American Marketing Association, Antitrust, Bureau of Competition, Clayton Act of 1914, Code of Ethics, Ethics, Federal Trade Commission, Federal Trade Commission Act of 1914, Greg Dean, Gregory Dean, HIPAA, IBM, Marketing, Marketing Research, moral idealism, Morals, Research, Robinson-Patman Act of 1936, Sherman Antitrust Act of 1890, utilitarianism
A marketing company is faced with a plethora of moral challenges. Considering that it is the responsibility of a marketing company to provide services on behalf of other companies, it stands to reason that any unethical decision or approach reflects on the company being represented by the marketing firm. Moreover, antitrust concerns are always prevalent due to the fact that the marketing company has access to internal knowledge of many companies—some of which are competitors in the same market.
Unlike other types of businesses, a marketing company must be trusted with a client’s most valuable asset—their customer data. In many cases, customer records for several companies are comingled and hosted on a common platform. The marketing company is responsible for protecting the integrity of the information, but at the same time ensure that the proprietary information is not shared with competitors. All the while, the marketing company is expected to create revenue-producing campaigns.
A marketing company’s success is based entirely on the performance and effectiveness of their strategies and campaigns. If a marketing company represents several clients in the same industry, there is an inescapable moral dilemma. The marketing strategy for one company could benefit from knowing the marketing strategy and corporate direction of another. The marketing industry is crowded and fierce. Pressure to retain a customer could lead to unethical decisions by campaign managers and salespersons within a marketing company.
The temptation for a salesperson to leverage information from one account for the purpose of producing revenue-generating campaigns for another is not uncommon. Pressure from upper management, coupled with personal financial responsibilities, can influence the salesperson to make immoral decisions. If caught, the individuals responsible can face serious legal problems. Velasquez (2006) defines one of the five characteristics of moral standards as one “not established by law or legislature” (p. 9). Marketing ethics are based on—among other things—advertising truthfulness and honesty, and privacy in database marketing.
Antitrust laws were designed to allow businesses to compete fairly. Having access to a competitor’s playbook—in this case, their marketing strategy—exposes an unfair advantage. The Federal Trade Commission created the Bureau of Competition to promote competition and protect consumers (Feinstein, 2010). The Compliance Division of the Bureau of Competition would be responsible for investigating complaints and enforcing the laws. Any legislation, passed or pending, should be in the foreground of all decisions made by an agency in the marketing industry.
A proven record of capabilities and performance is imperative, but not at the risk of a bad reputation. A marketing company that cannot be trusted to represent the best interest of their client’s will not sustain business. Moreover, the same effort and expertise should be used on every marketing campaign—regardless of the client. Ethical guidelines are critical to establishing a trustworthy reputation in the marketing industry. Enforcing the guidelines is critical for maintaining the reputation and business.
Before ethical guidelines can be established, research regarding ethics in the marketing industry must be conducted. Whether the research is empirical or conceptual, the results will be enough to formulate a series of ethical guidelines for the marketing industry. Research should continue until there is enough information regarding all current ethical dilemmas in order to establish an internal corporate ethical policy. The most prevalent ethical issues facing the marketing industry are product safety and reliability, advertising truthfulness and honesty, fairness in pricing, and forthrightness in selling (Murphy, 2002).
The American Marketing Association has established a code of ethics that provides a strong framework for which an internal, company-specific, code of ethics can be developed. The company’s ethical guidelines should include details regarding product development, promotion, distribution, pricing, and market research. Each area has its own unique ethical challenges. For example, ethic issues regarding promotion would encompass false and misleading advertising. Coercion is associated with the distribution or supply-chain process. The code of ethics needs to take into consideration every aspect of the business.
Marketing research has always been under the microscope of morally sensitive consumers. No one is comfortable giving personal information to a complete stranger. A corporate policy on ethics would offer support to the researchers in the field, and help alleviate any concerns by the survey audience. A published policy on the storage, usage, and privacy of information collected in the field will put at rest any concerns by the general audience. Additionally, an acceptable usage policy could serve as an addendum to the corporate code of ethics.
Corporate ethical guidelines concerning antitrust issues are becoming more important today than ever before. While the current code of ethics developed by The American Marketing Association concentrates on issues affecting consumers, there is little written regarding antitrust or business-to-business relationships. Legislation on the subject of antitrust has been in effect for over one hundred years. The aim of antitrust legislation is to create a level playing field for competitors (Fontenot, 2010). At the same time, however, antitrust laws and corporate adopted ethic guidelines are designed to protect the organization.
A corporate guideline of ethics needs to go beyond the issues covered by legislation. The Sherman Antitrust Act of 1890, the Clayton Act of 1914, the Robinson-Patman Act of 1936, and the Federal Trade Commission Act of 1914 together ensure inter-firm competition without interfering with the spirit and creativity of the marketing industry. Standard Oil, Alcoa, American Tobacco, IBM, and Microsoft—to name a few—have faced charges for antitrust violations. These situations may have been avoided if an internal corporate code of ethics was developed and enforced.
The company’s code of ethics should be a culmination of two moral philosophies—moral idealism and utilitarianism. The moral idealism approach assumes many expectations drawn from industry standards to establish a universal acceptance approach (Sobel, 2010). The utilitarian approach will take into consideration social costs and benefits of the policies defined in the corporate code of ethics (Velasquez, 2006, p. 60).
The company’s code of ethics will ultimately define the ethical culture of the organization.
At one time or another, every company is faced with moral challenges. The need for scruples spans every department at every level. The need for written policies regarding the company’s position on certain ethical issues is crucial. A company-wide adopted code of ethics demonstrates the company’s moral responsibility. This is not only important to the employees, but many clients and prospects insist on such a policy. It is not unreasonable for a potential client to ask for documentation concerning service levels, continuity plans, and ethical standards.
Certain types of business conducted within a marketing company are bound by pre-existing regulations. For example, if a marketing company were to produce a campaign that leveraged information—such as personal health data—the HIPA regulations would need to be followed. Similarly, under certain conditions, the Sarbanes-Oxley Act of 2002 would be enforced to ensure the proper reporting of financial information resulting from campaigns.
A formal code of ethics should include sections covering the acceptable use of the company’s inter- or intra-net. A policy explaining the proper etiquette and protocol of communicating electronically is very important. A large percent of daily communication between employees and clients happens via email. The casualness of an email message sometimes lends itself to the inadvertent mention of sensitive company or client information.
Electronic communication has become the standard. This method of communication, however, exposes several vulnerabilities and concerns. Security of everyday, casual email messages is non-existent. The corporate code of ethics should address problems related to the flippant attitude sometimes portrayed in electronic communication. Casual comments can very easily be taken out of context and leveraged against a company for proving a lack of ethical standards.
Email etiquette and voice mail policies—at the corporate level—need to be well documented, distributed, and enforced as part of a corporate code of ethics. Email messages are no longer used only to send quick messages to the next cubicle (Woloch, 1999). Important corporate communications, such as policies and contract negotiations, are distributed across email channels. The simplistic nature of email communication lends itself to vulnerabilities as it is used more often to communicate sensitive information.
One of the most important considerations for adopting a code of ethics is current technology. New technologies are realized every day. Companies are beginning to leverage technologies that did not exist a decade ago. Social networking, instant messaging, and text messaging are becoming mainstream communication tools for businesses in every industry. The code of ethics adopted by any company should include current issues that are easy to understand and enforce. The code of ethics for a marketing company will need to expand beyond the typical policies for interoffice communication. Social media has become a viable communication channel for corporate marketing and advertising.
A company code of ethics should never be a company secret, but rather the roadmap for morality.
Every employee, at every level, within the corporate structure should be trained to understand, abide by, and enforce the company’s code of ethics. The employees are the face and voice of the company. Every action is subject to scrutiny. The company will succeed by standing strong, unified, and embracing the adopted code of ethics. However, when an employee recognizes a situation that is contrary to his or her own moral virtues, there needs to be a mechanism for grievance.
The company’s code of ethics must include the procedure for reporting unethical behavior. A formal grievance procedure will encourage employees to become actively engaged in enforcing the corporate code of ethics. Moreover, the company is making a global statement regarding the widespread acceptance of the code of ethics policies. The grievance procedure will need to include sections explaining the differences, and reporting steps, between an illegal action and an unethical action. An illegal action, for example, should be reported to authorities responsible for upholding the laws.
Once adopted, the code of ethics will be circulated throughout the organization. Every employee will be required to attend training sessions that will enforce the importance of a company code of ethics on ethics while explaining the details of each internal policy. Most large organizations have an extensive human resources department. The HR department is already well versed in the methods and techniques for training employees on company policies and procedures. The challenge, of course, is managing competing schedules and the demands of clients while isolating the necessary time to train every employee.
While it is true that companies conduct ethics training to comply with legal mandates, positive fallout includes increased employee morale and retention (Tyler, 2005). With a well-defined code of ethics and a company-wide adoption of the policies, ethical issues can be addressed before they become a concern. As policies within the code of ethics change to address the company’s social costs, new training will be necessary to implement and enforce these policies. The corporate code of ethics is always evolving.
A marketing company must not only adhere to their internal policies, but also inherit the policies of their clients. Every marketing company eventually becomes an extension of other businesses. Any wrongdoing by the marketing company is reflected upon its clients. In some cases, as with Nestle in the 1960s, the burden of responsibility is entirely with the company—not the marketing firm or outside vendors. After many years of unethical behavior resulting in public boycotts, Nestle pledged to adopt the WHO/UNICEF International Code of Marketing of Breast-milk Substitutes (Sikkink, 1986). The development of a formal code of ethics by Nestle Corporation might have thwarted the unethical actions by their marketing and advertising team.
Businesses of every size leverage marketing companies for promoting their products and services. Any marketing company, bound by its own code of ethics, will accept projects that will not jeopardize their moral standards. Ethical dilemmas occur when a marketing firm is forced to choose between their moral compass and their bottom line. The policies outlined in the corporate code of ethics are only a guideline for moral standards. The decisions faced by a marketing company may not be as black and white as a code of ethics. In these situations, the company must look beyond these policies.
Companies find themselves, many times, faced with an ethical dilemma. In many cases, the problem is not internal to the company, but the result of a decision made by a client. A marketing company can be asked to develop a marketing strategy for a controversial product. There will always be a desire to be profitable, but to what end? A formal statement of ethical principles will add the necessary structure for an organization to become strong moral stewards. At the same time, a code of ethics can cause personal conflict. A marketing company armed with a code of ethics becomes the moral compass for their clients and a beacon of societal principles for the consumer.
Feinstein, R. (2010). Bureau of competition: 2010 user’s guide. Retrieved August 28, 2010, from http://www.ftc.gov/bc/BCUsersGuide.pdf
Fontenot, R. (2010). Antitrust issues in marketing. Retrieved August 29, 2010, from http://hercules.gcsu.edu/~rfonteno/Strategic/Anti-trust%20Issues%20in%20Marketing.pdf
Murphy, P. (2002). Marketing ethics at the millennium: Review, reflections, and recommendations. Retrieved August 28, 2010, from http://www.ethicalbusiness.nd.edu/pdf/Marketing_Ethics_Millennium.pdf
Sikkink, K. (1986). Codes of conduct for transnational corporations: The case of the WHO/UNICEF code. [Electronic version] International Organization, 40(4), 815-840. Retrieved August 27, 2010, from JSTOR: http://www.jstor.org/stable/2706830
Sobel, J. (2010). Kant’s moral idealism. [Electronic version] Philosophical Studies, 52(2), 277-287. Retrieved August 27, 2010, from http://www.springerlink.com/content/h386362587434775/fulltext.pdf
Tyler, K. (2005). Do the right thing: ethics training programs help employees deal with ethical dilemmas Retrieved August 29, 2010, from http://findarticles.com/p/articles/mi_m3495/is_2_50/ai_n11841923/
Velasquez, M. (2006). Business ethics – concepts and cases. Pearson Prentice Hall. New Jersey
Woloch, L. (1999). Email etiquette. Retrieved August 27, 2010, from http://www.theproductivitypro.com/newsletters/Number%202%20March%201999.htm