Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

22. Ethical Marketing in a
    Consumer−Oriented World:
    Appraisal and Challenges

Text © The McGraw−Hill

Companies, 2002

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges 643

Over several years, the innovator’s profits may rise—but rising profits also encourage

further innovation by competitors. This leads to new investments—which contribute

to economic growth and higher levels of national income and employment. Around the

world, many countries failed to achieve their potential for economic growth under cen-

trally planned systems because this type of profit incentive didn’t exist. Even now, many

of the regulations that are imposed by the developed countries are left over from old

ways of thinking and get in the way of progress.

Increased profits also attract competition. Profits then begin to drop as new com-

petitors enter the market and begin producing somewhat similar products. (Recall

the rise and fall of industry profit during the product life cycle.)

Advertising is the most criticized of all micro-marketing activities. Indeed, many

ads areannoying, insulting, misleading, and downright ineffective. This is one rea-

son why micro-marketing often does cost too much. However, advertising can also

make both the micro- and macro-marketing processes work better.

Advertising is an economical way to inform large numbers of potential customers

about a firm’s products. Provided that a product satisfies customer needs, advertis-

ing can increase demand for the product—resulting in economies of scale in

manufacturing, distribution, and sales. Because these economies may more than

offset advertising costs, advertising can actually lowerprices to the consumer.^8

Some critics feel that advertising manipulates consumers into buying products

that they don’t need. This, of course, raises a question. How should a society deter-

mine which products are unnecesary and shouldn’t be produced or sold? One critic

suggested that Americans could and should do without such items as pets, newspa-

per comic strips, second family cars, motorcycles, snowmobiles, campers, recreational

boats and planes, aerosol products, pop and beer cans, and hats.^9 You may agree

with some of these. But who should determine minimum material requirements of

life—individual consumers or critics?

The idea that firms can manipulate consumers to buy anything the company

chooses to produce simply isn’t true. A consumer who buys a soft drink that tastes

terrible won’t buy another can of that brand—regardless of how much it’s advertised.

In fact, many new products fail the test of the market. Not even large corporations

are assured of success every time they launch a new product. Consider, for example,

the dismal fate of Pets.com and eToys.com, Ford’s Edsel, Sony’s beta format VCRs,

Xerox’s personal computers, and half of the TV programs put on the air in recent

years by CBS. And if powerful corporations know some way to get people to buy prod-

ucts against their will, would companies like Lucent, General Motors, and Eastern

Airlines have ever gone through long periods losing hundreds of millions of dollars?

Consumer needs and wants change constantly. Few of us would care to live the

way our grandparents lived when they were our age—let alone like the pioneers who

traveled to unknown destinations in covered wagons. Marketing’s job is not just to

satisfy consumer wants as they exist at any particular point in time. Rather, market-

ing must keep looking for new and better ways to create value and serve consumers.^10

There is no doubt that marketing caters to materialistic values. However, people

disagree as to whether marketing creates these values or simply appeals to values

already there.

Even in the most primitive societies, people want to accumulate possessions. In

fact, in some tribal villages, social status is measured by how many goats or sheep

a person owns. Further, the tendency for ancient pharaohs and kings to surround

themselves with wealth and treasures can hardly be attributed to the persuasive

powers of advertising agencies!

Is advertising a waste

of resources?

Does marketing make

people buy things they

don’t need?

Consumers are not

puppets

Needs and wants

change

Does marketing make

people materialistic?