Marketing and ethics

It’s All on Sale: Marketing Ethics and the Perpetually Fooled

Andy Wible

Published online: 7 January 2012

� Springer Science+Business Media B.V. 2012

Abstract Discussion of marketing deception has mostly

focused on two main areas: first are cases that involve the

intentional deception of people who tend to have com-

promised intelligence, such as children or the elderly, and

second are cases that involve intentional falsehoods or the

withholding of vital information, such as Madoff’s

exploits. This article will differ from most in the field by

examining marketing practices that are generally truthful,

but deceive almost everyone. These practices do not fool

just small select groups, but are fooling those usually

assumed to be rational. For example, we love ‘‘free’’

merchandise so much that we are willing to irrationally

settle for less to get the free product. Behavioral econo-

mists and psychologists are proving that, as Dan Ariely

puts it, most all of us are ‘‘Predictably Irrational.’’ Is it

wrong for marketers to take advantage of the mass’s foibles

as it is wrong to take advantage of children? The article

will look at some of the behavioral economists’ data, how

that data affects the rational and ignorant person standards

of marketing, and suggest the reflective rational person

standard as a way to morally evaluate marketing techniques

given this new data.

Keywords Marketing ethics � Behavioral economics � Rational person standard � Advertising ethics

Most theorists hold that in marketing persuasion is

acceptable, but deception and lying are wrong. Hence,

discussion of marketing deception has mostly focused on

two main areas: first are cases that involve the intentional

deception of people who tend to have compromised intel-

ligence, such as children or the elderly, and second are

cases that involve intentional falsehoods or the withholding

of vital information, such as Madoff’s exploits. This article

will differ from most in the field by examining marketing

practices that are generally truthful, but deceive almost

everyone. These practices do not fool just small select

groups, but are fooling those usually assumed to be

rational. Behavioral economists and psychologists are

proving that, as Dan Ariely puts it, most all of us are

‘‘Predictably Irrational.’’ Is it wrong for marketers to take

advantage of the mass’s foibles as it is wrong to take

advantage of children? The article will look at some of the

behavioral economists’ data, and how we ought morally to

evaluate these marketing techniques.

Art Van: A Common Case

Art Van is a successful statewide furniture chain in

Michigan. They have a large advertising budget with loud

yelling TV commercials and bright newsprint that

announces its new sale every week. One week it is an

anniversary sale, the next week it is an inventory reduction

sale, the following week it has a ‘‘three day only’’ up to

65% off sale, and this week ‘‘it’s all on sale.’’ The sales are

constant and like many furniture stores, nothing is ever

offered at ‘‘full price.’’ The customer can always be assured

of ‘‘saving.’’ The approach seems to have worked on the

customer’s psyche. They have sales every week, but the

masses are still drawn to them. When they say ‘‘We have

never had a sale like this sale,’’ most of us know the prices

are not drastically different than last week. But these buzz

words still pique our interest and drive us to buy. Even with

A. Wible (&) Muskegon Community College, 221 South Quarterline Road,

Muskegon, MI 49442, USA

e-mail: Andy.Wible@muskegoncc.edu

123

J Bus Ethics (2011) 99:17–21

DOI 10.1007/s10551-011-1162-9

all the facts in front of us, we feel good about the ‘‘deal’’

we got on the La-Z-boy recliner.

Art Van’s marketing techniques are not unique. They

are followed by many if not most large retailers in the

country. With such widespread usage, the constant sale

technique must be working. But why are more people

attracted to stores that have constant ‘‘sales’’ than to a store

that has similar prices, but does not run a sale? Also, often

the ‘‘reasonable person’’ standard is used to assess the

morality of marketing techniques. It seemingly sensibly

says that only marketing techniques that would deceive a

reasonable person are immoral. Art Van’s marketing

techniques tend to persuade and perhaps deceive the rea-

sonable masses, so are they immoral?

Predictably Irrational

Dan Ariely is a behavioral economist who has looked into

why we are attracted to constant sales and other marketing

techniques. The thesis in his book Predictably Irrational is

that economists have been mistaken in assuming that

people are acting rationally within a market system.

Economists assume that people in general do quite well

making decisions to further their own interests. We do a

cost benefit analysis and perform that action which has the

most benefits with the fewest costs. We do make mistakes,

but ‘‘market forces’’ will cause us to correct our actions.

For example, we might buy a SUV because it looks cool,

but then be forced to trade it in when we cannot afford to

drive it. Behavioral economists like Ariely contend that

this is a rosy picture of human nature. Their findings show

us that we are often irrational in our decisions, and we are

irrational over and over again. We can overcome this

irrationality, but the draw will always be there. The illusion

of a good deal is similar to visual illusions. The Müller-

Lyer illusion is of two lines that seem to be of different

lengths due to different types of arrow like lines attached to

them, but upon closer measurement are the same. Yet, even

when we know the lines are the same length, visually they

still look different lengths. Marketing techniques work a

similar way and seem to be even more beguiling for they

have strong motivational effects even when we know that

they are irrational (Ariely 2009).

One of Ariely’s examples of irrationality comes from an

advertisement in The Economist magazine (The Economist

claims the ad was accidental). The advertisement was for

the economist on-line for $59, the print-only subscription

for $125, and the on-line and print subscription for $125.

Ariely found that 84% his smart MIT students wanted joint

on-line and print subscription and 16% wanted to the on-

line only version. No one wisely chose the print-only. He

then gave the ad to a similar group of MIT students but took

out the print-only subscription that no one chose and which

seemed to be irrelevant to their choices. But taking out this

option resulted in 68% of the students choosing the on-line

only version and 32% choosing the print and on-line option.

Ariely calls this the decoy effect where the comparison

makes us behave irrationally. The rationally irrelevant

addition of the print-only subscription makes us think that

we are getting something for nothing, and in many cases an

irrational decision is made (Ariely 2009, pp. 4–6).

Ariely tells of another decoy story that happened at

Williams-Sonoma. They had a $275 bread maker that was

not selling well. They brought in a Marketing expert who

recommended that they bring in another bread maker that

was larger and fifty percent higher in price. The gimmick

worked and the presence of the more expensive bread

maker caused the now cheaper looking $275 dollar bread

maker to fly off the shelves. The decoy made customers

want something that they normally would think was too

expensive and they did not need (Ariely 2009, pp. 14–15).

Similar examples can be seen all around. I have often

wondered why they make five thousand dollar televisions

that very few people can afford to buy. One answer is that

they help to sell the fifteen hundred dollar sets that with a

little stretch many people can afford. The five thousand

dollar set makes the fifteen hundred dollar set look like a

relative bargain.

Getting something for free is something that we all like,

but behavioral economists show us that free stuff actually

makes us irrational. Ariely shows in several examples that

we value free things more than we should. His example is

of giving people the option of a chocolate truffle at 15 cents

or a Hershey’s Kiss at 1 cent. 73% chose the truffle. When

the truffle price was lowered to 14 cents and the Kiss was

free, the whole dynamic changed. Now, 69% of people

chose the free kiss over the truffle (Ariely 2009, p. 52).

Being free made the product was much more valuable. We

know that free deals are everywhere in marketing and like

the ArtVan sales we continue to fall for them. We are told

that if we buy three tires, then we get the fourth one free.

Amazon.com tells us that if we buy two books then we get

free shipping. These free offers sometimes cause us to do

irrational things. We might buy a book that we did not

want, or buy sale tires even when non-sale tires are a better

deal. Thus, free merchandise causes irrational decisions.

The irrational attraction to free things might even explain

why ‘‘buy one get one free’’ sales are often more successful

than 50% off sales.

The Moral Assessment of Marketing in General

Marketers commonly defend their actions by saying that

they are simply supplying what the consumer wants and

18 A. Wible

123

needs. Theodore Levitt claims that advertising is analogous

to art. Art fulfills the human desire for beauty, enrichment,

imagination, and entertainment (Levitt 1974, pp. 84–92).

Entertaining ads during the Super bowl and Art Van

commercials satisfy these uniquely human needs. John

Kenneth Galbraith disagrees. He criticizes ads for creating

desires rather than satisfying them. People did not want the

$275 dollar bread maker until the $400 one was presented.

People are manipulated into developing wants that they

would otherwise not have. Galbraith believes that as a

result consumers spend their money on private goods like

expensive bread makers and then ignore public goods like

art, parks, and clean air that without advertising people

would desire (1976). Advertising is not like art, it is a

substitute for art. For Galbraith it is the bad consequences

of marketing, rather than deceptive intentions, that makes it

morally suspect. Art Van would have a very different

marketing campaign if it was simply supplying what the

consumer wants. They get many people thinking: ‘‘I don’t

really need a new sofa, but at 60% off it is very tempting.’’

A second defense of advertising is the claim that we are

dealing with adults and adults are rational persons. They

can make the choice not to buy the product or perform the

action. People are not as irrational as Galbraith suggests

and consumers are at fault when they irrationally fall for

these marketing techniques. The consumer should have

more fortitude. In one sense, this position seems right.

People should read books like Ariely’s and try to overcome

or work within their irrationalities. Ariely even suggests

tips to overcome irrationality by using devices, such as

smart credit cards that alert one’s spouse upon one’s giving

into a temptation. Nevertheless, focusing on the responsi-

bility of the consumer does not alleviate the entire

responsibility of the marketer. Kant rightly teaches us that

the marketer should not try to use people. Consumers

should not be fools, and marketers should not be foolers.

Analogously, I may be unwise to leave my house unlocked,

but my doing so does not negate the blameworthiness of

the robber.

The Rational and Ignorant Persons Standards

The marketers might reply that they are not trying to fool

people. They are simply presenting their product in a

persuasive and entertaining way. Some illogical people

may be deceived, but that is not the intent and the average

‘‘rational person’’ will not be. Advertisers should not be

held to such a high standard. As Manuel Valazquez says,

‘‘Advertisers should take into account the interpretive

capacities of the audience when they determine the content

of an advertisement. Most buyers can be expected to be

reasonably intelligent and possess a healthy skepticism

concerning the exaggerated claims advertisers make for

their products (2006, p. 286).’’ The rational person

approach does seem reasonable. It does not hold either the

marketer or the consumer to an unusually high standard.

One initial worry about the theory is that marketers would

still be allowed to fool the most vulnerable members of

society who need to be protected the most. Taking

advantage of people such as children and the elderly seems

particularly troubling. But there could be extra restrictions

put on ads that target those markets. For example, toys and

caskets currently have more stringent marketing require-

ments than cars and running shoes.

Behavioral economists point to a second major problem

with the ‘‘rational person’’ standard: it’s assumption that

most people are rational. What we have seen with Ariely is

on the contrary most people are irrational. They fall for

marketing tricks over and over and over again. We con-

tinually fall for free ‘‘giveaways’’ and stores with constant

‘‘sales.’’ So, perhaps the rational person theory holds the

consumer to an unusually high standard, as most people

have very strong irrational tendencies. The free shipping

that Amazon gives us is like giving fee drugs to a known

drug addict or using Müller-Lyer tricks to make their

products look bigger than they are. It is a rare person who

can overcome these ingrained tendencies. Much of what we

buy does not have such a detrimental effect as hard drugs,

but Galbraith seems right that we may be foregoing public

goods that we would value without the constant bom-

bardment of these marketing techniques.

The Supreme Court seemed to recognize this problem in

1937’s FTC vs. Standard Education. Standard Education’s

agents gave away a set of encyclopedias for free, and then

the buyer only had to pay $69.50 for updated inserts. The

‘‘free’’ approach convinced even doctors and professors to

buy the inserts even though the books and inserts were

regularly sold for the same price. The courts said that their

marketing practices were overly deceptive and the Federal

Trade Commission (FTC) could prohibit them. The court

declared that intentional deception was wrong and advo-

cated what is frequently called the ignorant consumer

standard.

The ignorant consumer standard says that event mar-

keting practices that deceive the naı̈ve and ill-informed

consumers should be banned. There is a responsibility to

protect the trusting as well as the rational and cautious

customer. Such an approach might seem appropriate given

Ariely’s research and the Standard Education case which

shows most everyone is frequently intellectually naı̈ve.

Most all of us are now protected from being used. The

standard holds that Art Van, the Economist, and almost all

infomercials which claim ‘‘but wait, for free we will

include not one but two extra of these amazing devices’’

are immoral.

It’s All on Sale 19

123

Many thought that this standard was too stringent on

marketers, and even the FTC eventually found that they

could not protect everyone from everything. Thus, the FTC

modified their approach by only going after marketers who

deceived large numbers of people. The modified standard

would still prohibit Standard Education’s practices due to

the prevalent deception, but what about Ariely’s cases? No

one is withholding valuable information in the Economist

or bread maker cases. As the deception is widespread, it

should be censured by the FTC, but are they using people?

The main problem the modified standard is that the

masses like these commercials. They watch television often

for these advertisements and enjoy the entertainment pro-

vided. They know they are being naı̈ve, but the thrill of

getting something for free or buying on sale is worth it.

Consumers want to be entertained and they want to buy;

this is why they read or watch the advertisement. They are

like a novice swimmer who wants to swim, but gets to the

end of the diving board and needs a little push. The mar-

keters are providing this push and Ariely has exposed the

psychology behind it. Yet, this does not open the flood

gates for any type of marketing technique. Consumers can

still be unjustly used as a mere means by being subjected to

detrimental deceptions or falsehoods. Thus, we will turn to

a sketch of a new approach to marketing protection.

The Reflective Rational Person

The reflective rational person approach says that consum-

ers are not being treated as a mere means if they accept the

way they were treated after reflection. The consumer

becomes rational after reflection. This approach protects

consumers from serious deception, but it preserves the

beauty and entertainment of advertisements. The con-

sumer’s long-term logical thinking is preserved, even if

suspended in the short term. The theory says that if people

say things such as, ‘‘I know it was irrational to take the free

item, but free items are fun and I still like the Hershey

kiss’’ or ‘‘I know that the sale at Art Van is a weekly sale,

but it felt good shopping there and I like my new couch’’

then the person is not being used as a mere means. If Art

Van’s sale prices are actually much higher than the com-

petition’s prices or their products are considerably inferior

for the price, then they are using the consumer and their

action was wrong.

Another example currently popular in infomercials is to

offer a lifetime of free pads for a mop and then in fine print

or a hushed voice to say that you must just pay shipping

and handling. Unlike the Standard Education case, the

marketer is not withholding vital information. Also, if the

consumer purchases the mop in part due to the free lifetime

pads, she will likely only have buyer’s remorse if the

shipping and handling costs more than pads for a similar

mop in a local store. After all, no reasonable person on

reflection should think a company could stay in business

giving away such things for free for a lifetime.

The rational reflective person standard does seem to be

commonly considered. Most retailers have generous return

policies that give buyers 30 days to return the product.

These return policies may be what make the consumer and

perhaps the FTC more willing to allow deceptive practices.

The consumer knows that on reflection she can simply take

the product back with little cost. However, many wrongly

believe that the rational reflective person standard legally

applies to agreements for large purchases, such as houses

and cars. Morally, it does seem like there should be a 3-day

return policy, but rarely is it the law. Unfortunately, in

general, the law is not on the buyer’s side, and any return is

dependent upon the good will of the seller.

Although it is an improvement over the alternatives,

there are some problems with the reflective rational person

standard. First, the most vulnerable consumer is not pro-

tected. As mentioned above, this problem can be somewhat

alleviated by having special restrictions on marketing

practices when such groups are targeted. The FTC does use

special precaution when it comes to children and certain

products.

Second, people often do not reflect after a purchase or

when they do they are unable to assess if they were treated

within fair limits. For example, it was very difficult for

consumers in 1937 of Standard Education’s encyclopedias

to know that the standard price for encyclopedias and the

inserts. Today, though, the open access to information

through easy transportation and the internet should help to

alleviate this problem. There is no requirement that people

reflect, but, in general, the opportunity is available. Special

precaution would need to be given to people, such the very

poor, who do not have ready access to information.

Third, overtly manipulative marketing practices would

be considered permissible if people do not mind them. The

marketer is saying I am going to try to fool you and the

consumer is saying ‘‘go ahead, it’s fun.’’ It is deception, but

perhaps not problematic because people are agreeing to it.

The consumer is saying, ‘‘Try to fool me, but don’t go too

far.’’ It is similar to going to a hypnotist to be fooled and

entertained, but we expect it to be limited to the perfor-

mance hall. This consent means that the consumer is not

being treated as a means only.

The consent may be a problem because it seems to be

given in retrospect. Consent is normally required before the

activity. If the hypnotist tricks us without knowing it, we

might feel used even if it was simply for our own enter-

tainment. Marketing techniques might be different because

they are so prevalent. We know they are constantly on

television, the web, or in print. They are almost everywhere

20 A. Wible

123

we look. The ubiquitous nature of marketing also means

that our knowledge of it in general is quite strong. We

should not be and are not usually surprised by marketing

techniques that lure us to buy things we normally would

not have considered. We are consenting by just being part

of an open market society. The reflection part is then less a

mater of consent and more one of performance evaluation.

Conclusion

Art Van’s ads and similar techniques are part of our

everyday life. For many they are entertaining and for most

they are alluring. Dan Ariely helps us to understand why it

is difficult to avoid being attracted to them. He shows us

that most of us are irrational. Sales and free items stupefy

the mind. Yet, the exposing of our weakness and mar-

keter’s deception does not mean we should prohibit such

techniques. Rather we should allow deception within lim-

its. Marketers cannot tell falsehoods and marketers cannot

unduly deceive as in the Standard Education case. Yet,

marketers can deceive as long as consumers in rational

reflective mode still look kindly upon the deception.

Within these constraints, perhaps consumers can enjoy the

entertainment and joy that marketers supply, and not feel

manipulated in the end.

References

Ariely, D. (2009). Predictably irrational: The hidden forces that shape our decisions (Rev. ed.). New York: HarperCollins.

Galbraith, J. K. (1976). The affluent society (3rd ed.). New York: Houghton Mifflin.

Levitt, T. (1974). The morality of advertising. Harvard Business Review, 48(July–August), 84–92.

Preston, I. L. (1996). The great American blow-up: Puffery in advertising and selling (Rev. ed.). Madison: University of Wisconsin Press, pp. 121–123.

Velasquez, M. (2006). Business ethics: Cases and concepts (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall, p. 286.

It’s All on Sale 21

123

Copyright of Journal of Business Ethics is the property of Springer Science & Business Media B.V. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.