Ethics and the Marketing Mix (AQA A Level Business): Revision Note

Ethics in product decisions

• Ethics in marketing refers to the moral principles that guide how a business promotes and sells its products

  • While businesses are driven by profit, they also have a responsibility towards their customers, wider society and the environment

• Unethical marketing decisions can cause real harm

  • Increasingly, consumers, regulators and the media hold businesses to account when they fall short

• The products a business chooses to sell, and how they are designed, sourced and presented, raise significant ethical questions

Product safety

• Businesses have an ethical responsibility to ensure their products are safe for consumers to use

• Selling products known to carry health risks without adequate warnings or cutting corners on quality control to reduce costs puts customers in danger

• In the UK, the Consumer Rights Act and product safety regulations provide a legal framework, but ethical businesses go beyond what the law requires

Planned obsolescence

• Planned obsolescence is the deliberate design of products to become outdated or stop working after a period of time

  • It forces consumers to buy replacements sooner than necessary

• This is widely considered unethical because it prioritises short-term profit over the interests of the customer and generates unnecessary waste

  • Apple faced significant criticism and legal action in several countries after it was revealed that software updates were slowing down older iPhones

  • This was widely interpreted as a strategy to encourage customers to upgrade to newer models

Environmental and sourcing ethics

• The way products are made raises questions about the treatment of workers, the sourcing of raw materials and the environmental impact of production

  • The fast fashion industry, including brands such as Primark and Shein, has faced intense criticism for producing large volumes of low-cost clothing that is worn briefly and discarded

  • There are concerns that their approach contributes to enormous textile waste and often relies on low-paid labour in developing countries

• Greenwashing occurs when a business makes misleading claims about the environmental credentials of its products

  • For example, labelling a product as 'eco-friendly' or sustainable' without evidence to support this

  • The UK Competition and Markets Authority (CMA) has increasingly challenged these claims

Products targeting vulnerable consumers

• Ethical concerns arise when products known to cause harm are marketed aggressively, particularly towards children or vulnerable groups

  • The high sugar and fat content of many foods and drinks aimed at children has prompted ongoing ethical debate

    • In the UK, there are restrictions on advertising fast food near schools and a 'sugar tax' was applied to soft drinks in 2018 to make diets healthier and tackle obesity

  • Nestlé's baby formula controversy is one of the most significant examples of unethical product marketing in history

    • The company was accused of marketing formula milk aggressively in developing countries where safe preparation was difficult, discouraging breastfeeding

Ethics in pricing decisions

• How a business prices its products can raise serious ethical concerns, particularly when it exploits vulnerable customers or uses its market power unfairly

Price gouging

• Price gouging occurs when a business dramatically raises prices during a crisis or emergency, taking advantage of consumers who have no choice but to pay

• This is widely considered deeply unethical

  • During the COVID-19 pandemic, several businesses - particularly online retailers and wholesalers - significantly increased prices for hand sanitiser, face masks, and essential medicines when demand surged

  • This attracted widespread condemnation and, in some cases, regulatory action

Predatory pricing

• Predatory pricing involves a business setting prices deliberately and unsustainably low - often below cost - with the intention of driving competitors out of the market, after which prices are raised

• This harms competition, ultimately leaving consumers worse off

  • Supermarket chains have been accused of pricing their own-label products so cheaply that small independent food producers cannot compete, gradually squeezing them out of the market

Exploiting price-inelastic demand

• When consumers have no real alternative - for example, when a drug is the only treatment for a serious illness — demand becomes price inelastic, and a business can charge very high prices with little impact on the quantity sold

  • In 2015, pharmaceutical businessman Martin Shkreli raised the price of Daraprim, a drug used to treat a life-threatening parasitic infection, by over 5,000% overnight

  • The decision provoked worldwide outrage and became a well-known example of unethical pricing behaviour

Hidden charges and misleading pricing

• Presenting a price that does not reflect the true total cost is considered dishonest, erodes consumer trust and makes it impossible for consumers to make genuinely informed comparisons

• Examples include booking fees, mandatory charges revealed only at the final stage of checkout or small print that significantly changes the deal

  • Several airlines and ticketing platforms have faced criticism and legal scrutiny for adding extra fees to advertised prices only at the point of payment

Shrinkflation

• Shrinkflation involves reducing the size or quantity of a product while maintaining the same price - effectively a hidden price increase

• While technically legal, many consumers consider this deceptive

  • Numerous household brand products, including chocolate bars, crisp packets and toilet rolls, have quietly reduced in size in recent years

  • Consumer groups have argued that businesses should be transparent about these changes rather than hoping customers do not notice

Ethics in promotional decisions

• Promotion carries particular ethical responsibility because it directly shapes how consumers think and behave

Misleading advertising

• Advertising that makes false, exaggerated, or unsubstantiated claims about a product is both unethical and, in the UK, illegal

• The Advertising Standards Authority (ASA) is the independent regulator for UK advertising, and it investigates complaints and can require misleading adverts to be withdrawn

  • Volkswagen's Dieselgate scandal (2015) involved the company advertising its diesel vehicles as low-emission and environmentally friendly, while installing software designed to cheat emissions tests

  • The deception affected millions of vehicles globally and resulted in billions of pounds in fines and legal settlements

Targeting vulnerable groups

• Directing promotion towards people who are particularly susceptible to influence, such as children, those with addiction issues or people in financial difficulty raises serious ethical questions

  • Advertising of high-fat, high-sugar food and drinks during children's television programmes has faced significant restrictions in the UK, with the ASA banning campaigns that target under-16s with unhealthy food products

  • Gambling advertising has been similarly restricted, following concerns about its impact on people with gambling addictions and its visibility to young people

Stereotyping and harmful representation

• Advertising that reinforces damaging stereotypes based on gender, race, age, body image or other characteristics is increasingly considered unethical, even where it is not illegal

  • Protein World's 2015 "Beach Body Ready" advertising campaign attracted over 380 complaints to the ASA and sparked a major public debate about body image and the way women are represented in advertising

• The ASA introduced new rules in 2019 explicitly banning adverts that portray harmful gender stereotypes - for example, showing women as primarily responsible for cleaning and childcare, or men as incompetent parents

Influencer transparency

• As influencer marketing has grown, so have concerns about transparency

  • Consumers have a right to know when content is a paid promotion rather than a genuine personal recommendation

• The ASA requires that paid promotional content by influencers is clearly labelled - typically with #ad or #sponsored - and has taken action against influencers and brands who fail to disclose commercial relationships

• Undisclosed paid promotion is considered deceptive and undermines consumer trust

Greenwashing in promotion

• Greenwashing is making exaggerated or false environmental claims in advertising to attract environmentally conscious consumers, without evidence to back those claims up

• Several major brands have faced ASA rulings or legal challenges over environmental claims in their advertising

• The Green Claims Code requires businesses to ensure that any environmental claims made in marketing are accurate, clear and not misleading

Data privacy in digital marketing

• The use of customer data gathered through cookies, social media platforms and Customer Relationship Management (CRM) systems raises important questions about whether consumers genuinely understand and consent to how their information is being used for promotional purposes

• Using personal data to target individuals with highly specific adverts, particularly on sensitive topics such as health, finances or political views, can feel intrusive and raise concerns about manipulation