Key Ethical Issues in Retailing and Distribution

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Introduction

Ethics, though not until recently, has been identified as a key part in the process of augmentation of products (Crane 2001). As such, it is also widely acknowledged that the consideration of ethics cannot be done without the core product or brand being placed at the heart of the consideration.

lthough ethical consumption is yet to take full form around the globe, there has been an upward growth in ethical consumerism, and a tendency has been observed whereby ‘anti-sentiment’ is increasingly-and worryingly- being directed towards brands with global presence due to their actual or perceived engagement in unethical behavior.

As Barnett et al. (2001) observed empirically, there are several self-evident dimensions to ethical consumerism which players in retail and distribution function should comprehensively be aware of, for these dimensions may act in an organized and collective manner to the detriment of the success of the retail and distribution function. This study investigates the key ethical issues in retail and distribution of consumer products.

Key ethical issues in retailing and distribution of consumer products

Ethical issues in retail and distribution of consumer products can be categorized into those that relate to marketing, human resource management and accounting functions of within an organization. With regard to marketing, issues of ethical nature commonly arise in activities such as market research, product pricing, and marketing audience selection (mostly in the context of advertisements content).

However, the link between the accounting function-as well as HR function- is not very direct as these functions minimally come into direct contact with consumers. Nonetheless, through increased awareness of ethical consumerism, consumers nowadays are increasingly keenly following the accounting and HR practices of companies, and “ethically” sensitive consumers tend to dissociate themselves with unethical entities.

Market research

Invasion of privacy and stereotyping of a selected market segment tend to be among the most recurring ethical concerns when conducting a market research. Directing very personal questions to respondents to a market research is what constitutes the main part of privacy issues. On the other hand, placing respondents into groups for purposes of making approximations on characteristics of populations may result into accusations of unethical practice of stereotyping leveled against a market researcher.

Market audience selection

Here, ethical issues arise from targeting the vulnerable or “unintended” market segment as well as alienating a potential customer segment from the marketing plan. Targeting children with products or services that are “unfit” for their age, such as cigarettes and alcoholic products, will almost definitely raise ethical questions about the ‘culprit’ (Cui and Pravat, 2003).

With respect to selective marketing or unethical market exclusion, ethical questions may come up if a marketer engages in activities deemed as aiming to discourage a certain portion of potential consumers from consuming an enterprise’s products or services. Such ‘undesirable markets’ may constitute ethnic minorities, gays, obese people, or people of a certain religious or political inclinations.

Advertising and promotional content

Ethical concerns in this activity mainly revolve around matters over honesty and truthfulness. For instance, whereas in the 1940s tobacco smoking was advertised as a pleasure which promoted health, it is both illegal and immoral nowadays to not only fail to disclose the fact that cigarette smoking is harmful to the consumers’ health, but also failing to warn the potential consumers against smoking tobacco (Brenton, and ten-Hacken, 2006).

Other issues under this category include taste and controversy; whereby some form of adverts may offend some individuals or groups of individuals, negative/attack adds; whereby a seller portrays a competitor’s products or services as inferior or even harmful, and using advertising materials deemed to celebrate violence, profanity or sex (Dubinsky, Rajan and Wen-Yeh, 2004).

A good example of a company that found itself under criticism of engaging in unethical practices is Sony, which frequently infuriated some religious groups by its portrayals of Jesus.

Ethical issues in HR and Accounting functions as related to retailing and distribution

The HR function is significantly involved-though indirectly- in the retailing and distribution of an enterprise’s since it is this department that identifies, recruits and conducts training of personnel to carry out the actual distribution and selling of a company’s products. Ethical issues regarding the HR function may arise in the process of identifying and recruiting salespersons.

These processes are prone to manipulation and can lead to hiring of incompetent and unethical salespersons. Accordingly, enterprises find it critical to set up mechanisms for both identifying and reporting salesmen misconduct. These mechanisms include codes of ethics, ethics chaplains, ethics training, as well as anonymous tip lines (Barnett et al., 2001).

With regard to the accounting function, ethical issues may arise due to the fact that accountants have access to significant volumes of crucial information relating to customers which is obtained through recording of transactions between the firm and its clients. Accounting code of ethics requires that accountants should handle customers’ information with a high degree of professionalism.

Thus, the function should always strive to uphold confidentiality of sensitive customer information to prevent such information from falling on wrong hands, such as customers’ competitors, as well possible resultant litigations.

Regulations pertaining to ethical conduct in retailing and distribution

The regulations surrounding ethical issues are entrenched in laws such as anti-trust laws and consumer protection laws. Additionally, the American Marketing Association (AMA) provides a comprehensive guideline to the ethical behavior expected of enterprises as a whole as well as ramifications for failing to abide by these regulations.

In essence, regulations of ethics in retailing and distribution of commodities aim at ensuring that all stakeholders have equal opportunity to earn business as well as upholding the right of customers to make free choices.

Conclusion

This study aimed to establish what ethical issues are faced by personnel in the function of retailing and distribution. Ethical issues can arise in areas such as market targeting, advertising content, handling of customers’ confidential information, and employee relations. It can tentatively be concluded that in deed unethical practices in these areas can result into adverse effect on the retail and distribution function of an enterprise because the increasingly “ethical consumer” tends to dissociate themselves with unethical organization.

To avoid such developments, enterprises need to adopt an integrated framework-which encompasses the consumer characteristics, nature of the product and market selection—in approaching the retail and distribution function and, in addition, infuse ethics and integrity throughout their corporate culture as well as into their definition of parameters of success.

However, further studies need to be conducted to determine conclusively the bearing which ethical/unethical practices in HR and Accounting functions of an organization has on ethical consumerism.

References

Barnett, C., Cloke, P., Clarke, N. & Malpass, A. (2005). “Consuming ethics: articulating the subjects and spaces of ethical consumption”. Antipode, 37(1): 23–45.

Brenton, S. & ten-Hacken, L. (2006). “Ethical consumerism: are unethical labour practices important to consumers?” Journal of Research for Consumers, 11:1-11.

Crane, A. (2001). “Unpacking the ethical product”. Journal of Business Ethics, 30 (4): 361-373.

Cui, G. & Pravat, C. (2003). “Consumer interests and the ethical implications of marketing: a contingency framework”. Journal of Consumer Affairs, 37(2): 364-378.

Dubinsky, A.J., Rajan N., & Wen-Yeh H. (2004). “The influence of moral philosophy on retail salespeople’s ethical perceptions”. Journal of Consumer Affairs, 38: 297–319.

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