Why Ethics Pays: A Reflection on Current Marketing Practises

With the rise of conscious consumerism, the importance of ethical marketing practice has never been higher. Consequently, the practice of contemporary marketing is undergoing a fundamental shift. Today’s consumer is well informed, better connected, and more cynical than ever towards marketing (Ottley, 2016). As a result, marketers are subject to far more scrutiny than ever before and can no longer expect to be ‘ethically lazy’ or careless in their practices (SAGE, 2011). Furthermore, deceptive marketing attempts by companies to greenwash or divert public attention from their unethical practices, with perfunctory social projects are becoming increasingly exposed.

As such it is often within the best interests of every company to hold themselves to a much higher standard of ethical marketing practice. Current research suggests that brands that are perceived as operating unethically are avoided by specific groups of consumers (Rindell, Strandvik, & Wilen, 2014), whereas an ethical image can be observed to build equity (Sierra et al., 2015), influence loyalty and positive word of mouth (Markovic et al., 2015).

The aim for this article is to explicate the potentiality ethical direct and digital marketing might have on ROI and brand image and what backlash a company may face from perceived unethical marketing practices. The article will also explore some of the recent changes in expected ethical standards within the industry. Specific case examples of discrete industry practices will be used to highlight the successes and mistakes made by companies and the impact these have had.

Unethical Targeting

Targeting is often used as an effective marketing method by which to better identify and market to likely groups of consumers. Ethical considerations arise when the focus is placed on vulnerable groups in society. A vulnerable consumer is defined as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care” (Coppack, 2015). Considering this definition, children and teenagers, who are particularly vulnerable to social pressure, fall within this classification. However, ethicality has often been ignored, frequently detrimentally, by companies in the past and present (Brenkert, 1998; Sulaiman & Syahrivar, 2018).

‘Big Tobacco’ companies such as British American Tobacco (BAT) have, due to declining western sales, increased their marketing efforts in Africa over the past 20 years (Gilmore et al., 2015). Recently, mounting evidence suggests that the scope of their marketing includes, and even focuses on, the targeting of children (Boseley, 2017). The result of more lenient marketing regulations in many African countries, and less informed consumers, have made the market, particularly that of vulnerable child consumers, readily exploitable (Bates & Rowell, 2004).

Marketing to children is a particularly contentious idea, as their remains an argument as to whether they are aware they are being marketed to, and how rationally they are able to judge the marketing content they have been presented (Brenkert, 1998). Whilst some critics would argue marketing to children is acceptable in certain instances (Koley, 2017), the practice becomes wholly immoral and unacceptable when considering the risks posed by tobacco consumption.

Although the tobacco industry’s clandestine marketing schemes are not always technically illegal, due to increasingly ingenious methods of regulatory circumvention (Davis et al., 2018), it has been argued, rightly, that this practice is extremely unethical. BAT, have publicly denied any form of marketing to children (BAT.com, 2019) however Bates & Rowell (2004) argue convincingly that the market logic to selling to children and teenagers is “overpowering” and continue to explain the paradox of whilst being both morally and legally unacceptable to directly advertise to children, it is crucial that this age group is advertised to to ensure the success of the business.

It may be argued that these practices do offer short-term financial gain, and it is easy to see why the declining tobacco industries are eager to bolster their sales, however unethical marketing, has and will continue to damage the industry. The Nigerian government, for example, took legal action against three leading cigarette manufacturers, demanding $40bn in compensation over their alleged role in the promotion of underage smoking (BBC, 2007). Along with financial repercussions, the industry is suffering from an increasingly loathsome brand image, often regarded as “evil” or “merchants of death” (Daube, 2012).

Nestlé are another infamous transnational corporation, well known for their frequently unethical business practices. Whereas one can plainly see how tobacco marketing to children is grossly unethical, with food marketing the ethical line becomes more blurred.

Nestlé have been frequently accused of marketing unhealthy products to children (Galalae & George, 2017; Davey, 2014). Critics have argued that it is within a company’s right to freedom of speech, opportunism and that it is good for business (Shugan, 2006), however the US Institute of Medicine (IOM), contends that the children targeted are too young to understand marketing from truth and which may be convincing them to consume unhealthy, but highly profitable products.

It is particularly egregious, when considering the influence marketing has, especially to susceptible children, that a company would target these audiences for unhealthy products. Companies, such as Nestle, know full well the causality shown between their marketing and increases in obesity, but continue to do so for profit.

As with the tobacco industry, whatever short-term profits attained through unethical marketing, are offset by the negatives. In Mexico, for example, Nestlé was fined for promoting heavily calorific products during children’s tv programs (Davey, 2014). More detrimentally has been the long-term damage to the company’s reputation and brand image caused in-part by what the public has deemed immoral marketing practices (Brunk 2010; Hegner et al., 2017). The direct impact of their increasingly tarnished brand image is readily apparent, when considering they are one of the most boycotted companies in the world (Sasson, 2016).

Big Data Use

Another increasingly prevalent marketing topic is the ongoing debate as to the ethical implications of Big Data use. Companies that have been caught misusing data, either unknowingly or worse still intentionally, are suffering the consequences.

Big Data refers to the recent “unprecedented volume, velocity, and variety of primary data available from individual consumers” (Erevelles et al,. 2016). Data is arguably the most valuable resource marketers can possess (McAfee & Brynjolfsson, 2012), giving companies a potent tool by which to gain advantage over competitors (Stroud, 2018). The potential value of Big Data however has seen many look to exploit it, often through arguably unethical means.

The infancy of Big Data analysis means that the ethics of this new field are highly untested and unregulated. Shilton & Sayles (2016), after having interviewed 20 data researchers, found that there was considerable disagreement over ethical best practice, including ignoring Terms of Service and obtaining informed consent. There is widespread opinion, particularly in marketing, that the restrictions imposed by ethical regulations will hinder the potential Big Data has to offer (Park and Skoric, 2015). Indeed, Leetaru (2017) argues that it may already be too late for Big Data ethics, explaining that for companies, academia and federal funding agencies it is often within their best interests to dismiss outside ethical reviews.

Nevertheless, many critics argue that ethical guidelines for big data use must be agreed upon. Zwitter (2014) states that it is our moral responsibility to establish said guidelines, in order to prevent Big Data being abused as a “new found source of information and power” (Zwitter, 2014, p. 5). Critics have highlighted that privacy concerns and the danger of discrimination are the two biggest dangers of Big Data, and that protection from these is a fundamental human right (Sloot and Schendel, 2016). However, the establishment of the European GDPR in 2018 hopes to act as the first implemented moral structure by which companies must abide, reducing (but not eliminating) the uncertainty of what is or isn’t ethical practice (Chase-Borthwick, 2018).

Although their remains an ethical ambiguity to Big Data practice and even inaccurate perceptions as to what constitutes ethical use within the GDPR framework, evidence suggests that companies will need to improve transparency in how they use consumer data and ensure privacy is always maintained. If companies can be as honest and forthright as possible in how they use their data, they will win the trust of consumers, guaranteeing that they are not only acting lawfully but achieving the more consumer-valued trait of ethical practice.

When examining industry examples, one need only look at the recent Facebook-Cambridge Analytica scandal, and the justifiable outrage it provoked, as sufficed evidence of the damages unethical practice can have. The consequences of carelessness, apathy and/or greed when handling Big Data are apparent. A 2018 YouGov survey, indicates that 69% of consumers would boycott a brand that misused their data (Tan, 2018), according to another survey by the RSA, 78% of consumers, are disinclined to purchase from companies that are known to mishandle consumer data (RSA, 2019).

Ethical Marketing

Whilst the repercussions of unethical marketing practices have been explored, what may a company achieve from operating ethically, or rather above the expected industry norms? Ethical marketing by definition is required to take into account not only economic concerns, but also how it might benefit socially and environmentally (Powell, 2011). Consumers are becoming increasingly cognisant of ethical issues, and as such are drawn to brands looking to benefit the greater good rather than solely themselves (Sudbury-Riley and Kohlbacher, 2016) Companies adopting this approach are witnessing significant increases in brand affinity, and revenue.

A 2014 Nielsen study indicates that 55% of global consumers would pay more for products and services provided by socially and environmentally responsible companies (Nielsen, 2014). Furthermore, 92% of millennial consumers and 81% of all consumers were more likely to purchase from ethically perceived companies, according to a 2015 Aflac report (Aflac, 2015). These figures alone aid to dismiss the, frankly, antiquated impression that ethical marketing is too expensive and cost inefficient (Parker, 2015).

The successes of socially and environmentally positive campaigns are evidence of their efficacy. For example, Guinness’s ‘Made of More’ campaign which highlights the importance of individuality and perseverance, saw an ROI almost double the category norm, along with decreased price sensitivity and increased brand awareness (Gallery and Sor, 2016). Dove’s ‘Campaign for Real Beauty’, is renowned as one of the most successful marketing strategies in history. Dove dedicated themselves to the promotion of a genuinely positive social message, conveying that true beauty lies within and not based on unrealistic societal standards. As a result, they saw sales increase from $2.5b to over $4b in just over ten years (Libert and Tynski, 2013). Clearly cultivating an emotional resonance with the consumer, creating an audience which feels good about purchasing your products, is an incredibly effective marketing strategy.

Schaltegger & Burritt (2015) remark that many companies act ethically purely out of self interest rather than genuine belief in the cause. This however seems to be beside the point. The motives behind a company’s reasons to act ethically are insignificant, as regardless the company will still be operating ethically. If ethical marketing can itself be marketed as financially and reputationally beneficial, then perhaps even the most morally insensitive of corporations may be inclined to do good.

Conclusions

Ethics in marketing, and indeed business in general, has been argued to be incompatible with short-term profits. Critics argue that ethical marketing is costly, time-consuming, inefficient, and in cases where the brand has missed the mark, detrimental (Olenski, 2018; Pribanic, 2018).

However, as this article elucidates, ethical practice, particularly in marketing today, is not only a remarkably profitable investment but essential in the long-term sustainability of a company. Whereas, to operate unethically, has been shown to cause irreputable reputational damage, in addition to an inundation of potential legal issues.

It has been proven, particularly amongst millennials, that ethical behavior is extremely well received and often preferred when making purchasing decisions. In 2018, amidst the rise of the conscious and connected consumer, there is no longer any tolerance for unethical practice, even from previously impervious corporate giants. If companies are unwilling to adapt to this new ethical standard, then they will find today’s consumer is unwilling to purchase from them.

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