Ethical Decision-Making by Consumers: The Roles of Product Harm and Consumer Vulnerability

The primary purpose of this study was to examine the effects of perceptions of product harm and consumer vulnerability on ethical evaluations of target marketing strategies. We first established whether subjects are able to accurately judge the harmfulness of a product through labeling alone, and whether they could differentiate consumers who were more or less vulnerable. The results suggest that without the presence of a prime, subjects who depended on implicit memory or guess were able to detect differences in “sin” and “non-sin” products and consumer vulnerability, but were far less likely to be able to distinguish among high and low levels of product harm and consumer vulnerability. The inability to accurately identify high and low levels of product harm and consumer vulnerability impacted their perceptions of the ethicality of target marketing strategies, such that only four out of 18 target marketing strategies were judged as unethical. Thus, our findings contradict previous research that found subjects judged many more of the integrated strategies as unethical [Smith and Cooper-Martin, J Market 61(1997) 1]. Our results suggest that assessing ethical evaluations of strategies varying in product harm, and consumer vulnerability may only be relevant if consumers can accurately identify product harm.     

Lead users and the adoption and diffusion of new products: Insights from two extreme sports communities

Lead users are proposed as a valuable resource for marketers in terms of the (1) development, (2) adoption, and (3) diffusion of new products. We present the first consumer study to provide evidence that the latter two suggestions are justified. First, we find that lead users demonstrate stronger domain-specific innovativeness than more “ordinary” users. Second, lead users perceive new technologies as less “complex” and might therefore be better prepared to adopt them. Third, we find that lead users demonstrate stronger opinion leadership and weaker opinion seeking tendencies. Finally, we discuss the implications of our findings for the marketing of new products.     

The time-harried shopper: Exploring the differences between maximizers and satisficers

Schwartz and his colleagues have proposed individual differences in consumer decision goals. Maximizers are those who always strive to make the best possible decision, whereas satisficers are those who are usually willing to settle for a “good enough” option. In this study, we explore the influence of the maximizing trait in situations where consumers have to make quick purchase decisions. The context for our empirical study is online gift purchases made under a time constraint. The results support our predictions that maximizers (vs. satisficers) engage in more prepurchase browsing behavior and also perceive more decision time pressure. Furthermore, these effects are moderated by the size of the available choice assortment. The results also show that maximizers are more likely to change their initial time-constrained choices if given the opportunity to do so. We discuss the implications of the research for the study of individual differences in consumer behavior and also for customizing retail sales and Internet marketing tactics based on buyer segmentation.     

Ethical Issues Related to the Mass Marketing of Securities

This paper examines ethical issues involved in the mass marketing of securities to individuals. The marketing of products deemed “socially questionable” or “sinful” (like tobacco and alcohol) has long been recognized as posing special ethical challenges (Kotler, P. and S. Levy: 1971, Harvard Business Review 49, 74–80; Davidson, D. K: 1996, Selling Sin: The Marketing of Socially Unacceptable Products (Quorum Press, Westport). We contend that marketers should consider securities (i.e. common stock, options) in a similar vein, as a potentially dangerous product. Given the inherent volatility of equity prices, responsible marketers need to exercise caution and restraint in promoting securities. We evaluate whether the NYSE’s current guidelines adequately encourage ethical marketing practices and deter unethical ones. Using recent examples of controversial brokerage advertisements, we expose weaknesses in the Exchange’s vague injunction that members not “mislead” reasonable people by making “exaggerated claims” in their communications. From a moral perspective, we find it troublesome that intentionality need not be present for a promotion to be considered misleading. Also problematic is the continued invocation of the reasonable person standard to judge the propriety of advertisements. We close with some thoughts on improving the quality of securities marketing. We suggest that the NYSE, in the interests of fostering higher ethical behavior among member marketers, may need to revive a marketing code of conduct prevalent on Wall Street in an earlier era.     

Recent Advances in Structural Econometric Modeling: Dynamics, Product Positioning and Entry

In the empirical analysis of consumer markets, recent literature has begun to explore the dynamics in both consumer decisions as well as in firms' marketing policies. Other research has begun to explore the strategic aspects of product line design in a competitive environment. In both cases, structural models have given us new insights into consumer and firm behavior. For example, incorporating consumer and firm dynamics may help explain patterns in our data that are not well-captured by static models. Similarly, the strategic aspects of firm entry and product-positioning may be intrinsically linked to firm conduct and the intensity of competition in a market. Structural analysis of these consumer and firm decisions raise a number of substantial computational challenges. We discuss the computational challenges as well as specific empirical applications. The discussions are based on the session “Structural Models of Strategic Choice” from the 2004 Choice Symposium.     

The impact of advertising on consumer price sensitivity in experience goods markets

In this paper we use Nielsen scanner panel data on four categories of consumer goods to examine how TV advertising and other marketing activities affect the demand curve facing a brand. Advertising can affect consumer demand in many different ways. Becker and Murphy (Quarterly Journal of Economics 108:941–964, 1993) have argued that the “presumptive case” should be that advertising works by raising marginal consumers’ willingness to pay for a brand. This has the effect of flattening the demand curve, thus increasing the equilibrium price elasticity of demand and the lowering the equilibrium price. Thus, “advertising is profitable not because it lowers the elasticity of demand for the advertised good, but because it raises the level of demand.” Our empirical results support this conjecture on how advertising shifts the demand curve for 17 of the 18 brands we examine. There have been many prior studies of how advertising affects two equilibrium quantities: the price elasticity of demand and/or the price level. Our work is differentiated from previous work primarily by our focus on how advertising shifts demand curves as a whole. As Becker and Murphy pointed out, a focus on equilibrium prices or elasticities alone can be quite misleading. Indeed, in many instances, the observation that advertising causes prices to fall and/or demand elasticities to increase, has misled authors into concluding that consumer “price sensitivity” must have increased, meaning the number of consumers’ willing to pay any particular price for a brand was reduced—perhaps because advertising makes consumers more aware of substitutes. But, in fact, a decrease in the equilibrium price is perfectly consistent with a scenario where advertising actually raises each individual consumer’s willingness to pay for a brand. Thus, we argue that to understand how advertising affects consumer price sensitivity one needs to estimate how it shifts the whole distribution of willingness to pay in the population. This means estimating how it shifts the shape of the demand curve as a whole, which in turn means estimating a complete demand system for all brands in a category—as we do here. We estimate demand systems for toothpaste, toothbrushes, detergent and ketchup. Across these categories, we find one important exception to conjecture that advertising should primarily increase the willingness to pay of marginal consumers. The exception is the case of Heinz ketchup. Heinz advertising has a greater positive effect on the WTP of infra-marginal consumers. This is not surprising, because Heinz advertising focuses on differentiating the brand on the “thickness” dimension. This is a horizontal dimension that may be highly valued by some consumers and not others. The consumers who most value this dimension have the highest WTP for Heinz, and, by focusing on this dimension; Heinz advertising raises the WTP of these infra-marginal consumers further. In such a case, advertising is profitable because it reduces the market share loss that the brand would suffer from any given price increase. In contrast, in the other categories we examine, advertising tends to focus more on vertical attributes.

“Just” Markets from the Perspective of Catholic Social Teaching

The “justice of markets” is intricately connected to the treatment of the poor and the disadvantaged in market economies. The increased interest of multinational corporations in low-income market segments affords, on one hand, the opportunity for a more inclusive capitalism, and on the other, the threat of greater exploitation of poor and disadvantaged consumers. This article traces the contributions of Catholic Social Teaching and its basic principles toward providing insight into what constitutes “justice” in such “marketing to the impoverished” situations.     

A nearly perfect market?

Internet shopbots allow consumers to almost instantly compare prices and other characteristics from dozens of sellers via a single website. We estimate the magnitude of consumer search costs and benefits using data from a major shopbot for books. For the median consumer, the estimated benefit from simply scrolling down to search lower screens is $6.55. This amounts to about 60% of the observed price dispersion and suggests that consumers face significant search costs, even in this “nearly-perfect” market. Price elasticities are relatively high compared to offline markets (−7 to −10 in our base model). Furthermore, contrary to the common assumption, search intensity is not correlated with greater price sensitivity. Instead, consumers who search multiple screens put relatively more weight on non-price factors like brand.     

Cognitive discrepancy in Chinese ��face��: Mian and lian, and their impact on cognition of country-of-origin image

Chinese “face,” as a complex social and psychological phenomenon, has attracted much attention from the fields of sociology and psychology. However, in the field of consumer behavior, research about how mianzi (face) affects consumer behavior is lacking. Moreover, research on the connotations of sub-dimension of mianzi (face), that is, lian and mian as well as their influences on consumer behavior is seldom seen. Based on the grounded theory, using focus group interviews and the self-report method, this study extracted scenario sentences of lian and mian, initially forming a preliminary scale with 14 positive items and 20 negative items concerning lian and mian. Moreover, by using close-ended questionnaire originated from previous grounded theory in terms of Chinese face, this study validated the discrepancy between “mian” and “lian.” Besides the discrepancy between “mian” and “lian” also appeared in consumer perception about product category and country-of-origin image.     

Stability induced by “no-quibbling”

We demonstrate the important consequence of one particular type of voter behavior: the “differentiation” (“no-quibbling”) constraint that alternatives too similar to the alternative which they might replace will not be considered. We find that imposition of a sufficient differentiation norm leads to stable outcomes of decision making in a spatial context. We also briefly consider the potential effects of other possible constraints on feasible choices, especially as these might synergistically interact with choices based on “no-quibbling.”     

Organizational Leadership, Ethics and the Challenges of Marketing Fair and Ethical Trade

This article critically evaluates current developments in marketing fair trade labelled products and “no sweat” manufactured goods, and argues that both the fair trade and ethical trade movements increasingly rely on strategies for bottom-up change, converting consumers “one cup at a time”. This individualistic approach, which we call “shopping for a better world”, must, we argue, be augmented by more collectivist approaches to affect transformative change. Specifically, we look at the concept of mission-driven organizations pursuing leadership roles in developing affinity relationships to promote fair and ethical trade and developing ethical spaces. Increasingly, a range of organizations are restructuring their operations, so that their mission is reflected in ethical practices throughout their operations, including product sourcing and product sales. First, ethical purchasing policies operated by non-profits and public agencies represent markets through which fair/ethical products reach end consumers. The efforts discussed to create ethical spaces through direct democracy and electoral mandate build on a broad-based affinity with the principles of fair and ethical trade. Second, we explore the potential for “mission-driven” non-profit organizations, such as zoos and aquaria for merging their mission of conservation education with their marketing activities through the operation of their shops and cafés. Interesting initiatives to link the conservation message to food choices is being undertaken by a number of zoos and aquaria, while there is scope for increased linkages in the giftware sold in their shops.     

Fostering Responsible Communities: A Community Social Marketing Approach to Sustainable Living

Just as socially irresponsible organizational behavior leaves a punitive legacy on society, socially responsible organizations can foster curative change. This article examines whether small organizations can foster societal change toward more sustainable modes of living. We contend that consumption is deeply intertwined with social relations and norms, thus making individual behavioral change toward sustainability a matter of facilitating change in individual behavior, as well as in social norms and relations between organizations and consumers. We argue that it is in this facilitation process that small firms can play a major role, by adopting upstream and downstream approaches to diffuse behavioral change. By synthesizing four key strands of literature – small businesses and corporate social responsibility, ethical consumption, community social marketing, and the diffusion of innovation – and using the exemplar case of Modbury, the iconic “plastic bag-free” town, we demonstrate how responsible small firms can influence communities, and the individuals therein, to encourage environmentally sustainable practice to diffuse and support change in society.     

When Should “Consumers-as-Producers” Have to Comply With Consumer Protection Laws?

Since the 1960s, consumer protection law has been built on the contrast between large “producers” and small “consumers.” Today, instead, an ordinary consumer owns what can accurately be called a “personal mainframe”—a home computer whose processing power matches an IBM mainframe from about 10 Years ago. Equipped with a personal mainframe—an Information-Age factory—ordinary “consumers” at home are increasingly also becoming “producers.” As unregulated consumers become regulated producers, a major legal question is whether and when the individual should have to comply with consumer protection laws. The discussion here selects four examples of US legal rules that might apply to consumers-as-producers, with recommendations spanning the range of possibilities: (1) consumer privacy legislation: creating a threshold, with no compliance required for databases of fewer than 5,000 names, is recommended; (2) advertising substantiation: concerning the requirement that advertisers have a “reasonable basis” for their claims, applying current law to small advertisers is recommended; (3) spam: current law does not create a threshold for those who send a few commercial emails, but such a threshold is worth considering; (4) political blogging: the author agrees with the US Federal Election Commission decision to create a major exemption from campaign finance laws for online political advocacy, even for large blogs or websites. The common theme among these recommendations is to describe the sort of harm that existing law seeks to reduce. The approach here next looks at how the use of personal mainframes affects creation of those harms. Where the sorts of harm are likely to be created by consumers-as-producers, the analysis tilts towards requiring compliance. Where the sorts of harms are unlikely to be caused by consumers-as-producers, then the case for an exception is stronger.

Sex, Personality, and Sustainable Consumer Behaviour: Elucidating the Gender Effect

Sustainable consumer behaviour—behaviour motivated or influenced by social and/or environmental considerations—is an important topic in public policy and consumer psychology. Research on the antecedents of sustainable consumer behaviour has found a robust “gender effect”: women are more likely than men to express concern about consumption’s broader impacts and to act upon those concerns. The mechanisms underlying the gender effect have not been well elucidated. At the same time, more limited research has found that sustainable consumer behaviour is also influenced by personality: more agreeable and more open consumers are more likely to place importance on and to act on social and environmental concerns. Separate research in personality psychology has shown that women tend to be more agreeable than men. The authors integrate these findings to propose and test a model in which personality mediates the effect of sex on sustainable consumer behaviour. The personality differences mediating this effect are the same ones elsewhere subsumed within “gender” differences. Our findings clarify the mechanisms underlying the observed sex effect, confirm the utility of personality constructs in clarifying differences in consumer attitudes and behaviours, and have compelling implications for public policy.     

Environmental and Economic Dimensions of Sustainability and Price Effects on Consumer Responses

The lack of attention to sustainability, as a concept with multiple dimensions, has presented a developmental gap in green marketing literature, sustainability, and marketing literature for decades. Based on the established premise of customer–corporate (C–C) identification, in which consumers respond favorably to companies with corporate social responsibility initiatives that they identify with, we propose that consumers would respond similarly to companies with sustainability initiatives. We postulate that consumers care about protecting and preserving favorable economic environments (an economic dimension of sustainability) as much as they care about natural environments. Thus, we investigate how two sustainability dimensions (i.e., environmental and economic) and price can influence consumer responses. Using an experimental method, we demonstrate that consumers favor sustainability in both dimensions by giving positive evaluations of the company and purchase intent. In addition, consumers respond more negatively to poor company sustainability than to high company sustainability. In comparison, consumers respond more negatively to the company’s poor commitment to caring for the environment than to the company’s poor commitment to economic sustainability. We also find that consumers do not respond favorably to low prices when they have information about the firm’s poor environmental sustainability. Finally, we find support for an interaction effect between consumer support for sustainability and corporate sustainability; that is, consumers evaluate a company more favorably if the company shares the consumers’ social causes. Overall, we conclude, from our empirical study, support for the idea that consumers do respond to multiple dimensions of sustainability.     

The Nestlé Infant Formula Controversy and a Strange Web of Subsequent Business Scandals

The marketing of infant formula in third-world countries in the 1970s by Nestlé S.A. gave rise to a consumer boycott that came to be a widely taught case study in the field of Business Ethics. This article extends that case study by identifying three specific individuals who were associated with managing Nestlé’s response to that boycott. It reveals their subsequent direct involvement in a number of additional “classic” 1980s business scandals (some of which ended with major criminal trials and the imprisonment of eminent business figures)—and describes tangential linkages to other business scandals of the time. The article discloses a behind-the-scenes pattern of business villainy, adding both depth and breadth to previous accounts of these scandals. The article offers a conceptual framework that goes beyond personal greed as an explanatory factor for such unethical behavior in the business world, suggesting the presence of personal and organizational networks of intrigue and opportunity. The linkages between the scandals suggest an epidemiological process with the plotters acting as “virus” carriers contaminating various corporate cultures.     

Maximizing the Efficiency of Greenhouse Gas Related Consumer Policy

Consumer policy approaches regarding green products and solutions can be differentiated by their main focus. “Green positioning” is basically targeted at environmentally aware consumers, while “efficiency-focused positioning” concentrates on the efficiency gain of the product or solution, targeting the whole society, regardless of consumers' environmental awareness. The paper argues that the scope and total environmental benefit can be increased if green products or solutions are promoted in different ways, not only as “green” but also based on other arguments (like cost-efficiency, return on investment, etc.). The paper suggests a model for improving the efficiency of greenhouse gas (GHG)-related consumer policy. Based on the marginal social cost curve and the marginal private cost curve, different (green, yellow, and red) zones of action are identified. GHG mitigation options chosen from those zones are then evaluated with the help of profiling method, addressing the barriers to implementation. Profiling may help design an implementation strategy for the selected options and make consumer policy more effective and acceptable for mass market. Case study results show three different ways of positioning of GHG-related consumer policy in Hungary from 2000 and give practical examples of profiling, based on the latest marginal social cost curve and the contemporary energy saving policy of the state regarding the residential sector.     

Business Ethics Index: Measuring Consumer Sentiments Toward Business Ethical Practices

The present study describes the development of an ongoing and systematic index to measure consumers’ sentiments towards business ethical practices. The Business Ethics Index (BEI) is based on the well established measurements of consumer sentiments, namely the ICS (Index of Consumer Sentiment) and CBCCI (Conference Board Consumer Confidence Index). The BEI is comprised of 4 measurements representing the dimensions of “personal-vicarious” and “past-future.” Data from 503 telephone interviews were used to calculate a BEI of 107. This indicates an overall positive consumer sentiment towards the ethical behavior of business. Future calculations of the BEI are planned which will allow for the estimation of the latent dynamics of trends in consumer sentiments toward American business ethics.     

An Empirical Investigation of Japanese Consumer Ethics

One of the gaps in the current international marketing literature is in the area of consumer ethics. Using a sample drawn from Japanese consumers, this study investigates these individuals' reported ethical ideology and their perception of a number of different ethical situations in the realm of consumer behavior. Comparisons are then made across several demographic characteristics. The results reveal differences which provide theoretical support for expanded research in the area of cross-cultural/cross-national consumer ethics and highlight the need for managers to consider possible differences in the ethical behavior of consumers when entering a new international market. In addition, this study extends current knowledge in international marketing ethics by utilizing a research design and survey instruments similar to previous studies on consumer ethics.     

Problem Gamblers’ Harsh Gaze on Casino Services

This study provides a first look at the perspectives and profiles of casino problem gamblers. The study proposes that problem gamblers (1) have unique antecedent conditions and (2) evaluate their casino service more favorably than nonproblem gamblers. While first proposition receives support, the findings counter the second; surprisingly, problem gamblers view casino service with a harsh gaze. The coverage here includes overall and specific findings from face‐to‐face interviews with gamblers (n = 348) inside seven casinos in the world's largest gaming destination (Macau). The interviews included asking participants to complete the “Problem Gambling Severity Index” (identified to participants as “My gambling‐related experiences”). The study includes both fit and predictive validities of overall service quality models for each of the seven casinos—these findings support the nomological validity that specific patterns of antecedents and outcomes associate with problem gambling. Policy and managerial implications inform how to go about creating unique marketing service designs to assist problem gamblers in managing their gambling behavior.