Download Ethical issues in marketing research: Encroachment in the personal

Ethical issues in marketing research: Encroachment in the personal
domain for the purpose of sales leads
Dr Ashutosh Kumar Singh
Assistant Professor
Department of Business Economics
VBS Purvanchal University,Jaunpur (UP)
Email: [email protected]
Abstract: It has been often seen that the companies collect personal information of the clients and
customers through market research for developing better strategies, for ensuring better services and to
orchestrate for better custom response management. This orientation is justified, but when the company
uses the information for non research purposes the trust of the respondent is breached. The above instance
has become a common practice in every organization, be it profit making or nonprofit making. The
automobile, telecom and insurance services has extensively relied on this method but what is more
alarming is that the educational institutions have also tried to access student information and database to
allure them to take admissions in their institutions. The problem has called for the intervention of the
TRAI and other regulatory bodies to restrain the companies from making unauthorized use of the
customer information for their own selfish ends. This paper attempts to study the public opinion on the
ethical issues involved in gathering the information for marketing research and disseminating it to the
companies for marketing their own products and services.
Purpose: The study has been done with a view to understand the customer’s opinion as to how they feel
about the use of their personal information for marketing purpose. This study has both academic and
practical implications for the marketing companies, who would understand the customer’s feelings and
would restrain from such practices.
Research Methodology: The study is based on the responses collected from 250 people of Jaunpur and
Varanasi selected on the basis of convenience sampling. The study examines the reaction of the
customers(customer’s who have shared information on internet as well as those who have disclosed
offline in the name of CRM) regarding the practice of unsolicited marketing on various parameters like
information sharing, security issues, and response generation and data collection. The data is analyzed
using factor and correlation analysis.
Findings: The respondents feel that the marketing companies generally access information from the
websites where one has provided their personal information, for the purpose of sales leads. The marketing
companies are also now targeting schools to gain access to their parents information for product
placements. The respondents have security issues, and refrain themselves from disclosing personal
information on the websites. This perhaps is one of the reasons where the internet survey is disliked by
the people.
Research Limitations: Since the study is confined to small cities where the online users are less the
results would be little skewed. The research domain can be enlarged which would reflect the clear picture
of the response.
Practical Implications: The research can be used by marketing companies to understand the consumer
behavior regarding telemarketing and also the regulator to restrain companies from such practices and
issue guidelines as has been done by TRAI by allowing mobile users to register for DO NOT DISTURB
facility.
Originality: The paper is original based on the primary data and has not been sent for publication
anywhere.
Keywords: Ethical marketing, security issues, On line marketing, CRM
Paper Type: Research type.
Introduction:
Most marketing research benefits both the sponsoring company and its consumers. Very often the
marketing companies conduct marketing research and learn more about consumers’ needs, resulting in
more- satisfying products and services. However, the misuse of marketing research can also harm or
annoy consumers. Two major public policy and ethic issues in marketing research are intrusions on
consumer privacy and the misuse of research findings. Many consumers feel positively about marketing
research and believe that it serves a useful purpose. Some actually enjoy being interviewed and giving
their opinions. However, others strongly resent or even mistrust marketing research. A few consumers
fear that researchers might use sophisticated techniques to probe their deepest feelings and then use this
knowledge to manipulate their buying. Or they worry that marketers are building huge data bases full of
personal information about customers. Whenever a company sells data about their customers, they run the
chance of aggravating their most valuable asset: the consumer. Whether the intended use of the data is
ethical or unethical, a vast majority of consumers are completely against the sell of information collected
on them. Do consumers have the right to not have their information even collected, let alone sold to third
parties? Who is responsible for ensuring a corporation does not violate a customer by the misuse or
selling of customer information?
Other consumers may have been taken in by previous research surveys that actually turned out to be
attempts to sell them something. Still other consumers confuse legitimate marketing research studies with
telemarketing efforts and say ‘no’ before the interviewer can even begin. Most, however simply resent the
intrusion. They dislike mail or telephone surveys that are too long or too personal or that interrupt them at
inconvenient times. Increasing customer resentment has become a major problem for the research
industry. Any business that deals with consumers’ information has to take privacy issues seriously. Some
companies view privacy as way to gain competitive advantage as something that leads consumers to
choose one company over another. The best approach is for researchers to ask only for the information
they need, to use it responsibly to provide value, and to avoid sharing information without customers’
permission.
Research studies can be powerful persuasion tools; companies often use study results as claims in their
advertising and promotion. Today, however, many research studies appear to be little more than vehicles
for pitching the sponsor’s products. In fact, in some cases, the research surveys appear to have been
designed just to produce the intended effect. Few advertisers openly rig their research designs or blatantly
misrepresent the findings; most abuses tend to be subtle stretches. Subtle manipulations of the study’s
sample or the choice or wording of questions can greatly affect the conclusions reached. In other cases,
so-called independent research studies are actually paid for by companies with an interest in the outcome.
Small changes in the study assumptions or in how results are interpreted can subtly affect the direction of
the results. Recognizing that surveys can be abused, several associations in United States have developed
codes of research ethics and standards of conduct. However, unethical or inappropriate actions cannot
simply be regulated away. Each company must accept responsibility for policing the conduct and
reporting of its own marketing research to protect consumers’ best interests and its own. From a broader
social view point, internet marketing practices have raised a number of ethical and legal questions. There
are certain negatives associated with internet such as unwanted e-mail and the annoyance of pop-up ads.
Online privacy is perhaps the number-one e- commerce concern. Most e-marketers have become skilled at
collecting and analyzing detailed consumer information. Marketers can easily track Web site visitors, and
many consumers who participate in Web site activities provide extensive personal information. This may
leave consumers open to information abuse if companies make unauthorized use of the information in
marketing their products or exchanging data bases with other companies. Many consumers and policy
makers worry that marketers have stepped over the line and are violating consumer’s right to privacy.
The commercialism does not stop in the schoolyard. School used to be a place where children were protected from
the advertising and consumer messages that permeated their world. The schools welcome with a highly
commercialized energy drink like Milo or Bournvita etc. They go to the classroom and open books that
are published by Disney that have cover page of Disney characters or books that have commercialized the
covers for advertising of goods. Companies have seen that their results work 20 times the norm for print
advertising when they started selling ad space on the textbooks and notebooks.
Corporations have realized the platform of the school environment for promoting their name and
products. A school setting delivers a captive youth audience. Marketers are eagerly exploiting this
medium in a number of ways, including:
• Sponsored educational materials: for example HLL has been going to school and taking to girl students
on the menstrual cycles and health care after which they promote their sanitary towels and tell the girls on
how it is the best along with which they give free samples. They are targeting young girls in the age group
of 9 to 11 and capturing a young market.
• Advertising posted in classrooms, school buses, for health drinks of particular brands in exchange of
sponsoring events or money.
• Contests and incentive programs: Many marketers advertise their products my sponsoring sports events
or cultural events in schools. They may also hold competitions for e.g. Camel has been conducting
drawing competitions in schools for decades where they advertise their product. ICICI bank a company
that does not have a product range that is for kids have been holding contests through which they get
names and contact numbers of the parents whom they then contact.
Many consumers also worry about online security. They fear that unscrupulous snoopers will eavesdrop
on their online transactions or intercept their credit card numbers and make unauthorised purchases. In
turn, companies doing business or marketing research on line fear that others will use the internet to
invade their computer systems for the purpose of commercial espionage or even sabotage. There appears
to be an ongoing competition between the technology of internet security systems and the sophistication
of those seeking to break them.
Beyond issues of online privacy and security, consumers are also concerned about Internet fraud,
including identity theft, investment fraud, and financial scams.
Businesses are targeting young children and teenagers especially because of the spending power they have
and because of their parents buying them what they want when they want it. If young children don’t get
what they want, they begin to complain and be unhappy if they don’t have this particular product. For
example, McDonald’s which is a major franchise restaurant worldwide has lured millions of children into
eating at their restaurant, by supplying a free venue for birthday parties and an outdoor area with a
children’s playground. This can create an image of “if you want a happy time, go to McDonalds”. They
also have their name on some of the educational products such as stationery and programs on computers
used in primary schools. This encourages young children to want to eat McDonald’s which is a very
unhealthy fast food, and as it is a part of the schooling environment, children think that this has the
approval of the education department. This could lead to poor food choices in later life.
Today many soft drink companies such as Coca-Cola and Pepsi try to cover up the fact that their soft
drink is extremely unhealthy, by creating new no sugar soft drinks to promote the fact that there is no
sugar in their drinks. So instead of putting sugar into their drinks they use artificial sweeteners to make it
have that same taste as the original drink. This makes the advertisement of these new “no sugar soft
drinks” misleading and therefore unethical. It really confuses the issue that artificial sweeteners are also
related to health problems.The field of marketing has had a history of individuals and organizations
attempting short-term gain through less than ethical means. The advent of the Web and other
technological advances has placed powerful resources in the hands of practitioners. Coupled with that
power is an acute public awareness of marketing abuses that have adversely hindered subsequent
marketing efforts. Marketers need to address basic marketing skills through old-fashioned personal
contact and personal relations that probably never will be effectively replaced with modern IT
methodology. Additionally, marketing should take a proactive approach to defining marketing
responsibilities to the public it serves to overcome the reputation that is established by a few who are
unethical in their approach to the craft.
Literature Review:
Ethics has been defined as inquiry into the nature and grounds of morality where the term morality is
taken to mean judgments, standards, and rules of conduct (Taylor, 1975, p. 1). It involves fundamental
human relationships and the conflicts in duties and responsibilities der iving there from. Of the
functional areas of business, marketing has been identified as the one most charged with unethical
practices (Baumhart,1961; Brenner and Molander, 1977 )
In the past few years several news stories have emerged detailing the foul practice of information selling,
which involves one host company selling the private details of their customers to marketing research
groups and other potentially harmful companies. Aside from the obvious problem of such a practice, it
should be stated that companies who do business on the internet often store information from customers
for their own (usually) non-abusive or unethical purposes. For example, online businesses often use
technology to track and better understand their customers and while this is not necessarily a negative
practice within itself, it does raise certain ethical questions
Many companies that do business over the internet have engaged in the practice of creating “cookies”
which are small advertisements, often the form of a pop-up, which record the user’s IP address. With the
growth of the Internet, computer security has become a major concern for businesses and governments.
They want to be able to take advantage of the Internet for electronic commerce, advertising, information
distribution and access, and other pursuits, but they are worried about the possibility of being “hacked.”
At the same time, the potential customers of these services are worried about maintaining control of
personal information that varies from credit card numbers to social security numbers and home addresses.
Today manufacturers, retailers, service providers and nonprofit making organizations routinely collect
information about the customers .However serious issues exist regarding the extent of use of these
personal information about specific customers (Culnan 1995;Nowak and Phelps 1995).There exists
variability in the disposition of the customers regarding the sharing of the information and the manner it is
being used. Most customers are willing to give up some of their privacy to participate in a consumer
society.
Much of ethics research in business has focused on the ethical behavior of marketing
professionals,including that of marketing researchers (Akaah and Riordan, 1989; Crawford, 1970; Hunt,
Chonko, and Wilcox, 1984; Tybout and Zaltman, 1974), marketing executives (Chonko add Hunt, 1985;
Ferrell and Weaver, 1978; Trawick and Darden, 1981), advertisers (Krugman and Ferrell, 1981; Hunt and
Chonko,1987), purchasers (Browning and Zabriskie, 1983; Rudelius and Bucholz, 1979), salespersons
(Chonko and Burnett, 1983; Dubinsky, Berkowitz, and Rudelius, 1980), and retailers(Dornoff and
Tankersley, 1975–76). While ethics literature is extensive, the review that follows is limited to areas
pertaining to the specific objectives of this study. By its very nature, the practice of marketing often
presents ethical dilemmas. In addition, marketing professionals are often near the bottom in terms of
ethical conduct and honesty ratings (Nussbaum 2002). Within the broader discipline of marketing,
marketing research has been cited as one of the most troubling in this regard (Lund 2001).Discussions
about the ethicality of various marketing research tactics and the misuse of research data are often in the
news (Phillips 2010).
Marketing academics have investigated marketing research ethics issues in a number of ways (Hunt and
Vitell 1986) including developing models of marketing research ethics to help understand various
decision-making approaches used by professionals (cf. Murphy and Laczniak 1992), and creating
empirically and conceptually derived lists of ethical issues (cf. Hair and Clark 2007; Malhotra and Miller
1998; Skinner et al. 1988; Tybout and Zaltman 1974).
Considering the importance of ethics in sales and marketing, academic researchers have developed
multiple ethical decision-making frameworks and examined individual as well as organizational-level
variables (for a detailed literature review, please refer to McClaren 2000 and O’Fallon and Butterfield
2005). Although past research provides some rich insight into the ethical decision-making of salespeople,
‘‘sales ethics remains a complex area to understand and offers a great opportunity for research on many
dimensions’’ (Ferrell et al. 2007).
Research shows that unethical marketing behavior impacts consumers’ behavior in the marketplace
(e.g., Alexander, 2002; Creyer and Ross, 1997; Folkes and Kamins, 1999; Smith and Cooper-Martin,
1997; Whalen et al., 1991).
Research Design:
The survey was conducted on 200 people in the city of Varanasi and Jaunpur. As everyone is supposed to
use products of some kind or other and have exposure of marketing ethics and underlying issues
responsible for misuse of the personal information, hence the respondents were selected on the basis of
convenience of time and space. Due care has been taken to ensure that the respondents are also exposed to
some level of internet use and have shared personal information on the internet or have an idea of it.
Out of the 200 questionnaire circulated for the survey only 107 filled in correct responses were finally
used for the analysis. The rest of them were either not correctly filled or were partly filled and hence were
not included in the analysis.
Data Analysis:
Analysis 1
Percentage Analysis:
The figures from 1-12 shown below reflects the response of the respondents on the various parameters.
Fig 1 shows that the respondents have agreed on the view that the electronic communications have
attributed more to the unethical marketing practices. Similarly Fig 2 reflects that the consensus is not
generated regarding unauthorized use of the personal information. However 32% agree that there has been
unauthorized use of it.Fig 3 shows that 43 % are neutral and only 20% agree that the incidents of misuse
of personal information is due to unclear laws. Fig 4 clearly depicts that the 47% of the respondents agree
that the unethical use is attributed to psychological marketing wherein the marketers or the salesman
access the customers’ information and then psychologically try to influence him. Fig 5 shows that 74%
respondents feel that the schools should refrain themselves being used by the marketer for their myopic
ends. Fig 6 reflects that 56 % agree and 45% strongly agree that the kids are more prone to such unethical
marketing especially through the internet and school based promotions. As regard to the popular belief
that females are also more prone to such unethical marketing practices the Fig 7 shows that the only 32%
agree to it whereas 31 % are neutral. As reflected in the fig 8 only 37 % agree that such telemarketing
misuse of the personal information is always informational and helps the customers access to the latest
information about the products.Nearly 46% of the respondents believe that the people get irritated by such
unethical marketing practices.
Fig1
Electronic communication has increased unethical marketing
Valid
Frequency
13
Percent
12.1
Valid Percent
12.1
Cumulative
Percent
12.1
Neutral
17
15.9
15.9
28.0
Agree
43
40.2
40.2
68.2
34
31.8
31.8
100.0
107
100.0
100.0
Disagree
Strongly
agree
Total
Fig2
Unauthorized use of personal information
Frequency
Valid
Percent
Disagree
23
21.5
21.5
21.5
Neutral
35
32.7
32.7
54.2
Agree
32
29.9
29.9
84.1
17
15.9
15.9
100.0
107
100.0
100.0
Strongly
agree
Total
Fig3
Unclear laws
Frequency
Valid
Percent
Valid Percent
Cumulative
Percent
Strongly
disagree
Disagree
6
5.6
5.6
5.6
23
21.5
21.5
27.1
Neutral
46
43.0
43.0
70.1
Agree
32
29.9
29.9
100.0
Total
107
100.0
100.0
Fig4
Psychological marketing
Valid
Cumulative
Percent
Valid Percent
Frequency
15
Percent
14.0
Valid Percent
14.0
Cumulative
Percent
14.0
Neutral
16
15.0
15.0
29.0
Agree
47
43.9
43.9
72.9
29
27.1
27.1
100.0
107
100.0
100.0
Frequency
5
Percent
4.7
Valid Percent
4.7
Cumulative
Percent
4.7
28
26.2
26.2
30.8
74
69.2
69.2
100.0
107
100.0
100.0
Disagree
Strongly
agree
Total
Fig5
Schools restrict such companies
Valid
Neutral
Agree
Strongly
agree
Total
Fig6
Kids more prone
Frequency
Valid
Percent
Neutral
6
5.6
5.6
5.6
Agree
56
52.3
52.3
57.9
45
42.1
42.1
100.0
107
100.0
100.0
Strongly
agree
Total
Fig7
Females more prone
Frequency
Valid
Cumulative
Percent
Valid Percent
Percent
Cumulative
Percent
Valid Percent
Disagree
28
26.2
26.2
26.2
Neutral
31
29.0
29.0
55.1
Agree
32
29.9
29.9
85.0
16
15.0
15.0
100.0
107
100.0
100.0
Strongly
agree
Total
Fig8
Informational to customers
Frequency
Valid
Valid Percent
Cumulative
Percent
Strongly
disagree
Disagree
1
.9
.9
.9
24
22.4
22.4
23.4
Neutral
29
27.1
27.1
50.5
Agree
37
34.6
34.6
85.0
16
15.0
15.0
100.0
107
100.0
100.0
Strongly
agree
Total
Fig9
People get irritated
Frequency
Valid
Percent
Percent
Valid Percent
Cumulative
Percent
Disagree
8
7.5
7.5
7.5
Neutral
37
34.6
34.6
42.1
Agree
49
45.8
45.8
87.9
13
12.1
12.1
100.0
107
100.0
100.0
Strongly
agree
Total
Fig10
Brand image affected
Frequency
Valid
Percent
Disagree
19
17.8
17.8
17.8
Neutral
44
41.1
41.1
58.9
Agree
29
27.1
27.1
86.0
15
14.0
14.0
100.0
107
100.0
100.0
Strongly
agree
Total
Fig11
Misuse of CRM
Frequency
Valid
Cumulative
Percent
Valid Percent
Percent
Valid Percent
Cumulative
Percent
Strongly
disagree
Disagree
5
4.7
4.7
4.7
25
23.4
23.4
28.0
Neutral
41
38.3
38.3
66.4
Agree
35
32.7
32.7
99.1
1
.9
.9
100.0
107
100.0
100.0
Strongly
agree
Total
Fig12
DND
Frequency
Valid
Percent
Valid Percent
Cumulative
Percent
Neutral
1
.9
.9
.9
Agree
59
55.1
55.1
56.1
47
43.9
43.9
100.0
107
100.0
100.0
Strongly
agree
Total
Analysis 2
Anova Analysis
2.1Cross sectional analysis
Comparing across Age ,Sex,Occupation and Income
On viewing the sig value of the Anova table in the Fig 13,Fig 14 & Fig 15 shown below clearly indicates
that the view of the respondents regarding the use of the telemarketing practices by the different
companies in the different sector is invariably same across the different age, sex occupation and income at
95% level of confidence.as there is no difference in the rating given to them.
Fig 13
ANOVA
Sum of
Squares
automobile
insurance
real estate
educational institutions
banks
consumer durables
Between Groups
df
Mean Square
.231
2
.115
Within Groups
71.788
104
.690
Total
72.019
106
Between Groups
1.157
2
.578
Within Groups
59.030
104
.568
Total
60.187
106
Between Groups
.452
2
.226
Within Groups
63.174
104
.607
Total
63.626
106
Between Groups
2.229
2
1.114
Within Groups
136.126
104
1.309
Total
138.355
106
1.100
2
.550
Within Groups
38.564
104
.371
Total
39.664
106
Between Groups
Between Groups
.534
2
.267
Within Groups
97.690
104
.939
Total
98.224
106
F
Sig.
.167
.846
1.019
.364
.372
.690
.851
.430
1.483
.232
.284
.753
Fig 14
ANOVA
Sum of
Squares
automobile
insurance
real estate
educational institutions
banks
consumer durables
Between Groups
df
Mean Square
.910
1
.910
Within Groups
71.109
105
.677
Total
72.019
106
.315
1
.315
Within Groups
59.872
105
.570
Total
60.187
106
Between Groups
Between Groups
1.133
1
1.133
Within Groups
62.493
105
.595
Total
63.626
106
Between Groups
4.642
1
4.642
Within Groups
133.713
105
1.273
Total
138.355
106
Between Groups
.004
1
.004
Within Groups
39.660
105
.378
Total
39.664
106
2.818
1
2.818
Within Groups
95.407
105
.909
Total
98.224
106
Between Groups
F
Sig.
1.343
.249
.553
.459
1.904
.171
3.645
.059
.010
.922
3.101
.081
Fig 15
ANOVA
automobile
insurance
real estate
educational institutions
banks
consumer durables
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Sum of
Squares
.617
71.402
72.019
1.030
59.156
60.187
.239
63.387
63.626
1.932
136.423
138.355
.171
39.492
39.664
.595
97.630
98.224
df
2
104
106
2
104
106
2
104
106
2
104
106
2
104
106
2
104
106
Mean Square
.308
.687
F
.449
Sig.
.639
.515
.569
.906
.407
.119
.609
.196
.822
.966
1.312
.737
.481
.086
.380
.226
.798
.297
.939
.317
.729
Fig 16
ANOVA
automobile
insurance
real estate
educational institutions
banks
consumer durables
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Between Groups
Within Groups
Total
Sum of
Squares
1.266
70.753
72.019
.847
59.340
60.187
1.845
61.781
63.626
3.595
134.761
138.355
1.641
38.022
39.664
4.391
93.833
98.224
df
3
103
106
3
103
106
3
103
106
3
103
106
3
103
106
3
103
106
Mean Square
.422
.687
F
.614
Sig.
.607
.282
.576
.490
.690
.615
.600
1.025
.385
1.198
1.308
.916
.436
.547
.369
1.482
.224
1.464
.911
1.607
.192
Managerial Implications:
The above research concludes that the people are very much irritated and dislike the use of the unethical
practices by the marketers. The marketers should realize that the more they tend to woo customers the
more negative impact it creates in the mind of the customer regarding the brand image of the company.
Unauthorized use of the customer information should be avoided to unnecessary disturb them with
unsolicited calls and SMS’s. It has also been noted that regarding the use of unwanted Telemarketing calls
the mean rating of the automobile ,insurance and the educational sector is more than 3.5(on the higher
side).The companies of these sectors should be more sensitive towards the privacy of the people and
should take due care in approaching them for the purpose of generating business lest it would backfire on
the image of these companies.
References:
Aggarwal Praveen ,Vaidyanathan & Stephen Castleberry “Managerial and Public Attitudes Toward Ethics
in Marketing Research” J Bus Ethics,Springer Link 2011.
Alison Stein Welner, ‘Research on a Shoestring,’ American Demographics, April 2001, pp.38-39
Bhattacharyya Ritu & Kohli Sangita “Target Marketing to Children – The Ethical Aspect” International
Marketing Conference on Marketing & Society, 8-10 April, 2007, IIMK
Fernandez, M.E. Design and implementation of participatory technology validation in Highland
communities of Peru. Farming Systems Research Symposium, Kansas State University, Manhattan,
USA., 1986
Goode, W.T. & Hatt, P.K., Methods in Social Research, McGraw-Hill, New York, 1985.
Gosh,B.N., Scientific Methods and Social Research, Sterling Publishers, New Delhi,1991.
Harper W.Boyd,Jr., and et.al., Marketing Research, Richard D.Irwin,Illinois,1998.
Kotler Philip and Armstrong Gary. Principles of Marketing (tenth ed.), Prentice Hall of India, New Delhi,
2004
Raj Agnihotri ,Adam Rapp ,Prabakar Kothandaraman & Rakesh K. Singh, “An Emotion-Based Model of
Salesperson Ethical Behaviors” J Bus Ethics,Springer Link 2011.
Wilkinson and Bhandarkar, Methodology and Techniques of social Research, Himalaya Publishing
House, Mumbai, 1993.