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Ethical Issues in Relationship Marketing. Teacher – Shahed Rahman. Introduction. Channel Relationship model – ethical and social responsibility forces are important components Balance between the interest of buyer and sellers

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Ethical Issues in Relationship Marketing

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Presentation Transcript
  • Channel Relationship model – ethical and social responsibility forces are important components
  • Balance between the interest of buyer and sellers
  • Marketing decisions should be made in accordance with accepted ethical principles
marketing ethics
Marketing Ethics
  • The moral standards that underlie exchange process
  • It advances the position that ethics is expected on interactive decision behaviors
  • Channel members must balance their own moral needs, as reflected in their own personal value systems with the interests of a firm’s internal and external stakeholders.
  • Critics often charge that marketing is the functional area most likely to be the source of unethical behavior in a business
exchange conviction belief
Exchange Conviction ( Belief)
  • Addresses the level of confidence and faith a channel member is willing to invest in other channel members.


  • Several factors influence exchange conviction:
    • Performance Outcomes
    • Competitive Arena
    • Expediency
    • Custom
performance outcomes
Performance Outcomes
  • Firms market value we understand from performance measure such as growth
  • Sales – Market share and Profits
  • Increased investment attracts more suppliers and customers
  • How ethically that partners deal with performance measures such as profit or sales.
competitive arena
Competitive Arena
  • As competition intensifies, firms may be more likely to engage in unethical practices to preserve their market position.
  • Keep their customer no matter what the cost
  • Firms may be willing to do whatever it takes to counter competitive challenges.
expediency just to fit convenience
Expediency ( Just to Fit- Convenience)
  • Individual driven by a short term view of economic conditions tend to take the path of least resistance.
  • Even though it will make a positive contribution in the career – students do not take the difficult courses voluntarily
  • So they take the short cut on ethics to attain the firm’s objectives
  • May people expect that used car sales person use puffery to exaggerate product quality.
  • Industry convention or custom is such that these or similar actions are expected
  • Channel members often use their experience with the industry custom as cues for managing their confidence in the ethicality of other channel partners
social tact perception and relationship ethics
Social Tact (Perception) and Relationship Ethics
  • Social Tact describes individuals’ way of dealing with others in their environment.
  • Develops overtime
  • Relationship ethics describe the process by which organizational ethics are adapted to suit the needs of particular exchange relationships
  • Each channel member’s representatives – individual employees who interact on behalf of their respective firms – are responsible for moral footing of a relationship.
the ethics continuum scale
The ethics Continuum ( Scale)
  • One firms actions can affect another firm’s action in many ways
  • Breaches of ethics will reduce the level of cooperation present in any exchange
  • Buyers are aware of seller’s persuasive tactics
  • Is the seller is an honest person ?
  • Is the seller truly interested in the buyer welfare?
  • Balance between the essentially opposing views held by buying and selling channel members is reflected in an ethics continuum
caveat emptor
Caveat Emptor
  • Ideology is based on belief that the pursuit of profit maximization is the overriding organizational ethic.
  • Dictates by the moral baseline provided by the law represents the only constraints on ethical business practice
  • Genuinely applies within a channel relationship
  • The goal is to maximize profits within the constraints of laws and regulations
caveat venditor
Caveat Venditor
  • Caveat Venditor anchors the other end of our ethics continuum
  • Seller beware – draws on the pursuit of customer satisfaction
  • Customer satisfaction taken to its extreme

Seller’s Interest Favored

Buyer’s Interests Favored

Codes of Ethics

rationalization of unethical buyer behavior
Rationalization of Unethical Buyer Behavior
  • Denial Responsibility
    • Deny personal accountability
  • Denial Injury
    • Its no big deal, nobody got hurt
    • Returning damaged goods ‘normal in this industry’
  • Denial of Victim
    • As a countervailing mechanism for a seller’s exercise of power
  • Condemning the Condemners
    • Acquisition of their own misconduct by pointing out that others have also engaged in similar behaviors
    • Unethical practice is the normative behavior
  • Appeal to Higher Loyalties
    • I know that was questionable but I had to compensate my own hardworking employees they are supporting their families
ethical dilemmas in relationship management
Ethical Dilemmas in Relationship Management
  • Exclusionary Tactics
    • Aimed at restricting normal channel flows
    • Sometimes granted exclusive distribution rights for a product
    • Free market system slow down
    • Example – toys r us and K-mart different terms and conditions
  • Diverting Practices
    • Unauthorized distribution of products
    • Gray marketing
    • Gray marketing damages channel relations
    • Normal profit margin can no longer be earned by legitimate channel members because the unauthorized distributors rarely offer the same service as authorized dealers
ethical dilemmas in relationship management1
Ethical Dilemmas in Relationship Management
  • Repressive Control Maneuvers
    • Coercive attempts to manipulate another channel members business practices
    • Full line forcing
    • Levis forced retailers to carry its whole line
  • Anticompetitive Channel Promotions
    • Involve efforts by one channel member to control the distribution of its products
anti competitive channel promotions
Anti Competitive Channel Promotions
  • Brand Discounts
    • Often provided to a channel member in return for shelf space
    • Greater shelf space is traded off in return for lower prices
    • Discount may eliminate the opportunity for small, limited line producers to obtain shelf space
  • Aggregate (Combined) Rebates
    • Currency or merchandise credit offered on the basis of total line sales
  • Demand signaling
    • Manufacturer’s use of pre launch advertising and skimming wholesaler pricing to convince retailers that its new product is a winner
  • Slotting Allowances
    • Street money or placement fees
    • Little public data is available on the scope of slotting allowances
moral codes
Moral Codes
  • How channel members use rules and standards to tell right from wrong.
  • A sound business decision or an unfair practice
  • Depends on whom you ask.
  • No single moral code offers a full proof guideline for deciding what is ethical and unethical across all possible situations
moral codes get the definition from text book
Moral Codes - Get The Definition from text book
  • Rules-Based Moral Codes
  • Consequences –Based Moral Codes
  • Experience based moral Codes
    • Situational Differences
    • Multiple Cues
    • A Presumption of Rightness

Get The Definition from text book