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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. 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