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Ethics in Marketing and Consumer
Protection


To know the ethical dilemmas in marketing



To understand the reasons for marketing ethical behavior



To learn the initiatives taken in India towards promoting healthy competition



To know the distinction between protecting consumers interest and public interest



To know the initiatives taken by the United Nations towards Consumers Welfare

Next to doing the right thing, the most important thing is to let people know you are doing the right
thing
...
ROCKEFELLER

Ethics and Marketing
The task of marketers is to influence the behavior of customers
...
Broadly speaking, these tools include the
design of a product, the price at which it is offered, the message used to describe it, and the place
in which it is made available
...
To act in an ethical fashion is to conform to an
accepted standard of moral behavior
...

It is easy to be ethical when no hardship is involved – when a person is winning and life is
going well
...
These
pressures arise in all walks of life, and marketing is no exception
...
In any situation they must be able
to distinguish what is ethical from what is unethical and act accordingly, regardless of the
possible consequences
...
Over 90 per
cent of the Fortune 1,000 companies have ethics codes, as do many smaller business
...
In addition, ethics codes strengthen a company’s hand in dealing with customers or
prospects that encourage unethical behavior
...

However, every decision cannot be taken out of the hands of the manager
...
It is not realistic for an organization to
construct a two-column list of all possible practices, on headed ―ethical‖ and the other ―unethical
...


Behaving Ethically In Marketing
Marketing executives should practice ethical behavior because it is morally correct
...
So let’s consider
four pragmatic reasons for ethical behavior:


To reverse declining public confidence in marketing
...
Though such practices are limited to only a small proportion
of all marketing, the reputations of all marketers are damaged
...
Companies must set high ethical standards and enforce
them
...




To avoid increases in government regulation
...
Business apathy, resistance, or token
responses to unethical behavior simply increase the probability of more government
regulation
...
Moreover,
once some form of government control has been introduced, it is rarely removed
...
Marketing executives wield a great deal of
social power as they influence markets and speak out on economic issues
...
If marketers do not use their power in a socially
acceptable manner, that power will be lost in the long run
...
Buyers often form an impression of an entire
organization based on their contact with one person
...
You may base your opinion of a retail store on the behavior

of a single sales clerk
...
‖

Healthy Competition And Protecting Consumer’s Interest
Competition – Challenges and Changes : Globalization and progressive liberalization of trade
during the last decade opened a widening atmosphere giving rise to certain inevitable tasks and
challenges for every country around the globe
...

The World Trade Organization’s (WTO) treaties and agreements, their implications on trade and
commerce have already compelled many countries to review their competitiveness of trade and
economic policies not only within their economy but across the frontiers of other countries also
...
The law which was originally enacted to deal
with market and competition (i
...
, the Monopolies and Restrictive Trade Practices Act, 1969)
addressed the problems concerning Monopolistic, Restrictive and Unfair Trade Practices only
...
Given the fact that the
structure of world economy and trade has taken rapid strides and undergone vast changes, India
has been taking adequate steps for integrating itself with the new changes and challenges thereby
market functioning, positioning becomes effective and competitive
...
10
...
S
...
S
...
The Committee submitted its report on 22nd
May 2000
...

This Bill became an Act after receiving assent from the President on 13th January 2003 and a few
sections of the Act have already come into force by virtue of two separate Government notifications
[i
...
, S
...
340 (E) dated 31st March, 2003 and S
...
715 (E) dated 19th June, 2003]
...

What is Competition?
A broad definition of Competition is ―a situation in a market in which firms or sellers independently
strike for the buyers’ patronage in order to achieve a particular business objective, for example
profit, sales or market share‖ (World Bank, 1999)
...
For a free market to be in existence the handicap is that for a
given distribution of income of those who can pay the highest price will most be able to purchase
the goods regardless their relative needs
...
In an unregulated free market, in certain circumstances it could
be of greater benefit to the owner to withhold goods from market in order to extract a higher price
...

Competition Policy and Law: The Competition Policy is regarded as genus, of which, the
Competition Law is specie
...
The central economic goal of the Competition
Policy is the preservation and promotion of the competitive process
...
In
conditions of effective competition, competitors will be having equal opportunities to compete
for their own economic interest and therefore the quality of their outputs and resource
deployment will be given top priority in order to sustain and succeed in the market by meeting
consumers’ demand at the lowest possible cost
...

The Sherman Act passed in 1890 was the first Federal Anti-Trust Laws
...

The Clayton Act is a civil statute (carrying no criminal penalties, was passed in 1914 and
significantly amended in 1950)
...
It attempts to nip monopolies in the
bud by specifying practices that monopolists used to gain monopoly power
...
However, there was Federal Trade
Commission to monitor violations of the Act
...

The UK Competition Act, 1988 which came into force in March 1, 2000 is based upon the
Competition Law of the European Commission
...

The Enterprise Act introduced the next major reform of UK Competition Law, 2002 which
concentrated on a new regime for the assessment of mergers and markets in the UK
...
To
regulate the competition and its practices, most of the countries have the competition
authority commonly known as the Competition Commission
...
The renewed efforts of the Government in implementing a Competition Act, 2002 is a
laudable step in the right direction and a new beginning in the frontiers of India’s Competition
Policy towards harmonizing international trade and policy
...
Such agreements [namely tie in arrangements, exclusive dealings (supply and
distribution), refusal to deal and resale price maintenance] shall be presumed as anticompetitive if they cause or likely to cause an appreciable adverse effect on competition
within India
...




Regulation of combinations which cause or likely to cause an appreciable adverse
affect on competition within the relevant market in India is also considered to be void
...
The difference is that
under clause (i), in the Competition Act, it uses the words ―whether such purchase of goods
is for the resale of for any commercial purpose or for personal use‖ in places of the words
―but does not include a person who obtains such goods for resale of for any commercial
purpose‖, as in the Consumer Protection Act
...
Thus, the
interpretation of ―consumer‖ in the Consumer Protection Act will be the same as in

Competition Act
...

Consumer Interest and Public Interest
1
...
But they are
not and need to be distinguished
...
If the consumer is at the fulcrum, consumer
interest and consumer welfare should have primacy in all Governmental policy
formulations
...


Consumer is a member of a broad class of people who purchase, use, maintain and
dispose of products and services
...
They are clearly
distinguishable from manufacturers, who produce goods and wholesalers or retailers,
who sell goods
...


Public interest, on the other hand, is something in which society as a whole has some
interest, not fully capture, by a competitive market
...
However, there is
a justifiable apprehension that in the name of ―public interest‖, Governmental policies
may be fashioned and introduced which may not be in the ultimate interest of the
consumers
...
What is desirable for them in one capacity may be inimical
in the other capacity
...
A farmer wants the
price of goods he consumes to be as cheap as possible but wants the highest price for
his produce
...
In genera, it can be stated that buyers want
competition and sellers monopoly
...
They are all too conscious of the possibility of abuse
of the expression ―public interest‖ by vested interested
...
All these goals have
an interactive relationship and, when in harmony, deliver total welfare
...
On the other hand, it
is the consumers who are the main losers due to anti-competitive activities in a market
...

It is sometimes believed that competition policy and law are tools for the rich, the urban, and
industries alone
...
At the

micro level, an effective competition regime or consumer law (covering competition
distortions) can prevent consumer abuses, both at industry level as well as in a village or
locality where one shopkeeper can cheat the whole community
...

Before we embark on assessing the consumer welfare implications, it is important to
understand the notion of consumer welfare
...
Even so, one can have a fair understanding of the notions surrounding
consumer welfare by looking at the United Nations Guidelines for Consumer Protection,
adopted by the UN General Assembly in 1985, and amended in 1999
...

The UN Guidelines call upon governments to develop, strengthen and maintain a strong
consumer policy, and provide for enhanced protection of consumers by enunciating various steps
and measures around eight themes (UNCTAD, 2001)
...


Physical safety

2
...


Standards

4
...


Redress

6
...


Specific areas concerning health

8
...


Consumer Protection Councils In India


The Central Consumer Protection Council: The objects of the Central Council shall
be to promote and protect the rights of the consumers such as,(a)

the right to be protected against the marketing of goods and services which are
hazardous to life and property;

(b)

the right to be informed about the quality, quantity, potency, purity, standard and
price of goods{or services, as the case may be} so as to protect the consumer
against unfair trade practices;

(c)

the right to be assured, wherever possible, access to a variety of goods, and
services at competitive prices;

(d)

the right to be heard and to be assured that consumer’s interest will receive due
consideration at appropriate terms;

(e)

the right to seek redressal against unfair trade practices {or restrictive trade
practices} or unscrupulous exploitation of consumers; and

(f)

the right to consumer education
...




The District Consumer Protection Council: The objects of every District Council shall
be to promote within the State the rights of the consumers laid down in point (a) to (f)
mentioned above

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