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In the last several decades, targeting distinctive consumer segments with differentiated marketing has been a popular strategy among many marketers. The distinctive nature of various consumer groups such as children, the elderly, women, and ethnic minorities has made them attractive market segments (Macchiette and Roy 1994). However, market segmentation and targeted marketing have, from time to time, met with tremendous difficulties. Targeting potentially harmful products at vulnerable and disadvantaged consumers such as children, the elderly, and inner-city residents has received negative publicity and been subjected to damaging litigation (Karpatkin 1999; Sautter and Oretskin 1997). The increasing willingness of some large corporations to exploit vulnerable consumers indicates unfair treatment of these consumers and a lack of justice in the marketplace (Karpatkin 1999; Laczniak 1999).
On the other hand, cases of discrimination and redlining still occur in certain product and market areas, such as the discrimination directed at minority consumers by insurance and mortgage companies (Harrington and Niehaus 1998; Schafer and Ladd 1981). Disenchanted consumers are increasingly rallying consumer interest groups to put pressure on firms that they consider to be predatory or discriminatory in their marketing practices. Companies such as R. J. Reynolds, Prudential Insurance, and Texaco Oil Company have suffered from tarnished images, consumer boycotts, and court penalties of hundreds of millions of dollars.
Although the modern marketing concept emphasizes its mission to satisfy consumer needs and wants, that promise, in reality, is sometimes lost or misplaced, resulting in outcomes that are not in the best interests of either the customers or society (Rotfeld 2001). A lack of understanding of the ethical issues associated with market segmentation and selection has contributed to these problems, which have tremendous social and economic costs. While targeting harmful products at vulnerable consumers has received harsh criticism, restricting the marketing of certain products and labeling some consumers as vulnerable are considered equally troublesome, suggesting that the ethical implications of marketing practices are complicated. Although researchers have examined the ethics of market segmentation and selection (Karpatkin 1999; Smith and Cooper-Martin 1997), effort is lacking in synthesizing various issues to provide a holistic understanding of the ethical implications of the marketing exchange.
Based on contingency theory, we integrate previous research and propose a three-dimensional framework--which includes the nature of the product, consumer characteristics, and market selection--to analyze the ethics of market segmentation and related marketing strategies. Interactions among these variables lead to various scenarios with different ethical implications for marketing management and public policy making. Particular attention is given to areas in which marketers and consumers differ in their perceptions of ethical propriety with respect to the nature of the product and market selection. To avoid ethical conflicts in marketing, we suggest that companies consider consumers' interest and assess the ethical implications of their marketing plans before implementation.
LITERATURE REVIEW
In the marketing field, market segmentation and the differentiation of the marketing mix have become so prevalent that they are almost synonymous with competitive strategies. While targeted marketing has largely been beneficial to both consumers and marketers, cases of consumer discontent from time to time raise questions about the ethical implications of market segmentation and targeted marketing, most notably the targeting of harmful products at vulnerable consumers, such as targeting alcohol and cigarettes at inner-city consumers and churning insurance policies to the elderly (Karpatkin 1999; Smith and Cooper-Martin 1997). Meanwhile, the opposite of targeting--the exclusion of certain consumers from a company's offerings--is just as controversial (Harrington and Niehaus 199 cool .
These problems are not unique to marketers of consumer goods. Business service providers and public and nonprofit organizations are not immune to such challenges. Organizations, including educational institutions and government agencies, that cater to certain segments of society have also become the targets of public scrutiny and face the prominent possibility of consumer discontent and legal actions (Alexander 1997). While consumers and marketers continue to struggle with these complicated issues and seek viable solutions, researchers have studied the ethics of market segmentation and market selection (Macchiette and Roy 1994). Recent studies have focused on the ethical implications of targeted marketing of harmful products at vulnerable consumers.
Targeted Marketing
Targeted marketing, as a popular marketing strategy, refers to the concentrated marketing of a product to a segment of consumers due to the attractiveness of the group, in terms of such factors as its size and growth rate. Theoretically speaking, there is nothing inherently wrong with targeted marketing (Cespedes 1993). When marketers promote a product beneficial to a group of consumers, targeted marketing is largely ethical and welcome by consumers. For instance, some restaurants and hotels have special promotion programs aimed at children, and indirectly at their parents, with inexpensive toys and special vacation packages. In recent years, however, many cases of targeting potentially harmful products at vulnerable consumers have raised ethical concerns in terms of justice and fairness, such as targeting sweepstakes at the elderly (Lowry 199 cool and handguns at women (World Watch 199 cool . Even indirect and subtle targeting of potentially harmful products at vulnerable consumers has received criticism, such as targeting children with R-rated movies and using animal characters to promote cigarettes and alcohol (Seiler 2000; Wall Street Journal 1997).
Product Harm
Many products in the marketplace, such as wholesome food and medicine, are beneficial or at least beneficial to the target group. However, products that are intended to be beneficial have from time to time been found harmful to some consumers, resulting in "market failures" (Rittenburg and Parthasarathy 1997). For instance, unless a pharmaceutical company tests a new product on everyone (instead of limited clinical trials), it is difficult to determine whether the product will cause any harm. The key issue here is the marketer's knowledge of the product's potential harm, even to a small group of people (Morgan, Schuler, and Stoltman 1995). If a company discovers that a small percentage of people may suffer negative reactions from its products and it immediately takes corrective measures, the company may be deemed as acting ethically, believing that it should take responsibility for the incident as part of its business liability. If the company had prior knowledge of the side effect and it took no remedial measures upon such discovery, it would be considered as intentionally harming the consumers (Morgan, Schuler, and Stoltman 1995). Having prior knowledge of the harmfulness of a product and withholding that information have been used as evidence against companies, such as in the Dow Corning case of silicone breast implants and the legal battle against tobacco companies (Byrne 1992).
However, the evaluation of a product's harmfulness is not always clear-cut. Even the marketing of seemingly beneficial and harmless products can sometimes take an unexpected turn, because such products can be harmful to consumers who have known characteristics (Rittenburg and Parthasarathy 1997). Some products, even though not inherently harmful, can be potentially harmful to consumers due to abuse or misuse. For instance, targeting alcoholic beverages at poor inner-city consumers is particularly problematic, as this segment already suffers from a greater number of alcohol-related health and social problems than the general population (Smith and Cooper-Martin 1997). Thus, ethical evaluations of many products depend on their interaction with consumer characteristics and marketing practices.
Vulnerable Consumers
Recently, consumer vulnerability has drawn much attention in studies of marketing ethics. In numerous legal cases, the court system in the U.S. has defined vulnerable consumers as a group of people who, due to various idiosyncrasies, are sensitive and susceptible to the potential negative effects associated with using a particular product (Morgan, Schuler and Stoltman 1995). For instance, a small group of people, due to their body biology, may suffer side effects from using certain medications. Moreover, children do not have the same level of knowledge, experience, or maturity as adults to process commercial information (Macchiette and Roy 1994). Many elderly people, due to their physical and/or mental conditions, also face challenges as consumers (Karpatkin 1999). In addition, some consumers may be prone to addiction or compulsion while others may be disadvantaged due to their social and economic conditions. Such examples of targeting vulnerable consumers include the targeting of high interest loans of credit cards to consumers with poor credit histories and less financial sophistication (Karpatkin 1999). Thus, product harmfulness is heightened for consumers at a risk or disadvantage, and poses ethical concerns.
Discrimination
While much recent research has examined the ethics of targeting harmful products to vulnerable consumers, some researchers continue to investigate the opposite case: the exclusion of certain consumers in marketing. Discrimination in marketing refers to the practice of denying access to products to a group of consumers due to their racial or ethnic background, age, gender, or other characteristics. Discrimination may also have to do with discrepancies in product quality and variety, and the terms of exchange such as pricing and payment method (Ayres and Siegelman 1995). Since the 1960s, many studies have investigated pricing discrimination against the poor and minority consumers (Goodman 1968; Sexton 1972). Despite the tremendous progress in the last few decades, discrimination and redlining have persisted in areas such as housing, mortgage lending, and financial services (Bell and Burlin 1993; Harrington and Niehaus 1998; Schafer and Ladd 1981). Here, the important gauge points are the equivalence or proportionality in marketing intensity and the disparate treatment of consumers (LaCour-Little 1999).
Summary
Existing studies have made significant progress in conceptualizing the ethics of market segmentation and differentiated marketing. In several important respects, their findings have elevated our understanding of the ethical implications of the marketing exchange. First, these studies emphasize that the concern with the ethical consequences of marketing practices in the United States is well grounded in the fundamental beliefs in social and moral equity, fairness, and justice for all people (Sautter and Oretskin 1997; Smith and Cooper-Martin 1997).
Second, researchers have emphasized the ethical risks inherent in market segmentation and differentiated marketing. Dunfee, Smith and Ross (1999) suggest that due to the boundary-expanding nature of marketing, ethical concerns may arise in certain situations when marketers cross such boundaries. For instance, marketing products to youth that are intended for mature consumers, such as alcoholic beverages, leads to different ethical evaluations. According to Star (1989), the social discontent and ethical concerns associated with marketing stem from the functional limitations of the marketing concept. Contemporary marketing practices often rely on market segmentation, which divides consumers into submarkets based on characteristics such as age, gender, race, and nationality. To provide unique values to consumers and to avoid head-on competition, each market segment may require a unique marketing mix. Thus, segmentation and subsequent marketing practices often imply differential albeit unequal treatment of various consumer groups, and raise ethical concerns (Cespedes 1993).
Third, extant studies have found that ethical concerns or dilemmas often arise when a marketer's perception is in conflict with that of consumers or the public (Moore, Williams, and Qualls 1996; Smith and Cooper-Martin 1997). In fact, the customer interface represents the area of marketing in which conflicts in the perception of the ethical propriety of marketing practices frequently occur. Thus, marketers must study the perception of the public when formulating marketing strategies in order to avoid potential misunderstandings (Smith 1995; Smith and Cooper-Martin 1997).
Need for Integration
The review of literature reveals several deficiencies in the existing research. First, previous studies have focused on one or another issue of the marketing exchange and lack the integration of disparate perspectives. While much recent research has concentrated on targeting harmful products at vulnerable consumers, the practice of excluding some consumer groups is equally controversial. However, discussion of these two topics has largely been separate in the existing literature. Theoretically speaking, these two issues are closely related to each other because discrimination and redlining have as much to do with market segmentation and selection as targeted marketing, but in opposite directions. Moreover, insufficient effort has been expended to examine the many positive marketing activities that target disadvantaged groups, such as charity, corporate sponsorship, and public service programs (Andreasen 1993).
Although the existing literature condemns unethical marketing practices, it has not offered consistent guidelines to determine exactly when the marketing of certain products to some consumers becomes ethically problematic. There are also questions as to whether some consumer characteristics are the causes of vulnerability or simply its correlates. For instance, when controlling for education and income, the effect of vulnerability among ethnic groups may be less pronounced (Moschis 1987). Thus, several authors have cautioned against the use of race- or ethnicity-based vulnerability (Rittenburg and Parthasarathy 1997; Sautter and Oretskin 1995; Smith and Cooper-Martin 1997). Government intervention to restrict marketing may have some merit, and at the same time finds strong opponents among those who support the free market and free speech. Often, consumer advocates and industry spokespeople find themselves in deadlocks in the heated debate about the ethics of market segmentation and selection.
Recent studies have revealed complex interactions among products, consumer characteristics, and marketing practices in ethical evaluations of marketers, and have recommended that marketers should tread carefully when venturing into certain market segments (Smith and Cooper-Martin 1997; Treise et al. 1994). Despite these research efforts and the many theories of marketing ethics that have emerged, a framework for comprehensive analysis of the ethical implications of market selection and related marketing strategies remains elusive. Noting the manifold issues and perspectives, several researchers stress the need for a normative theory of ethics about market selection and marketing strategies (Smith and Cooper-Martin 1997). A more integrated approach to analyzing the ethical implications of the marketing exchange can help chart a coherent discourse on these critical issues and a better understanding of marketing ethics for managers and public policy makers.
A CONTINGENCY APPROACH
Existing Theories
Since the early 1980s, businesses and researchers have devoted much attention to the ethical implications of business practices, which has signaled the arrival of the "ethics era" in which consumer sovereignty is given more emphasis than marketers' interests, and there has been a decline of the caveat emptor assumption (Macchiette and Roy 1994; Smith 1995). A creative variety of frameworks and theories has been developed within the marketing ethics literature, such as the general theory of marketing ethics (Hunt and Vitell 1986), moral decision-making theory (Laczniak and Murphy 1991), and social contracts theory (Dunfee, Smith and Ross 1999). These theories typically rely on one or more of the classical theories, such as Kantian ethics and perspectives of rights, duties, and justice.
Existing theories of marketing ethics have developed various "tests" to examine the ethicality of marketing practices. Some of these ethical tenets are related to product harm, consumer characteristics, and market selection. For instance, Laczniak and Murphy's (1993, pp. 49-51) framework of ethical reasoning elaborates several such tests. The motive test asks whether the intent of the contemplated action is harmful. The consequence test establishes whether any major damage to people or organizations will result from the contemplated action. The justice test asks whether the proposed action leaves another person or group less well off, and whether this person or group is already a member of a relatively underprivileged class. Although these tests have pragmatic appeals, there may be conflicting responses to their questions due to multiple stakeholders in the marketing exchange (Dunfee, Smith, and Ross 1999).
Despite the frequent ethical problems that involve consumers, few theories have considered the role of consumer perceptions in marketing ethics. The exceptions include the consumer sovereignty test (Smith 1995) and distributive justice (Laczniak 1999). The consumer sovereignty test (comprising three dimensions) requires marketers to examine whether consumers are vulnerable or disadvantaged, perhaps due to age, education, of income. Marketers need to establish whether a target market has the capability to understand the benefits and risks associated with a product, has sufficient information to judge whether their expectations for purchases will be fulfilled, and has the choice of going elsewhere (Smith 1995). The theory of distributive justice suggests that the unequal and differential treatment of consumers, when it leads to detrimental effects on their well-being, particularly of those who are disadvantaged, may result in a perceived lack of fairness and justice (Laczniak 1999).
However, most normative theories of marketing ethics that have emerged in the last two decades have focused on either defining the fundamental principles of ethics to develop guidelines, or on the moral development and ethical reasoning of managers (Laczniak and Murphy 1993). Although this approach undoubtedly has merit in assisting marketers to reflect on the ethics of their decisions, it is less satisfactory in providing definitive ethical evaluations of specific practices (Dunfee, Smith, and Ross 1999). Meanwhile, others have proposed universal codes of marketing ethics, such as those of the American Marketing Association, that deal with various ethical issues in different marketing areas such as advertising, sales management, and marketing research. However, they do not specifically address the complex interplay among consumer characteristics, product types, and marketing strategies.
Contingency Theory
Dunfee, Smith, and Ross (1999) contend that the pluralistic approaches in current marketing ethics research reflect the inadequacy of general normative theories of marketing ethics to handle the rich and complex context of the marketing function. Thompson (1995) argues that making decisions on the basis of the context-independent general principles while disregarding the contextual details can result in socially irresponsible, and even detrimental, consequences. Although most marketing ethics theories, particularly the classic utilitarian (teleological) theories of ethics, consider the interests of various parties and complex situations, they have been criticized as too abstract and general to provide adequate guidance for managers (Dunfee, Smith, and Ross 1999). Due to the great number of ethical issues inherent in customer relationships and marketing functions, one set of universal rules or principles of ethics may be too simplistic to apply to all marketing situations (Smith 1993).
To provide clear guidelines for ethical decision-making in marketing, several researchers have emphasized the role of various cultural, organizational and environmental factors in ethical evaluations of marketing activities, including the contextualist approach (Thompson 1995) and the social contracts theory (Dunfee, Smith, and Ross 1999). The contextualist approach stresses that the sources of ethical concerns for marketers come from the interests of different stakeholders and affect the evaluation of the ethical justifiability of a particular marketing activity (Thompson 1995). According to the social contracts theory (Dunfee, Smith, and Ross 1999), ethical concerns arise when one community's legitimate norms (e.g., those of marketers) conflict with those of another community (e.g., consumers or the larger society). Therefore, a theory that considers different stakeholder interests and distinguishes various marketing scenarios and their ethical evaluations would be the most fruitful.
One of the theoretical approaches well suited to analyzing complex interactions among various dimensions of a phenomenon is contingency theory. Rooted in organizational behavior research by Herbert Simon (1976), contingency theory deals with the effect of interactions among various organizational and environmental factors on performance outcomes. According to Zeithaml, Varadarajan, and Zeithaml (198 cool , contingency theory emphasizes the importance of situational influences on the management of organizations and questions the existence of a single best way to manage. Contingency theory contributes to practical management by encouraging managers to: 1) identify important contingency variables that distinguish between contexts, 2) group similar contexts based on the variables, and 3) determine the most effective solution for each group (Zeithaml, Varadarajan, and Zeithaml 198 cool .
The contingency approach is particularly helpful in analyzing the ethics of marketing activities. Based on contingency theory, we reject the possibility that a single set of criteria can determine marketing ethics in all circumstances. Instead, we examine the interactions between the contextual variables and emphasize the analysis of the ethical implications of specific scenarios. As the most frequent ethical conflict that faces marketing managers involves attempting to balance corporate interests against those of consumers (Smith 1993), a useful framework should first examine how a marketer's perception of marketing ethics interacts with that of the consumer, who is as an integral and indispensable party to and a key stakeholder of the marketing exchange process.
A New Framework
Marketing is often considered as an exchange between marketers and consumers that aims to satisfy consumer needs and maximize the return on investment for shareholders. Thus, there is an inevitable and omnipresent tension between marketers' interests and those of consumers (Smith 1995; Dunfee, Smith, and Ross 1999). This conflict forms the basis for different positions on the ethics continuum of marketing practices (Smith 1995, 1993). However, placing consumers' interests against those of marketers on the ethics continuum may be too simplistic, because it may imply that marketing is a zero-sum game and reject the possibility of a win-win outcome (Smith 1995). Both marketers and consumers may form their perceptions of the ethics of specific marketing scenarios according to ethical principles such as rights, justice, fairness, and equity (Dunfee, Smith, and Ross 1999). In many cases, marketers and consumers agree on the ethical evaluations of certain marketing scenarios and raise no ethical concerns. For instance, both groups agree in principle that providing beneficial products to consumers is ethical as well as desirable and responsible.
However, existing research has documented significant gaps between marketers and consumers in their ethical philosophies as well as ethical evaluations of specific marketing practices (Singhapakdi et al. 1999). From time to time, a marketer's perception may conflict with that of the public, which results in ethical concerns and, perhaps, disapproving behavior by the public such as protests and boycotts (Smith and Cooper-Martin 1997). For instance, consumers may believe that reduced pricing for medications such as AZT for the critically ill is ethical and laudable, but manufacturers may consider it unacceptable and unethical based on their obligations to shareholders. In other cases, while consumers perceive targeting harmful products at vulnerable consumers as unethical and exploitative, some marketers consider any restriction of marketing as an infringement of their legal right to free speech under the First Amendment. Thus, consumers' ethical evaluations of a particular marketing situation may be negative, while the marketer's perceptions are based on different moral priorities (Smith and Cooper-Martin 1997).
Given such complexities, this research integrates previous studies, applies contingency theory to analyze the ethical implications of the marketing exchange, and explains how ethical concerns arise in various marketing situations based on the agreement of lack thereof in the perceptions of ethics between marketers and consumers. Several recent studies have used two-dimensional frameworks and focused on the targeting of harmful products at vulnerable consumers (Rittenburg and Parthasarathy 1997; Smith and Cooper-Martin 1997). In our three-dimensional model, we include three concepts as the contextual variables, i.e., the nature of the product, consumer characteristics, and market selection. Furthermore, we examine three categories in each variable (see Figure). In the following sections, we define each of the three contingency variables and discuss how interactions among these dimensions distinguish between various contexts, and how ethical conflicts or dilemmas may arise under certain circumstances.
Nature of the Product
The nature of a product is an important contingency variable that affects the ethical impacts of marketing practices. Although there is a continuum of product benefits and harms, products can generally be classified as beneficial, harmful due to abuse/misuse, of inherently harmful (Rittenburg and Parthasarathy 1997). Many products, such as wholesome food and medications, provide a variety of benefits to consumers, including physical, functional, emotional, and social benefits. On the other hand, products such as cigarettes and other tobacco products are inherently harmful, and it is unethical to market such products. Moreover, some products are benign to sophisticated consumers but may be harmful to others due to abuse of misuse. Alcoholic beverages, for instance, may be beneficial or benign for mature adults who use them responsibly, but are harmful to under-aged youths. The greater the harm of a product, the harsher will be the criticism of marketing practices promoting the product (Smith and Cooper-Martin 1997).
Although a physical product itself may be beneficial, the nature of a product's marketing correlates may be unethical. Besides bodily harm, consumers may suffer from economic harm such as the loss of benefits due to deceptive pricing, and psychological harm such as disrespect, humiliation, and a sense of powerlessness that is caused by fraudulent and irresponsible marketing practices such as product defects and deceptive investment schemes (Andreasen 1993). In addition to consumer discontent and social censure, awareness of the economic impact and psychological effects of unethical marketing practices on consumers has become more important, given the penalties for both economic and psychological damages under the current corporate sentencing guidelines (Morgan, Schuler, and Stoltman 1995).
Consumer Characteristics
Existing studies suggest that consumer capability is the most salient factor in ethical evaluations of marketing practices (Rittenburg and Parthasarathy 1997; Smith 1995). Clearly, consumer capability/vulnerability is multifaceted (Morgan, Schuler and Stoltman 1995; Smith and Cooper-Martin 1997). Consumers need mental, physical, and economic abilities to effectively execute a marketing exchange. At times, however, some consumers may lack one or another type of ability to the extent that they can not make informed decisions about a product or benefit from it. Lack of such capabilities may lead to some degree of vulnerability.
In general, a consumer's ability falls on a continuum that runs from being sophisticated to being vulnerable. Here, we group consumers into three categories: sophisticated, at-risk, and vulnerable (Rittenburg and Parthasarathy 1997). Many consumers may be sophisticated due to maturity, education, prior experience, or professional background. Some consumers are considered at-risk when they are prone to addiction or compulsion even though they may possess basic skills and capabilities. These consumers also include those who are socio-economically disadvantaged (Rittenburg and Parthasarathy 1997; Smith and Cooper-Martin 1997). For instance, some consumers may be at greater risk if they already suffer from a disproportionate occurrence of harmful behavior patterns, including those who may not be able to control their own behavior, such as alcoholics, smokers, or other drug addicts. Moreover, some consumers may be vulnerable due to personal characteristics such as age, education, and physical and mental health (Andreasen 1993).
Market Selection
With respect to any consumer group, a marketer basically has the following options: to target the group with a unique marketing mix, to market to the group via integrated mass marketing, or to exclude the group from marketing programs (Kotler 1991). While integrated mass marketing remains a popular strategy for many products, targeted marketing is considered more effective for companies to gain competitive advantages. When a product has universal benefits, market selection involves decisions about the inclusion of one group of consumers or the exclusion of another, and may be perceived as unequal or unfair (Cespedes 1993). When a company's marketing programs exclude certain consumers inadvertently or by design, consumers may have limited choice or incur higher switching costs of going elsewhere (Smith 1995).
According to the contingency approach, each of the dimensions discussed above is important in ethical evaluations of marketing activities. However, none of the dimensions alone can determine the ethicality of a marketing situation. The degree of negative or positive ethical evaluation depends on the interaction among the three dimensions. To inform marketing practice and provide ethical guidelines, a normative framework of marketing ethics should enable decision-makers to make better moral judgments that are applicable to specific and often complex situations (Smith 2001). Thus, analyzing the specific contingencies of a given marketing activity would be more helpful for assessing the ethical evaluations of marketing than would offering a limited set of general prescriptions.
Contingencies and Ethical Implications
As shown in the Figure, the interactions among the three contingency variables form 27 scenarios. They have different ethical implications due to differences in perceptions between marketers and the public based on the universal principles of equality, fairness, and justice. Each block provides a unique interaction of the three factors. The white block indicates positive or non-negative ethical evaluation. Black indicates negative ethical evaluation that marketers should avoid. These two areas often represent situations of universal agreement about ethical practice. The gray block suggests caution due to potential ethical concerns and represents the area in which there are different ethical perceptions and hence disagreement on the ethicality of marketing practices. Based on contingency theory, we describe the following seven common marketing practices and discuss their ethical implications.
Scenario 1. Mainstream Marketing
First, companies may market beneficial products to sophisticated and at-risk consumers through targeted marketing or mass marketing, as in the blocks from A1B1C1 to A2B1C2. In these cases, companies will receive positive evaluations from consumers and should proceed. Ringold (1995) suggests that marketing transactions with equal participants (i.e., capable and informed consumers) are typically regarded as fair and ethically sound. While many consumers are sophisticated and will not be considered at-risk or vulnerable under normal circumstances, this is not to say that unethical practices would not occur in these situations. Unethical practices may affect capable consumers (who do have bounded rationality and are sometimes vulnerable to unscrupulous marketing) as evidenced by numerous fraudulent investment schemes (Karpatkin 1999). As well, in the case of silicone breast implants, many sophisticated consumers fell victim to unethical practices.
Scenario 2. Positive Targeting and Social Marketing
Second, targeting and integrated marketing to vulnerable consumers is positive as long as the products are beneficial, and may be meaningful in some product categories (blocks A1B1C3 and A2B1C3). Children, due to their body size and stage of mental development, are often targeted with beneficial products and features such as specially formulated medications, safety caps for medication containers, and educational toys. Targeting beneficial products at vulnerable consumers mostly receives positive ethical evaluation (Smith and Cooper-Martin 1997). Based on the concept of social responsibility, many businesses provide beneficial products to vulnerable and disadvantaged consumers, such as charitable donations to those who are weak and poor. Social marketing programs also target beneficial products at these consumers, such as free vaccinations for the children of poor families, and low interest rate mortgages for households with limited income. Marketers should receive positive evaluations from the public for these goodwill practices that contribute to consumer well being (Macchiette and Roy 1994).
Scenario 3. Marketing Potentially Harmful Products
Third, the gray areas are the most challenging for marketing organizations and merit caution (blocks A1B2C1 and A2B2C2 are coded gray). Targeting products that are harmful due to abuse/misuse at any consumers is generally a questionable practice (Smith and Cooper-Martin 1997). The marketing of such products to consumers who are already at risk and disadvantaged is even more problematic. For instance, targeted marketing of malt liquor of higher alcohol content to inner-city minorities by some companies led to severe criticism and consumer boycotts due to the disproportionate consumption of such products and more frequent alcohol-related health problems among these groups (Sautter and Oretskin 1995; Smith and Cooper-Martin 1997). Therefore, when marketing products that are potentially harmful due to abuse or misuse, it is important that marketers examine the characteristics of their target markets and use extreme caution to avoid marketing such products to consumers at risk or a disadvantage (Rittenburg and Parthasarathy 1997).
Scenario 4. Predatory Marketing
Fourth, marketing of harmful products to any consumer group is unethical, as indicated by blocks from A1B3C1 to A1B3C3, which are coded black (Figure). Targeted marketing is appropriately met with intense public scrutiny and even consumer boycotts when products are detrimental to consumer well being and lead to health and social problems. For this reason, the marketing of cigarettes has been curtailed in the U.S. and many other countries. Negative ethical evaluations are even stronger when harmful or potentially harmful products are targeted at vulnerable consumers, because companies are considered to be preying on the weaknesses of such consumers (A1B2C3 and A2B2C3). Because cigarettes and other nicotine products are detrimental to consumer health, it is even more problematic when they are targeted towards the vulnerable (e.g., young children). The U.S. Food and Drug Administration recently ordered several companies to stop making lollypops that contained nicotine due to their potential to harm children.
Scenario 5. Discrimination and Redlining
Fifth, the exclusion of certain consumer groups, particularly vulnerable and disadvantaged consumers, from access to beneficial products is unethical because such actions limit consumer choices (A3B1C1 to A3B1C3). It is also illegal to exclude any consumer groups from marketing programs specified under U.S. laws such as the Fair Lending Act and the Fair Housing Act. However, segmentation and targeted marketing often mean the inclusion of some groups and exclusion of others, which http://www.fastfoodnation-lefilm.com/uncategorized/increase-your-online-presence-with-these-blogging-tips/ results in inadvertent redlining. For instance, when marketers launch new products or expand into new geographical markets, they often select business locations based on criteria such as demographic statistics, the cost of doing business, and crime rates. Naturally, companies choose areas where consumers are affluent and the cost of doing business and crime rates are low, thus bypassing poor communities.
Hence, the conflict between consumer interest and corporate objectives poses an ethical dilemma. A number of banks, insurance underwriters, and mortgage companies, such as American Family Insurance and Chevy Chase Bank, faced lawsuits by minority consumers for alleged discrimination and redlining under the Fair Lending Act and the Fair Housing Act (Harrington and Niehaus 1998; Schafer and Ladd 1981; the U.S. Department of Justice 1995). Although the companies admitted no wrongdoing in the consent decrees, it is the effect, not the intent, of these marketing practices that causes cries of "redlining" from those experiencing the lack of equity and fairness. In such cases, marketers need to ensure that their market selection and marketing activities are based solely on valid business criteria and consumer characteristics that are not directly related to factors such as age, gender, or ethnicity.
Scenario 6. Demarketing
However, not all exclusive marketing practices are unethical. Some exclusion is not only positive but also necessary to protect consumers (blocks A3B3C1 to A3B2C3). Many social marketing programs are designed to dissuade consumers from adopting harmful of potentially harmful products, such as alcoholic beverages, cigarettes, and other addictive drugs. In addition to efforts by government agencies and civic organizations, many corporations also sponsor and participate in these programs. To encourage responsible consumption of alcohol products and to prevent drunk driving, Anheuser Busch Company, for instance, sponsored a consumer education program that included advertising, designated drivers, and free taxi rides. These demarketing efforts play a critical role in educating and protecting consumers and minimizing the potential harm to them (Kotler and Roberto 1989).
Scenario 7. Reverse Discrimination
Finally, targeting beneficial products at vulnerable and disadvantaged consumers is not entirely without controversies, especially when other groups are not included in these programs (blocks A3B1C1 A3B2C2). While marketers may face discontent from disadvantaged consumers--who are the traditional targets of discrimination--lawsuits also come from the non-target segments. For instance, long distance telephone carriers and airlines have designed special promotions for certain nationality groups who make more calls or travel more often to certain destinations. These and other affinity programs give the target consumers special rates or discounted fare. Members of other ethnic groups, who are automatically disqualified, may cry discrimination for exactly the same reasons as traditional victims of discrimination (Mitchener and Reed 1997).
Although most reverse discrimination cases have to do with employment-related issues, some are directly related to social marketing programs that are designed to assist the disadvantaged. In a number of cases, white entrepreneurs have charged the U.S. Small Business Administration with reverse discrimination, in that these non-members of protected groups have been discriminated against precisely due to their ethnic background. Thus, marketers need to pay attention to the perceptions and responses of non-target groups, who may derive different meanings from such marketing efforts (Grier and Brumbaugh 1999: Smith and Cooper-Martin 1997). Any targeted marketing program should be fair and sensitive to non-target consumer segments.
Ethical Implications Assessment
A society has many avenues to ensure that marketing will benefit rather than harm consumers. Consumer activism, legislative activity, and government enforcement help to guard against unethical conduct http://www.fastfoodnation-lefilm.com/uncategorized/increase-your-online-presence-with-these-blogging-tips/ by corporations. While "obey the law" and legal clearance of marketing programs by companies may be necessary for ethical conduct, they are apparently not sufficient (Smith 2001). Ethical decision-making for businesses requires companies to act in "enlightened self-interest" to ensure the integrity of their marketing programs. Today, many marketing organizations have adopted the consumer-centered business philosophy, making "customer satisfaction" their number one priority. If marketers truly subscribe to that mission, then consumers' interests should be given more weight in resolving potential ethical conflicts in marketing decisions (Smith 1995).
To fully respect consumer sovereignty and uphold the principles of fairness and justice, we recommend that marketers conduct an "ethical implications assessment" of their marketing programs. Companies could establish a Marketing Ethics Committee, which includes consumer voices, to conduct such exercises and make the decisions about marketing practices for a given product. Companies can take the following steps using the contingency framework that we have outlined. First, prior to the launch of products or marketing programs, companies need to study the perceptions of consumers, including those of non-target segments, in terms of consumer capability, nature of the product, and marketing strategies. In the second stage, the above dimensions should be examined simultaneously to determine the type of contingencies that the company may be facing and whether "ethical clearance" should be given to the proposed marketing program. If the marketing program lands in the black zone, the committee should recommend stopping or aborting the program. The committee can endorse a marketing program only if it appears in the white zone. If the results point to the gray zone, the committee should recommend further revisions to avoid potential pitfalls. Finally, only when all negative or questionable contingencies are cleared should the committee give the final seal of approval. By so doing, marketers have a better chance of ensuring that their marketing programs will benefit consumers, thereby creating benefits as well for the company in a win-win situation.
DISCUSSION
Comparisons with Other Theories
Normative theories of marketing ethics provide a basis for moral deliberation by practitioners and others of the many complex and often troubling ethical issues in marketing (Smith 2001). As researchers and practitioners search for meaningful guidelines amidst complex interactions, the contingency approach provides a plausible framework for analyzing the ethics of the marketing exchange and can help sound decision-making in marketing and public policy. The contingency framework considers the parties to and objects of the exchange, and related marketing strategies. Thus, it is comprehensive and enables systematic analyses of the ethical implications of marketing across multiple dimensions and various scenarios. Analyzing the specific contingencies can help generate concrete guidelines for ethical decision-making.
Compared with the general normative theories of marketing ethics, the contingency approach is more flexible in analyzing the ethical implications of various situations based on the three contextual variables. Meanwhile, unlike ethical or moral relativism, the contingency approach stresses the universal principles of equity, justice, and fairness in analyzing specific scenarios, hence remains truthful to a normative theory. Because the framework considers different products and consumers with different levels of capability as well as the differential impact of marketing on consumers, the perspective of justice provides the most compelling basis for the ethical evaluations of marketing practices (Smith and Cooper-Martin 1997). In a sense, the contingency framework serves as a bridge between the principled approach and the utilitarian perspective of marketing ethics, which seem to be incommensurable with each other.
The framework can be expanded in greater detail and applied to other consumer characteristics such as age, income, and education. Products may range from economic models to premium models with enhanced features. The ethical implications of other components of a marketing mix, i.e., distribution, promotion, and price, should be explored. Distribution strategies, for instance, may range from exclusive to selective of intensive distribution. These marketing practices, when interacting with consumer characteristics and product categories, may lead to ethical concerns. Given the increasing efforts by marketers to target various consumer segments with unique marketing mix strategies, the ethical implications of a marketing campaign based on market segmentation and differentiated marketing warrants systematic and rigorous examination before implementation.
Implications and Suggestions
Several practical implications of this approach can be derived. First, to encourage ethical behavior, companies and industry organizations have established codes of ethics of relied on self-regulation, consumer ombudsmen, or external audits. However, these efforts alone are not enough to eliminate unethical conduct. Many companies have been relatively passive in examining their positions in marketing ethics and are still operating according to traditional business models and processes that do not consider consumer interests and the ethical implications of their actions as critical issues. The ethical implications of marketing activities often remain afterthoughts, and are yet to be systematically incorporated into management decision-making. The contingency framework can facilitate this preemptive approach to ethical decision-making.
To integrate ethics into a firm's planning and strategy formulation processes, marketers should study consumers' ethical evaluation of their marketing programs (Smith and Cooper-Martin 1997). An "ethical implications assessment" is necessary before the implementation of a marketing program. In addition to financial, market, and competitive objectives, marketers should include consumers' interest and ethical integrity as important criteria for management decision-making. Furthermore, ethics must be coordinated throughout the marketing planning process from product development, market selection, advertising and promotion to implementation and evaluation. Given the competing priorities facing companies in their decisions, finding an ethically sound synergy among product types, consumer characteristics, and marketing strategies is as complicated as solving a crossword puzzle--it has to make sense in all dimensions.
The contingency approach can also serve as a framework for public policy makers to analyze the ethical implications of marketing activities. While public policy makers can take the initiative to protect consumers and promote good corporate citizenship, they also face tremendous challenges and complex dilemmas when making critical decisions, such as restricting certain types of advertising or the availability of some products. For instance, should the legislature make marijuana and similar drugs legal for distribution because they may benefit one group of people? Regulators need to consider the benefit accruable to one group of consumers as well as the potential harm to another. As Laczniak and Murphy (1993) put it, "weighing the concerns of multiple stakeholder groups ... becomes the essence of appropriate ethical decision-making ... [and] the root of the complexity of such decision-making" (p. 51). While public policy makers should certainly protect the rights of marketers in a free market economy, they must also consider the interests of consumers, particularly those with various degrees of vulnerability, such as children and the elderly.
Future studies of marketers' and consumers' ethical evaluations of the various marketing contexts would help to validate the contingency approach. How consumers form their perceptions of marketers' intentions and make ethical evaluations of marketing will be a fruitful avenue for future research (Smith and Cooper-Martin 1997). Researchers may focus on specific situations that would raise ethical concerns for marketers, especially variations in consumers' ethical evaluations of marketing practices (e.g., advertising and distribution) for different market segments (e.g., children and the elderly). In addition to consumer capability, information and choice are two important criteria to determine marketing ethics under the principle of consumer sovereignty (Smith 1995). Thus, how companies present information about their products, and how they handle potentially damaging information, may help to shed some light on the ethical decision-making of marketers.
The increasing diversity of the marketplace in the U.S. has significant and complex implications for marketing practices. As more companies are concentrating their resources on the most desirable and profitable segments of consumers, they inevitably exclude other groups. Consumer and marketing research should use more representative samples of diverse groups to examine consumer responses to marketing programs, including the responses of non-target markets. In the foreseeable future (around 2020-2050), the United States will be a marketplace in which all Americans are minorities, and that will pose special challenges and opportunities for both private companies and public organizations. Determining when segmentation and differentiation may lead to perceptions of discrimination or reverse discrimination will continue to be a focal issue for future research.
This research focuses on marketing and consumers in the United States. Cross-country and cross-cultural research would help to understand marketing ethics in a broader context. In the past, multinational corporations experienced difficulties with their marketing strategies in other countries, as in the case of Nestle's baby formula. Despite adverse public attitudes at times, multinationals and local companies used a variety of techniques and media to promote their products to consumers in developing countries without close scrutiny of the consumer perceptions of such practices (Hill and Boya 1987). In light of increasing globalization, more companies are crossing national boundaries to produce and market their products in other countries. Thus, how the local communities of the global marketplace evaluate the marketing practices of multinational corporations has become an important subject of investigation.
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Geng Cui is an Associate Professor in the Department of Marketing and International Business, Lingnan University, Tuen Mun, N.T., Hong Kong. Pravat Choudhury is Professor and Chair of the Department of Marketing, School of Business, Howard University, Washington, DC.
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