Legal and Ethical Considerations of Marketing in America Essay

Introduction            Most people may be tempted to think that marketing is just about promotions, product development and setting of prices. However, there are various issues that marketers need to deal with even as they design their marketing strategies. Including legal and ethical considerations in the marketing plan not only helps in avoiding trouble with the law but also creates a good corporate image for the company.

Legal considerations guide marketers on the extent to which they may conduct their marketing activities. Ethical considerations though not considered illegal in most cases have to do with the culture, customer expectations and societal norms. Failure to consider these values could lead to detrimental effect on the company’s image as well as poor sales of the intended commodities.

Legal and ethical issues are multifaceted and may affect the consumer, other businesses in the market as well as the community. This paper will discuss the various legal and ethical elements that apply to products and services.Analysis            1)Unfair marketing practices            These are practices that mostly have to do with unfair competition in an attempt to outdo competitors.

Fierce competition such as lowering prices below the market price so as to drive other competitors out of the market is considered unethical (Murphy, 2007). Other unethical marketing tactics include displaying other company’s products as inferior and in extreme circumstances attacking competitors’ premises or employees physically (Thomson, 2000). Such actions could be deemed illegal and may lead to civil cases. The creation of monopolies through mergers is also considered unethical. Oligopolies which merge to form cartels are illegal in the United States and any act depicting the formation of a cartel in order to gain unfair advantage in the market is stopped with immediate effect and legal actions taken against the perpetrators.            2) Pricing            The issue of pricing is a legal as well as an ethical issue. Unfair pricing tactics include price fixing, price discrimination and predatory pricing (Smith, 2007). There are those goods and services whose prices are set by the government and which all companies must follow and failure to this would lead to legal liability.

High pricing of goods by monopolies is an issue that many consider unethical. At the same time, it is illegal for a company to take advantage of its position to oppress customers. The government however helps to contain this by setting prices for monopolies.

Marketers must adhere to government prices without fail (Thomson, 2000).            While it may not be illegal to charge different prices for the same good, this could raise an issue of ethics since the customers deem this as an unfair business practice (Murphy, 2007). This is in the case of price discrimination where the producer sells the same item at different prices in different markets. It raises the concern of why some people can acquire a good or service at a cheaper price while others have to pay more.

In order to avoid losing customers due to such a practice, marketers assess the markets to determine whether different prices can work for their product (Smith, 2007). This is however effectively undertaken by monopolies where customers’ elasticity for demand is low.            3) Deceptive/ misleading advertising            Deceptive advertising is where marketers use false characteristics of products in order to attract customers. This may also include the non-disclosure of harmful effects while putting strong emphasis on the positive characteristics of the product (Smith, 2007).

Murphy (2007) notes that companies may make use of oversize packaging and fail to disclose surcharges or hidden fees in their advertisements. An issue that has also been raised about deceptive advertising is the case where marketers pay cash gifts to consumers in order for them to make endorsements, reviews of recommendations. The Federal Trade Commission is very particular about this practice and any marketer found with the giving falseful information will answer to a charge of deceptive advertising.            4) Complete disclosure            Company representatives are expected to be as transparent with the customers as possible. This is to mean that they should disclose any information that is of relevance to the consumer concerning the product (Smith, 2007). This is an issue that is especially prevalent in the sale of medication where the seller is supposed to disclose the effectiveness of the drug as well as any side effects that are associated with the drug.

  It raises ethical concerns when a consumer suffers from the side effects of a product if he or she had not been accorded the rightful information. In order to deal with the issue of complete disclosure of product specifications, the law requires that manufacturers put the description of the product such as the quantity and warning signs on the package of the product (Thomson, 2000). The Federal Trade Commission uses the Fair Packaging and Labeling Act to ensure that this requirement is met (Murphy, 2000).

Others include the Federal Cigarette Labeling and Advertising act that requires cigarette manufacturers to place health warnings. In products such as bank and insurance products, the sellers of the services are expected to provide the customers with all the necessary information required for them to make a decision. These terms must be included in the contract to be signed by the customers stating that he or she understands all the terms and conditions of the given service (Thomson, 2000).            5) Data Privacy            Customers are bound to surrender personal information to the marketers and in essence, this is confidential information that consumers do not expect to be kept safely.

Marketers are therefore supposed to be cautious with consumer data files to avoid leaking consumer information to the unintended audience (Smith, 2007). This will prevent cases of fraud where customer information is used to defraud customers of their money in the company’s name leading to serious legal cases (Smith, 2007). Most marketers are keen about this ethical issue and as a way of safeguarding consumer information, the consumer data bases are well protected by the use of passwords and codes. Companies are also keen on including confidentiality in handling of consumer information in their ethical policy statements.

            6) Internet advertising            With continuous advancement in technology, marketers are shifting from the traditional media advertising and venturing in internet advertising (ICC, 1998). It is believed that internet advertisement reaches more people and buyers can also make their orders online. Online marketing has however raised numerous ethical issues as well as legal issues prompting advertisement bodies and government agencies to step in. Consumers have fallen for fraudsters’ gimmicks and lost thousands of dollars hence losing trust in products bought over the internet (Thomson, 2000). There has also been the issue of consumer data sharing such that consumer information is not kept private by the marketer to whom the consumer disclosed information.

Confidentiality of consumer information is one ethical consideration that marketers should highly maintain. The International Chamber of Commerce which sets ethical codes of conduct and the Federal Trade Commission have come up with ethical standards that need to be  maintained in internet advertising (Thomson, 2000). Internet marketing standards are expected to be designed in such a way that they do not erode the confidence that the public has on the web as a marketing medium (ICC, 1998). This also depicts that the advertisements must meet acceptable commercial standards. Advertisers are expected to disclose their identity so that the customers can access them easily. All costs associated with the product including message and product access should be disclosed on the site (ICC, 1998). Data privacy is a key requirement and the advertisers should use all the means possible to keep the consumer data files securely (ICC, 1998). In addition, advertisers are required to post their privacy policy statements on the website.

Conclusion            It is essential that every marketer takes into consideration ethical and legal issues before taking a product into the market. As indicated in the above analysis, it is possible for a company to ruin its reputation as well as face liability charges as a result of engaging in illegal marketing practices. Most legal practices may be considered unethical but unethical practices do not have to be illegal. This is as in the example of setting different prices as which is considered unethical but not illegal. The introduction of internet marketing has brought in new perspectives in marketing ethics and legal issues prompting advertisement bodies to place rules and sanctions. Business could be lost in the event that marketers do not put legal and ethical issues into considerations. As a result, whether it is pricing, complete disclosure or data privacy among other legal and ethical issues, extra caution is to be taken to safeguard the image of the business.

Word count: 1440ReferencesICC (1998). Guidelines on Advertising and Marketing on the Internet. Retrieved on June 8,        2009 from, E.

(2007). Ethical Marketing. Boston, MA: Prentice Hall.Smith, P. (2007). Good Marketing Practices.

New York: McGraw Hill.Thomson, G. (2000). Ethical and Legal Issues in Marketing. New York: John Wiley and             Sons.