CHAPTER 15
Marketers’ Ethics and Social Responsibility
LEARNING OBJECTIVES
15.1 To understand the importance of marketing ethics and social responsibility.
15.3 To understand how marketers exploit and manipulate children and others.
15.5 To understand how marketers disguise advertisements.
15.7 To understand offensive communications.
15.9 To understand consumers’ ethical obligations.
CHAPTER SUMMARY
Learning Objective 15.1: To understand the importance of marketing ethics and social
responsibility.
The marketing concept is sometimes incompatible with society’s best interests. The
societal marketing concept requires that all marketers adhere to principles of social
responsibility in the marketing of their goods and services. Since all companies prosper
when society prospers, companies must integrate social responsibility into all marketing
Learning Objective 15.2: To understand the wide-ranging abuse of consumers’ privacy.
Consumers’ loss of privacy is an increasingly problematic ethical issue as marketers
identify and reach out to increasingly smaller audiences through innovative media and
more sophisticated tracking. The collection and dissemination of this information raises
many privacy issues and various governmental bodies have proposed measures to ensure
consumers’ privacy. “Do not track” and opt-out mechanisms, regulation of data brokers
and because no one specifically monitors for potential violations of consumers’ rights to
privacy online, there is no consensus as to whether government regulation or voluntary
measures could alleviate this concern.
Learning Objective 15.3: To understand how marketers exploit and manipulate children
and others.
The study of consumer behavior allows marketers to understand why and how consumers
make their purchase decisions, but it also enables unethical marketers to exploit human
vulnerabilities in the marketplace and engage in other unethical marketing practices. Such
practices include targeting vulnerable consumers such as children, teenagers, the elderly,
and less-educated consumers who may not have the knowledge or experience to evaluate
Learning Objective 15.4: To understand the harm caused by misleading labels.
Nutritional labels are placed on all packaged food items sold in the United States.
Nevertheless, many critiques have pointed out that the current format of such labels is
unclear and somewhat manipulative. For example, the labels list information on a “per–
Learning Objective 15.5: To understand how marketers disguise advertisements.
Marketers can manipulate consumers’ interpretations of marketing stimuli through the
context in which those stimuli are featured. Covert marketing consists of marketing
messages and promotional materials that appear to come from independent parties but
are, in fact, sent by marketers. Native advertising (sometimes called branded content) is
Learning Objective 15.6: To understand the damage of false and misleading advertising.
The FTC has developed guidelines as to what constitutes deceptive advertising, and it
holds marketers responsible for determining their ads’ potential to mislead consumers.
Although the FTC is responsible for stopping false or misleading ads, and the agency
encourages and investigates complaints by consumers and companies regarding false or
Learning Objective 15.7: To understand offensive communications.
Too many marketing messages convey socially undesirable stereotypes and images, some
of which tend to encourage risky or illegal behavior or create unrealistic perceptions.
Learning Objective 15.8: To understand promoting socially beneficial causes.
Many not-for-profit organizations, including consumer advocacy groups, exist primarily
to promote socially beneficial behaviors. Many companies try to increase their credibility
by being “good corporate citizens” and integrating socially desirable practices into their
operations. Some firms engage in cause-related marketing, where they contribute a
Learning Objective 15.9: To understand consumers’ ethical obligations.
Another facet of marketing ethics is buyers’ dishonest behavior in the marketplace. For
example, many stores started charging restocking fees, limiting return policies, and
tracking abnormal return patterns because of buyers who bought items, used them, and
then returned them for a refund (some stores encountered shoplifters who tried to return
stolen merchandise). Also, in the digital world, software piracy is a major problem.
CHAPTER OUTLINE
INTRODUCTION
1. Marketing ethics are moral principles that govern marketers’ behavior.
2. Ethics express the differences between right and wrong behavior and the goodness or
badness of human character.
3. Not all that is allowed (by law) is in the best interest of society or marketers’ goals.
4. Marketing practices that overtly contradict societal interests end up in embarrassment,
decreased profits, and diminished consumer confidence in promotional messages and
products.
*****Use Figure #15.1 Here; Use Key Term marketing ethics Here*****
Socially Responsible Marketing
2. The cumulative persuasive impact of advertising may have negative implications for
consumer behavior (e.g. materialism and unrealistic ideal body images).
3. The societal marketing concept calls upon all marketers to satisfy the needs and
wants of their target markets in ways that preserve and enhance the well-being of
4. Many trade associations representing marketers of consumer goods have developed
industry-wide codes of ethics.
a. Industry-wide self-regulation deters governments from imposing its own
regulations on industries.
b. Companies recognize that socially responsible activities improve their image
among consumers, stockholders, the financial community and relevant
publics.
c. Perceptions of a company’s lack of social responsibility or unethical
marketing can negatively impact consumer purchase decisions.
*****Use Key Term marketing ethics Here*****
Disregard for Consumers’ Privacy
2. Senators proposed a Commercial Privacy Bill of Rights.
*****Use Learning Objective #15.2 Here *****
3. Questionable practices exist related to consumer privacy.
a. Retailers have been tracking customers’ movements using Wi-Fi signals from
customers’ smartphones, using video surveillance, and using data from check
out and coupons that include a lot of identification information.
b. Marketers who monitor cell phones can learn about consumers, what they
purchase, and where they are.
c. SmartTVs can track website visits, television viewing behavior, and can
enable targeting of ads to other devices based on what people watched on TV.
d. Facebook has most likely been the worst abuser of privacy, with dubious
practices including emotional contagion experiments, manipulation of news
feeds, and notifications about purchases.
Exploiting Children and Others
1. There are many targetable segments that can be exploited because they are more
vulnerable than most other consumers (less educated, older, low income, no political
power), but targeting children and encouraging overeating and irresponsible buying
are the focus of this section.
a. Consumer socialization is the processes by which young people acquire
skills, knowledge and attitudes relevant to their functioning as consumers in
the marketplace. The three stages are:
i. The perceptual stage (3-7 years old)
ii. The analytical stage (7-11 years old)
iii. The reflective stage (11-16 years old)
b. Children become brand aware as they age.
c. Overall, the older the child, the more influence he or she has on a parent’s
purchase behavior.
e. There are many ethical concerns regarding advertising to children.
f. A major concern regarding the impact of marketing on children’s behavior is
whether food marketers “teach” children to eat more than they should and
cause obesity and other health problems.
3. Packaging and presentation can encourage overeating.
a. Both children and adults consume more juice when the product is presented in
short, wide glasses than in tall slender glasses.
b. Candies placed in clear jars were eaten much quicker than those presented in
opaque jars.
sizes are present lead to eating more.
h. People generally do not keep track of how much food they consume. When
told, they are often surprised at how much they have consumed.
i. Large inventories of foods at home increase the quantity believed to be
appropriate for a given meal.
j. Small packages do not necessarily decrease consumption and can sometimes
actually increase it. Responsible companies should sell small packages
individually, rather than bundling them together in a larger container, because
the availability of multiple small packages leads to overconsumption.
***** Use Figures #15.4 and #15.5 Here*****
k. Advertising to children is subject to self-regulation according to guidelines
developed by the Children’s Advertising Review Unit (CARU) of the Council
of Better Business Bureaus.
l. The guidelines direct marketers to abandon product presentations or claims
that:
i. Mislead children about the product’s performance or benefits
ii. Exploit the child’s imagination or create unrealistic expectations
iii. Creating buzz about products and encouraging children to send ads to
their friends.
iv. Offering children brand-related items.
v. Not including “ad breaks” and reminders that the content watched is
advertising.
vi. Offering young children prizes for registering at websites.
o. Although the FTC regulations do not allow information gathering by apps and
online services directed at children under 13 without parental knowledge, the
FTC does not have a definition of this regulation.
*****Use Review and Discussion Question #15.2 Here *****
4. Marketing is a form of persuasion. Marketers use situational factors to persuade
consumers.
5. Direct-to-consumer pharmaceutical advertising has increased the consumption of
numerous categories of medications since 1997.
a. The pharmaceutical industry has developed voluntary restrictions regarding
direct-to-consumer advertising because they recognized it was too aggressive.
b. The Senate majority leader has called for a temporary moratorium on
advertising new drugs to consumers
i. The FDA urged pharmaceutical companies to include risk information
about drugs in the companies’ search advertisements (the short text
that appears besides the results of one’s Google search)
ii. Because Google limits such ads to 95 characters, it is unclear how this
can be done.
e. Because they can market products directly to consumers, pharmaceutical
companies are more eager than ever to “extend the life” of products that have
become consumer favorites, as the dates for patent expiration and the
availability of generic versions of these products near.
*****Use Review and Discussion Question #15.4 Here *****
Misleading Labels
1. Nutritional labels are placed on all packaged food items sold in the United States.
3. Manipulating service size escapes consumer attention and may reduce consumption–
related “guilt”.
5. We have very flexible guidelines regarding the use of the word natural because it has
no clear meaning.
6. Food can be marketed as healthy if it meets five criteria: fat, saturated fat, sodium,
8. Smart phones may be used to scan labels and flag unhealthy products.
*****Use Learning Objective #15.4 Here; Use Figure #15.2 Here *****
Camouflaged Advertising
1. Marketers can manipulate consumer’s interpretations of marketing stimuli.
2. Because advertisers do not want to be associated with news broadcasts or programs
that cover serious issues, media companies may choose to shorten coverage of serious
4. Native advertising (a.k.a. branded content) is promotional messages designed to
5. Search engines with organic results and sponsored links may also confuse consumers.
6. Covert marketing (also known as masked or stealth marketing) consists of
marketing messages and promotional materials that appear to come from independent
parties, although, in fact, they are sent by marketers.
a. Some maintain that covert marketing strategies often violate the FTC’s
definition of deceptive advertising, endorsement guidelines, and other
regulations pertaining to marketing, and believe the FTC should have clearer
rules.
b. Others argue that the widespread use of stealth marketing abuses consumers’
efforts to avoid advertising and will result in increased consumers’ distrust of
product information.
c. Popular methods of covert marketing include:
i. Actors posing as customers to tell people about a product’s benefits
and give people a chance to examine or try the product.
ii. Paying bartenders for praising brands of alcoholic beverages and
recommending them to customers.
iii. Employees posing as customers online and spreading positive word–
of-mouth about the product.
7. Marketers increasingly use techniques that blur the distinctions between figure and
ground and make it more difficult for consumers to distinguish advertising from
False and Misleading Advertising
1. False or misleading advertising is also an issue.
a. Regarding accuracy, a toothpaste ad stating that “brand A is the best” is
considered an acceptable form of advertising “puffery” because consumers
generally understand that there is no credible way to determine what “best”
means.
e. In addition to the FTC, there is the National Advertising Review Council
(NARC), a self-regulatory group that monitors complaints from companies
and consumers regarding truth in advertising and often determines what ads
can or cannot state.
f. A large number of promotional violations occur in the marketing of drugs.
One study identified the three major categories of such violations:
i. Unsubstantiated effectiveness claims: Representing the drug as more
effective than the evidence available suggests; representing the drug as
useful in a broader scope than the research evidence indicates.
*****Use Key Terms product placements, advertorials, infomercials, truth-in–
advertising laws, deceptive advertising and corrective advertising Here; Use Hands-
on Assignment Question #15.8 Here*****
Offensive Communications
2. Neuromarketing is being used to see how different parts of the brain react to
commercials.
*****Use Learning Objective #15.7 Here; Use Key Term neuromarketing Here; Use
Table 15.4 Here*****
Promoting Social Causes
1. Many not-for-profit organizations, including consumer advocacy groups, exist
2. Many companies try to increase their credibility by being “good corporate citizens”
and integrating socially desirable practices into their operations.
a. A societal marketing program can create positive consumer attitudes toward
companies.
b. Perceptual fit between the sponsoring organization and the promoted cause(s)
enhances consumer involvement in the cause(s) and their purchase intentions.
*****Use Learning Objective #15.8 Here; Use Figure #15.3 Here*****
3. The primary objective of many not-for-profit organizations is to promote socially
covetable behavior and discourage ones that produce negative outcomes.
5. Marketers who implement ethical strategies do so in order “to do the right thing,” to
6. Cause-related marketing is a process by which a firm donates a portion of its
revenues from selling certain products to supporting needy groups.
*****Use Key Term cause-related marketing Here; Use Figures #15.4,#15.5, and
#15.6 Here *****
Consumer Ethics
1. Another facet of marketing ethics is buyers’ dishonest behavior in the marketplace.
a. Many stores charge restocking fees, limit return policies, and track abnormal
2. Airlines enable and inadvertently encourage creative, and possibly unethical,
customer behavior around checked bags, flight compensations, and claims of damage.
*****Use Learning Objective #15.9 Here *****
REVIEW AND DISCUSSION QUESTIONS
15.1 Some say that targeting any group of consumers who are willing and able to
purchase a product is simply good marketing. For example, advertising sweet
and fatty foods to young children is perfectly okay because children like sweets
and, and when parents buy these products at their children’s requests, the needs
of both the kids and their parents are met and satisfied. What is your reaction
to this view?
Student answers will vary. This is a good opportunity to discuss their answers in
relationship to the guidelines developed by the Children’s Advertising Review Unit
of the Council of Better Business Bureau. Students might also discuss the
15.2 A soft drink company distributed cell phones to preadolescents in low-
income areas. The phones routinely received advertising messages for the drink.
Following criticism, the company said that the benefits to the disadvantaged
children from having the cell phones (e.g., safety) outweighed any “exploitive
targeting” considerations. Do you agree or disagree with the company’s
position? Explain your answer.
A lively conversation regarding intent and credibility should result from this question.
Answers might also relate to the societal marketing concept. It appears that the soft
15.3 At a time when many consumers can avoid advertising messages via time-
shifting devices, marketers increasingly use product placements (also known as
branded entertainment). In your view, is this a wise strategy or not? Explain
your answer.
Product placement results in the line between television shows and ads becoming
virtually non-existent. Students need to consider if this is an appropriate use or misuse
15.4 Is it right to advertise prescription medications directly to consumers? Why
or why not?
As students read the text they will realize that consumers say they obtain most of the
information about medications from TV commercials. However, the pharmaceutical
15.5 Why is it important to study consumer ethics?
The purpose of studying consumer behavior is to understand why and how consumers
make their purchase decisions. Some critics are concerned that an in-depth
15.6 What are the privacy implications of companies’ increasingly widespread
monitoring of online consumers?
Loss of privacy is increasingly problematic. Individual profiles are developed
allowing for sophisticated analysis and the development of highly targeted and
persuasive messages. Should marketers be allowed to “track” your behavior? At what
HANDS-ON ASSIGNMENTS
15.7 Find, and discuss ads that depict each of the following:
a. Exploitive targeting of children
b. Overaggressive advertising
c. Direct-to-consumer advertising of pharmaceuticals
d. Cause-related marketing
15.8 Online, find three examples of advertising embedded within entertainment
content and discuss them.
15.9 Compile a list of consumption behaviors that you consider unethical. For
each behavior listed, explain why you view it as wrong. Also, for each behavior
listed, discuss the possible reasons a person engaging in that practice may use to
justify doing so
Instructor’s Discussion
This exercise should provoke a lively discussion. Typically, students disagree on
15.10 Visit the news section at www.caru.org. Select three of the press releases
featured there (other than those discussed in the chapter) and illustrate how
they depict the unethical applications of learning or perception in targeting
children.
Instructor’s Discussion
The website lists quite a number of press releases. Students easily should be able to
S.T.A.R. PROJECTS
Ethical Issues in Consumer Behavior
S.T.A.R. Project #1
As a student at a large university, you have been asked by a state senator to attend a
meeting to discuss youth and obesity. When you arrive at the meeting, you discover the
real purpose of the invitation. The state senator is considering sending a bill to the
legislature requiring that all colleges and universities in the state be required to use only
organic food in all residence halls. In addition, the senator wants to require a reduction in
sugars, fats and starches served and an increase in nutrients. The senator believes strongly
in the societal marketing concept and feels that it is the social responsibility of all
colleges and universities to. The reason students have been invited is to sign a petition
supporting this bill. Consider this issue from two perspectives. Given the senator’s
agenda was not clearly stated, was the invitation ethical? Is the senator’s bill truly
societal marketing? Why or why not?
Instructor’s Discussion
S.T.A.R. Project #2
Online advertisers are able to track your behavior. As you move through the internet,
advertisers track where you click, how frequently you visit a site and how long you spend
on a site. This knowledge enables advertisers to then tailor offers directly to you.
Your assignment is to consider tracking from your personal perspective and the
perspective of advertisers. Should your exploration through the internet be private or
public? Who is to decide? What rights do advertisers have?
After you have considered these questions (and others you consider relevant), visit the
Federal Trade Commission web site and read their recommendations on self-regulation
principles for online behavioral advertising. Do you agree or disagree with their position?
Instructor’s Discussion
Small Group Project
S.T.A.R. Project #3
Your group’s assignment is to find advertisements that members feel are unethical. Each
group member must bring at least three examples to the discussion. Debate among
members the ethical/unethical nature of the ads. Why might some members feel an ad is
ethical while others might disagree? Vote on each ad. Are some product categories more
susceptible to unethical advertising? Why or why not?
Instructor’s Discussion
S.T.A.R. Project #4
Your assignment is to watch either two hours of television or a movie. While watching,
you are to record every incidence of product placement. Also record whether the product
placement was overt (the brand was named or pointed to) or less obvious. Which
placement was more effective? Why? Did or will the placement cause you to purchase
the product? How do you feel about the newly formed consumer advocacy group,
Commercial Alert, which is asking for legislation requiring upfront disclosure of ad
designed as product placements?
Instructor’s Discussion
This project will aid the students in recognizing product placements. Lead them through
