Reading: Common Ethical Issues in Marketing

Let’s start by taking at look at a hypothetical business situation:

Examples

Photo of point-of-sale system for a restaurant. Display monitor shown on counter.

You’re a member of the marketing team for a B2B company that sells software to restaurants. Your product is a point-of-sale system that manages orders, menus, and staff scheduling. While it generally works well, there are sometimes glitches that cause it to drop orders, and the system goes down more often than you would like. You are marketing the system to a major restaurant chain, and they’ve asked for a list of references from current customers. The marketing and sales teams sit around a table reviewing the current customer list trying to decide which references to provide. First, the team screens out those who have complained most vocally about the glitches with the product. There is one customer who told his account manager, “These things happen with all systems,” so the team thinks he would be a good reference. There’s also a new customer who started using the system recently and hasn’t yet experienced the system downtime that other customers have. The team selects that restaurant, as well, and prepares to send the two names to the sales prospect.

Question

Is that ethical? Is it fair and honest to cherry-pick the customer references, selecting only the ones that are unlikely to share negative experiences about your product? To be sure, there’s a range of customer feedback, and not all of it is positive. Are you expected to give a full picture of customers’ experience—warts and all—so the restaurant chain will know exactly what it’s buying?

Answer

In general, when prospective customers request customer references, they expect to receive favorable ones, and doing so is not a violation of their trust. It’s a lot like a prospective employer’s request for a job candidate’s work references. When you’re marketing yourself for a new job, you name the references who are most likely to report your talents and strengths—you don’t include a crabby boss who never had good things to say about anyone.

The question becomes more challenging when the customer relationship is more complicated. In every case—even the simplest—it’s a judgment call. Suppose your company compensates customers for providing references. A company might give some small thank-you gift to acknowledge that taking reference calls requires time, and that the company appreciates the client’s support. Is that unethical? Possibly. On one hand, it’s reasonable and desirable to express your appreciation to the customer, since part of maintaining the customer relationship is letting customers know that you value them and their time. On the other hand, there’s a risk, especially if the gift is large, that the customer might be influenced or even induced to give your company or product a favorable review. There is a point where the compensation begins to distort the customer dialogue and relationship, and then it’s clearly unethical—and if you’re inducing a customer to alter their behaviour in exchange for a gift, it’s bribery.

Marketing professionals face regularly face questions of this kind. Where the organization appreciates a close partnership with a client, a thank-you gift may well be appropriate. The challenge is to choose one of the right sizes that expresses appreciation but doesn’t compromise the integrity of the client or the marketing organization.

Difficult Ethical Issues Marketing Professionals Face

Below is a list that shows how marketing professionals responded to a survey on the most difficult ethical issues they faced in 1985. [1] Today, with over 3,800 digital marketing tools (Martech) including artificial intelligence and big data analytics marketers face digital dilemmas. [2] In the ’80s, confidentiality and data ranked at the bottom of concerns.

Concerns in 1985 Examples Concerns in 2019 Examples
Bribery Gifts from outside vendors, payment of questionable commissions, Deception Misinformation and disinformation, False and influencer (disguised) advertising, pricing
Fairness Inducing customers to use services not needed Client Data, Storage and Privacy Ensure consumer info is not hacked, Identity theft
Honesty Misrepresenting services and exaggerating capabilities Product Safety and Sustainability Greenwashing, Advertising to Children, Food labeling, Advertorials
Pricing Differential pricing Market Research Confidentiality, Deceptive practices, disclosure, Protection of customer data

Notice that many of the responses include watchwords like “questionable” or “exaggerated.”  In marketing, the greatest challenge is to influence the behaviour of the target customer (by getting them to buy) without violating the customer’s trust or acting unethically. With the rise of social media, customers are in a much better position to share frank evaluations of products and services publicly, and this gives marketers a new means of capturing unbiased customer feedback. [3]

Take the challenge. How ethical are you?

The formidable research conducted in 1977 still remains a popular management case study. Why not explore how you may act in these ethical dilemmas? Read the case studies in the short article How Ethical Are You?[4]


  1. Lawrence B. Chonko and Shelby D. Hunt, “Ethics and Marketing Management: An Empirical Examination,” Journal of Business Research, Vol. 13, 1985, pp. 339–359.
  2. Boote, T. (2017, January 17). What Have Ethics Got to do with Digital Marketing? Digital Marketing Magazine http://digitalmarketingmagazine.co.uk/digital-marketing-features/what-have-ethics-got-to-do-with-digital-marketing
  3. O'Barr, W. (2007). Ethics and Advertising. Project Muse. https://muse.jhu.edu/article/221968
  4. Ovans, A. (2012, November 12). How Ethical Are You? Harvard Business Review. https://hbr.org/2012/11/how-ethical-are-you

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Introduction to Marketing I 2e (MKTG 1010) by NSCC & Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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