Download The Analysis of Over-marketing on the Basis of Business Ethics

The Analysis of Over-marketing on the Basis of Business Ethics
ZHENG Ruihong
Department of Economics and Trade, Guangdong College of Industry and Commerce, P.R.China,
510510
[email protected]
Abstract: By highlighting over-marketing activities in modern operations, this paper reviews the basic
theories and thoughts concerning business ethics and marketing morals. Through the analysis of
over-marketing behaviors of modern businesses in China, the author discussed in depth management
challenges brought about by marketing in terms of business ethics: honest operation, protection of
consumers’ interest, unfair competition and corporate social responsibilities.
Keywords: over-marketing, business ethics, social responsibilities
1. Over-marketing Behaviors of Modern Businesses Management
Recently, there is some phenomenon of over-marketing in China (Figure 1), which affected consumers’
purchasing motives and behaviors, and customers satisfaction and consumers’ value, even did great
harm to corporate identity and brand prestige, and reduced consumers’ loyalty. Some enterprises only
pursue short-term benefit instead of consumers and society’s long-term benefit, so that their behaviors of
polluting environment and wasting resources are beyond the social ethics entirely. Over-marketing
behaviors of modern businesses management can be shown in the following aspects:
Type
Product
Price
Market
research
Behavior
Type
◆fake
◆under-danger product
◆polluted product
◆excessively packed product
◆unfit guaranty
◆false branded product
◆non-franchise product
◆unfitting product
◆Rises in prices excessively
◆dumping price
◆price discrimination
◆skimming pricing
◆false discount
◆encroach consumers’ privacy
◆encroach consumers’ knowing facts
◆steal commercial information
◆conceal research purpose
◆cheating
◆misleading research results
Promotion
Place
Brand
strategy
Behavior
◆exaggerate function of products
◆confuse the concept of products
◆false advertisement
◆boring/excessive advertisement
◆sexual hint advertisement
◆bait advertisement
◆telephone sale promotion
◆personal selling
◆illegal multi-level marketing
◆selling beyond agreed areas
◆discount
◆bribe
◆arrearage
◆excessive brand extension
◆too much brands
◆brand run wild
◆excessive competition
◆industry monopoly
◆entering un-healthy industry
Figure 1 Unmoral behaviors of businesses marketing
Source: Refer to LuTaihong, Consumers Behavior, Peking: Higher education press, 2005, P300-301.
1.1 False Advertisements and Excessive Advertisements
In order to improve sales and expand popularity, it’s not bad for businesses to advertise in all kinds of
media widely. But it is unmoral to exaggerate products’ effects and functions excessively. When
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advertising, some businesses may exaggerate the effect of their products, use absolute word, make a
pseudo-science indication, misuse the concept of science and technology, and make use of patients’,
experts’, certain medical organizations’ proofs. However, some businesses did not have the
qualifications. Moreover, some drugs and healthy products etc are boasted about having many effects
and can cure all diseases.
1.2 The “Digit” Constructing of Market Investigation
Market research is the base of marketing, and businesses will not success without thorough and effective
research. Therefore, modern businesses are increasingly beginning to enlarge the investment of
personnel, finance and materials, and gain information by using reasonable scientific methods. Because
market research is very rigorous, businesses generally entrust professional researching company to do it.
However, market research is new in our country, without standardization, many researching companies
don’t carry on researches standardly. They analyze some unrelated datum coming from internet,
newspapers and magazines, which looks logic, but it is useless.
1.3 The Serious Phenomena of Fake and Shoddy Products
At present, there are many fake products. Because of consumers’ motive of pursuing famous brands,
many businesses begin to copy well-know brands. Produce fake wines and fake medicines which can
make someone dead, produce disfiguring cosmetics, and produce false seeds which cause farmers
harvest nothing. Fake products have already permeated all industries and have done great harm to
consumers’ benefits and state-tax revenue. According to the statistics of National Bureau of Technical
Supervision, the percentage of qualified products is only 75% throughout our country, while the
percentage of small & medium-sized enterprise is much lower, less than 60%. The figures alarm us, and
we must put quality in agenda and take it seriously.
1.4 Price Cheating and Price Trap
Some businesses deceive consumers with price, such as, “1 Yuan for mobile”, “jumping price”,
“shocking price”, “the last three days for dumping stocks”, “markdown sale”, “the lowest price” and so
on, but most of them are price traps. Now, price sues are very common, which is chiefly prominent in
telecommunication, education, medical service, transportation, housing and drugs etc. Even some public
organizations charge unreasonably with their monopolistic position. All kinds of discounts and
preferential prices in department stores may be traps. We hope some measures taken to end this and
consumers will feel fair.
1.5 Grave Chaotic Channels
Concerning businesses’ marketing, some can choose proper channels to sell their products or sell their
products through normal channels, while others don’t, they distribute products by deceiving and playing
tricks beyond commercial ethics and faithfulness, or confine others’ competitions by certain superiority.
Products must hand from some distributors and agents to others before arriving to the terminal or
consumers. For the difference of geographical positions, local economic development and sales policies,
distributors and agents will benefit differently when selling products. Which will cause products sell
beyond agreed areas and harm channel members’ benefit.
1.6 False Pledges of After-sale Service
When selling products, many businesses are very enthusiastic and promise consumers “three pledges”,
good quality, using safely, and fifteen-day for exchanging freely and etc. But when consumers claim for
the unqualified products, they usually take an opposite attitude right away, or delay, even or deny.
Service marketing and after-sale services are significant to businesses. Only good after-sale service and
more added values to consumers, can businesses make consumers satisfied and can they win. The fact is
apparent. But after-sale service is just a word at most businesses.
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2. Review of the Researches on Business Ethics
2.1 Main Studies of Business Ethics by Foreign Scholars
Undoubtedly, marketing ethics is the new progress of modern marketing, and it is essential and key to
business ethics. Boone & Kurtz (2005) had made a thorough analysis of business ethics, especially
marketing ethics. They classified many social problems faced by marketers into marketing ethics and
social responsibilities. By constructing the model of marketing ethics, they also stated the social
problems of businesses, the relationship of marketing and ecology and green marketing.
While Ferrell (2005) put forward the basic philosophy and principle of business ethics in detail. First, he
thought that“businesses must profit, then balance their hope for profit and social demands, and maintain
the balance”. Secondly, he posed the point of social responsibility: “businesses must have social
responsibility, maximize the positive influences and minimize the negative influences”, and he thought
ethics belongs to social responsibility. Finally, he analyzed the problems of interest conflict, excessive
competition, honest and fair, false propaganda, technology development, consumers privacy and so on
from the view of ethics, then proposed the thought of “social citizen”.
By analyzing business ethics thoroughly, Weiss (2005) constructed the moral responsibility of
stakeholders matrix Figure 2 . He also explored fairness, honest operation, privacy, ecology ethics,
social ethics, sex and racial discrimination, sexual harassment, extra-work, glass ceiling and so on. Then,
on the base of relativism, utilitarianism, universalism, right and justice theory, he summarized the ways
of individual ethics decision-making, which may be the answer of commercial ethics in business
management.
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The nature of businesses’ responsibility
stakeholders
Legal
responsibility
Economical
responsibility
Ethics
responsibility
Volunteer
responsibility
Owner
Customer
Staff
Society
Public
Figure2 Moral responsibility of stakeholders matrix
Source: Joseph W. Weiss, Business Ethics: A Stakeholder and Issues Management Approach
Peking: Renmin University of China Press, 2005.
（Third Edition）,
2.2 Main Research of Business Ethics by Domestic Scholars
With the fast development of global market economy, multinational corporations have regarded social
responsibility as a significant index when operating, assessing collaboration and investment projects.
Meanwhile, domestic scholars start to study modern commercial ethics mainly from marketing ethics
and marketing morals as well as their implement, include Gan Biqun(1996), Guo Guoqing (1999),
Zhuang Guijun (2004), Lu Taihong (2005), Zhou Zucheng (2005), Gao Pu (2005), Wang Zimei and Li
YansShu (2005), Zhao Liqiong (2006) and Miao Zehua, et al. (2007), and achieve some important
progresses.
3. The Commercial Ethics Regulations of Marketing Operation
3.1 Honest Business Operation
The gains and loss of honest operation: Honest is our traditional virtue. Mencius once said: “honesty, the
way of nature; thinking honestly, the way of human being”, some unmoral people will get short-term
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benefit by taking any speculations. However, in the long term, unmoral behavior will be exposed by
consumers and those businesses will be punished in the end. For example, Nanjing Guanshengyuan
event in 2001, its overdue materials of moon-cake may bring a good short-term benefit to business.
After the fact that selling moon-cakes produced with overdue materials was exposed by CCTV, for
business, the result is not only fined by business administration department, but also refused by
consumers thoroughly. Which makes business in debt deeply, and was announced bankruptcy in 2002.
Only by honest operation can business get consumers’ trust, reduce the cost of transaction effectively,
keep old customers and attract new customers easily, and make customers loyal. Business’ prestige
based on honest operation is not only a scarce resource, but also is the important intangible asset for
business, and is the driven-power for business’s sustainable development. Consequently, business must
operate honestly instead of taking any unmoral short-term behaviors.
3.2 Protection of Consumers’ Interests
Content of consumers’ interests: With the thorough development of market economy, consumers’ status
has been improved largely and consumers’ rights and interests are protected widely in our society,
especially with the guidance of modern customer-oriented marketing philosophy, which aims at meeting
customers’ demands and respecting customers’ rights and interests fully. Concerning consumers’ rights
and interests, they refer to all the rights and interests that consumers have during their buying and
post-buying, and they are the products of social production under certain commodity economy and
social system. The main rights and interests include security right, knowing right, option right, fair
transaction right, claim right, association right, learning right, esteem right and supervisory authority.
"Act of protection consumers’ rights and interests": Six basic rights and interests as following: (1)
Voluntary option. The voluntary option is the guarantee for consumers. (2) Fair transaction right. On one
hand, consumers should be treated fairly in quality guarantee, reasonable price, accurate measurement
and so on; on the other hand, consumers have the option of refusing compulsory transactions. (3)
Security right. Consumers can request businesses to provide products and services which can assure
consumers’ personal and property safety. (4) Knowing right. It is the legal assurance with which
consumers can understand products and services completely and avoid the damage brought about by
blind buying. (5) Claim right. When consumers suffer from businesses, claim right is the compensation,
and it is the standard of punishing unmoral businesses. (6) Esteem right. When buying or using
commodities and services, consumers have the right of being respected on personal dignity and custom
or habits, and the behavior of encroaching upon consumers’ personal rights should be forbidden firmly.
In addition, the government has also formulated "act of protection consumers’ rights and interests", "act
of anti-unfair competition", "law of product quality", " regulations of foods sanitation", "trademark law"
and so on, which has formed a whole legal framework of protection consumers’ rights and interests and
provided a practical assurance of consumers’ rights and interests in law.
3.3 Against Unfair Competition
Comprehend unfair competition: In the economic society with commercial ethics deviation, human's
subsistence right, job right, enjoying right, development right as well as fair consumption and choice
right are basic, but consumers’ rights and interests (security health, just, voluntary choice and so on)
should be protected at first. Law is the bottom line of ethics, and it plays its role when organization or
person breaks through the bottom. For instance, the State Council promulgated "act of anti-unfair
competition" in 1993 so as to protect fair competition and businesses’ legitimate rights and interests. The
main contents of against unfair competition as follows: (1) Operators should obey the principle of
voluntary, equality, fairness and honesty in their transactions, and obey the generally acknowledged
business ethics. (2) In order to avoid squeezing out other businesses’ fair competition, public businesses
or other operators who have the legal monopoly status, can not force consumers to buy the assigned
products. (3) Operators shouldn’t sell or buy commodities with bribe. It is called carrying bribe that
giving commission to the opposite part or individuals secretly outside the account; on the contrary, it is
called accepting bribe. (4) Operators should not use advertisements or other methods to propagate false
and misunderstanding information on commodity quality, ingredients, performance, function, producer,
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expiry date, origin place and so on. (5) Operators should not fabricate and disperse false fact to damage
competitors’ commercial reputation or commodity prestige.
3.4 Social Responsibilities of Enterprises
Enterprise social responsibility means enterprises should take into consideration the benefit of other
related parties in society, as well as create profit and achieve the maximum benefit for shareholders. The
responsibilities include business ethics observance, honest management, safe production, environment
protection, resource conservation, law obedience, etc. An enterprise is a molecule of society, as
Peter·Druke said, “The enterprise is a kind of organ of society”. Therefore, enterprises are required to
take responsibilities as the role of citizens in society. It is definitely not a simple cost devoting, but a
strategic investment for enterprises to implement their social responsibilities. The responsibility taking
degree of an enterprise has positive correlation with its economic performance.
References
[1]. Smith, N.C., Quelch, J.A. Ethics in Marketing. Homewood, IL: IRWIN, 1993.
[2]. Carroll, A. B. and Buchholtz, A. K. Business and Society: Ethics and Stakeholder Management.
(4th ed) Cincinnati, Ohio: South-Western College Publishing, 2000.
[3]. Tsai, T., Young, M. N. Contemporary Confucian Entrepreneurs: the case of Sinyi real estate,
Submitted to Journal of Business Ethics Special Issue on Business Ethics in Greater China. August
15, 2007.
[4]. Du Peng. Marketing Ethics Deviation: on the visual of game theory, Collection of Commercial
Economy, 3 2005 .
[5]. Ferrell. Business Ethics. 5th ed Peking: Tsinghua University Press, 2005.
[6]. Joseph W. Weiss. Business Ethics: A Stakeholder and Issues Management Approach. 3rd ed
Peking: Renmin University of China Press, 2005.
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