Consumer behaviour in marketing ethics

Marketing can undoubtedly bring benefits to society, although some aspects of marketing may be questionable on ethical grounds. The aim of this assignment is to raise criticism of marketing and show that consumer behaviour is affected by ethical issues. Do consumers really care about marketing ethics?

Ethics is a complex concept to define, and there is an attempt made by contemporary theorists to highlight ethical behaviour in a marketing context. Issues surrounding marketing ethics and social responsibility are inherently controversial. An area that causes particular dispute is the question of the effect of ethical and unethical marketing activity in regards to the purchasing behaviour of consumers. According to the contemporary theory of ethics one would like to think that being a “good company” would attract consumers to your products, whilst unethical behaviour would see customers boycotting the products of the offending organisations.

In order to judge both sides of marketing ethics, we must understand why the consumers believed that purchasing a product was in fact in their best interest or whether or not the marketing concepts behind the product used elements of deception. Marketers used deceptive techniques to influence the ‘weak spot’ within consumer’s minds, in order to play into their weaknesses. The evolution of marketing has progressed from the point of necessity to an indulgent of excess. Times have changed with consumers better informed, more educated and an increased awareness of greater consumer rights and product requirements especially in the developed countries. This awareness does not necessarily mean that consumers actually participate in ethical buying practices, simply because the issues raised do not affect the majority of people’s concerns.

Most organisations want the consumers to hold a positive view of the company, as reputation is built on an image. The Co Op banking group hold a very ethical and clean cut image represented by its policies to fund environmental causes, where as other leading banks are more concerned about return on capital.

We are at an age where information is available from a click of a button, with the accessibility of the internet and various other media sources, to inform us of any corporate wrong doings. This has led to a rise in consumer activism, for example the boycott against petrol retailers in the UK due to high prices. We also had a highly publicised boycott of French imports during the BSE crises, as well as the ongoing global Nestle boycott over infant formula marketing practices. There is evidence that companies do suffer commercially from boycotts; Shell were estimated to have lost between 20 per cent and 50 per cent of their sales during the Brent Spar boycott (Klein, 2000), and the Nestle boycott is said to have cost the firm $40 million (Nelson-Horchler, 1984). Global availability of the internet has led to protests by consumer advocacy groups against Nike and McDonalds.

The Nike swoosh and McDonalds golden arches are amongst the worlds well known corporate trademarks.

Numerous sponsorship deals with major athletes from Michael Jordan (basketball) to Lindsay Davenport (tennis) to Tiger Woods (golf) have helped make Nike a leading brand of sports footwear and apparel worldwide. Nike is seen by many consumers as brand leaders due to the high prices of goods and high profile sponsorship of events and teams. So why was Nike publicly criticized on ethical grounds?

Nike started outsourcing from Japan, as the Japanese market matured a decade after Nike began contracting there for shoe production. Nike shifted its operations to cheaper Taiwanese and Korean suppliers, followed by China, Indonesia, Thailand, and Vietnam.

Nikes control over and awareness of the factory conditions decreased with each successive production level outsourced to subcontractors. In June 1996, the conditions of Nike’s factories became a nationwide media topic due to the fact New York Times columnist, boldly criticised Nike labour conditions. It was alleged that Nike built its wealth and products with the slave labour of young Asians, strongly criticised due to the use of sweatshops of and compared the corporation from a “giant pyramid that crushed the backs of oppressed labourers” (Herbert, 1996). The affects led to international outrage among consumers, activists, and international corporations. There were also reports of human rights abuses, violence to labourers, and terrible working conditions within Nike’s Asian organisations. The consumers hit Nike back with a string of protests and small boycotts around the country. Nike’s image was stained, the case in question highlights that there are consumers willing to take a stance against theses corporations on ethical grounds.

In the case of McDonalds similar to Nike there are many organisations working against them to highlight ethical issues concerning the way in which there organisations function. McDonalds market its products towards the younger generation some may argue the ones who are most easily influenced. The marketing of McDonalds was based on the materialism that “bigger is better” such as the big Mac and super size meals. They targeted children by introducing happy meals which included a toy character usually associated with Disney movies. There actions were apposed by activists who raised the issue that there meal are not nutritious. They argued that the eating of food was historically the practice of eating the healthiest possible food (bearing in mind the constraints of time and poverty) the situation of rapidly changing pace affected the way by which people fed themselves mass produced processed foods increasingly replaced fresh and healthy foods and companies such as McDonalds capitalised on the situation promoting fast and unhealthy meals selling approximately thirty million people daily.

Nutritionists argue that the high fat low fibre diet is linked to disease such as cancer, heart disease, diabetes and obesity. It is medically proven that these diseases cause three quarters of premature deaths in the western world. McDonalds and its supporters argue that they have as much right to market there products in any way as the same way chocolate or cream cake manufacturers do, stating (if people want to buy it is there choice). Also McDonalds have responded to these claims that the scientific evidence is not conclusive and maintain that there food can be valuable to a balanced diet.

Similar to Nike McDonalds have been criticised for there employment policies. The corporation was geared towards maximum turnover of products and profits. They now employ over one and a half million workers and half of them are under 21 years old which is considered to be seen as a net destroyer of jobs using low wages and a huge power base to undercut local food outlets, in turn forcing them out of business. It is seen that the perception of McDonald’s great job opportunity may just be a way of exploiting the high unemployment rate that are made up by the most vulnerable people in society working them hard for little money. There have been complaints from the employees regarding discrimination and lack of rights, illegal hours, understaffing, few breaks and poor safety conditions.

In 1980 London green peace began a campaign focusing on McDonald’s, a high profile corporation who symbolised everything wrong in corporate mentality. There leaflets attacked McDonalds and accused them of exploiting children with advertising, promoting unhealthy diets, exploitation of there staff, responsibility for environmental damage and ill treatment of animals. Many leaflets were dropped in the UK outside many McDonalds restaurants attacking there policies. McDonalds reacted by approaching those responsible within amongst the green peace activists and offered them a choice of either publicly apologising or retracting their segments or be held liable. Out of the five people which McDonalds served writs on three retracted there statement and two refused.

Helen and Dave decided to take on one of the world’s most powerful corporations and went through a series of court hearings and appeals their court battle lasted over a decade attracting many supporters from all corners of the globe. These cases heard hearings ruling that Helen and Dave had not sufficiently proved the allegations on rain forest destructions, heart disease, cancer, food poisoning and bad working conditions. However, it was proved that McDonalds did exploit children with advertising, falsely advertised there food as nutritious, risk the health of their regular customers, are (culpabably responsible) cruelty to animals, work against unions and finally pay their workers low wages. This outcome attracted a lot of attention and more support to the McLiable case.

The judge ruled that Helen and Dave had libelled McDonalds but proved many allegations, thus would only owe half of the claimed damages. However the pair rejected the ruling and decided to fight again until they win. Many series of cases and appeals continued finally ending in early 2005 at the European high court where the decision proved Helen and Dave to be right. The consumer reaction affected the corporations profits as at the end of 2202, McDonalds announced their first ever loss in fifty years, which led them to plan the closure of at least one hundred and seventy five restaurants. Here is an example of consumer reaction to corporations operating in an unethical manner where the company’s profits are severely affected.

In the wider scale the proportion of activists and boycotters form only a small minority compared to the average consumer. Most of the boycotts and activist group members are of an older generation, it is clear that younger consumers have a different ethical perspective than other age groups. Ethical purchase behaviour may be influenced by various demographical characteristics, age being one of them. In the case of Nike image is of paramount importance, as well as fashion and price which influences consumer behaviour. Peer pressure and deceptive advertising has lured younger people towards a frame of mind of wearing the “right” cloths and brands. In most cases the current importance of Nike as a youth icon is overpowering the ethical issues.

There are reasons why ethical consumers are in a minority, such as the fact that purchasing ethically is often inconvenience for the consumer. Background research on a company is rarely practiced before a purchase is made; people have the convenient of not needing to shop around as markets have been flooded with so much choice and illusion to the naked eye.

In order to counter act bad publicity McDonalds as well as Nike, promote and become highly involved in non profit “good deeds” campaigns. McDonalds have allied themselves with the help a London child charity fund raiser, by installing charity boxes at every restaurant and at every till in the UK.

As for Nike they have used their advantage of high profile athletes in order to promote their “kick racism out of football campaign” this has proved highly successful (some will argue for marketing purpose) in terms of highlighting what Nike will want to appear like.

Realistically we must accept that there are consumers that will not be influenced by ethics that have no direct effect to them. The sad truth of the matter is that even with highly publicised cases against corporations on ethical grounds it may not lead to negative consumer reaction towards the company as a whole.

Having done relevant studies on Nike and McDonalds has it changed our perspective as researchers? Although the evidence was there of major unethical practices our views of Nike will still be: looks good and McDonalds: Still make a tasty burger.

References:

Principles of Marketing F.Brassington S.Pettitt 2nd Edition 2000

International Marketing, International addition, 4th Edition, M.R.Czinkota I.A.Ronkaiaen

JOURNAL OF CONSUMER MARKETING, VOL. 18 NO. 7 2001

www.saigon/nike.com

www.bbc.co.uk/nike

www.mcspotlight.org