Introduction
Ethical marketing is an area of ethics that deals with the morals that are associated with marketing. Ethics can highly influence the decisions that people make in any situation being principles of ethical conduct. In a certain setting, people are required to behave in some particular way.
In addition, they need to respond to a number of situations. Consumer behavior can be influenced by ethics in marketing (Schlegelmilch, 1997). A business is expected to behave in some peciliar way while marketing its goods or services.
A business organization should always try to do better than its competitors so as to maintain its customers, and at the same time, attract new ones. Marketing is essential in helping the organization gain a competitive advantage over its competitors.
It is imperative that a business should be ethical when marketing its products. It should observe ethical principals when developing and manufacturing the products (Diacon and Ennew, 1996). This way, the organization can be able to satisfy its customers.
Recently, there has been much focus on ethics. Consumers are loyal to organizations, which adhere to ethical principles rather than just provision of services or production of goods. They know which product is suitable for them and which one is not. As a result, many organizations are now turning to corporate social responsibility so as to build their image.
This article looks at a case study of Cadbury when the company has decided to substitute cocoa butter with palm oil in its production of chocolate. The purpose of this step is to cut the cost of production since the company has found itself in a rough situation which is not promising for their future performance.
Overview of the case
The case study in question clearly shows how a customer can influence the performance of a company based on its ethical and unethical activities. Consumer behaviour theories can be used in understanding how the public responds to a company’s unethical activity.
Cadbury decided to use palm oil in the chocolate production instead of cocoa butter beacuse of reducing its cost of production. The move caused a public outcry from international environmental groups as well as from local organizations.
It gave the company negative publicity because the use of palm oil posed a threat to the extinction of Orangutan forest. The forest acts as a habitat to palm oil plantations in New Zealand. Conservationists stood against the move by Cadbury which led to the company reversing its palm oil policy within a period of three months.
The case illustrates how strong the consumer can be in influencing the performance of a company that engages in unethical or ethical behavior based on the buyer behaviour theories.
Relevant supporting evidence
A lot of customers in the market prefer brands that are socially and environmentally responsible and friendly. Therefore, the company that markets goods, which do not adapt to ethical issues, are likely to have a dismal performance since most customers will not buy its products (Mangos, Roffey and Lewis, 1997).
Customers will move to competitors’ products that adhere to ethical standards, as a result, the size of the market for such a product will decrease immensely. If the company is to lose its market in Europe, it means that it is going to lose a large amount of sales.
It is pinpointed that out of the twenty countries that consume chocolate, 16 of them are from Europe. It means that more than 22 percent of consumers are from New Zealand and Australia. On the other hand, when Cadbury turned to ethical marketing of its chocolate, its sales increased significantly.
Fairtrade Certified Cadbury Dairy Milk was presumed to be the best selling blocks of chocolate in the country. About 5.7 million blocks were expected to be sold upon its introduction.
In fact, it was projected that the selling block would increase the sales of chocolate by 20 times in both New Zealand and Australia (Cadbury, 2012). Therefore, it is imperative that the company has to act ethically for it to secure and maintain its share of the market.
Marketing concepts
Consumer behavior can be highly influenced by the ethical activities of a company. The perception the consumer will have on the company’s activities is crucial in influencing their behavior. It is emphasized that most customers and especially the so called green consumers, have now learnt about Fairtrade logo.
The logo is used by companies that conduct ethical business activities. Consumers prefer brands which are socially and environmentally responsible. It is useful for companies to cooperate with marketing and business activities that have the ability to change the perception of consumers.
They should engage in positive activities that are appealing to consumers. The outcome will be the fact that consumers will transfer their values to the positive brands.
Corporate Social Responsibility is an activity carried out by companies which are eager to take control of their actions (Chen, 2011). They act in a manner which is not harmful to both the society and the environment. This is the way that Cadbury has to go if it wants to change the perspective of its customers.
The mass media has been influential in changing the perspective of customers about the chocolate containing palm oil. The negative reports in the press have made customers buy ethical products.
The other consumer behavior that has to be taken into consideration is the issue of self-concept. Consumers will go for products that help them identify their self-concept that would help them have a feeling of self-satisfaction (Rhee and Johnson, 2012).
However, lower prices that come with unethical products, are likely to get the attention of some customers especially the youths, who are the main consumers of chocolate (Peters, Shelton and Thomas, 2011).
They may wish to go for greener products, which have a positive image, however, these products often the prices of such products go premium. Young people will likely to buy the palm oil chocolate since they want to have the sense of self concept, which becomes a significant challenge to green marketing.
Motivation cannot be overlooked in this area of marketing as well. Consumers have to be motivated for them to buy ethical products. Such nature of consumption behavior is explained by the Maslow’s theory that describes the hierarchy of needs (Dye, Mills and Weatherbee, 2005).
According to this theory, human beings are motivated by their own needs which are placed in a hierarchical order. The needs start with the most basic and end up with the least basic ones.
Therefore, an individual will work to satisfy the needs at the lowest level of the hierarchy, and move up after satisfying these primitive needs. The theory can explain the need for consumers to prefer ethical products.
According to this theory, low involvement products offer customers more choices as compared to the higher ones. However, brands, which are satisfactory and at a higher level, are more appealing to consumers.
As a result, consumers are likely to go for unsustainable products. In the case of Cadbury, these are the chocolate brands using palm oil in the chocolate production.
Consumers feel guilty for the wrong reasons
Consumers of chocolate have the tendency of feeling guilty when eating chocolate that leads to fattening despite the fact that it is delicious and tasty. However, in New Zealand, the feeling of guilt exist for a different reason among people.
Cocoa butter used in chocolate has been replaced by palm oil for the purpose of cutting costs. Palm oil is said to have a negative effect on the environment. One of the problems associated with consumption of palm oil is the threat of extinction of some species and the effects onthe environment leading to greenhouse gases making customers have a feeling of guilt since palm oil is perceived as unethical marketing or business activities.
At the same time, it has been stressed on the fact that it is not the right reason for one to feel guilty when consuming chocolate.
Conclusion and recommendations
Companies ought to take right approaches in order to avoid the destruction of palm oil forestation. This will help to save the habitat; it will also help to preserve trees which are helpful in reducing the effects of greenhouse gases.
Consequently, I would recommend the company to reverse the policy and engage itself in ethical marketing activities, which are the use of cocoa butter rather than palm oil. It should engage in corporate social responsibility.
Despite the fact that this will increase its cost of production, it will be helpful for the consumers who strive and prefer to buy the brand. It is pertinent to note that marketing activities help the organization gain a competitive advantage and, hence, it can survive in the current economy.
Reference List
Cadbury Website 2012, Fairtrade Certified Cadbury Dairy Milk Hits Nz Shelves. Web.
Chen, C H 2011, ‘The major components of corporate social responsibility’, Journal of Global Responsibility, vol. 2 no. 1, 85-99.
Diacon, S R & Ennew, C T 1996, ‘Ethical issues in insurance marketing in the UK’, European Journal of Marketing, vol. 30 no. 5, 67-80.
Dye, K, Mills, A & Weatherbee, T 2005, ‘Maslow: man interrupted: reading management theory in context’, Management Decision, vol. 43 no. 10,1375-1395.
Mangos, N C, Lewis, N R & Roffey, B H 1997, ‘Marketing accounting services: an inter-country and ethical comparison’, Marketing Intelligence & Planning, vol. 15 no. 1, 11-18.
Peters, C, Shelton, J A &Thomas, J B 2011, ‘Self-concept and the fashion behavior of women over 50, Journal of Fashion Marketing and Management’, vol. 15 no. 3, 291-305.
Rhee, J & Johnson, K P, 2012, Predicting adolescents’ apparel brand preferences, Journal of Product & Brand Management, vol. 21 no. 4, 255-264.
Schlegelmilch, B B 1997, ‘The relative importance of ethical and environmental screening: implications for the marketing of ethical investment funds’, International Journal of Bank Marketing, vol. 15 no. 2, 48-53.