and
charging different buyers
different prices for the same
products.
Price deception occurs when an
actual selling price turns out to
be more than was claimed.

Price-Fixing
Best

known illegal marketing


tactic.

Establishing

the price of a
product or service, rather than
allowing it to be determined
naturally through free-market
forces.

Price Signaling
Everyone

agrees that a market is


more efficient and competitive when
suppliers and consumers have
information about market prices.

Discriminatory Pricing
A

supplier is allowed to respond to


changes in demand by charging
various prices for a product or
service in different situations and
at different times

Charging

2 customers diff. prices


for exactly the same type and
amount of goods in the same
situation & time period is not

Resale Price Maintenance


Although

manufacturers are
required to sell their products at
the same wholesale prices to diff.
retailers, they are not allowed to
enforce standard resale prices.

Predatory Pricing
is

apricing strategywhere a
product or service is set at a very
low price, intending to drive
competitors out of themarket, or
createbarriers to entryfor
potential new competitors.

DISTRIBUTION RELATIONSHIP
REGULATIONS
Franchising

and Exclusive
Relationship
- is a long-term trading contract
or partnership w/ another party.

Tying Contractual Relationship


- you cannot use demand for one
product to sell another

Restricting

Intrabrand
Competition
-although the courts may
frown on the exclusive franchising
of existing distributors, they have
allowed manufacturers to
deliberately restrict their number
of product resellers in a particular
market, be it a regional territory or
a group of customers.

SELLING REGULATIONS
to protect consumers when they shop
online or enter into other contracts at
a distance from the supplier,

The

rationale for giving consumers


special protection in such deals is that
the consumers does not have the
benefit of meeting face-to-face w/ the
supplier & inspecting the goods or
services offered for sale.

ADVERTISING
REGULATIONS
The

major concern of the


government regulation of
advertising is the control of
deceptive practices.

DECEPTIVE

considered
deceptive if the claim was related
to an important product
characteristics and was not
literally true.

Substantiation of Claims
Superlatives

in advertising,

the

best
the cheapest and
the easiest to use
Positive claims were long
considered acceptable, bec.
advertisers were expected to
praise their product.

MARKETING ETHICS
is

an area ofapplied ethicswhich


deals with the moral principles
behind the operation and
regulation ofmarketing.

Law is a Minimum Ethical


Standard
generally

considered to be only a
min. Ethical standard.
the law often does not work the
way it should.

THEORIES OF MARKETING
ETHICS
Competition, Ethics, and Efficiency
Social Darwinism is the idea that the
laws of natural selection and survival of
the fittest apply to the marketplace.
competition makes the market efficient.
when ethics do not exist, markets fail
and govt regulation must be present to
ensure that competition works honestly
and openly.

The Shifting Sands of Situational Ethics

Principle

of utility
the right action is that which
produces the most good for the
most people in a specific
situation.

one

action is judged against


another instead by an absolute
standard.

Categorical Imperative
offers

an alternative to
situational ethics.
it asks whether the proposed
action would be right if everyone
did it.

Religious Foundations of Marketing Ethics

marketplace

ethics have a religious

basis
exercise of different religious beliefs and
values increases the variability in the
ethics that we are likely to observe in
the marketplace.
predominant religions values used as a
common core for our societys ethics to
enable us to anticipate the likely
behaviors of other parties in the market.

ETHICAL SCREENING PROCESS


For

market decision making


behavior, an individuals mental
model is used to ethically screen
suggested product market goals,
strategy ideas, and
implementation programs.

Personal Ethics Checklist for


Marketers
1.
2.
3.
4.
5.
6.

7.
8.

Am I violating the law? If yes, why?


Are the values and ethics I am applying in business lower
than those I use to guide my personal life? If yes, why?
Am I doing to others as I would have them do to me? If
not, why not?
Would it be wrong if everyone did what I propose to do.?
Why?
Am I willfully risking the life and limb of consumers and
other by my actions? If yes why?
Am I willfully exploiting or putting at risk children, the
elderly, the illiterate, the mentally incompetent, the
naive, the poor, or the environment? If yes, why?
Am I keeping my promises? If not, why not?
Am I telling the truth, all the truth? If not why not?

9.
10.
11.
12.

13.
14.

Am I exploiting a confidence or a trust? If yes,


why?
Am I misrepresenting my true intentions to
others? If yes, why?
Am I loyal to those who have been loyal to me?
If not, why not?
Have I setup others to take responsibility for
any negative consequences of any actions? If
yes, why?
Am I prepared to redress wrongs and fairly
compensate for damages? If not, why not?
Are my values and ethics as expressed in my
strategy offensive to certain groups? If yes,
why?

The Legal and Ethical


Constraints on Marketing
Maximum
standards

Personal code of ethics

Free
will

Company code of
ethics
Professional code
of ethics
Legal
constraints
Minimum Standards

Market Strategy

Enforceme
nt