Ethical issues in negative marketing

NEGATIVE MARKETING - DEFINING THE PLAYFIELD

WHAT IS NEGATIVE MARKETING - A LAYMAN'S DEFINITION

Negative marketing is a tactic meant to make your competition look bad. All of it is of course a ploy used in order to make you and/or your product look better than theirs.

In the world of advertising, this type of marketing is termed "aggressive" or "comparative marketing" instead of negative marketing. This way they aren't labelled as trying to sabotage the business of someone else.

Also the whole phenomenon is not limited to business. Politics is another arena where negative marketing is put to use almost daily - only here it is colloquially termed as mudslinging.

A FORMAL DEFINITION

Merritt (1984) argues that negative advertising is a special form of comparative advertising. Negative advertising identifies the competitor for the purpose of "imputing inferiority," i.e., with the intent of damaging the image or reputation of the competition (Merritt 1984)1.

Comparative advertising, by contrast, identifies the competition for the purpose of claiming superiority or enhancing perceptions of the sponsor's brand (Prasad 1976)2.

Hill (1989)3 further worked on Merritt's definition, labelling as "negative" those ads which only communicate negative information about the opposition and as comparative those ads which communicate positive information about the sponsor in addition to providing negative information about the competition.

Thus while Merritt's definition is subject to interpretation, Hill's definition is restrictive and might lead to a situation that the marketing campaign may include one positive aspect of the product but mainly be according negative qualities to its competitors.

Comparative advertisements thus were then categorized with respect to the degree to which the competitor is identified (intensity) and the direction in which the comparison is made (associative vs. differentiative) (Lamb, Pride, and Pletcher 1978)4. Ads that are solely comparative include those in which broad, general product comparisons are made against members of a product class or the vast majority of competitors; those which make comparisons with a fictitious brand or the famed brand X of old; and those which attempt to engender perceived similarity between brands through an associative technique.

By contrast, negative advertising is limited to comparative advertising in which a differentiative technique is employed. Furthermore, the ads must identify a single competitor either directly, or by clear implication (i.e., the competitor's identity is readily apparent -- via identification of its package, brand name, slogan, spokesperson, etc., -- although the company or product may not be explicitly named).

Disinformation appears to be an operative component of negative political advertising. It seems that the line between negative and comparative advertising is drawn when the consumer perceives an ad to be malicious in some way, or "hitting below the belt" by violating preconceived standards of fair play in a malicious or vicious personal manner. It is this perception of maliciousness and the perceived violation of fair play standards which, when combined with the perceived negative intent of the ad (impute inferiority, denigrate or destroy the competition's image), serves to differentiate negative comparative advertising from its milder cousin.(Hensel 1991)5

Negative Online Marketing

A new and disturbing trend in the world of the internet is negative online marketing. Negative online marketing is a term used to describe individuals using various online marketing tactics to slander their competition as opposed to promoting themselves.

Techniques: The most common method is blogging. Negative online marketers would go into those blogs and create the illusion that they have worked with the business and had a negative experience. Review websites are also very popular with negative online marketers. Reviews can be submitted by visitors on websites like: Yahoo local, Google Shopping and many other online shopping sites. Negative online marketing can also be done by creating simple websites or by emailing marketing and discussing negative aspects about a business's competition.

THE NEGATIVE MARKETING MECHANISM

WHY IT WORKS - HOW IT WORKS

Purposefully Creating Dissatisfaction

Charles Kettering stated that business needs to create a "Dissatisfied consumer." Kettering, who at the time was Head of General Motors (GM) Research Labs, also stated that "Self-satisfaction is one of the world's worse diseases." Kettering made it the mission of GM Research Labs to endeavour towards "the organized creation of dissatisfaction."

Many companies engineer products for "planned obsolescence" in order to continue to create future demand. Similarly - "New and improved" versions create additional sales when consumers become dissatisfied with their existing products.

The Change Equation by Beckhard and Harris(1987)6 - They state that change will be motivated when

  1. an individual has a sense of "dissatisfaction" with the current situation,
  2. can see a vision of something better, and
  3. is provided with direction or steps to take towards the realization of that vision.

If these are greater than the individual's resistance to change - the individual will be motivated to take the action towards making the change.

One more explanation for the effectiveness of negative advertising is based on observed phenomena typically referred to as a negativity bias. The overwhelming preponderance of research findings confirms that consumers tend to favour or assign disproportionate value to negative information in the decision-making process.

Attribution theory essentially predicts that "the more an individual attributes information about an entity that is obtained from another person to that entity's factual performance or actions (a stimulus cause), the more the individual will be influenced by that information" (Mizerski 1982)8. Of particular import here is the discounting principle which states that "the role of a given cause in producing a given effect is discounted if other plausible causes are also present" (Kelley 1973)9. Both experimental studies and analyses of complaint behaviour have verified that subjects perceive a greater number of causes for favourable information than they do for unfavourable information (Jones, Gergen and Jones 1963; Thibaut and Riecken 1955)10 11, implying that negative information is the more influential of the two.

A modification of the discounting principle has been labelled the "social desirability of effects" hypothesis (Jones and Davis 1965)12. In an extension of this hypothesis' assumptions, Kanouse and Hanson (1971)13 argue that because social norms tend to inhibit negative information, unfavourable information when it does appear is typically attributed to the person or object being evaluated (i.e. as a stimulus cause), rather than to biased reporting or some other nonstimulus cause.

"Make $10,000 by next month selling frog bait, using my fail-proof method today!! In no time you'll be making enough money to pay your bills, buy that car you've been eyeing and take the vacation of your dreams."

The above doesn't work as well as

"I was totally struggling to get by. My credit cards were mounting and my rent was 6 weeks overdue. I was at a breaking point when I came across an opportunity to make a legitimate income, selling frog bait. Strange I know, but it worked, and than goodness it did."7

Firstly it gets attention - because one relates to it. Secondly because it created all the effects listed in the change equation, primarily creating the dissatisfaction in the reader's mind.

That is how it works in the world of advertising - the ads target the competitor's weakness - showing that the consumer will be dissatisfied with that product and asking them to switch to theirs - and it need not be a competitor - it might just be their own obsolete product.

EFFECTS OF NEGATIVE MARKETING

1. On the negative marketer:

Research has shown that the information offered with negative marketing tends to remain with the consumer for a very long time. The consumer explores his emotions about the information given and that gets results for the advertiser and increases sales. If the advertiser goes about it the right way, negative marketing can prove to be extremely powerful.

2. On the competitors:

The company on the flip side worked hard to get its product recognized in a positive way. Their product name associated with negative marketing can cost them a great deal of money in the long run. The effect that negative advertising can have on these companies is unbelievable. Millions of people use the internet each day to search for various products. When it is the negative aspects of a given product that find their way to the top of the search engine rankings caused through negative search engine marketing initiated by their competitor it impacts their sales.

EXAMPLES OF NEGATIVE MARKETING

1. The Cola Wars - Pepsi vs Coke

The global advertisement wars between the cola giants quickly spread to India as well. Internationally, Pepsi had always been seen as the more aggressive and offensive of the two, and its advertisements the world over were believed to be more popular than Coke's. It was rumoured that at any given point of time, both the companies had their spies in the other camp. The advertising agencies of both the companies (Chaitra Leo Burnett for Coke and HTA for Pepsi) were also reported to have insiders in each other's offices who reported to their respective heads on a daily basis.

  • Coca-Cola claimed that the real thing was back. Pepsi simultaneously released advertisements declaring: "Today Pepsi would like you to try a Coke."
  • When Coke bagged the official sponsorship rights to the 1997 World Cup, Pepsi launched a campaign 'Nothing official about it' against Coke.
  • Coke showed 2 apes copying Pepsi's Azhar and Jadeja with the line 'Dont be a Bandar, taste the thunder' for Thumsup.
  • Coke launched Sprite with 'baki sab bakwaas'

2. Google vs Microsoft

Microsoft's search engine Bing is being marketed vociferously. "BING Is Not Google". And Google recently adopted a negative marketing strategy, whereby it forced personalized search results on every single user. The filter was subtly linked to results related to Microsoft. Although there is an option to unsubscribe to the service, most people are unaware that they are being force fed these types of results in the first place.

3. Salesforce.com vs Siebel Systems

Salesforce.com garnered more than its fair share of publicity and posed a direct challenge to Siebel Systems and the rest of the conventional software establishment with ads featuring a nine-year-old writing at the blackboard a hundred times, "I will not let Siebel take my lunch money." Another classic example of negative marketing, it was heralded as a stroke of genius by all the pundits. Does it become fair when it's a situation of David vs Goliath?

4. Apple vs Microsoft

Apple is one of the first companies to have their commercials be fuelled by the failures and flaws that another company has. Apple portrays themselves as hip and cool innovators, while they show Microsoft as an old outdated business man. They are attacking Microsoft's credibility and trying to make a statement that no matter what Microsoft says their product is going to be inferior to Apple.

5. Audi vs BMW

In Santa Monica, California, Audi posted a billboard advertising their new car as a direct competitor to BMW's. The billboard sported the smug headline: "Your Move BMW."

How did BMW respond? They purchased the billboard right next to Audi's billboard added a billboard extension and countered with a one-word headline: "Checkmate."

THE ISSUE OF ETHICS

The issue of ethics is one that often comes up with regards to negative marketing. While it may be legal to use it many feel it borders right on the line of being ethical. They feel there are better ways to promote your products to get an emotional response from buyers. The fact that the company is resorting to slander may not say a great deal about their integrity or professionalism. Yet most of that is ignored due to the way consumers respond to it. Some companies really don't want to but they feel like they are backed into a corner. They feel it is better to be the one to initiate it and get the benefits than to wait for a competitor to do it to them.

ANALYSIS USING THE DEONTOLOGICAL FRAMEWORK

Deontological framework is an approach toethicsthat judges the morality of an action based on the action's adherence to a rule or rules. Deontologists look at rulesand duties.

THE ANALYSIS

Seen in the light of how a negative marketing campaign becomes effective as studied in the section of understanding the mechanism of successful negative marketing campaigns - focussing on the dissatisfaction in the minds of the audience - and the greater impact of unfavourable messages of the campaigns i.e the negativity bias of the audience towards the unfavourable messages - we can see how the campaigns are unethical deontological perspective.

The campaigns base themselves on the facts that humans in the present world can be easily discouraged and dissatisfied - and that the social structure as of now is such that allows overlooking of negative biases and projects any unfavourable information as a potentially true one - the equivalent of police conducting a fake encounter to label innocent men as terrorists.

The deontological approach thus finds negative marketing to be unethical.

ANALYSIS USING THE UTILITARIAN FRAMEWORK

In the basic utilitarian framework, action is ethical depending on the consequences. In a decision setting, an ethical course of action is one that maximizes the amount of good for the greatest number of people while minimizing the negative consequences.

WHY A UTILITARIAN FRAMEWORK

A utilitarian framework is useful for analyzing business practices in a global setting. Bayesian rationality postulates are "inescapable criteria of rationality for policy decisions" and together with Pareto optimality requirements, necessitate a utilitarian ethics framework for examining ethical issues (Harsanyi, 1978)16.

Harsanyi convincingly argues in favour of using a utilitarian approach. Marketing decisions entail the utilitarian ethics framework because the very definition of marketing (satisfying needs and wants) is so closely tied with the concept of "consequences." (Nantel & Weeks, 1996) 17

Furthermore, while the competitive and ethical landscape of international business is complex, companies operating in less developed countries should adhere to guidelines based primarily on the principle of "do no direct intentional harm" (De George, 1987)18.

THE ANALYSIS

Thus viewed with a utilitarian approach we can see how negative marketing would be termed as unethical. The marketing campaign would serve to provide gains for the company by increasing the sales/destroying the competitor and as such benefit the shareholders and employees. But what about the other stakeholders - the society . The company via their campaign induce in the minds of the public - the ideas of dissatisfaction, depression, and withered lives - and as said by Stephen Covey in his book - the speed of trust - a loss of trust altogether - where any campaign is seen in a bad light no matter what the purpose is. Thus the society as a whole is harmed.

The greater number is harmed, than benefited. Four significant areas of negative consequences associated with purposefully creating dissatisfaction are encouragement of body dissatisfaction, encouragement of hedonic treadmills, the lack of sustainability on a global scale associated with the expansion of the practice, and the discouraging of human flourishing. These negative consequences are of such a magnitude as to render the practice indefensible from a utilitarian perspective - which would decry the act of negative marketing as unethical.

Thus not only from a deontological perspective is negative marketing unethical but, as can be seen from the above analysis negative marketing is unethical in light of what the utilitarian framework says!!

THE TABLES TURNED

KANTIAN ETHICS IN PLAY

So far what we have studied and seen is that negative marketing tends to create a perception in the mind of the consumer of a product/person causing dissatisfaction to them or for it being socially unacceptable for the product to do whatever the competitor does.

The above application of utilitarian ethics however is slightly different in the case of social cause marketing.

The Delhi government came out with the radio advertisement of - "...but Pappu vote nahin karta" - during the election time. It seems to be violating the frameworks, as analysed before. Any similar campaign against drugs, drinking etc would thus be the equivalent of mudslinging and thus, unethical.

However, in this case, though it meant to create a demeaning stature of those who don't vote (or those who drink) - it would still be termed as ethical in light of utilitarian framework (while still being unethical on the deontological framework).

KANTIAN ETHICS

Immanuel Kant argued that the only absolutely good thing is a good will, and so the single determining factor of whether an action is morally right is the will, or motive of the person doing it.

Kant's three significant formulations of thecategorical imperativeare19:

  • Act only according to thatmaximby which you can also will that it would become a universal law.
  • Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end.
  • Act as though you were, through your maxims, a law-making member of a kingdom of ends.

In the light of the above it can thus be seen that the above act of the government would also be ethical in the deontological framework if the maxim that is to be applied is "public good".

DEALING WITH DILEMMAS -THE QUESTION OF SUSTAINABILITY

MOTOROLA INCORPORATED AND THE NATION OF AMRUBIA20

The analysis up to this point proves that negative marketing is an unethical strategy and not only by the deontological, but also the utilitarian approach.

The question then is of sustainability - i.e. your loss in terms of business and related profits because your competitor is following negative marketing vs. the issue of you becoming unethical to oppose them.

It's a similar situation what Motorola Inc faced in Amrubia. The Amrubian government (called the GRUNJ) had a poor human rights record, and allegations were made that the Motorola "Telekom SuperPackage" was being used to facilitate these abuses. Motorola firmly believed that the product could have a positive impact on any nation's desire to expand its production and improve the quality of life for its citizens.

One is the adherence to Motorola's philosophy of corporate ethics and social responsibility. The other is the preservation of global market as well as their business reputation. Additionally, Motorola would be subject to public contempt if it withdrew from Amrubia, but remained in other areas with similar problems.

A withdrawal from Amrubia would have left its forecasted nineteen million-dollar market ripe for the competition's offerings. However, if Motorola remains in the market, the competition could use that as a powerful tool in a negative marketing campaign against Motorola.

In such a case the suggested course of action would be as follows -

Motorola should immediately withdraw from the region - this will not allow its competitor to campaign against it. Additionally, it should work with International Mercy Volunteers (a humanitarian aid society operating in Amrubia) to make up for whatever it has done, including maintaining its reputation, in accordance with its corporate ethics. Finally, it should be ready to deter any other competitor with a negative marketing campaign of its own - this being along the lines of Kantian ethics discussed previously - using the maxim -"for the better good of the people of Amrubia".

Motorola can never succeed if it remained in the market , because thought not illegal now, human rights association would come into play later on inviting sanctions from international governments and that would not only force Motorola to withdraw from the market, but also ruin its reputation.

With the above strategy, however, the company not only sticks with its ethics. It also manages to help improve the condition of people in Amrubia and its action would be lauded by the international community. To top it all of , it would not have lost the region to any other competitor , who would be deterred by Motorola's action. On the other hand, such action would help it gain easy access to markets worldwide.

Playing the right way, thus, doesn't mean losing at the end! - THERE IS NO TRADE OFF!!

A FEASIBLE COMPROMISE

In order to achieve a practical compromise, the following unwritten guidelines can be followed:

1. Mention your competition, don't promote them.

They say there is no such thing as bad publicity. There is a tendency to communicate entirely too much about your competition. This amounts to a promoting your competition. Instead, promote the fact that there exists a competition in marketplace. Mention the players, if you must, and move on.

2. Compare don't contrast

The heart of a good slander play is to compare yourself to the competition whom you've publicly named. Shy away from contrast, or showing your differences. If you are really so different, why are you competing at all. For example, Dyson and other vacuum manufacturers share many of the same focuses, but with one key difference--"Dyson doesn't loose suction". The one clear difference is your company's core value and should be the aim of your marketing message.

3. Contextualize your strengths

Slander plays can often focus on the negative. But the value really lies in this strategy's ability to showcase your strengths in the context of your competition. The key is context.

4. Don't lie, Identify

Identify, specifically, the weaknesses in your competition. The more specific you are and the more evidence you have to support it, the less room your competition has to retaliate. For example, "company X's products are returned for service an astonishingly 56% of the time according to a recent Consumer Reports study".

CONCLUSION

In this report we first understood the scope of negative marketing - how it functions and how why it has been successful. A few examples were presented which showed that the world's leading organisations have used negative marketing as a strategy time and again.

The effect of the strategies was then studied in the light of various ethical frameworks - teleological, deontological (particularly Kantian).

It was found that the negative marketing campaign cannot be justified on ethical grounds in either of the approaches.

However when it comes to social cause marketing which uses negative marketing as a tactic - both the approaches can find the campaign ethical.

Lastly we listed a few pointers to help counter the attacks of competitors while ensuring that our business remains successfully profitable and not resorting to unethical negative marketing campaigns.

The case of Motorola was used to understand that there isn't a trade off - following the right way and winning can go hand in hand!

BIBLIOGRAPHY and REFERENCES

1. Merritt, Sharyne (1984), "Negative Political Advertising: Some Empirical Findings," Journal of Advertising, 13 (no. 3), 27-38.

2. Prasad, V. Kanti (1976), "Communications-Effectiveness of Comparative Advertising: A Laboratory Analysis," Journal of Marketing Research, 13 (May), 128-137.

3. Hill, Ronald Paul (1989), "An Exploration of Voter Responses to Political Advertisements," Journal of Advertising, 18 (no. 4), 14-22.

4. Lamb, Chalres W., Jr., William M. Pride and Barbara A. Pletcher (1978), "A Taxonomy for Comparative Advertising Research," Journal of Advertising, 7 (Winter), 43-47.

5. Hensel, Paul J (1991),"Negative advertising: the malicious strain of comparative advertising," Journal of Advertising

6. BeckhardandR.Harris. Organizational Transitions. Addison-Wesley. 1987

7. http://www.digital-pink.com/blog/uncategorized/positive-vs-negative-marketing

8. Mizerski, Richard W. (1982), "An Attribution Explanation of Disproportionate Influence of Unfavorable Information," Journal of Consumer Research, 9 (December), 301-308.

9. Kelley, Harold (1973), "Processes of Causal Attribution," American Psychologist, 28 (February), 107-128.

10. Jones, Edward E., Kenneth J. Gergen and Robert G. Jones (1963), "Tactics of Integration Among Leaders and Subordinates in a Status Hierarchy," Psychological Monographs, 77 (no. 3), 566-575.

11. Thibaut, John W. and Henry W. Riecken (1955), "Some Determinants, and Consequences of the Perception of Social Causality," Journal of Personality, 24 (September), 113-133.

12. Jones, Edward E. and Keith E. Davis, (1965), "From Acts to Dispositions: The Attribution Process in Person Perception," in Advances in Experimental Social Psychology, Vol. 2, Leonard Berkowitz ed., New York, NY: Academic Press, 218-266.

13. Kanouse, David E. and L. Reid Hanson Jr., (1971), "Negativity in Evaluations," in Attribution: Perceiving the Causes of Behavior, Edward E. Jones et al. eds., Morristown, NJ: General Learning Press.

14. www.negativemarketing.com

15. Jeffrey J. Bailey, Jason C. Porter, "Utilitarian Ethics and the Purposeful Creation of Dissatisfaction," Journal of Global Business Issues, 2008

16. Harsanyi, John C, 1978. "Bayesian Decision Theory and Utilitarian Ethics,"American Economic Review, American Economic Association, vol. 68(2), pages 223-28, May

17. Jacques Nantel, William A. Weeks, "Marketing ethics: is there more to it than the utilitarian approach?," European Journal of Marketing ,vol. 30,issue 9,pg 9-19, (1996)

18. De George, Richard T., "The Status of Business Ethics: Past and Future,"Journal of Business Ethics,6 (1987), pp. 201-211

19. www.wikipedia.org

20. Uncompromising Integrity: Motorola's global challenge, 1998

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