Deck 8: Ethics and Marketing

Question 1

Are some products too dangerous to be marketed in any circumstance? What regulations, if any, would you place on marketing cigarettes? Handguns? Prescription drugs?

Answer 1

Marketing of products stands for the promotion of the products and services that a selling company undertakes so as to increase the awareness of the offerings among the targeted customers.
It could be said that there are indeed certain products that are too dangerous to be marketed in any circumstance because the products carry risky elements and traits that are not appropriate for human consumption and should not be marketed and promoted by the firms in any circumstances. These products pose large amount of threat for human beings and the overall environment which makes these products too dangerous to be marketed.
In the marketing of cigarettes and handguns, the regulations that could be put over these products are that the firms cannot market these products on a national television through ads or sponsoring any of the programs or serials. These products should be sold at locations that are at a safe distance from schools and colleges so as to prevent bad exposure to the children and young adults. The products should carry labels depicting the related dangers attached with these products so as to beware the buyers about its ill effects and the dangers these products pose. These are some of the regulations that could be put over the marketing of cigarettes and handguns.
While, in the marketing of prescription drugs, the regulations that could be put over this product could be that the advertisement and promotional tools used for marketing this product should not carry puffery statements or vague (untrue) messages that could send wrong messages to its buyers. The marketing of drugs should be very clear and transparent depicting the known and assured benefits of using that particular drug without any exaggerated promises.

Question 2

Conduct a classroom debate on the MacDonald's spilt coffee case. Conduct an Internet search for this case ( Liebeck v. MacDonald's ) to find both legal and journalistic comments on this case. One-third of the class should play the role of Mrs. Liebeck's attorneys, one-third the role of MacDonald's attorneys, and one-third the role of the judge and jury.

Answer 2

Court cases over firms could be very harmful for its overall image and reputation in the minds of the existing as well as potential customers. Firms should be very cautious before taking any step so as to prevent legal obligations in future.
Split coffee case of DM Co. depicts that Ms. L, who is an old lady in her seventies spilled an entire hot coffee between her legs when she bought it through a driveway DM outlet and trying to open a lid of the same. As a result, she received third degree burns in her pelvic area and other parts of genital area. She was hospitalized for 8 days and had to undergo skin draft surgery. Over this, she filed a case against DM Co. for strict product liability and received a huge compensation from DM Co.
The following is the classroom debate over the above case-
Ms. L's Attorney - My client has suffered third degree burns when the hot coffee bought from DM spilled over her legs damaging her lower parts severely. It is the duty of DM Co. to provide beverages having a limit in its hotness. And, as a result that DM failed to provide hot beverage to my client with a limited level of hotness, it should be held liable for the injuries she has received and should be asked by the court to compensate to my client Ms. L.
DM Co's Attorney - My client DM Co. is known popularly for selling fast-food food items and operates various driveway restaurants at which people stop mid-way and relish upon the food items and drinks that DM offers. The hot coffee that DM sells is a product that is hot in nature and it is easily recognized as hot through its name. so, while opening and carrying the hot coffee container, Ms. L should had taken great care and should had not put the coffee between her legs which might had prevented her burns. Thus, DM Co. carries no liability over the burns that L received by wrongly placing and opening the coffee container.
Judge and Jury - After listening to the arguments of both the parties- plaintiff and defendant, the jury has decided in favor of Ms. L stating that the level of hotness of a liquid should be pre-determined by the selling firm, and it should carry labelling stating the extreme hot nature of the product being sold in it to the customers. And, as DM Co. failed in providing extremely hot label in a container in which it sold coffee to Ms. L. it makes DM liable for the injuries that L suffered under strict product liability.

Question 3

Research the case Pelman v. McDonald's in which it was alleged that McDonald's was partially responsible for the health problems associated with the obesity of children who eat MacDonald's fast food. Should MacDonald's and other fast-food restaurants be judged negligent for selling dangerous products, failing to warn consumers of the dangers of a high-fat diet, and deceptive advertising?

Answer 3

Court cases over firms could be very harmful for its overall image and reputation in the minds of the existing as well as potential customers. Firms should be very cautious before taking any step so as to prevent legal obligations in future.
In a court case of Mr. P and DM Co., Mr. P, an 18-year old alleged DM that by eating at fast-food restaurants of DM Co., P has become obese and thereby DM Co. is to be held liable for the obesity-related diseases that P has suffered by continuously eating at DM's outlets. The court favored DM Co. by stating that Mr. P is an adult and should had possess the knowledge of side-effects that could be received by him by eating quite frequently at fast-food restaurants like DM.
On the basis of above case, it could be said that fast-food restaurants like DM Co. and others not be judged for showing negligent attitude for selling dangerous products; for their failure to warn customers of a dangers associated with a high-fat diet, and deceptive advertising. This is because fast-food by name only suggest that are not very healthy and nutritious for consumption, and that is why they are named as fast-foods that are prepared and consumed in less time.
The people consuming fast-food items at restaurants like DM should be aware of the high-fat contents in these products which are not so healthy for consumption on a regular basis. People should consumer these items on their own risk because these fast-food items are likely to possess carbs and fats that is capable of making a person obese with time by having continuous consumption of it on a regular basis. Thus, this way it could be concluded that fast-food restaurants like DM Co. and others not be judged for showing negligent attitude for selling dangerous products; for their failure to warn customers of a dangers associated with a high-fat diet, and deceptive advertising because the products that they sell are full of fat and salt which makes a person increase his weight with time and it is impliedly described in the promotion of these products.

Question 4

The Federal Trade Commission regulates advertising on the basis of two criteria: deception and unfairness. How can an ad be unfair? Who gets hurt by deceptive advertising?

Question 5

Collect several sample prescription drug ads from magazines, newspapers, and television. Based on the location of the ad, what do you think is the intended target audience? Are the ads in any way misleading? Are the required side-effect warnings deceptive in any way? Do you believe that health care professionals provide adequate screening to insure that prescription drugs are not misused?

Question 6

Review the Decision Point, ?Marketing in Schools? (concerning marketing in theschools and Channel One), and refl ect on your own educational experience. Assumeyou were offered a laptop computer as long as you understood that you would see acommercial every time you turned it on and for two minutes for every fi fteen minutesof use. What is your initial reaction to this arrangement? As you consider it in greaterdetail, what types of restrictions on advertisements do you think the laptop manufacturer(or service provider who is responsible for managing the advertising messages)should impose if the laptops will be given to college-aged students? How would youdevelop standards for these restrictions?

Question 7

Many sales people are compensated predominantly on a commission basis. In other words, though the salesperson receives a small base hourly rate, most of her or his compensation derives from a percentage of the price of items sold. Since basically the salesperson only makes money if you buy something and he or she makes more money if you spend more money, do you ever trust a salesperson's opinion? What would make you more likely to trust a commission-based salesperson or less likely? Is there anything a commissioned salesperson could do to get you to trust her or him? Best Buy, the consumer electronics store, communicates to consumers that it does not pay its salespeople based on commissions in order to encourage objectivity. Are you more likely to go to Best Buy as a result?

Question 8

In 2001 TAP Pharmaceuticals pled guilty to participating in a criminal conspiracy with doctors by providing free samples of Lupron for which the doctors later billed Medicare and patients. Federal prosecutors also charged that TAP executives and midlevel managers with fraud, alleging that TAP employees bribed doctors and hospitals with cash, free vacations, and free samples as an incentive for them to prescribe Lupron. Defendants argued that the samples and gifts were standard industry practice and did not amount to a bribe. In December 2004, a jury acquitted the individuals involved. TAP itself settled their case with the government by agreeing to pay $150 million restitution to consumers and insurance companies for what the government charged were artificially inflated drug prices. The prices were inflated because of the alleged bribes paid to doctors.
TAP did not admit to any wrongdoing, claiming that it settled to avoid further legal costs. Studies have shown that samples, as well as small gifts and lunches, can lead doctors to prescribe more expensive brand names when cheaper generic drugs would be as effective. What additional facts might you need to know to make a fully informed judgment in this case? What outcome do you believe the pharmaceutical companies are striving to achieve through these practices? What alternatives might be available to pharmaceutical companies to serve a similar outcome without incurring legal liability or crossing ethical lines? Do the doctors or hospitals bear any ethical responsibility under these circumstances? What duties do the pharmaceutical companies, doctors, or hospitals have? What does the principle of fairness require in this case? What rights are implicated?

Question 9

Go to the FTC Web site ( http://www.ftc.gov/bcp/grnrule/guides980427.htm ) andreview the cases in the Decision Point, ?Examples of Greenwashing.? You will fi nd theFTC?s judgment on each case (and others). Do you agree with the FTC?s assessment ofmisleading environmental marketing examples?