Chap Et Mark

8/3/2019 Chap Et Mark

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Ethics of Marketing

Presented by:

Saeed Zaman, Kafeel Ahmed

Presented to:

Syed Zeeshan Arshad


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What is Marketing?

Marketing is a total system of activities designed to

plan, price, promote and distribute want satisfyingproducts, services and ideas to target markets in

order to achieve organizational objectives.

Stanton and Futrell


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Markets vs Bazaars


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Markets & bazaars

-- Business has only two basic functions; maximization

of profits and technologies

-- Anonymous

-- A business makes money but doesnt maximize it as

it only maximizes relations

-- Anonymous


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Markets vs. Bazaars

Markets

Profit maximization

(utility maximization)

Individual is autonomous

Prices are determined

through supply and

demand curve

Profit is directly

proportional to the

demand and resources

Bazaars

Profit is minimal

(relationship

maximization)

Individual is not

autonomous

Prices are set due tosocial interaction


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Thus, markets exist in civil

(capitalist) society.


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The role of Government

Government is needed for the security of capitalist

property (firms)...

- Consumer is the king of the market

- Firms should have complete information about market

trends.

Government should realize the need of lower income

level people..

Government is needed to respect the rights of people

and it should not affect prices


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Perfectly Competitive market

Favourable for both; supplier

and consumer

Economic efficiency (profit

maximization) and technicalefficiency (maximization of

output) are achieved

All spheres of justice are

inferior in capitalism

Concepts of haram and

halal do not exist in

capitalism


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Imperfectly Competitive

Market As capitalism matures, perfectcompetition gets eliminated

Prices are higher and quantitylevel is low

It fails to satisfy efficiencyand maximization ofproduction

Price discrimination is present

Economic efficiency &technical efficiency isdifferent

Consumer is not sovereign


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Comparison

Perfect market charges lowest cost to maximize

customer preference so that each consumer can get

goods for the utility maximization

Imperfect market charges monopolistic cost to

maximize profits and thus profits are earned

abnormally through the exploitation of economies ofscale


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Ethics of Advertising

Objective of advertisements:

To provide information regarding price, quality,

durability, safety etc of the product.

Give Corporation human and personal characteristics

i.e. Branding.

Thus, rationally persuading consumers to buy your

product.


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What advertising shouldnt do ?

Advertising shouldnt persuade consumers irrationally,

i.e. by tempting, providing manipulated information orby emotional appeals.


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Reason

Irrational persuasion misguides the consumer to

buy the prod

uct which red

uces his own right to

choose, thereby, reducing freedom.


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What is practically being done?

Emotional appeals are aroused by targeting children,

poor and illiterate people.

Effectiveness is overstated and avoids the full

disclosure of its negative effect.


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Why it shouldnt be done?

It harms the profit maximization in the long run due to

reduced cons

umer loyalty, which in t

urns harms the

interest of the company itself.


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Major Critique of Ethics of

Advertising Paternalism, which restricts consumers to buy certain

products harmful for themselves, e.g. cigarettes.

Cigarettes are injurious to health

Critique in the light of capitalism because it restrictsprofit maximization.


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Other Critiques

Advertising increases cost which thereby, increases the

price of the product paid by the consumer.

Advertising increases consumption which is decreasing

the amount of non-renewable items in the long run,

e.g. Sui Gas.


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Is it harmful for Capitalism?

Advertising creates monopolized markets and doesnt

promotes perfect competition and later on, creates

competition in monopolized markets as well.

However, capitalist policies in practice are concerned

with the sustainence of these imperfect markets than

the perfect ones.


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What is not at all acceptable in

Advertising?

Using the word guarantee without guaranteeing anything.

Quoting misleading prices.

Failing to disclose defects.

Making misleading comparison with competitiveproducts.

Reproducing well known brands.


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Who is held responsible for

misleading ads?

Firm, who owns the ad.

Employee who makes the ad, or guides the third party

to make the ad.

The media, or the advertising agent. Usually, the thirdparty.


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Any of the three may not be held

responsible only when

The advertiser did not intend to mislead by statement

or implication.

The advertiser did not know that what the ad was

implying or stating was false.


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Managing Reputation and

Retaining Consumer

Loyalty


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Consumer Loyalty

Consumers and Firms strong link

Long term profitability and Consumer Loyalty


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Consumer Loyalty

Honesty should be practiced by firms

But should firms have the same moral standardsas those of civil society?


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Consumer Loyalty

Management to practice Ethics of Care

Kant & Rawls Contract theory

Contract theory assumptions - unrealistic


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Consumer Protection


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Consumer Protection

Markets do not respect consumer rights

Government intervention needed

Neo Classical theorists not in favor ofintervention

Due Care theory (also called paternalist)

proposed


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Consumer Protection

Larger firms have greater social responsibility

Liable to pay compensations for injuries

But costs increase substantially


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Consumer Protection

External costs borne by the Capitalist State

through Taxation

However, Capitalism does not requireprofit

maximization at the cost of minimization ofsocial welfare


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Consumer Protection in

Pakistan Consumer is an integral Part in Capitalist Order. Capitalist Governments ensures the rights of Consumers

by Providing Legislations.

CRCP (Consumer Rights Commissions of Pakistan)

established in 1998.


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CRCP

Mission Statement

Articulating and promoting the interest and rights of

consumers and facilitate the emergence of an

organized consumer movement in Pakistan


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Punjab Consumer Protection

Act 2005 Based on Model Law provided by CRCPUnder which:

Manufacturers are liable for defective Products.

Inadequate warning of likely effects countstowards Defectiveness.

Product Characteristics Disclosure Required.


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Cntd..

Issuance of Receipts. Formulation of Refund and Return Policy.

False, misleading and deceptive sales

information is prohibited.

DCOs are empowered to hear complaints of

non compliance.

Complaints forwarded to COncumer Courts

working under CPC.


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Cntd..

Task of provincial Consumer Protection Council

is to prohibit the sale of defective products

CPC impose punishments and fines onmanufacturers who violates the provisions of

this Act


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Pakistan Standards and quality

Controls Authority Act (1996) No Representation of Consumer in Governing

Body and in the Advisory council

1 representative of Consumers 5 industrialrepresentatives on the board

No complaint procedure defined


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Pakistan Standards and quality

Controls Authority Act (1996) No complaints are entertained

No provision for compensation of consumers

who have suffered harm due to violation

Fines & imprisonment for violators of Act

Quality Standards not applied to agricultural

sector goods & services


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Other Legislations

Islamabad Act (1995)

NWFP Consumer Protection Act (1997)

Natural Gas Regulation Authority (2000)

Drugs Acts (1940)

Drugs Acts (1976)


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Other Legislations

Pakistan Penal Code (1860)

Contract Act (1972)

Sales of Goods Act (1936)

Fatal Accidents Act (1955)

Motor Vehicles Act (1969)


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Orthodox and Revisionist Approaches

towards Capitalist Marketing

Orthodox Approach

Rejects Capitalist Order and their practices

Prefer infaq (charity) form of consumption

Minimize and Restricts Consumption

Satisfaction of Self is required

Self is not satisfied in capitalist marketing

Maintenance of Low prices monitored by

Muhtasib


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Six Necessities of Orthodox Followers

Food

Clothing

Dwelling Household equipment

Family

Income


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Six Principles of Marketing in Orthodox View:

Enter the market to enjoin good and

forbid evil

Strictly Limited time in market

Continuous hymn of Praising God

Avoid avarice ness and covetousness

Limit his consumption

Close the shop as soon as earned enough

to satisfy needs


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Revisionist Approach

Islamic States in Revisionist approach should

not regulate with respect to:

It cannot charge monopoly price

It cannot levy customs duties or impose

quantitative restrictions

It cannot establish exchange control It cannot levy consumption taxes


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Cntd..

It cannot protect industry

It cannot levy income tax, corporate tax andany tax for the performance of state

functions

It cannot impose death duties

It cannot levy any indirect taxes


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CONCLUSION

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