Ethical Marketing for Competitive Advantage on the Internet

Academy of Marketing Science Review, 2001 by Ranchhod, Ashok

Ethical Marketing for Competitive Advantage on the Internet

"The function within business firms most often charged with ethical abuse is Marketing"

Murphy and Laczniak, 1981 (p. 251)

The development of internet-based technologies opens endless possibilities for Marketers. Marketing research can be carried out subtly by actively archiving the procedures that each individual undertakes on the Web, through Web tracking software. Thus making a whole new set of variables available to the marketer. The technological opportunities are obviously highly appealing for Marketers to explore and use extensively and intensively. However, we suggest that exploiting all these opportunities can be a threat to marketing performance in the long run. Technology has no inherent morality and the way in which it is utilized is what really matters. In this matter, both the deontological as well as the utilitarian view of ethics (Bergman, 1997) apply. Paying close attention to the ethical aspects of the use of web-based technologies in marketing might constitute a differentiating force for proactive firms.

In a first section, we will discuss current marketing practices on the Internet and propose 7 criteria for judging the ethicalness of marketing practices. In the second section, we develop the potential advantages of ethical marketing on the Internet.

Delineating Ethical Marketing Practices

The observation of marketing practice on the Internet can give an idea of the types of unethical practices that are either already in place or recommended by certain marketing consultancy sites. A simple analysis of many sites highlights two important issues. The first one is concerned with the gathering of consumer information and the second one is concerned with the utilization of various marketing techniques. These are many and varied ranging from banners to fixed spot advertisements and flash advertisements and the selling or exchange of consumer information.

Gathering Information - The Issue of Consumer information Privacy As Kelly (2000) notes, Internet technology provides opportunities to gather consumer information "on an unprecedented scale". However some aspects of information gathering are visible (such as self-divulgence of information for purchase, self-divulgence of information in accessing a web-site, self-divulgence of information for free merchandise) and some are less visible (such as anonymous profile data, IP, cookies). Owing to these possible uses and abuses of information, many consumers remain hesitant about Internet purchasing. The development of software allowing "private Internet experience" and 'completely undetected surfing' is an indication of consumer concern regarding the invasion of privacy. A survey of the top 100 commercial web sites shows that only 20 per cent apply a full ethical policy. This shows that there is room for the development of competitive advantage (Culnan, 1999a and b). Culnan's reports on Internet privacy policy show that five aspects can used to describe a web site's position concerning privacy:

Notice, that is an indication to the consumer about what information is collected, how it will be used; whether is will be disclosed to third parties and whether cookies are used or not.

Choice: is the consumer given the choice to agree with aspects of information gathering?

Access: does the consumer have access to the information gathered? Is the consumer given the possibility to review and correct the information?

Security concerns the protection of information transfer and subsequent storage.

Contact: are consumers given a contact person or address for asking questions or registering complaints regarding privacy?

Using Information - The Issue of Marketing Tools Advertising is an important marketing tool on the Internet with a range of possibilities for customer interactivity and involvement (Ranchhod, 1998). Banner advertising has been an important vehicle for many Internet based advertisements with much research dedicated to its design elements. At the same time, marketing professionals try to understand how individuals surf through websites and consequently attempt to increase the CTR (click-through ratio). In this respect, researchers as well as practitioners try to identify key variables: type and size of ad banners, animation, use of color, sounds, images, incentives, etc (see www.bannertips.com). Certain practices can be observed and are recommended as efficient ones: pop-ups, deceiving banners (computer-like messages, with "ok" button). Here are some excerpts from the advice given for designing an efficient banner:

Feature a Call To Action,

Create Urgency,

Use the Word "FREE,"

Certain truisms remain true -- intrigue and sex sell

Parallel to Internet advertising, the development of e-mail marketing and spam are features of aggressive e-marketing.

Judging Marketing Practices In the field of advertising, Nwachukwu et al. (1997) found that three variables are important for judging the ethical nature of an ad: individual autonomy, consumer sovereignty and harmfulness of product. These ideas are utilized to assess specific ads and to assess sovereignty in terms of consumer awareness of a product's use and availability. Individual autonomy refers to the ability of the individual to recognize the manipulative power of advertising. Consumer sovereignty refers to the level of knowledge and sophistication of the target audience (e.g. the marketing of infant formula in less developed countries illustrates low consumer sovereignty). Lastly, harmfulness of product refers to the nature of the product (advertising for cigarettes can be deemed unethical as the product is detrimental to people's health). On the Internet, harmfulness could be defined by the advertising of pornography or harmful visual imagery.