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Table of Contents

CHAPTER 1............................................................................................................... 5
What is Marketing Ethics?.............................................................................................. 5
Advantages and disadvantages:........................................................................................ 5
Areas with which Marketing ethics deals:............................................................................5
What is Ethical Marketing?............................................................................................. 6
Need of Marketing Ethics............................................................................................... 6
Life without Ethics........................................................................................................ 6
Your say on Ethics:..................................................................................................... 7
CHAPTER 2.................................................................................................................. 8
Framework for Marketing Issues....................................................................................... 8
Issues in Ethical Marketing............................................................................................. 8
1-Market research...................................................................................................... 8
Ethical danger points in market research include:..................................................................8
Invasion of privacy:................................................................................................... 8
Stereotyping:............................................................................................................ 9
2-Market Audience........................................................................................................ 9
The Ethical danger points out of the Market audience mail include:........................................9
3-Pricing Ethics.......................................................................................................... 10
List of unethical pricing practices.................................................................................10
1.

Bid rigging:.................................................................................................. 10

2.

Dumping (pricing policy):............................................................................. 10

3.

Predatory pricing:........................................................................................ 10

4.

Price discrimination:.................................................................................... 10

5.

Price gouging:.............................................................................................. 10

6.

Price fixing:.................................................................................................. 11

7.

Price skimming:........................................................................................... 11

8.

Price war...................................................................................................... 11

9.

Supra competitive pricing:...........................................................................11

10.

Variable pricing:........................................................................................ 11

4-Ethics in advertising and promotion..............................................................................12


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1.

Issues over truth and honesty:.....................................................................12

2.

Issues with violence, sex and profanity:.......................................................12

3.

Taste and controversy.................................................................................. 12

4.

Negative advertising techniques:................................................................12

CONTROVERSIES IN MARKETING............................................................................. 12
1-Delivery channels................................................................................................. 13
2-Deceptive marketing.............................................................................................. 13
3-Using Ethics as a Marketing Tactic............................................................................ 13
CHAPTER 3............................................................................................................. 15
CODE OF ETHICS IN MARKETING............................................................................. 15
Some of the basic issues related to code of ethics are:...........................................................15

Business Relationships................................................................................. 15

Offering Gifts to Clients................................................................................ 15

Receiving Gifts From Clients.........................................................................15

Business Communication.............................................................................15

Marketers Choice:....................................................................................................... 15
Canadian Marketing Associations Code of Ethics...............................................................16

Accuracy of Representation of Products.......................................................16

Support of Claims Made About Products......................................................16

Acceptability for Using the Word Free.......................................................16

Guidelines for Advertising Which Compares One Product to Another..........16

ETHICAL NORMS..................................................................................................... 16
Do no harm............................................................................................................ 16
Foster trust in the marketing system.............................................................................. 16
Embrace ethical values.............................................................................................. 16
ETHICAL VALUES.................................................................................................... 16
Honesty................................................................................................................ 16
Responsibility....................................................................................................... 17
Fairness .............................................................................................................. 17
Respect .............................................................................................................. 17
Transparency........................................................................................................ 18
Citizenship............................................................................................................ 18
AS PER AMERICAN MARKETING ASSOCIATION Code of Ethics :....................................18
Responsibilities of the Marketer.................................................................................. 18
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Rights and Duties of Parties in the Marketing Exchange Process:.........................................19


In the area of product development and management:........................................................20
In the area of promotions:.......................................................................................... 20
In the area of distribution:.......................................................................................... 20
In the area of pricing:................................................................................................ 20
In the area of marketing research................................................................................. 20
Organizational Relationships:..................................................................................... 20
CHAPTER 4................................................................................................................ 22
POWER OF SUING:................................................................................................. 22
ETHICAL DILEMMAS:.............................................................................................. 22
Invasion of Privacy.................................................................................................. 22
Spamming............................................................................................................. 23
Public Bashing :...................................................................................................... 23
Dishonesty and Distortions......................................................................................... 23
Distorted Endorsements and Improper Anonymity............................................................24
Misuse of Free Expertise and Contests..........................................................................24
Opportunism.......................................................................................................... 24
CHAPTER 5................................................................................................................ 25
DMA Principles....................................................................................................... 25
The Terms of the Offer........................................................................................ 25
Advance Consent/Negative Option Marketing....................................................25
Marketing to Children............................................................................................... 25
Special Offers and Claims.......................................................................................... 26
Sweepstakes........................................................................................................... 26
Fulfillment............................................................................................................. 26
Collection, Use, and Maintenance of Marketing Data........................................................26
Digital Marketing.................................................................................................... 27
Telephone Marketing to Landline & Wireless Devices.......................................................27
Mobile Marketing.................................................................................................... 27
Fundraising......................................................................................................... 27
Laws, Codes, and............................................................................................... 27
CHAPTER 6................................................................................................................ 28
State of the Field and Future Directions............................................................................ 28
Insights.................................................................................................................. 29
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CHAPTER 7................................................................................................................ 30
Conclusion................................................................................................................ 30
ETHICS IN MARKETING MINI-CASE STUDIES................................................................31
Case Study 1............................................................................................................. 31
Incredible Shrinking Potato Chip Package.........................................................................31
Case Study 2............................................................................................................. 32
Falsification of Data.................................................................................................... 32
Case Study 3............................................................................................................. 33
Washing Dirty Laundry................................................................................................ 33
Case Study 4............................................................................................................. 35
Lottery Mania............................................................................................................ 35
Case study 5.............................................................................................................. 36
Bibliography................................................................................................................ 38

CHAPTER 1
What is Marketing Ethics?
Marketing ethics is less of a marketing strategy and more of a philosophy
that informs all marketing efforts. It seeks to promote honesty, fairness, and responsibility in all
advertising. Ethics is a difficult subject because everyone has subjective judgments about what is

right and what is wrong. For this reason, ethical marketing is not a hard and fast list of rules,
but a general set of guidelines to assist companies as they evaluate new marketing strategies.

Advantages and disadvantages:


There are distinct advantages and disadvantages to ethical marketing.
Unethical advertising is often just as effective as it is unethical. And since unethical behavior is
not necessarily against the law, there are many companies who use unethical advertising to gain a
competitive advantage.
For companies looking to improve the image of a brand and develop long-term relationships with
customers, unethical behavior can quickly lead to failure. Customers do not want to feel
manipulated by the brands they like. Companies can use ethical marketing as a way to develop a
sense of trust among their customers. If a product lives up to the claims made in its advertising, it
reflects positively on the entire company. It can make the consumer feel like the company is
invested in the quality of the products and the value they provide customers. It is impossible to
claim that any company is completely ethical or unethical. Ethics resides in a gray area with
many fine lines and shifting boundaries. Many companies behave ethically in one aspect of their
advertising and unethically in another.

Areas with which Marketing ethics deals:


Marketing ethics is an area that deals with the moral principles behind marketing.
Ethics in marketing applies to different spheres such as in product, pricing, Placing
(Distribution), promotion & advertising etc.

What is Ethical Marketing?


Ethical marketing refers to the application of marketing ethics into the
marketing process
Marketing ethics has the potential to benefit society as a whole, both in the short- and
long-term
Study of Ethical marketing should be included in applied ethics and involves examination
of whether or not an honest and factual representation
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Marketing ethics has influenced companies and their response is to market their products
in a more socially responsible way.
The increasing trend of fair trade is an example of the impact of ethical marketing.
The philosophy of marketing is not lost with this newfound ethical slant, but rather hopes
to win customer loyalty.
Ethical marketing should not be confused with government regulations brought into force
to improve consumer welfare.

Need of Marketing Ethics


There are times when the right and wrong decisions are obvious, but what about
the times where the outcome is less clear? Situations where, if nobody knew we made the
wrong decision, we would be benefited financially, emotionally, or otherwise. Ethics help
us navigate the gray area between absolute rights and morally wrong. They provide the
structure that helps us make a decision we can be proud of.

Life without Ethics


Without ethics, society would be reduced to the type of animal behaviour that is
seen in nature. Hunt, kill, feed, fornicate. When mankind started to think about the
outcome of their action, or inaction, ethics were born. Mankind demonstrates its
difference from the rest of the animal kingdom by being imaginative enough to follow a
concept through the various possible outcomes, and then deciding on the action that best
suits the personal beliefs of the person in question.

Your say on Ethics:


There are many schools of thought to help us make our ethical choices.
Epicurus believed if everyone is honest, prudent, and employs justice when dealing
with others, they would be free from retribution from society. Basically, if everyone
is good, everything will be good .Immanuel Kant had a different idea about ethics.
Kant saw everything as black or white and mankind has a duty without exception.
This view affords no wiggle room on any decision. If the outcome is bad in any way, then
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it is ethically wrong. W.D. Ross provided a more lenient view of Kants philosophy.
By providing self-evident duties Ross helps us navigate the gray areas of the map by
providing guidelines for us to follow. Ross starts with First do no harm but then
juxtaposes this with the second rule of Make amends if you do harm. By allowing
for violations of the first rule, Ross allows mankind to make the decisions that suit
their personal beliefs.
So in short, we can give many reasons but will notify some which are as follows:

When an organization behaves ethically, customers develop more positive attitudes


about the firm, its products, and its services.

To create Values or trust with key stakeholders

To build good image about the organization in the minds of customer, employees,
shareholders and the society.

CHAPTER 2
Framework for Marketing Issues

Value-oriented framework, analyzing ethical problems on the basis of the values which
they infringe (e.g. honesty, autonomy, privacy, transparency). An example of such an
approach is the AMA Statement of Ethics.

Stakeholder-oriented framework, analyzing ethical problems on the basis of which


they affect (e.g. consumers, competitors, society as a whole).

Process-oriented framework, analyzing ethical problems in terms of the categories used


by marketing specialists (e.g. research, price, promotion, placement).
None of these frameworks allows, by itself, a convenient and complete

categorization of the great variety of issues in marketing ethics

Issues in Ethical Marketing


1-Market research
Market research is the collection and analysis of information about consumers,
competitors and the effectiveness of marketing programs. With market research, businesses can
make decisions based on how the responses of the market, leading to a better understanding of
how the business has to adapt to the changing market. It is used to establish which portion of the
population will or does purchase a product, based on age, gender, location, income level, and
many other variables. This research allows companies to learn more about past, current, and
potential customers, including their specific likes and dislikes.

Ethical danger points in market research include:


Invasion of privacy:
One of the most serious ethical considerations involved in market research is
invasion of privacy. Companies have an unprecedented ability to collect, store and match
information relating to customers that can infringe on a person's right to privacy. In many
instances, the customer does not know or understand the extent of the company's infiltration into
his life. The company uses this information to reach the customer with targeted advertising, but
the process of targeting can have a chilling effect on personal freedom.
Stereotyping:
In social psychology, a stereotype is a thought that can be adopted about specific
types of individuals or certain ways of doing things. Marketing campaigns often cast particular
groups in stereotypical roles, such as washing powder advertisements that show women as
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housewives preoccupied with their laundry, or do-it-yourself marketing that seldom portray
anyone other than men as being handy. In addition, the stereotypical impression created by
much commercial marketing is that having an abundance of possessions will lead to fulfillment
and happiness, but the opposing message is that the consumer will not be part of the happy group
if he does not purchase the product.

2-Market Audience
The Ethical danger points out of the Market audience mail include:
1-Excluding potential customers from the market: selective
marketing is used to discourage demand from undesirable market sectors or
disenfranchise them altogether.
2-Targeting the vulnerable (e.g. children, the elderly).

For example: Unethical market exclusion or selective marketing are past industry attitudes to the
gay, ethnic minority and obese ("plus-size") markets. Contrary to the popular myth that ethics
and profits do not mix, the tapping of these markets has proved highly profitable. For example,
20% of US clothing sales are now plus-size. Another example is the selective marketing of health
care, so that unprofitable sectors (i.e. the elderly) will not attempt to take benefits to which they
are entitled.

In the case of children, the main products are unhealthy food, fashion ware and entertainment
goods. Children are a lucrative market as children below twelve years of age but are not capable
of resisting or understanding marketing tactics at younger ages (children don't understand
persuasive intent until they are eight or nine years old. At older ages competitive feelings
towards other children are stronger than financial sense.

3-Pricing Ethics

List of unethical pricing practices.


1. Bid rigging: Bid rigging is a form of fraud in which a commercial contract is
promised to one party even though for the sake of appearance several other parties also
present a bid. This form of collusion is illegal in most countries. It is a form of price
fixing and market allocation, often practiced where contracts are determined by a call for
bids, for example in the case of government construction contracts.
2. Dumping (pricing policy): In economics, "dumping" is a kind of predatory
pricing, especially in the context of international trade. It occurs when manufacturers
export a product to another country at a price either below the price charged in its home
market or below its cost of production.
3. Predatory pricing: Predatory pricing (also undercutting) is a pricing strategy
where a product or service is set at a very low price, intending to drive competitors out of
the market, or create barriers to entry for potential new competitors. If competitors or
potential competitors cannot sustain equal or lower prices without losing money, they go
out of business or choose not to enter the business.
4. Price discrimination: Price discrimination or price differentiation is a pricing
strategy where identical or largely similar goods or services are transacted at different
prices by the same provider in different markets or territories
5. Price gouging: Price gouging is a pejorative term referring to a situation in which a
seller prices goods or commodities at a level much higher than is considered reasonable
or fair. This rapid increase in prices occurs after a demand or supply shock: examples
include price increases after hurricanes or other natural disasters. In precise, legal usage,
it is the name of a crime that applies in some of the United States during civil
emergencies. In less precise usage, it can refer either to prices obtained by practices
inconsistent with a competitive free market, or to windfall profits. In the Soviet Union, it
was simply included under the single definition of speculation.
6. Price fixing: Price fixing is an agreement between participants on the same side in a
market to buy or sell a product, service, or commodity only at a fixed price, or maintain
the market conditions such that the price is maintained at a given level by controlling
supply and demand.
The intent of price fixing may be to push the price of a product as high as possible,
generally leading to profits for all sellers but may also have the goal to fix, peg, discount,
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or stabilize prices. The defining characteristic of price fixing is any agreement regarding
price, whether expressed or implied.
7. Price skimming: Price skimming is a pricing strategy in which a marketer sets a
relatively high price for a product or service at first, then lowers the price over time.It is a
temporal version of price discrimination/yield management. It allows the firm to recover
its sunk costs quickly before competition steps in and lowers the market price.
8. Price war:Price war is commercial competition characterized by the repeated cutting
of prices below those of competitors.One competitor will lower its price, then others will
lower their prices to match. If one of them reduces their price again, a new round of
reductions starts. In the short term, price wars are good for buyers, who can take
advantage of lower prices. Often they are not good for the companies involved because
the lower prices reduce profit margins and can threaten their survival.
9. Supra competitive pricing: Supra competitive pricing is pricing above what
can be sustained in a competitive market. This may be indicative of a business that has a
unique legal or competitive advantage or of anti-competitive behavior that has driven
competition from the market.
10. Variable pricing: Variable pricing is a pricing strategy for products. Traditional
examples include auctions, stock markets, foreign exchange markets, bargaining and
discounts.

4-Ethics in advertising and promotion


1. Issues over truth and honesty: In the 1940s and 1950s, tobacco used
to be advertised as promoting health. Today an advertiser who fails to tell the truth
offends against morality in addition to the law. However the law permits puffery
(a legal term). The difference between mere puffery and fraud is a slippery slope.
The problem is the slippery slope by which variations on puffery can descend
fairly quickly to lies
2. Issues with violence, sex and profanity: Sexual innuendo is a
mainstay of advertising content, and yet is also regarded as a form of sexual

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harassment. Violence is an issue especially for children's advertising and


advertising likely to be seen by children
3. Taste and controversy: The advertising of certain products may strongly
offend some people while being of interest to others. Examples include: feminine
hygiene products as well as hemorrhoid and constipation medication. The
advertising of condoms has become acceptable in the interests of AIDSprevention, but are nevertheless seen by some as promoting promiscuity
4. Negative advertising techniques: In negative advertising, the
advertiser highlights the disadvantages of competitor products rather than the
advantages of their own. The methods are most familiar from the political sphere

CONTROVERSIES IN MARKETING
The advertising of certain products may strongly offend some people
while being of interest to others. Examples include: feminine hygiene products as well as
hemorrhoid and constipation medication. The advertising of condoms has become acceptable in
the interests of AIDS-prevention, but are nevertheless seen by some as promoting promiscuity.

1-Delivery channels
Direct marketing is the most controversial of advertising channels, particularly when
approaches are unsolicited. Common examples are: TV commercials and direct mail.
Electronic spam and telemarketing push the borders of ethics and legality more strongly.
2-Deceptive marketing
Deceptive marketing is not specific to one target market, and can sometimes go unnoticed
by the public. There are several ways in which deceptive marketing can be presented to
consumers; one of these methods is accomplished through the use of humor. Humor
provides an escape or relief from some kind of human constraint, and some advertisers
intend to take advantage of this by deceptively advertising a product that can potentially
alleviate that constraint through humor.
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3-Using Ethics as a Marketing Tactic


Major corporations fear the damage to their image associated with press revelations of
unethical practices. Marketers have been quick to perceive the market's preference for
ethical companies, often moving faster to take advantage of this shift in consumer taste.
This results in the propagation of ethics itself as a selling point or a component of a
corporate image.
A list of known unethical or controversial marketing strategies:
1.
2.
3.
4.
5.
6.
7.

Anti-competitive practices
Bait and switch
Planned obsolescence
Pyramid scheme
Vendor lock-in / Vendor lock-out
Viral marketing / guerilla marketing
Subliminal advertising

Controversial marketing strategies associated with the internet:


1. Embrace, extend and extinguish
2. Search engine optimization
3. Spamdexing.

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CHAPTER 3
CODE OF ETHICS IN MARKETING
The call for marketers to become more responsible for their actions has led to the
development of a code of ethics by many companies and professional organizations. A company
code of ethics includes extensive coverage of how business is conducted by members of an
organization.

Some of the basic issues related to code of ethics are:


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Business Relationships-must never take unfair advantage of others through


manipulation, concealment, abuse of privileged information, misrepresentation of

material facts or any other unfair dealing practice.


Offering Gifts to Clients -may not furnish or offer to furnish any gift that is of

more than token value or that goes beyond the common courtesies.
Receiving Gifts From Clients -must never request or ask for gifts,

entertainment or any other business courtesies.


Business Communication -should take care to avoid exaggeration, colorful
language, guesswork, legal conclusions and derogatory remarks or characterizations of
people and other companies.

Marketers Choice:
Marketers often join professional organizations for the purpose of associating
with others who share similar interests. These organizations include industry associations, whose
membership is mostly limited to those who work within a particular industry, and professional
services associations, whose membership consists of those who share similar job responsibilities.
Marketers joining these organizations often find that a code of ethics has been developed that is
intended to be followed by all organization members. For example, the Canadian Marketing
Association lays out rules for its membership, which includes marketers from many forprofits and not-for-profit organizations, in its Code of Ethics and Standards and Practices.

Canadian Marketing Associations Code of Ethics


The Code discusses such issues as:

Accuracy of Representation of Products -must accurately and fairly

describe the product or service offered.


Support of Claims Made About Products -must be able to substantiate the

basis for any performance claim or comparison.


Acceptability for Using the Word Free -Products or services offered

without cost or obligation.


Guidelines for Advertising Which Compares One Product to
Another -must be factual, verifiable and not misleading
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ETHICAL NORMS
Marketers must:
Do no harm. This means consciously avoiding harmful actions or omissions by embodying high
ethical standards and adhering to all applicable laws and regulations in the choices we make.
Foster trust in the marketing system. This means striving for good faith and fair dealing so as
to contribute toward the efficacy of the exchange process as well as avoiding deception in
product design, pricing, communication, and delivery of distribution.
Embrace ethical values. This means building relationships and enhancing consumer confidence
in the integrity of marketing by affirming these core values: honesty, responsibility, fairness,
respect, transparency and citizenship.

ETHICAL VALUES
Honesty to be forthright in dealings with customers and stakeholders. Thus, a marketer
should:

Strive to be truthful in all situations and at all times.


Offer products of value that do what we claim in our communications.
Stand behind our products if they fail to deliver their claimed benefits.
Honor our explicit and implicit commitments and promises.

Responsibility to accept the consequences of our marketing decisions and strategies. Thus, a
marketer should:

Strive to serve the needs of customers.


Avoid using coercion with all stakeholders.
Acknowledge the social obligations to stakeholders that come with increased marketing

and economic power.


Recognize our special commitments to vulnerable market segments such as children,
seniors, the economically impoverished, market illiterates and others who may be

substantially disadvantaged.
Consider environmental stewardship in our decision-making.

Fairness to balance justly the needs of the buyer with the interests of the seller. Thus, a
marketer should:

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Represent products in a clear way in selling, advertising and other forms of


communication; this includes the avoidance of false, misleading and deceptive

promotion.
Reject manipulations and sales tactics that harm customer trust.
Refuse to engage in price fixing, predatory pricing, price gouging or bait-and-switch

tactics.
Avoid knowing participation in conflicts of interest.
Seek to protect the private information of customers, employees and partners.

Respect to acknowledge the basic human dignity of all stakeholders. Thus, a marketer should:

Value individual differences and avoid stereotyping customers or depicting demographic

groups (e.g., gender, race, sexual orientation) in a negative or dehumanizing way.


Listen to the needs of customers and make all reasonable efforts to monitor and improve

their satisfaction on an ongoing basis.


Make every effort to understand and respectfully treat buyers, suppliers, intermediaries

and distributors from all cultures.


Acknowledge the contributions of others, such as consultants, employees and coworkers,

to marketing endeavors.
Treat everyone, including our competitors, as we would wish to be treated.

Transparency to create a spirit of openness in marketing operations. Thus, a marketer should:

Strive to communicate clearly with all constituencies.


Accept constructive criticism from customers and other stakeholders.
Explain and take appropriate action regarding significant product or service risks,
component substitutions or other foreseeable eventualities that could affect customers or

their perception of the purchase decision.


Disclose list prices and terms of financing as well as available price deals and
adjustments.

Citizenship to fulfill the economic, legal, philanthropic and societal responsibilities that serve
stakeholders. Thus, a marketer should:

Strive to protect the ecological environment in the execution of marketing campaigns.


Give back to the community through volunteerism and charitable donations.
Contribute to the overall betterment of marketing and its reputation.
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Urge supply chain members to ensure that trade is fair for all participants, including
producers in developing countries.

AS PER AMERICAN MARKETING ASSOCIATION Code of Ethics :


Members of the American Marketing Association are committed to ethical
professional conduct. They have joined together in subscribing to this Code of Ethics embracing
the following topics:
Responsibilities of the Marketer
Marketers must accept responsibility for the consequences of their activities and make every
effort to ensure that their decisions, recommendations and actions function to identify, serve and
satisfy all relevant publics: customers, organizations and society.
Marketers' Professional Conduct must be guided by:

The basic rule of professional ethics: not knowingly to do harm;


The adherence to all applicable laws and regulations;
The accurate representation of their education, training and experience;
The active support, practice and promotion of this Code of Ethics.
Honesty and Fairness

Marketers shall uphold and advance the integrity, honor and dignity of the marketing profession
by:

Being honest in serving consumers, clients, employees, suppliers, distributors, and the

public;
Not knowingly participating in conflict of interest without prior notice to all parties

involved; and
Establishing equitable fee schedules including the payment or receipt of usual, customary
and/or legal compensation for marketing exchanges.

Rights and Duties of Parties in the Marketing Exchange Process:


Participants in the marketing exchange process should be able to expect that:

Products and services offered are safe and fit for their intended uses;
Communications about offered products and services are not deceptive;

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All parties intend to discharge their obligations, financial and otherwise, in good faith;

and
Appropriate internal methods exist for equitable adjustment and/or redress of grievances
concerning purchases.

It is understood that the above would include, but is not limited to, the following responsibilities
of the marketer:

In the area of product development and management:


Disclosure of all substantial risks associated with product or service usage;
Identification of any product component substitution that might materially change the

product or impact on the buyer's purchase decision;


Identification of extra cost-added features.

In the area of promotions:


Avoidance of false and misleading advertising;
Rejection of high-pressure manipulations, or misleading sales tactics;
Avoidance of sales promotions that use deception or manipulation.
In the area of distribution:
Not manipulating the availability of a product for the purpose of exploitation;
Not using coercion in the marketing channel;
Not exerting undue influence over the reseller's choice to handle a product.
In the area of pricing:
Not engaging in price fixing;
Not practicing predatory pricing;
Disclosing the full price associated with any purchase.
In the area of marketing research:

Prohibiting selling or fundraising under the guise of conducting research;


Maintaining research integrity by avoiding misrepresentation and omission of pertinent
research data;
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Treating outside clients and suppliers fairly.

Organizational Relationships:
Marketers should be aware of how their behavior may influence or impact the
behavior of others in organizational relationships. They should not demand, encourage or apply
coercion to obtain unethical behavior in their relationships with others, such as employees,
suppliers, or customers.

Apply confidentiality and anonymity in professional relationships with regard to

privileged information;
Meet their obligations and responsibilities in contracts and mutual agreements in a timely

manner;
Avoid taking the work of others, in whole, or in part, and representing this work as their
own or directly benefiting from it without compensation or consent of the originator or

owner; and
Avoid manipulation to take advantage of situations to maximize personal welfare in a
way that unfairly deprives or damages the organization of others.

Thus, these are some basic obligations that every marketer should take into consideration to
maintain an ethical code of business and marketing, that will only help it to take the business or
the organization to the most successful edge.

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CHAPTER 4
POWER OF SUING:
With the rise of content marketing, brand marketers and advertisers have found a
gold mine of opportunities for reaching and engaging their audiences. Whats more, consumers
enjoy the power to invite their potential suitors.
But with this newly discovered consumer freedom to select what they read and
who they befriend comes some new ethical challenges. No longer is the information vetted
through high journalistic standards. Internet users now have to adopt their own filters for
information. In addition, temptations still exist for advertisers to fake their endorsements and
literally purchase favorable comment.

ETHICAL DILEMMAS:
A growing list of ethical dilemmas continues with violations of
misrepresentation, privacy, cyber bullying and general creepiness. With the arrival of broad
reaching and relatively unrestricted social channel communications comes the price of consumer
vulnerable to new scams and deception. This is why ethics in social media is now receiving a
great deal of attention. At the heart of consumer protectionism in this arena is a concern for
trustworthy advice and protection of privacy as it relates to the protection of an individuals own
credibility. The following are several common ethical dilemmas faced when sales personnel and
marketers engage in social media:
Invasion of Privacy
Actions that unknowingly infringe on the privacy of social networking
participants should be considered unethical if it potentially harms an individuals personal and
professional credibility. This would include any non-permissive approaches taken by a marketer

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to disclose profile information as well as the sharing of sensitive personal information through
channels that could exploit or otherwise harm the individuals standing.

QUESTIONABLE AREAS

A questionable area to consider when evaluating social media ethics is the role
of behavioral targeting. Consider the ways advertisers track where you shop and browse from
click-through behaviors used in retargeting campaigns. An assumption here is that ad viewers
will appreciate the the improvement in message relevance.
A similar question should be raised in the use of Custom Audience features that
permit marketers to pass on their email lists to Facebook, who then matches these lists with their
own user log-in IDs for further targeting.
Spamming
Over-promoting unsolicited messages is often viewed as unethical given the manner in
which messages are broadcasted. Users are often deceived through a trail of spamming Twitter
and Facebook links. The unwanted messages often clutter up opportunities for more useful
information.
Public Bashing :
Publicly disparaging others (e.g., your competition) in your social media
dialogs is typically considered unethical. Such negative sentiment can quickly go
viral without permitting fair rebuttals. These defenseless attacks will not only
damage your reputation, they run the risk of libelous lawsuits if not properly
founded.

Dishonesty and Distortions


At the core of social media intentions is transparent communication. Dishonest claims
or untruthful derogatory comments can jeopardize the long-term reputation of your company
with an uncontrollable number of message recipients.

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This issue has become especially contentious with the trend


towards native ads. Although the FCC is likely to step into the arena, brand publishers have
essentially been given a green light on disguising their ad content as publishing content.

Distorted Endorsements and Improper Anonymity


A similar ethical violation involves the misrepresentation of your
credential, affiliations and expertise. Many once reputable companies have been severely
damaged with fake stories of consumers using their products. i.e., What may appear to be an
anonymous testimony is instead backed by a voice with a vested interest in the sponsor.
Any practice of hiring folks to comment favorable or fabricate a story
about your companys offerings should be considered unethical. In a similar vein, overly
aggressive employees have been found guilty of exaggerating competitive shortcomings. This
activity is especially harmful if it catches the parent company off guard.
Misuse of Free Expertise and Contests
With the growing use of Face book contests and crowd sourcing for
soliciting design ideas, contest participants run the risk of divulging their secrets with no reward.
Oftentimes, design ideas are rewarded to the most profitable partners of the social network
sponsor leaving many with unrewarded work. This abuse is especially unethical if the sponsor
knowingly gathers superior design ideas from contestants they have no intention of
compensating.
Opportunism
In the spirit of providing social networking communities with contributions to
their cause or business challenges, social media marketers are discouraged from providing
content that subliminally heads readers down a self-serving path. Whether these actions are
unethical or just plain unprofessional depends on the situation and degree of deception.
So which of these deadly sins concern businesses the most?

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CHAPTER 5
DMA Principles
DMA Principles are the underlying framework for the Guidelines for Ethical
Business Practices detailed herein, and for Guidelines that will be drafted in the future. These
Principles apply to DMA members relationships with current and prospective customers, donors,
and members, and are the grounding for all DMA members, which includes those who market
directly not only to consumers, but also to businesses, government agencies, and SOHO
(small-office/home-office) entities. The Principles provide a general statement to the public of
the expectations they can have when dealing with DMA members.

The Terms of the Offer


Honesty and Clarity of Offer - Article #1
Accuracy and Consistency - Article #2
Clarity of Representations - Article #3
Actual Conditions - Article #4
Disparagement - Article #5
Decency - Article #6
Photographs and Artwork - Article #7
Disclosure of Sponsor and Intent - Article #8
Accessibility - Article #9
Solicitation in the Guise of an Invoice or Governmental Notification - Article #10
Postage, Shipping, or Handling - Article #11

Advance Consent/Negative Option Marketing - Article #12

Marketing to Children
Marketing to Children - Article #13
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Parental Responsibility and Choice - Article #14


Collection and Use of Information from or about Children - Article #15
Marketing Online to Children Under 13 Years of Age - Article #16

Special Offers and Claims


Use of the Word "Free" and Other Similar Representations - Article #17
Price Comparisons - Article #18
Guarantees - Article #19
Use of Test or Survey Data - Article #20
Testimonials and Endorsements - Article #21

Sweepstakes
Use of the Term "Sweepstakes" - Article #22
No Purchase Option - Article #23
Chances of Winning - Article #24
Prizes - Article #25
Premiums - Article #26
Disclosure of Rules - Article #27

Fulfillment
Unordered Merchandise or Service - Article #28
Product Availability and Shipment - Article #29
Dry Testing - Article #30

Collection, Use, and Maintenance of Marketing Data


Consumer Choice & the Collection, Use, and Transfer of Personally Identifiable Data - Article
#31
Personal Data - Article #32
Health Information Privacy and Protection - Article #33
Promotion of Marketing Lists - Article #34
Marketing List Usage - Article #35
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Responsibilities of Database Compilers Article #36


Data Security - Article #37

Digital Marketing
Online Information & OBA - Article#38
Mobile Service Commercial Message Solicitations Delivered to a Wireless Device -Article #39
Commercial Solicitations Online - Article #40
Email Authentication Article #41
Use of Software or Other Similar Technology Installed
on a Computer or Similar Device Article #42
Social Media & Online Referral Marketing - Article #43
Email Appending to Consumer Records - Article #44
Telephone Marketing to Landline & Wireless Devices
Reasonable Hours - Article #45
Taping of Conversations - Article #46
Restricted Contacts - Article #47
Caller-ID/Automatic Number Identification Requirements Article #48
Use of Automated Dialing Equipment/Robocalls Article #49
Use of Prerecorded Voice & Text Messaging - Article #50
Use of Telephone Facsimile Machines - Article #51
Promotions for Response by Toll-Free and Pay-Per-Call Numbers - Article #52
Disclosure and Tactics - Article #53

Mobile Marketing
Obtaining Consent to Contact a Mobile Device Article #54
Providing Notice about Mobile Marketing Practices Article #55
Mobile Opt-Out Requests Article #56
Sponsorship or Affiliate Marketing Article #57
Location-Based Mobile Marketing Article #58
Mobile Subscription & Premium Rate Services Article #59

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Fundraising - Article #60


Laws, Codes, and Regulations - Article #61

CHAPTER 6

State of the Field and Future Directions


The latest description of marketing ethics and their discussions of empirical
tests of the theory provides an excellent framework for understanding the why
questions about marketing ethics. The model shows why peoples ethical judgments
differ in an organizational context. This theory, provide directions for future
empirical descriptive research in marketing ethics. While many researchers and
managers believe that personal ethics determines organizational ethics, these
frameworks and empirical research question this assumption. The role of corporate
culture along with internal control of opportunity to engage in misconduct remains a
key determinant of marketing ethics.
The development of stakeholder theory and the importance of stakeholder
orientation provide a new direction for integrating ethics into marketing decisions.
This perspective focuses on understanding and responding to important stakeholder
groups that hold marketing accountable for its actions. This approach assumes that
stakeholders are knowledgeable on key ethics issues and that the organization can
respond in a manner that maintains marketing relationships.
Stakeholder orientation has the potential to redefine the strategic concept of
market orientation by including the interests of all stakeholders in marketing
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decisions. Marketing can be viewed more as a network of relationships providing


skills and knowledge to all stakeholders .From this perspective marketing ethics
would be an important part of the strategic planning process.
The role of normative theory and cognitive moral development continues to
be a part of the pluralistic approach used to discover and evaluate marketing ethics.
Both descriptive and normative researchers agree that marketers do develop
guidelines and rules for ethical conduct based on accepted norms and moral
philosophies. Integrative Social Contract Theory (ISCT) based on norms as the
foundation of rules within communities, provides a direction for future research.
Stakeholder theory can be linked with ISCT to examine multiple conflicting norms
and discovery of norms that should have priority in marketing decisions.

Insights
For most organizations, trade associations define minimum acceptable ethical
behavior and the regulatory system provides the foundation for acceptable conduct
in society. While acceptable ethical behavior is derived from the professional,
cultural, industry, and organizational environments, individual behavior may differ
based on ethical judgments .Marketing ethics remains a complex area to
understand and offers the opportunity for research on many different dimensions
that have been discussed in this section. Marketing will be under pressure from
organizational efforts to institutionalize formal ethics programs in order to satisfy
stakeholder demands. Both normative and descriptive understanding will be
required to improve marketing ethics. There are many opportunities to contribute to
the advancement of knowledge in this important area of marketing.

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CHAPTER 7
Conclusion
Much progress has been made in advancing theory and research in marketing
ethics. In addition, the practice of marketing has been elevated to higher levels of
ethics from professional codes of conduct provided by the American Marketing
Association, Direct Selling Association, Direct Marketing Association, Marketing
Research Association, American Federation of Advertising and the National
Advertising Division of the Council of Better Business Bureaus. In addition, most
corporations have developed comprehensive codes of conduct that address specific
ethical risk areas in marketing practice. Recent regulatory changes that require
boards of directors to be responsible for oversight on all ethics issues within an
organization elevate the importance of marketing ethics. It is clear that marketing
ethics is part of organizational responsibility and individuals cannot make
independent decisions about appropriate conduct. There is recognition through
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academic research and regulatory initiatives that corporate culture plays a key role
in improving marketing ethics. But certain questions needs to be answered which
are
1-What is the interrelationship between contract law and ethics in building
and sustaining marketing exchanges?
2- Does the contingency framework for understanding ethics in a
marketing organization assist in designing an effective program to
maintain and improve ethics in marketing?

ETHICS IN MARKETING MINI-CASE STUDIES

Case Study 1
Incredible Shrinking Potato Chip Package
Topic: Cost vs. price vs. value issues
Characters:
Julie, Brand Manager for potato chips at a regional salty snacks manufacturer
Dave, Marketing Director for the regional salty snacks manufacturer
Julie has been concerned about the profitability of the various items in her line of potato chips. According
to her potato suppliers, the recent drought caused a 35 percent reduction in the potato crop compared to
one year ago, resulting in a 25 percent hike in potato prices to large buyers like Julies company. Potatoes
accounted for almost all of the content of her chips (which also consisted of vegetable oil, one of three
different flavoring spices, and salt), plus there were packaging costs. To hold the line on margins, which
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of late had been slim at only about 5 percent due to fierce competition from several other local and
regional brands, Julie would need to raise potato chip prices about 15 percent. On her most popular 7.5
oz. size, which had a price spot of $1.59 on the package, this would require a price hike of $.24, bringing
the price up to $1.83.
Julie wondered what would be the appropriate strategy to deal with this unfortunate circumstance. She
was very reluctant to raise the price to maintain the margin. First, she feared incurring the bad will of her
loyal customers; it wouldnt be perceived as fair by them. Moreover, she was worried about competitive
responses; her other larger competitors might be willing to incur a loss in the short-run to keep their
customer bases and to attract price-hiking rivals customers. Julie couldnt afford such a strategy since she
was evaluated solely on the basis of monthly net profits. Historical data in this industry revealed another
possible competitive maneuver in the face of rising ingredient costs: hold the line on prices and package
size while reducing the net weight of the package. Julie was concerned that this might be a deceptive
practice. She recalled from a Consumer Behavior course she had taken in college a concept known as the
just noticeable difference. This said that relatively small changes in a stimulus (such as a price hike or
content shrinkage) go unnoticed by consumers. Julie felt intuitively that the price increase necessary to
maintain margins would be noticed, given the price sensitivity of buyers for snack foods. However, the
past industry data suggested that perhaps buyers might not notice the package size reduction needed to
sustain profits, which in this case would be 1.1 ounces.
Julie asked her boss, Dave, the Marketing Director, about the advisability of reducing the net weight of
the potato chips. Dave said that this was a practice known variously as downsizing and package
shorting. It was a very common practice among packaged goods manufacturers. For instance, he said,
candy bar manufacturers are subject to constantly fluctuating ingredient prices, and because there are
expected (fair or reference) prices for candy bars, package sizes are frequently adjusted without
informing consumers. Jim said that was a nonissue since marketers have been above board in labeling
products accurately as to weight, serving size, price, and quantity. Furthermore, the Food and Drug
Administration had no laws against the practice. Dave recommended downsizing the potato chips, but he
made it clear to Julie that the ultimate decision was up to her. Julie still had her doubts. After all, it would
seem that consumers who are in the habit of buying a particular product size generally dont scrutinize the
net weight label on subsequent purchases. If this were true, it seemed to Julie that downsizing would be a
deceptive practice.
Author: Geoffrey P. Lantos, Associate Professor of Marketing, Stonehill College.

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Case Study 2
Falsification of Data
Topic: Marketing Research (via research supplier company)
Characters:
Greg, Marketing research analyst
Elizabeth, Project/Work coordinator
Ms. Jordon and Mr. Collins, Co-owners and active managers
Greg is in his second month of employment with XYZ Marketing Research. The firm is a large, wellknown, highly respected, very successful supplier of marketing research. Its clients include major
companies in many different industries throughout the world. Routine procedure is for Ms. Jordon and
Mr. Collins to secure business in the form of research projects. Each project ends with an analyst
preparing a written report with marketing strategy recommendations based on his/her interpretation of the
data. This report is given to Elizabeth who gives it to Ms. Jordon and Mr. Collins who then deliver the
written report, complete with a verbal presentation, to the client. Projects are assigned to one of the 16
research analysts by Elizabeth, depending on the workloads of the different analysts. Given the volume of
projects and the similarity of most projects, different analysts usually work on different parts of a project.
For example, different analysts are used to plan the sample, construct the questionnaire, and interpret the
data. Data collection and computer processing of data are conducted by separate companies contracted
with the XYZ Marketing Research company.
Gregs responsibilities are to interpret the data and write a report with marketing strategy
recommendations. He has completed about 20 such projects, for which the co-owners have praised his
work. On Wednesday afternoon he completed this project. Following regular procedures, he gave the
completed report to Elizabeth to give to Ms. Jordon and Mr. Collins. Thursday morning when Greg
arrived at work, he found the original computer data printouts by his door with numerous numbers in the
tables changed with red ink There was also a note to see Elizabeth.
Elizabeth explained that Mr. Collins thought the findings would have been different and that the client
would probably not agree with the actual findings and related recommendations. He has therefore taken
research license and changed a few numbers in the computer data printouts. Now he wants you (Greg)
to rewrite your report accordingly. Elizabeth explained that since clients are provided with a copy of these
summary printout sheets, she has called the outside computer firm to send new printouts with the revised
numbers.
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Case Study 3
Washing Dirty Laundry
Topic: Advertising (Unethical Tactics)
Characters: Bruce Seth, project manager at a consumer products company
Priscilla Wheeling, Bruce's boss
Bruce Seth, a project manager at a consumer products company, was wondering how he should proceed
with his recommendation for the Endirt commercials. Endirt had been doing well in the market, but not a
week went by without a customer (or former customer) writing to complain about the commercial.
There were variations of the commercial, but the central theme was Dirt on your shirt. It typically
featured a woman saying, Dirt on your shirt! Dirt on your shirt! in a taunting voice to a man whose shirt
was soiled. The man looked at another lady (presumably his wife), who was very embarrassed at the
entire situation. Later shots showed her washing the shirt after rubbing Endirt into it, and the other woman
(or women) saying, No more dirt on your shirt! The complaining letters, almost exclusively from
women, expressed objections to the commercial because it was demeaning to women and otherwise
offensive as well. On the one hand, the brand was doing well; it was the brand leader in a growing
market, though a much larger competing company was quite capable of beating Endirt with its brand. On
the other hand, were the rights of the women being infringed? All the letters seemed to imply that. Bruce
was a believer in the profit motive, but not at the cost of condoning unethical behavior. He had been asked
to make a recommendation for the commercial for the next TV season. After reviewing the sales data and
reading the letters of complaint, Bruce was contemplating his next move.
Marketing research managers and project managers worked along with brand managers on specific brand
research issues. Bruce reported to Priscilla Wheeling, a marketing research manager, and would provide
recommendations to her and to the brand manager responsible for Endirt. Priscilla was a capable,
promising executive with excellent graduate degrees. She was supporting her husband through his Ph.D.
in history. She did not like the Endirt commercial and made no secret of it. She proclaimed that she would
never buy the brand because the message was offensive and because of the role of the woman in the
commercial. Bruce was pursuing a graduate degree while working and putting his wife through college;
he certainly needed the job and the income. He was a recent recruit still in his probationary period.
Bruce had reviewed all the letters, practically all of which were from women and strongly negative. Many
of them said, as Priscilla did, that they would not buy the brand because of the offensive commercial and
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because it was demeaning to women. Secondary data showed that the primary decision makers and
purchasers of the product were women. Part of the reason for Endirts success was believed to be the
advertising message, which not only had a high level of recall but a high level of association with the
brand. Bruce wondered if, in spite of its apparent success, it was ethical to continue with the advertising
message if it infringed on the rights of women, the major buyers of the brand.
Author: Beheruz N. Sethna, Ph.D., Gulf States Utilizes Professor of Business, Dean,

College of Business, Lamar University

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Case Study 4
Lottery Mania
Topic: Marketing Management (Event Marketing)
Characters:
Jane, Recently appointed Director of Event Marketing for the Anystate Lottery
Jim, Marketing Director for the Anystate Lottery
Sal, Commissioner of the Anystate Lottery
Jane was recently hired out of college as the Director of Event Marketing for the Anystate Lottery.
Although Janes father was a compulsive gambler and she received several betterpaying job offers, she
decided to take the lottery job because she is a strong supporter of education and 50 percent of lottery
sales go to supporting public education. Her family was against her accepting the job.
The Anystate Lottery started five years ago after it was approved by 80 percent of the electorate. Two
years ago, sales began to decline. This has led Jim, Marketing Director for the Anystate Lottery, to
consider segmenting the population of Anystate into frequent, occasional, and nonparticipating players.
Jim decided to target frequent players for the new lottery game, Lottery Mania. The probability of
winning Lottery Mania was estimated to be one in 24 million.
Frequent players of the lottery spend, on the average, $20 per week. Members of various minority groups
constitute a large proportion of frequent players. Research conducted by the Anystate Lottery found that
many minority frequent players use part of their limited grocery money to play lottery games. In some
cases, people have gone hungry in order to play the lottery in hopes of winning the big prize.
As Commissioner of the lottery, Sal is concerned about any negative publicity that may surround the
operation of the lottery. However, he has directed Jim to increase sales of lottery tickets by 10 percent
during the new game of Lottery Mania. Jim called Jane and ordered her to develop several promotional
events to be targeted toward minority lottery players. These events will be used to launch Lottery Mania
scheduled to start four weeks from now. Event marketing has been used very successfully for targeting
minority consumers for a variety of products.

35

Jane is upset about the task of specifically targeting minority segments over all other segments in the
population of Anystate. Jane is a member of a minority group. Jane knows that additional money for
education will help all students in Anystate, especially minority students. Yet she cant help but think
about all the families that will play the lottery even
though they cant afford it.
Author: Craig A. Kelley, Professor of Marketing, California State University, Sacramento.

Case study 5
Adapted by Damian Grace from Manuel Velasquez, Business Ethics, 3rd. edn., Prentice Hall,
1992, 302-3.
AUSTRALIAN GRADUATE SCHOOL OF MANAGEMENT
Business Ethics
Marketing Ethics Case Study
In 1978, the US Food and Drug Administration (FDA) warned manufacturers of hair dyes that it
was considering a requirement for them to place this label on products containing 4-MMPD (4Methoxy-M-phenylenediamine sulfate):
Warning: Contains an ingredient that can penetrate your skin and has been determined to
cause cancer in laboratory animals.
Companies likely to be affected included Clairol, Revlon, Alberto-Culver, and Helene Curtis.
The alert on 4-MMPD had gone out in 1975, when it was found that the chemical caused
mutations in bacterial genes. This was taken as a sign of carcinogenic potential in humans.
Subsequently this view received more support when 4-MMPD was found to produce cancers in
animals. Because of powers under its Act of 1938, the FDA was unable to do more than require a
label to be fixed to the dye. This was not an appealing prospect for dye manufacturers, who
strenuously defended their products against the imposition of the warning label. They asserted
that animal tests were not transferable because that would be the equivalent of a woman
drinking more than 25 bottles of hair dye a day, every day of her life. Despite legal defences,
the cosmetic
industry lost the fight and the labels were required. Most manufacturers had already removed 4MMPD from their products by the time the court found for the FDA, thereby avoiding the
offending warning label. Revlon,

36

however, removed 4-MMPD and replaced it with 4-EMPD. When the FDA tested this chemical,
it found that it too caused bacterial mutations. Revlon countered that the National Cancer
Institute had tested 4-EMPD and had not found it a cancer-inducing agent. The NCI then denied
that it had ever tested the chemical and Revlon was
forced to correct its story: its own scientists had done the tests, but like the FDA the Revlon
researchers had found bacterial mutations. Nevertheless, the FDA was not able to require a
warning label to be placed on dyes with 4-MMPD until animal tests had been conducted, a
process which takes three to four years. Warning labels cannot be affixed to containers until a
further one to two years after this. Meanwhile, no manufacturers using 4-MMPD withdrew old
stock from the market when labels were imposed. These products continued to be sold for
several years without the warnings. Damian Grace

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