Ethics plays a fundamental role in business. In light of the recent ethical scandals, consumers are starting to pay attention to the ways, in which companies are behaving. Businesses and organizations that do not pursue ethical principles in their relations with markets and customers will have fewer chances to outperform their competitors than the companies, which are ethically compliant.
Yet, with the growing intensity of market competition, it is becoming much more difficult for businesses to retain and expand their market presence. Building non-price barriers to market entry has proved to be an effective mechanism of attracting and keeping consumers.
Unfortunately, not all companies can successfully balance their profitability objectives with the calls for ethics: unethical advertising remains a serious ethical problem, as companies are willing to sacrifice their values and principles for the sake of profits.
Profits do not come without advertising. According to McConnell, Brue and Flynn (2009), “the expense and effort involved in product differentiation would be wasted if consumers were not made aware of product differences.” Unfortunately, many firms forget that advertising does have its limits. A recent article in the New York Times raises the issue of advertising and its impacts on children.
According to Klass (2013), the era of television and the Internet makes children and adolescents particularly vulnerable to the negative impacts of advertising. The most problematic is the process of advertising cigarettes and alcohol. Klass (2013) refers to several empirical studies and asserts that aggressive advertising pushes children and adolescents towards unhealthy behaviors.
Underage drinking and smoking becomes a norm, as businesses use advertising to expand their market presence. No less serious is the problem of food advertising: the food industry is extremely competitive, and aggressive advertising often becomes the only way for businesses to expand their customer base.
However, even a 30-second exposure to a harmful food product, such as hamburgers and Coke, makes children and adolescents change their brand preferences (Klass, 2013).
What is good for business is not always good for consumers. While advertising raises non-price barriers to market entry, children and adolescents learn unhealthy behaviors and develop health problems. This is one of the most serious ethical challenges related to the use of non-price barriers in competition.
Businesses seek greater profits, and they do not always care about the consequences of their decisions. However, in the long-run, such non-price business activities lead to serious public health and social complexities, including childhood obesity and underage drinking.
The main question is what can be done to improve the situation and whether at all businesses can maintain their market power while being aligned with ethical standards, legal requirements, and current values. Apparently, organizations can maintain a reasonable balance of their profitability and ethics objectives.
Legally, alcohol and cigarettes should not be advertised, when children are watching cartoons or television programs. Also, the time period when such advertising is allowed, should be limited. As for ethics, businesses that use aggressive advertising to promote their harmful products should also include a message that the product can result in an addiction or health problem, if used by children and adolescents.
Unfortunately, few businesses are ready to put ethical ideals before profits. Consequently, aggressive advertising as a form of non-price competition remains an issue of hot concern for parents and ethics activists in the developed world.
References
Klass, P. (2013). How advertising targets our children. The New York Times. Web.
McConnell, C.R., Brue, S.L. & Flynn, S.M. (2009). Economics, principles, problems, and policies. 18th ed. McGraw-Hill Company.