In the current era of heightened consumer awareness, business owners must understand one empirical fact: buyers prefer to invest in ethical brands.
In fact, many groups of shoppers are inclined to spend more money on products and services that are sustainably sourced, truthfully advertised, fairly priced, and offer real value to the consumer. Conversely, adopting unethical policies can severely damage a brand's reputation, lead consumers to shun its offerings and therefore cause long-term financial harm.
Ethical Issues in Marketing
For this reason, you should consider the impact of your marketing strategies from an ethical point of view, especially given the heightened sense of social awareness among younger audiences. To illustrate what these potential issues are, we've looked more closely at the importance of ethics, what to avoid in your campaigns, and how you can adopt moral principles to your long-standing advantage.
Here are six unethical practices to avoid:
1. False Advertising
You should be careful to avoid overstating the benefits that a product or service offers in your marketing and advertising communications, so as to steer clear of accusations of false advertising. Advertising is considered to be misleading if it misrepresents the value, uses, or outcomes of a product, utilising inaccurate information in its content to gain buyers' interest.
Although false advertising may be successful in drawing customers into the early stages of a sales funnel, it ultimately proves extremely harmful to consumer trust and influences long-term negative brand perception when shoppers inevitably feel disappointed and deceived.
In addition, false advertising can also prove extremely costly for companies should they be held legally accountable for this unethical practice.; energy drink giant Red Bull provides a teachable example of this. In 2014, the brand was sued for some $13m for purporting that its canned drink gave consumers better concentration and reaction speeds, in addition to more energy – claims that were not adequately supported by compelling research and evidence.
2. Selective Marketing
The practice of customer segmentation can become immoral if it results in selective marketing, a term that describes the exclusion of particular types of consumers, most commonly determined by their sexual orientation, ethnicity, weight, or physical mobility.
This selective marketing discourages demand among so-called 'undesirable' consumers who are considered to be unprofitable or damaging to the brand's image, by making them feel unwanted and unwelcome, whether through lack of inclusion in marketing campaign representation, restricted customer targeting, or deliberate limitations of product ranges.
Rather than being unprofitable, increasing accessibility and inclusivity – such as adding plus size clothing to your product lines, or developing product variations for disabled consumers – can significantly boost your sales and ensure continued market relevance in the future.
3. Unethical Data Collection
Market research is incredibly valuable for businesses throughout all stages of their operations; utilising accurate consumer data in the composition and execution of market strategies can greatly boost the effectiveness and ROI of promotional activities. Data collection must be conducted ethically, however.
You should carefully consider governmental data and privacy protection policies before embarking on market research activities, and ensure full compliance with these regulations. In Europe, businesses must refer to General Data Protection Regulation (GDPR), while companies registered in the US can utilise the nation's own privacy protection laws.
The 2018 Cambridge Analytica scandal is a perfect example of the devastating effects of breaching a consumer's right to personal data privacy, through collecting information without their consent. Due to its unethical collection processes, the company experienced a total loss of credibility, came under legal scrutiny, and ultimately closed its operations as a result.
Companies do not need to resort to unethical means to gain valuable and accurate market insight, so there is no excuse. A wide array of acceptable methods are available, including customer surveys, professional focus groups, buyer interviews, and shopper behaviour observation.
4. Stereotyping
Business owners should be aware that adopting stereotypes in marketing and advertising campaigns is not only controversial, but also borders on unethical in many instances.
This stereotyping often targets extremely broad consumer groups based on their gender, age, or ethnicity, assuming that their behaviour, preferences, means, and needs are alike due to singular common characteristics. For example, brands may portray traditional gender roles in promotional campaign materials, heavily featuring women in ads for cleaning products and household goods, while representing men in ad scenarios relating to business or DIY.
As buyers increasingly respond to tailored communications, appreciating inclusive representations in your marketing will indicate your brand's acceptance of their unique differences. Conversely, stereotypes in ad campaigns can offend, alienate or enrage potential consumers.
5. Negative Advertising
Although every business is vying for consumer preference and loyalty over competitor brands, conducting advertising in such a way as to highlight the negative aspects of a contender's offering is unethical. This negative advertising, often described as 'smear tactics', seeks to discredit a competitor's image in order to elevate your own reputation among consumers.
You can avoid this practice by setting clear standards for all promotional activities and messaging, and effectively communicating these to company marketers.
6. Pricing Strategies
There are many unethical policies that may influence your company's pricing strategies, too, each of which leave the consumer disadvantaged in some way in exchange for greater brand profits.
Price Gouging
Among these is price gouging. This defines the business practice of unreasonably inflating your prices during a period of particularly high demand, knowing that many buyers will have no choice but to make purchases at a premium. Increased demand may be driven by national emergencies – such as the panic buying of household goods noted during the first stages of 2020's COVID-19 pandemic – or natural disasters, such as elevated sales of building and repair services following floods, earthquakes, or hurricanes.
Instead of greedily profiting from consumers' disadvantaged, often temporary, circumstances, you can instead pledge to support charities that aim to do good in the affected communities with a portion of the revenue gained. Such actions in a time of need will ensure positive brand perception and consumer appreciation that will endure for many years to come.
Predatory Pricing
Predatory pricing is another unethical policy that sees businesses promote products at extremely low prices in order to unfairly beat out the competition. These unusually rock-bottom prices encourage consumers to select a particular brand's offering, leading to temporary increased sales for the business, though this may not always translate to heightened revenues.
This practice can also have a significant impact on medium-term demand for the promoted products due to the price fluctuation, and can also block new competitors from entering the market.
Bait and Switch
Finally, bait and switch is a questionable pricing strategy that involves misleading consumers by initially advertising low prices to gain their consideration, then revealing that the promoted products are not available so as to push more expensive items to fulfil their needs instead.
Rather than falsely attracting buyers' interest in this way, you can instead transparently share your fixed prices and focus on offering a clear value proposition to justify these costs honestly.
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Employing a standard of ethics in your marketing can only ever benefit your brand, both in the short and long-term. Indeed, today's buyers prefer to transact with companies that proudly demonstrate morality and transparency in all areas of their business, from the management of buyer data to pricing strategies, campaign messaging and more.
With consumers gaining increasing access to the innermost details of businesses' operational policies and philosophies, any questionable marketing approaches are sure to come to light sooner or later – so don't bother investing time and money into something that could counteract all your hard work!
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