Ethical Questions for Marketers – Part 6

Welcome to the newest installment of our weekly blog series, Ethical Questions for Marketers. Each week we plan to introduce a new topic and explore it in detail, preparing marketers for the day when they face such a problem at their organization.

Last week’s topic was Price Consistency.

This week’s topic: Ad Targeting

The general principle of modern advertising is this – you want to show the right ad, to the right person, at the right time. That’s what we talk about when we talk about targeted advertising.

Digital tools give marketers the ability to customize, or personalize, advertising in a number of interesting ways. First, we can show different ads to different people based on what we know about who you are. For example, men and women might see different versions of the same ad.

Second, we can show ads to people based on something unique about you. For example, you might see an ad for a cable subscription right after you move into your new home.

Ad targeting is the Holy Grail for marketers and companies right now, because the ones who get it right are able to dramatically increase their return on investment. Not only does it save money by no longer advertising to people who are not likely to purchase, but it also increases the effectiveness of the ads served because they are more relevant.

The question is, when does targeting cross the line? It is easy to see that there are lines that can be crossed. For example:

·         You might target ads for high-risk financial products to people with low incomes

·         You might target ads for alcohol-related products to someone you know has a drinking problem

·         You might target ads based on race or religion

It might be tempting for marketers to defend how they’re advertising when they can point to success in terms of revenue generated. But you cross the line when the nature of your advertising has detrimental effects on the people you are targeting.

Stay tuned next week for another installment of our Ethical Questions for Marketers series. If you have an ethical topic you’d like to see addressed, write us.

Ethical Questions for Marketers – Part 5

Welcome to the newest installment of our weekly blog series, Ethical Questions for Marketers. Each week we plan to introduce a new topic and explore it in detail, preparing marketers for the day when they face such a problem at their organization.

Last week’s topic was Competitor Spying.

This week’s topic: Price Consistency

Pricing is an important topic for marketers to learn more about, made even more important due to the fact that is commonly overlooked as a lever we have at our disposal. But pricing decisions do not come without ethical considerations.

Under the subject of pricing consistency, one can run into several ethical problems. Many of us think that if we offer a product, that product has a price. It’s simple. That product costs X.

But that’s not always how it works. Many companies practice some degree of variable pricing.

There are legal issues in variable pricing. For example, it was quite common in the past for companies to charge black people more than whites. That’s illegal. And before the Affordable Care Act outlawed this practice, it was common for health insurers to charge sick people more than healthy people.

Then there are variable pricing strategies which are still perfectly legal. Amazon made headlines early in their rise to dominance in the ecommerce space when it was discovered that the pricing users see on their website doesn’t always match what other users see. That’s because Amazon uses pricing algorithms to determine what price they can charge you as an individual in order to get you to purchase a product. The goal is to charge as much as possible, so that they can maximize their profit.

Many B2B companies and auto dealerships offer customized pricing models, where the price someone pays depends on features and negotiating skills. And B2C companies regularly uses special offers and discounts that are available to only a select audience (for example, email subscribers or loyalty program members).

So where do we draw the line? As long as what you’re doing is legal, it is up to each company to set their own rules around pricing consistency.

To help you, determine how you would explain your pricing strategy to a customer who feels ripped off. If you can’t do it in a way that would make sense to them, you’re probably outside of your ethical comfort zone.

Stay tuned next week for another installment of our Ethical Questions for Marketers series. If you have an ethical topic you’d like to see addressed, write us.

Ethical Questions for Marketers – Part 3

Welcome to the newest installment of our weekly blog series, Ethical Questions for Marketers. Each week we plan to introduce a new topic and explore it in detail, preparing marketers for the day when they face such a problem at their organization.

Last week’s topic was Price Collusion.

This week’s topic: Price Wars

There are obvious ethics associated with going to war. What about companies that want to go to war with other companies?

We often talk of competition in the business world as if it is life or death. We often treat markets as fixed, so that in order to increase our own market share, someone else has to lose theirs. These are classical ways of viewing competition, and part of the reason that business has long attracted competitive personalities. We talk about strategy. We talk about wins and losses.

Price wars are one common way that this kind of competition reaches a point of no return. Competitors obsess over offering the lowest price in order to take market share from other industry players. But in hyper-competitive markets, this usually just triggers lower prices from competitors.

In price wars, where lowest price wins the most customers, the natural outcome is a race to the bottom. In the long run, it’s not sustainable. Either companies go out of business because they can’t compete, or they strip themselves down trying to cut costs that customers end up worse off.

Before you go to war with your competition, there are some questions you should ask yourself.

  1. Can we afford to compete if they lower their price too?
  2. Is the market truly fixed or is there a way to grow without stealing market share?
  3. Can we make our product better so we don’t need to offer the lowest price?

Stay tuned next week for another installment of our Ethical Questions for Marketers series. If you have an ethical topic you’d like to see addressed, write us.

Ethical Questions for Marketers – Part 1

Welcome to the newest installment of our weekly blog series, Ethical Questions for Marketers. Each week we plan to introduce a new topic and explore it in detail, preparing marketers for the day when they face such a problem at their organization.

This week’s topic: Customer Privacy

Privacy is a subject that is all over the news these days. Usually, that news focuses on one specific form of privacy – cell phones, government surveillance, consumer rights, etc.

For companies, and marketers more specifically, the big concern is customer data. While today’s digital landscape makes it very easy for businesses to collect and store massive amounts of information about its customers, the ethical questions rarely get the attention they deserve.

Should we be storing such data? How much data do we need? What data is deemed too sensitive to store?

The risks with storing such data is that it can be used in ways against our customers’ interests. Even assuming for a second that your company would never take advantage of customer data (which is more than can be said for many companies), hacks and accidental leaks are inevitable. And so what happens when your customer data finds its way into someone else’s hands?

It is important for marketers to ask these questions internally, and stand up for the rights of your customers, because we are the managers of our brands. Brands that will certainly suffer as soon as private customer data gets exposed.

We need to be sure that the companies we work for are taking steps to keep information limited, confidential, and secure. While data helps marketers do their job, it’s better to have less of it than to risk its exposure.

Stay tuned next week for another installment of our Ethical Questions for Marketers series. If you have an ethical topic you’d like to see addressed, write us.

New Series – Ethical Questions for Marketers

Any role in the business world runs up against ethical questions from time to time. Marketers are no different. And in fact, may face more ethical quandaries than most.

With that in mind, we wanted to kick off a brand new weekly blog series aimed at exposing some of the biggest ethics questions facing today’s marketers. Each week, we will introduce a new topic and explore it in detail, preparing marketers for the day when they face such a problem inside their own company. Because the best thing we can do is to define our ethical boundaries now, so that we are not caught off guard later.

Stay tuned next week for the first installment.