#3 - Advertising Ethics

 Ethics in Advertising

Advertising is one of the most crucial aspects of marketing. Individuals are surrounded by advertisements every day. Whether on television, social media, the grocery store, or even during movies, advertising is shown without consumers noticing. Because advertising is used so often and is essential to marketing and sales, do companies continually advertise their products ethically?  It is safe to say that ethics are not always considered when promoting a product. 

There are many examples of how companies have made unethical decisions when advertising a product. One of which is 5-Hour Energy, after falsely advertising its energy drink as a "doctor-recommended product." The scandal was followed by multiple lawsuits and backlash from customers.  Another example that is similar to that of 5-Hour energy is Activia Yogurt. The yogurt company claimed that their product was "scientifically proven to boost immune systems and regulate digestion," which was later found not to be true. 

5-Hour Energy and Activia Yogurt's advertising scandals have one thing in common. They fabricated the truth. According to the Management Study Guide, the three moral principles of advertising are truthfulness, social responsibility, and upholding human dignity. Why would a company base its product on dishonest claims? The simple answer would be to increase sales under false pretenses. 

Who is Affected?

How does unethical advertising affect a company? Most false claims are usually followed by lawsuits that cost a company money. The company will also lose consumer trust, which is vital to sales. A group of individuals, who are often unthought-of being affected during a company-wide scandal, are employees. A company's employees are who the customers deal with. Although they are not in charge of making decisions, customers will generally direct their anger towards employees. The employees are approached with questions such as, "why didn't your product do what it claims to do" and the customers will expect an answer. Unhappy employees will either quit or lose work ethic, affecting a company's performance.

Another question that could be asked regarding advertising ethics is, are retailers responsible for a company's false advertising? A manufacturer of dietary supplements sued several convenience stores for selling a competitor that was falsely advertising its product. Many defendants moved to dismiss, and the Fifth Circuit claimed that "simply selling the products in their store was not enough," as they did not make the false claim themselves. According to the court: 

 "Here, Defendants undoubtedly sell many products -- should they be responsible for scrutinizing and determining the veracity of every claim on every product label in their stores simply because they sell the product?"

Although the retail stores were not involved in making the false claim, they should choose whether to continue selling the falsely advertised product in their store. 

When a company makes false claims, many people are affected by the scandal. Of course, the company faces its ethical reliability and trustworthiness, along with consumer scrutiny. Employees, retailers, and consumers are also significantly affected. Striving to be honest in every decision is how a company succeeds. People, and retailers, remember unethical scandals, and it determines whether or not they will buy or sell a product.