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CONSUMERBEHAVIOR
DR. CASSANDRADAVIS
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ETHICS
EXPECTATION GAP
Ethics is concerned with distinguishing
between good and evil in the world,
between right and wrong human actions,
and between virtuous and nonvirtuous
characteristics of people
Society’s
Expectations
of Business
Ethics
Ethical
Problem =
E/Gap
Ethics vs. Morals - Ethics refer to rules
provided by an external source, e.g.,
codes of conduct in workplaces or
principles in religions. Morals refer to an
individual's own principles regarding right
and wrong.
Actual
Business
Ethics
Ethical Problem
1950s
Time
Early 2000s
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ETHICS
Ethics = the study of good and bad,
right and wrong
For example, promoting human
welfare, maximizing freedom,
minimizing pain and suffering
Relativists = those who believe ethics
varies with social context
Universalists = those who believe right
and wrong remains the same across
cultures and situations
Ethics is a prescriptive pursuit: it tells
us how we ought to behave
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MORALMODELS
Immoral Management:
Customers viewed as opportunities
to be exploited;
They are willing to do almost anything
to achieve their personal goals and the
interests of their company as long as
they believe they can get away with it
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MORAL MODELS
Immoral Management:
Customers/Employees viewed as
opportunities to be exploited;
They are willing to do almost anything
to achieve their personal goals and the
interests of their company as long as
they believe they can get away with it.
Amoral Management:
Does not focus on what is fair for
customers/employees;
Believes that it is not necessary to consider
ethical principles when making business
decisions because it is supposed to be
perfectly legitimate for businesses to do
anything they wish so long as they stay
within legal and regulatory bounds
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MORALMODELS
Immoral Management:
Amoral Management:
Moral Management:
Customers viewed as opportunities
Does not focus on what is fair for
to be exploited
customers
High standards of ethical behavior
both personally and professionally
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DETROIT
FOOD
DESERTS
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Food Deserts
§
Building stores in low-income neighborhoods comes with unique
complications
A large customer base on food stamps creates erratic flows with a rush
of business in the beginning of the month when food stamps are
issued, but slow business at the end of the month
§
Insurance and security can be more costly in neighborhoods perceived
to be high crime
§
Workers from neighborhoods with high unemployment sometimes
need extra training for basic job skills.
§
The average supermarket operates on a 1 or 2% profit margin and
must be sustainable for at least a decade to recoup any profit, so
retailers can't afford to pick unprofitable locations
§
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Marketing Ethics
For marketers, ethics refers to rules
(standards, principles) governing the conduct
of organizational members and the
consequences of marketing decisions (Ferrell,
2005).
Ethical marketing is defined as “practices that
emphasize transparent, trustworthy, and
responsible personal and organizational
marketing policies and actions that exhibit
integrity as well as fairness to consumers and
other stakeholders” (Murphy, Laczniak, Bowie
and Klein, 2005).
Marketing ethics focuses on principles and
standards that define acceptable marketing
conduct
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UNETHICAL PRACTICES
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Ethical Issues in
Marketing
Research
§ Reliability
§ Researcher – marketing
manager relationship
§ Participants
§ Informed Consent
§ Manipulation
§ Deception
§ Psychological Stress
§ Anonymity
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Pollution
Ethical Issues
within the
‘Marketing Ps’
Framework:
Product
Product Warranties
Planned Obsolescence
Product Quality and Safety
Fair Packaging and Labeling
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Planned obsolescence
§ Planned obsolescence is a policy of producing
consumer goods that rapidly become obsolete
and so require replacing
ü Create a fashion change or demand for
a new style
ü Hold back attractive functional features
then implement in future models,
making the previous range obsolete and
unfashionable
ü Produce products that will break,
wear, tear or rot before they should
§ “No
one
ever
went
broke
underestimating the intelligence of the
American public.” H.L. Mencken
§ Who wants a 20 year old phone?
ü
ü
Technology and competitive forces
Consumer demand
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Product Quality and Safety
§ Most manufacturers want to produce quality goods
§ Damage or help reputation
§ Conflicts with consumer groups and regulators.
§ Product liability suits
§ Unsatisfied customers
§ How do you define ‘unsafe’?
§ Soda = obesity
§ Aggressively promoting overindulgence to illinformed or unwary consumers?
§ Satisfying the wants of customers by offering
products that ping consumer taste buds while letting
consumers make their own consumption choices?
§ Policing Public Taste?
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Fair Packaging and Labeling
§ Labels
§ Transparency
§ Simplicity
§ Warning labels
§ How strong?
§ How prominent?
§ Wording
§ Specificity
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Fair Packaging and
Labeling
§ Labels
§ Transparency
§ Simplicity
§ Warning labels
§ How strong?
§ How prominent?
§ Wording
§ Specificity
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Fair Packaging and
Labeling
§ “Putting calorie labels on menus
really has little or no effect on
people’s ordering behaviors at all”
§ Including calorie information for
each food item, plus the
recommendations on how many
calories are appropriate to
consume during one meal, or over
the course of a day, doesn't turn
people off a Big Mac (500-plus
calories).
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Price Fixing
Ethical Issues
within the
‘Marketing Ps’
Framework:
Price
Price Increases
Price Discrimination
Deceptive Pricing
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Price Discrimination
§ Occurs when a firm charges
different prices to different
customers for reasons other than
differences in costs
§ Amazon was criticized in the early
2000s for offering goods at lower
prices to people it identified as
new customers.
§ Amazon, Staples and videogame
store Steam vary price by
geographic location by as much as
166%. Such practices are legal, but
companies are reluctant to talk
about them.
§ Orbitz
§ Mac computers spend as much as 30%
more a night on hotels
§ Orbitz Shows Higher Prices to Mac
Users
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Deceptive Pricing
§ Occurs when a seller states prices or
price savings that mislead
consumers or are not actually
available to consumers
§ Claim prices are lower than
competitor
§ Going out of business sales
§ Bait and Switch – lured into the
store for a very low price but item is
not there
§ Amore expensive product is offered
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Ethical Issues
within the
‘Marketing Ps’
Framework:
Promotion
§ Bait and SwitchAdvertising
§ False and Deceptive Advertising
§ MisleadingAdvertising
§ Promotional Allowances
§ Marketing to VulnerableConsumers
§ Stereotypes in Advertising
§ Sex-basedAdvertising
§ Materialism/False Wants
§ Excess Consumption andWaste
§ Brainwashing
§ Too Much Power
§ Consumerism
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Children as
Vulnerable
Consumers
§ Ability to understand
intention to sell
§ Ability to understand“fine
print”--e.g.,
§ Batteries not included
§ Optional accessories
§ Health consequences
§ Values promoted (e.g.,
materialism)
§ Resultant family conflict
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Children as Vulnerable
Consumers
§ Playing unhealthy food advergames:
ü Increases nutrient-poor snack food
consumed
ü Reduces fruit and vegetables
consumed
ü Affects regular advergame players
more
ü No age differences
§ Playing healthy food advergames:
ü Increases fruit and vegetables
consumed
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MARKETING
STEREOTYPES
§
§
§
§
§
§
§
GENDER
RACIAL
WEIGHT/OVERWEIGHT
SES
DISABLED
LGBTQ
RELIGIOUS/NONRELIGIOUS
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MARKETING STEREOTYPES
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MARKETING
STEREOTYPES
§ Sexuality attitudes, at an implicit level,
have changed by about 33 percent
over the past decade
§ Race and skin-tone perceptions also
changed, just at a slower rate: about
17 percent for race attitudes and 15
percent for skin tone attitude
§ From about 2004 to about 2010, body
weight bias actually increased by 40
percent
https://www.wbur.org/commonhealth/2019/01/11/implicit-bias-gay-black-weight
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SEX-BASED
MARKETING
§ Women: like sex-basedads
for expensive products
only…
§ Men: Just likeit…
§ Dahl et al.(2013)
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FALSEWANTS/MATERIALISM
§ Definition of materialism:
a way of thinking that
gives too much
importance to material
possessions rather than to
spiritual or intellectual
things
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FALSE WANTS/MATERIALISM
Definition of materialism: a way of thinking that gives too much importance to
material possessions rather than to spiritual or intellectual things
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FALSEWANTS/ MATERIALISM
Feudalism: The dominant social system
in medieval Europe, in which the
nobility held lands from the Crown in
exchange for military service, and
vassals were in turn tenants of the
nobles, while the peasants (villains or
serfs) were obliged to live on their
lord'sland and give him homage, labor,
and a share of the produce, in
exchange for military protection.
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EXCESS CONSUMPTION AND WASTE
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EXCESS CONSUMPTION AND WASTE
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EXCESS CONSUMPTION AND WASTE
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BRAINWASHING
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Internet = Diversity of Views?
• With all the options
available, we still see
most people going to the
wealthiest media giants
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TOOMUCHPOWER
§ For bad
§ For Good too…
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TOOMUCHPOWER…
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TOO MUCH POWER…
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TOOMUCHPOWER…
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TOOMUCHPOWER…
Ethical Issues
within the
‘Marketing Ps’
Framework:
Distribution
§ Dumping
§ Export a product to a foreign country at a price
below the normal price of that country (create
monopoly)
§ Dealer Rights
§ The markets may at times give exclusive rights of
distributions to only certain dealers, who may
turn around and misuse such rights
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MARKETING =
GOOD
§ Marketing Affects Business
– Helps businesses find
markets for their
products and services
and sell them profitably
– Encourages competition
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MARKETING =
GOOD
•
Marketing Helps People
– Better products at lower cost
– Employment
• 1/4 to 1/3 of all jobs are
marketing-related
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MARKETING =
GOOD
•
Marketing Benefits Society
– Helps consumers make
more effective decisions
about what to purchase
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CONSUMERBEHAVIOR
DR. CASSANDRADAVIS
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What is CSR?
“Corporate Social Responsibility is the continuing commitment by
businesses to behave ethically and contribute to economic
development while improving the quality of life of the workforce and
their families as well as the local community and society atlarge”
- World Business Council for SustainableDevelopment
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M ILTO N F R I E D M A N
“There is one and only one social
responsibility of business - to use its
resources and engage in activities designed
to increase its profitsso long as it stays within
the rules of the game, which is to say
engages in free and open competition,
without deception or fraud.”
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h ttp s://op p ortu n ity.b u sin essrou n d tab le.org/ou rcom m itm en t/
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Caveat Emptor
§ Caveat emptor is the
legal concept of “let the
buyer beware” that was
pervasive in the
American business
culture prior to the
1960s.
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Market Failure
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§ Occurs when individuals acting
in rational self-interest (for him or
herself) produce a less than
optimal or economically
inefficient outcome
§ Government intervention should
counter market failure
ü Laws and regulations
ü Tax harmful activities
ü Economic incentives to promote fairness,
conservation, and sustainability (e.g., pollution
permits, pay landowners for ecosystem services)
The Consumer Bill of
Rights (1962)
§ law that codified the ethics of exchange between buyers and
sellers, including the rights to safety, to be informed,
to choose, and to be heard
The Right to Be Safe. Safe operation of products, avoiding
product liability
The Right to Be Informed. Avoiding false or misleading
advertising and providing effective customer service
§
The Right to Choose. Ability of consumers to choose the
products and services they want
§
The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate parties
§
§
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Profit, People and
Planet
• As the triple bottom line -• Business goals are always for profit, and
that
• Business and corporations are supposed to
take part in the efforts to fulfill people's
welfare and this
• Requires active participation in securing
the planet's sustainability
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Major Arguments Against the Assumption of SocialResponsibilities
§ Violation of Profit Maximization: Business is most sociallyresponsible
when it attends strictly to its economic interests
§ Costs: Cost of social action is passed on to consumers
§ Too Much Power: Business is already one of the most powerful
institutions in our society
§ Lack of Accountability: There are no direct lines of social
accountability from the business sector to the public
§ Lack of Broad Public Support: There is no broad mandate from
society for business to become involved in social issues. The
public is divided on the issue
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Major Arguments For the Assumption of SocialResponsibilities
A review of 95 studies over 30
years found that a majority
(53 percent) of businesses
showed a positive relationship
between profits and
responsibility, while 5 percent
showed a negative
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Costs of Unethical Behavior and Benefits of
Ethical Behavior
Costs of UnethicalBehavior
§ Loss in market share
§ Loss of business reputation
§ Increased regulations by regulatory
authorities
§ Loss of consumer confidence, and consumer
boycott of products
§ Employee turnover
§ Abuse of the environment
§ Decreased returns on investment to
shareholders
§ Compensation or damages to thoseharmed
Benefits of Ethical Behavior
Avoid lawsuits and expensive settlements
Avoid damage to reputation of thebusiness
Attract and retain goodemployees
Boost employee morale, trust andloyalty
Longer term business performance and
sustainability
§ Goodwill between the business andits
community
§ Benefits all stakeholders
§
§
§
§
§
Source: Stephen Robbins, Rolf Bergman, Ian Stagg and Mary Coulter (2006) Management, 4e, NSW: Pearson Prentice-Hall, pp.160-162.
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CSR is an influence on
CSRconsumer
is an influence on consumers…
75%
Purchasing a car or major appliance
52%
Choosing a bank/financial services
company
72%
53%
70%
Choosing an insurance company
Choosing a cell phone provider
Selecting a home builder
Purchasing consumer products
50%
68%
40%
68%
50%
Company’s reputation
61%
47%
Company’s CSR
FGI Research Inc.
Q1. Please rate how likely your decisions are to be influenced by a company’s
reputation when doing any of these following activities. Q7. How likely are your
purchasing decisions to be influenced by a company’s corporate social
responsibility when doing any of the following activities?
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Consumers and CSR
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67
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FAIR TRADE EFFECT
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SUSTAINABILITY LIABILITY
GENTLENESS
STRENGTH
Potential Negative Effects of Ethicality on Product Preference
Sustainability Liability: the positive effect of product sustainability on consumer preferences is
reduced when strength-related attributes are valued, sometimes even resulting in preferences
for less sustainable product alternatives (i.e., the “sustainability liability”)
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Do We Really
Care About
Ethics?
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CSR does matter to the public
Most customers will not pay more for products from responsible companies.
BUT
Increasingly the public is expecting corporations to act responsibly.
When forming a decision about buying a
product or service, how important is it to
you that it shows commitment to social
responsibility?
Behavior & Attitudes Marketing Research, 2003
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Consumer Attitudes: What elements of CSR have
priority?
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§
Create jobs and provide a
chance for upward
mobility
§
Treat employees with
respect
§
Offer salaries and benefits
that help employees
reach their personal goals
RESPONSIBILITY to EMPLOYEES
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McDonald's
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AMAZON
Amazon hired an army of
employees to say nice things
about it on Twitter, and it shows
how big its reputation problem
has gotten - SFGate
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Greenwashing
§ The act of misleading
consumers regarding
environmental practices of a
company or the environmental
benefits of a product or
service
§ Ads, packaging, products,
websites, emails, videos…etc.
§ Most common in three
categories: kids
products/services, cosmetics,
and cleaning products
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Consumer Social
Responsibility (ConSR)
“the moral principles and standards
that guide the behaviors of
individuals as they obtain, use, and
dispose of goods and services”
(Muncy and Vitell 1992)
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ConSR Shows Up in Three
Ways
#1
Expressed activity with respect to specific
causes – such as donations, voting, or
willingness to be involved in protests and
boycotts
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ConSR Shows
Up in Three
Ways
#2 Consumption attitudes and behaviors
§ Responsibility to Stakeholders (consumer ethics): a
responsibility to act ethically which usually involves
the obtaining, using, and disposing of goods and
services
§ Responsibility to Society as a Whole: consumers
have a responsibility to avoid societal harm and
even to act proactively for social benefit which may
involve all three facets of consumer behavior—
obtaining, use and disposal
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A key limitation here is that ethical
consumers "carry" salient moral motives and
that these are readily transformed into
ethical obtaining, using, and disposing of
goods and services
Differences of opinion in terms of what is
ethical. For example, some economists and
consumers argue that sweatshops are a
good thing
Consumption attitudes and behaviors
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Think Break
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#3 Expressed opinions in
surveys or other forms of
market research
ConSR Shows Up in Three Ways
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