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Ethics of Marketing
Ethics are moral principles that guide business behaviour. Marketing ethics refers to the moral
aspects of firm’s marketing strategies. Unethical marketing behaviour exists when moral codes of
practices are not adhered to and when such actions are offensive to members of the general public.
Bait -and-switch marketing techniques are considered to be unethical. Once customers are hooked
onto the deal (the bait), they discover that it is no longer available and change to purchasing another
more pricey alternative (the switch) from business.
Other examples of misleading, deceptive or unethical advertising techniques include:
> Health fraud
> “Get rich quick”
> Travel fraud
> Product misrepresentation using brand names similar to well-known trademarks.
> Pester power- involving using children to pester their parents into buying certain products.
> Confusing marketing – using a marketing strategy that involves businesses swamping customers
with excessive price information.
Marketing Objectives
Marketing objectives are targets that the marketing departments wishes to achieve. These
objectives should be compatible with the firm’s overall objectives. Marketing objectives may include
> Maintain/increase market share
> Product positioning
> Consumer satisfaction
> Diversification
> Market development
> New product development
> Product innovation
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SAMPLING
Sampling is the practice of selecting a small group (or sample) of the population for a particular
market for primary research purpose.
Sampling methods:
There are five main methods of sampling : quota, random, stratified, cluster and snowballing.
1. Quota sampling
Quota sampling is based on market segmentation, i.e. grouping research respondents according to
shared characteristic s such as their age, gender, or occupation. It is most commonly used sampling
method in market research.
2. Random sampling
Random sampling also know as probability sampling, involves, giving everyone in the population an
equal chance of being selected for the sample. The respondents are often randomly chosen by a
computer using information from a database. Airlines might use this method to get feedback from
its business and first-class passengers.
3. Stratified sampling
Stratified sampling is similar to quota sampling in that it involves segmentation. The population is
likely to be heterogeneous so needs to be subdivide into segments (known as strata) that share
homogeneous or very similar characteristics. This method benefits from using samples that are more
representative of a particular market segment.
4. Cluster
Cluster sampling is used when getting feedback from respondents involves too much time, travelling
or money. For instance, it would be too time consuming and costly for a multinational to randomly
interview people across all the countries that it operates in, instead, it is more cost effective to select
several geographical areas (known as clusters) and then randomly interview people within each of
the chosen clusters.
5. Snowballing
Snowballing refers to surveys or interview carried out with individuals who then suggest other
friends, family or colleagues to increase the sample. Businesses use this technique when they are
unable to get hold of appropriate respondents since the population is not clear. Snowballing is
common in the financial services such as health insurance, motor vehicle insurance and personal
financial planning.
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MARKET SEGMENTATION AND CONSUMER PROFILES
Market segmentation – is the process of splitting a market into distinct groups of buyers in order to
better meet their needs. The main method of market segmentation is based on demographics,
geographic and psychographics factors.
Targeting – means that each distinctive market segment can have its own marketing mix. Different
markets can also be targeted, depending on whether they operate in niche, differentiated or mass
markets.
Consumer profile – are the characteristics of customers and consumers in different markets, such as
their age, gender, income and purchasing habits.
Segmentation by demographics.
Demography is the study of the characteristics of the human population within certain areas or
region. It looks at a range of variable including:
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Age
Gender
Race and ethnicity
Marital status
Religion
Language
Income and socio-economic class
Segmentation by geographic factors
 Location
 Climate
Segmentation by psychographic factors
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Status
Values
Culture
Hobbies and interests
Advantages of segmentation
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Better understanding of customers
Increase sales
Growth opportunities
Gives support to product differentiation
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It is not always be possible for a business to effectively carry out market segmentation.
Marketers often use the acronym DAMAS as a set of criteria for ensuring successful
segmentation:
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Differential – segments must be unique and respond to the different marketing mixes of
the business.
Actionable – businesses must be able to provide suitable products to cater for each
segment.
Measurable – the size and purchasing power of each segment must be quantifiable.
Accessible – the business must be able to reach customers in customers in a costeffective way.
Substantial – each market segment must be sufficiently large in order to generate
profits.
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TARGETING
Targeting means that each distinctive market segment can have its own marketing mix. Different
markets can also be targeted, depending on whether they operate in niche, differentiated or mass
markets.
Niche marketing
Niche marketing, also know as concentration marketing, targets a specific and well-defined market
segment.
Examples : Businesses that provide speciality goods such as Armani suits, Ferrari cars and Cartier
watches operate in niche markets, catering for consumers interested in high-end luxury goods.
Advantages of niche marketing:
 There is better marketing focus since a specific market segment is being targeted.
 Since there is less competition, businesses can charge higher prices for their exclusive
products. This will help the business to gain higher profit margins.
 Firms become highly specialized in meeting the need and wants of their niche target market.
Disadvantages of niche marketing:
 Limited number of customers
 Few opportunities to exploit economies of scale.
 Highly successful and profitable niche markets may attract new entrants into the industry.
Undifferentiated marketing (mass marketing)
Undifferentiated marketing, also know as mass marketing or market aggregation, is the strategy
that ignores targeting individual market segments. Instead a large number of different market
segments are targeted in order to maximize sales volume.
Example : Coca-Cola, Nike, Nokia, Apple and Microsoft all use this strategy to all market segments in
the same way.
Advantages
 Huge potential economies of scale from being able to supply products in a mass market.
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 There is no need to tailor different marketing mixes for different segments, this can save the
business a lot of time and resources.
Disadvantages
 Competition can become quite fierce as customers must be persuaded to buy the firm’s
product rather than to buy from a rival business.
 Mass marketing is not suitable for all businesses because there are high entry barriers for
mass production.
Differentiated marketing
Differentiated marketing, also know as selective marketing or multi-segment marketing, is the
targeting strategy that tailors a marketing mix to each market segment.
Advantages
 Customers can enjoy a more satisfying experience since a tailored marketing mix caters for
their specific and individual needs and wants.
 Risks are spread out by focusing on several market segments. Hence decline in one market
segment has less of an impact on the overall business.
Disadvantages
 Differentiated marketing is costly.
 Excessive differentiation can drain a firm’s resources and confuse customers.
(In reality, many businesses will have operations that use all three targeting
Strategies)
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POSITIONING
Market positioning is analytical tool that ranks different products, services or firms in relation to
others in the market according to the views of the general public.
Example : most customers perceive Evian and Perrier as superior brands of bottled water.
There are three stages of positioning:
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Identify the competitive advantages of the product.
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Decide in which aspects of these strengths should be marketed.
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Implement the desired positioning by using an appropriate marketing mix.
Corporate image
Corporate image plays a vital part in the success of businesses. There are vast possibilities for a firm
to improve its corporate image, such as through implementation of corporate social responsibilities
(CSR). Some CSR activities include providing educational support for schools, colleges and
universities. Firms might also sponsor environmental projects to enhance their corporate image.
A poor image will not only drive customers away, but it can also impose damage that is irrevocable.
Example : In 2007, Pakistan International Airlines was banned from flying European Union countries
due to safety concerns. In the same year, America also raised concerns over the poor image of
Garuda Airways, the Indonesian airline carrier, due to its poor safety record.
Unique selling point (USP)
Unique selling point or unique selling proposition, refers to any aspect of a product that makes it
stand our from those offered by rival businesses. The USP explains why customers buy the product
over rival brands.
A USP can be major source of competitive advantage and therefore firms will want to emphasize
their product’s USP in order to attract customers. This again can help develop firm’s image to
differentiate itself from competitors.