BUSINESS ETHICS & VALUES

Lecture 12: Marketing

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 Learning Outcomes
Delineate the responsibilities of business on
advertising.

Assess the merits of the arguments for and against

advertising.

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 Introduction
Advertisement dominates the human world where
famous ones become part of our culture, dance in
consumers head, haunt consumers dreams and
shape consumers taste.
Advertising is also a big business where firms spends
billions
of dollars in it to secure their sales and market shares
Examples: McDonald’s, Procter & Gamble, General
Motors and Nestle

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 Advertising
Definition: Communication between a seller and
potential buyers that is publicly addressed to a mass
audience and is intended to induce members of this
audience to buy the seller’s product.
The implication is that the defining function of
advertising is to provide information to consumers.
Most of the advertisement were actually said to have
no information values.

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 Advertising
The goal of advertising: Advertising provides little
useful information about goods and services, but has
as its goal to persuade us to buy certain ones.
Except for classified ads and newspapers
advertisement that shows prices, very few
advertisements offer any information of genuine use
to the consumer.
Advertisement today are meant to capture the
attention of consumers and persuade them to but for
the purpose of sales.

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 Ethical Purpose of Advertising

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 Ethical Purpose of Advertising
Provide Information
 Advertising should display all the information
including prices for consumer to make the necessary
decision on their purchase.
 Some advertisement try and hide certain information
from public knowledge just for sales
Availability of Choices
 Advertisement offer choices for consumers to choose
as they can compare the features and usage of the
product and this enables them to become smart
consumers.
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 Ethical Purpose of Advertising
Evaluation of Alternatives
Consumers can evaluate, compare and justify all
available alternatives before choosing their ideal
choices as they are informed on the benefits they can
get from each available products.
Special deals that benefit consumers
Business should inform the consumers about their
promotions and items for promotion and not inform
the public in general.
Terms and condition should also display accordingly
as not to deceive the consumers
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 Advertising and Market Power (Kaldor’s
View)
Massive advertising campaigns enables to achieve
monopoly.
Campaign creates consumers loyalty.
Reduce competition and raise barriers to entry into
markets.

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 The Benefits of Advertising
No one now can escape the influence of advertising
Creates desire in consumers
Physical : as desires for food a shelter
Psychological : Sense of achievement ,feeling of
equality
Demand through advertisement
Ensure people buy the product

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 Criticism of Advertising

Social effects of Advertising : It degrades people’s

tastes of the people , waste valuable resources and it
creates monopoly power.
Psychological effects are damaging in that it debases
the tastes of consumers by inculcating materialistic
values and ideas about how happiness is achieved.

Production costs are the costs of the resources

consumed in a product.
Selling costs are the additional cost of the
resources that do not go into change the product .
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 Advertising (Galbraith view)
Advertisement manipulate the consumer.
Advertisement violates the individual’s right to
choose.
The consumer is used merely as a means for advancing
the ends and purposes of producers and this diminishes
the consumer’s capacity to freely choose.
Firms can use us to absorb their output
Success of advertisements depends on its appeal to the
values consumers already posses.

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 Critics towards Galbraith’s View

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 Advertisement is Waste

Advertising have no value of its own, entirely harmful

and corrupting for individuals and society.
Advertisement is wasteful and it violates utilitarian
principles.
Information contains minimal
Increase consumption led rapid industry expansion and
pollute the environment.
Selling costs are not use to improve the product.
but merely persuade people to buy it. Such resources
are wasted. So it violates utilitarian principles.

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 Deception and Unfairness
in Advertising
Deceptive techniques:
 Providing frank product information is not always
the most effective way to sell something –
advertisers are tempted to misrepresent and
deceive.
 This is due to the fact that most people prefer to hear
lie than truth.
 As such, company or business organization will try to
sell their product through deception and
misrepresentation.

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 Deceptive Techniques

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 Ambiguity
Most of the advertisement are ambiguous where the
information can be understood in two or more ways –
deceiving .
For example, an advertisement for bread imply that
eating the bread will reduce the weight of the
consumers as it contains lesser calories.
In real facts, the cutting of the bread was smaller than
the usual bread and it reduces the calories for each
serving of bread .
Advertisers intend to make consumers to draw false
assumption in order to promotes sales
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 Ambiguity
Aiding ambiguity is the use of weasel words; words
used to evade or retreat from a direct or forthright
statement .
Examples are the use of words like help, can be, up to,
as much as:
Ambiguity raised a lot of moral concern as it tend to
mislead and exploit consumers.

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 Concealment of Facts
Advertisers conceal the facts and suppress
information that is unflattering to their products.
They neglect to mention, or they try to distract
consumer’s attention away from information,
knowledge of which would probably make their
products less desirable .
For example: Kraft mentioned that their cheese is half
the calories of butter but didn’t tell consumers that it
is high in fat.

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 Exaggeration
 Advertisers like to make claims that are not supported with
relevant information, and this is used to mislead consumers
.
 This tactic is commonly used in advertising for health care
and cosmetics
 Examples: Claims made by pain reliever where it is 50%
stronger than Aspirin.
 Cereal containing natural juices of fruits but only a small
portion.
 Hair care products claimed to stop hair loss problem but
actually slow down the effect of hair drop .

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 Psychological Appeal
 Psychological appeal is a persuasive effort aimed
primarily at emotion, not reason .
 It rely extensively on pitches to power, prestige,
sex, masculinity and femininity appeal in order to
fantasize the consumers on their dreams and desire .
 Example: Automotive advertisement that presents
the product surrounded by wealthy people.

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 Psychological Appeal
Some advertisement try to use sex and femininity
appeal to inspire the opposite gender in buying their
products.
This is use for products advertisement like beers, cars,
beauty products, clothes and perfume .
Such appeal influence the subconscious mind of the
customers into pursuing their fantasy and create brand
awareness among the consumers.

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 Deception and Unfairness
in Advertising
Advertising to children:
Children are particularly susceptible to the
exaggerations of advertising
Advertisers say that parents still control what gets
purchased and what does not .
However, advertiser still appeal to children as they
hope that children will pester their parents to buy.
Such practice raise critics where they doubt the
fairness of advertisement of selling to parents through
their children .

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24
 Debate Over Advertising
Although company no doubt had misuse the
advertising for their profit, it still provides little
useable information and product awareness to
consumer.
There are still people who think that there is good in
advertising .
Besides, it promotes economy development and
increase job opportunity especially for marketing .

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 Debate Over Advertising

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 Consumer Needs
Some defenders of advertising concede that glamour,
sex appeal and adventure is something that consumer
want .
They reasoned that sometimes consumers not only
want the product and usage but also the attributes or
feelings associated with it .
By connecting products with important emotions and
feelings, advertisement can satisfy consumers deeper
needs and wants.

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 Consumer Needs
Theodore Levitt; Harvard Business Professor had
drawn an analogy between advertising and art .
He believed that advertising actually help people to
repackage the crude, drab and generally oppressive
reality that surround the people.
He views advertising as imaginative, symbolic, and
artistic content as answering real human needs.

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 Consumer Needs
However, those who opposed Levitt’s view contended
that even if advertising appeals to the same deep needs
that art does, advertising rarely promise the
satisfaction of those intrinsic needs as advertised .
They reasoned that a product is still a product and
relationship is not changed regardless of the which
brand of product used.
The imaginative, symbolic, and artistic content view
by Levitt is regarded as manipulating, distorting and
unnecessary creation of need.

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 Market Economics
Defenders of advertising see advertising as an aspect
of free competition in a competitive market, which
work ultimately to the benefit of all.
It is a necessary and desirable aspect of a free market
system where people can compete fairly in the
economy.
Advertising is also believed to move consumer closer
to the ideal of full information and It promotes
economic growth by creating more opportunities and
advancement.

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 Market Economics
Critics of advertising says that advertising does not fit
into perfect market as advertising is pointless if
everyone has full and complete information.
In additions, critics believe advertising leads to unjust
pricing and ruin fair competition.
This is because advertising enhance brand loyalty and
consumer is willing to pay more for a product that is
indistinguishable from its competitors.

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 Market Economics
Critics also pointed out that advertising is meant to
persuade consumers to buy and have no intention to
promote well-being of the consumers.
Critics believe that advertising is a waste of resources
as those resources should be used for public goods.
Besides, advertising also serve to raise the price of
goods as company will transfer the cost to consumers.

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 Free Speech and the Media
 Advertising is a form of communication and is liable
under the legal protection of laws.
 Both defenders and critics have their own points
regarding to free speech and usage of media as a
medium for advertisement.
 Defenders believe that advertising is has its legal
rights and assist the corporation responsible for
media like television station.
 Critics argued that advertisement had misused its
legal rights and the media.

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 Defenders View on Free
Speech and the Media

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 Critics View on Free
Speech and the Media

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 Thank You

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