Business Ethics Project III

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consumers, leading to sustainable business models that are especially the firm and the consumers.

Internet and Digital media are the main drivers of changing the face of marketing (Chaffey and Chadwick, 2015).Digital marketing is defined as the strategy involving marketing of goods and services through digital channels (Kannan and Li, 2017). It is an umbrella term that includes all digital technologies to reach target customers with the purpose of selling products and ser vices, esta blishing the connection with a ll sta keholders to promote business. (Chaffey and Chadwick, 2015).

Economies across the globe are witnessing the effect of digitalization of businesses in terms of better e- commerce performance table.1 gives a few details about the growth of e-commerce in an Indian context.

Rashmi.S.Chaudhry1, Amita Sharma2

1Ph.D. Scholar, Chandigarh University. 2Ph.D. Scholar, Chandigarh University.

ABSTRACT The present study is a review paper that is conceptualized to explore various ethical issues involved

in digital marketing. The study attempts to look at the initial bases for incorporating the subject of ethics in business firms, further try to explore the dimensions of marketing ethics through previous researches. The consumer emphasis is to explore studies conducted on the ethical concerns faced mainly by users of digital marketing. The terms digital marketing, online marketing, and e-marketing are used interchangeably in the present study. With the help of previous research papers, the main ethical issues of digital marketing that have been explored include Privacy, trust, security concerns, non-deception, service recovery and fulfillment/ reliability.

Keywords : Ethics, Digital Marketing, Privacy, Trust, Ethical issues.

Ethical Issues in Digital Marketing - A Review

Introduction Adapting to the change brought about by digitization of business is the most challenging task fa ced by businesses currently. Internet the most important digital tool has transformed the role of business stakeholders, especially the media. Much power is in the hand of users, every member registered on any social media site can create opinion on practically everything.so, the change that is seen is unprecedented and exponential and is welcomed by many for increased productivity, low cost, faster communication etc.Technology enabled initiatives like mobile payment gateways, e-tailing sites ar e on one ha nd being a cknowledged by both academicians and practitioners for speed, convenience, increased scope, more options; at the same time it is not possible to ignore the concerns of ethical and moral implica tion of these dyna mic ever evolving technologies.(eg. The Facebook scam of manipulating posts in 2016 and various other cyber scams, frauds observed lately).disadvantages of many applications of this platform have been highlighted through harsh response of critics in the form of anti socialization debate (Mick and Fournier,1998). Further depersonalization experience has been observed as a major disadvantage of e-retailing (Forman and Sriram, 1991) Hence the researchers and business leaders are working hard to develop the marketing strategies that resonate best with

Table-1: Growth of E-Commerce in India

• India n business ha s seen a ma jor transformation owing to e-commerce. This industry in India has been on an upward growth trajectory with compound annual growth rate predicted at 28% from 2016-2020 and US$63.7 by 2020.The main reason for the growth can be attributed to increase in the penetration rate of internet and smartphones in the country.

• Internet user base is expected to increase to 829 million users by 2026.(59% of the total

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population)

• Internet industry in India is likely to double to US$250 Billion by 2020.

• The major share of online spending including both the domestic and cross-border buying is predicted to increase by 31% to Rs 8.76 Trillion by 2018.

• Top three countries preferred by Indians for online buying in 2016 were USA (14%), UK (6%) and China (5%).

• Online travel agents account for the largest market share (70%) in the consumer market while remaining 30 % includes fashion, furniture, e-tailing, grocery, food, education technology and alternative lending.

• E-Commer ce is showing incr ea sed acceptance in Tier 2 and Tier 3 cities.

• Consumers have started perceiving increased value and benefits with digital marketing resulting in significant rise in investments in e-commerce businesses like Shoppers Stop, Lifestyle stores,

• Innovations supported by technology like digita l pa yments, a na lytics stimula ted customer engagement, hyper local logistics will encourage growth in this sector

• Ca shless tr a nsa ctions a r e pr edicted to comprise 55 % of online sales by the 2020, attributing to increased adoption of electronic payment gateways and mobile wallets.

SOURCE: KPMG Report - E-commerce Retail Logistics India, Media Reports, Press Information Bureau (PIB), Union Budget 2017-18,IBEF.ORG.

Marketing Ethics Initial research on ethical issues in marketing can be dated back to 1960, with initial studies conducted by Bartel (1967) who listed the conceptual factors influencing ethical decision making in marketing. Further studies continued to include ethical considerations revolving around the specific areas of marketing decision making such as marketing of products that

are harmful or dangerous to consumers, deceptive and misleading advertisements, unfair prices, untimely, delayed distribution services. Companies started adopting the code of ethics in business functioning for the first time in the early 80s.Embracing ethical pra ctices such as fair pricing, genuine product infor ma tion, r easonable quality a ssur a nce wa s beginning to reap benefits in terms of increasing the number of sa tisfied customer s. Ther eafter the academic interest in role ethics in marketing strategic formulation grew exponentially with a series of studies conducted on this topic (Nill a Schcibrowsky, 2007), (Schclegelmilch and overseer, 2010). The studies related to marketing ethics can be further classified into five distinct areas (Gomaa Agag Ahmed El-masryetal; 2016) that include: 1. Studies on ethical issues pertaining to key

functional areas of marketing: a) Product: Dangerous or hazardous nature of

products b) Price: Overpricing, inaccurate billing, price

discrimination, price fixing, skimming c) Distribution: The cost and effectiveness of

distribution channels(Sarma,2001) d) Promotion: Includes issues such as false and

deceptive a dver tisements, offensive advertising(Bakir & Vitell,2010)

2. Studies centered around the specialized aspects of marketing such as marketing education, its consequences on ethical orientation, behavior, and attitudes of both the consumer and the firm. These studies further highlight various standards, norms and code of conduct guiding advertising and marketing practices.

3. Studies focussing on various decision-making models on ethica l concer ns fa ced by organizations. Important models are the ones formulated by researchers like Ferrel et al, 2007, Hunt and Vitell 2006).These models explain the ethical decision making by individuals and are based on the ethical traditions grounded in the moral philosophy.Four basic components of

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decision making identified through various studies are: (i) Association of an important issue or problem with its moral characteristics. (ii) Making moral judgments. (iii) Identifying a moral intent (iv) Transforming moral decisions into actions. But certain studies(Bush et al;2000) have pointed out limitations in providing a generalized model of ethical decision making due to the presence of situa tiona l fa ctor s tha t a r e completely unpredictable.

4. Studies on consumers' perception of unethical marketing practices. These studies are related to concerns faced by marketers and consumers' in the course of business transactions affecting various stakeholders like green retailing issues (Chen et al; 2008) the effects of ethical sales behavior on customer satisfaction, commitment and trust. (Roman & Ruiz, 2005; Leonidou, et al., 2013).Consumers' perception of online buying.

5. Final categorization of research is related to the studies focussing on consumer's perception of ethical or unethical behaviors or procedures adopted by the firms.These studies take up the issues that are more closely related to consumers in their day to day business transactions like shoplifting, pirated goods,etc.further the bases for the formation of this perception are also discussed. It has been discovered that cultural identity and demogr a phic va r ia bles a ffect the kind of perceptions consumers form about the firm's ethical behaviour.

Digital Marketing Digital marketing is an umbrella term that includes all digital technologies to reach target customers with products, information related to products. Social media has gained importance for building brand equity - Chafey and Elis, Chadwick in 2015, identified three types of media channels- Paid media, Earned media and owned media(POEM). The main strength of digital marketing is its ability to communicate directly with potential customers with the aim to generate the response from them instantly. Internet and digital media are the main drivers for

changing the face of online marketing as stated by Chafey and Chadwick in 2015.Digital marketing is a strategy involving marketing of products and services through digital channels - Kannan and Li, 2017. Online marketing includes the digital platform for exchanging information between buyers and sellers; Further, Menter et al (2000). Have defined e-retailing as a "virtual realm" where information is used to know about the various products and they are delivered through information based channels. Online marketing practices are an interesting mix of changing market parameters on one side and advancing technology on other, making it a dynamic field of study. The present paper uses the terms e-marketing and digital marketing synonymously, though there is some differences mention in a few studies. The Internet has added a new dimension to the business environment that is vulnerable to unethical behavior (Freestone and Mitchell, 2004). The collection, accessing and using users' information of web browsing in terms of engaging in online buying or surfing various websites to ga ther pr oduct or ser vice r ela ted information are the main functions of internet providers or organizations catering to customers needs.Carrying out this function lead to unauthorized sharing or using these customer databases that give rise to multiple ethical issues of digital marketing. Some of the most studies ethical issues have been privacy, trust, security concerns, non-deception, unsolicited information through junk mails, wrong claims made and justified by the digital providers. Ethical Issues In Digital Marketing Exponential technological development, especially in the field of computers and information, enabled sectors have brought about enormous changes in the major economies of the world. Within next ten years, the internet will be the most important medium for business and communication (Sinan Nardal & Ayse Sahin et al 2011).This tectonic shift of marketing and customer services to the internet also present some serious concerns like the emergence of ethical issues and resulting consumer responses. Studies have developed a scale of consumers' perception regarding ethics of

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online retailers (CPEOR). They have discussed the main ethical problems of digital marketing affecting customers such as Privacy, security, deception, and reliability. (Sinan Nardal &Ayse Sahinet et al, 2011). Online shopping has given rise to contentious ethical practices for online shoppers.(Roman,2010).Ethical issues with respect to online retailers are one the major threat to online shopping. (Ahuja et al, 2003). Review of long-established retailing has identified the ethical behavior of retailer with respect to consumer behavior. (Basset al.1999). Online Retailers have done little public a ssessment of the consequences a nd r esults of implementing new technology. Some companies allow our guidelines on the use or non-use of subscriber record information. The Direct Marketing Organization (DMA) has designed a record of consumers of Do not disturb facility with regard to email. Using consumer information without their consent will lead to unethical practice that will affect the relationship between company and customer in a long run. Nguyen and Biderman, 2008; Beekunet al, 2005; Ferguson et al, 2011).Roma n (2007) defined the system which measures perspicacity of online sellers honesty and answerability in contacting buyers. Another study identifies buyer trust (Yang et al, 2009).Reliability and Satisfaction (Limbu et al, 2011).Consumer finds it difficult to identify the ethical behavior of online seller because of no personal interaction. Various strategies adopted by customers to acquire information (Clemons, 2007).Sangeeta Sahney et al,2013 studies the ethical concerns faced by online buyers in terms of discomfort, apprehension, and skepticism specially in case of the monetary exchange. Other ethical issues such as privacy, transaction security, unsolicited e-mail, deceptions, lack of reliability, shared value, service recovery. Following section details the contributions made by various studies in relation to these specific issues: Privacy In today's competitive environment, privacy is the major concern for online buyers. Increase in the usage of inter net, it is easier for compa nies to a cquir e information a bout the consumers without their

permission. Various alternatives are available to companies for acquiring such information. Such practices helping companies for segmenting & targeting its upcoming customers. Companies use databases for advertisements & other promotions (Cardill, 2000; Milne, 2000; Sheehan, 2000). Fair information practices (FIPs) term includes various principles that provide assurance to customers. As FIPs followed by marketers will lower the concern of privacy and give assurance to customers. A study conducted over the Online rated privacy as the most important problem experiencing the Internet (Georgia Tech Research Corporation 2000). Furthermore, a Business week survey study discovered that people who do not use the Online report privacy as their main purpose for preventing this electronic method. (cite). (Green 1998). Consumer privacy can be protected by consumer awareness of information & choice for information selection & privacy can reduce when marketer acquires information of the customer without their consent. Studies have identified that online shopper is concerned about privacy, Web security, fraud, retailer loyalty and qua lity (Grabner-Kra euter, 2002; Miyazaki and Fernandez, 2001; Koehn, 2003). As soon as, customers willing for interactive marketing actions and allow consent, they need to provide personal information to the appropriate company. Such kind of information includes per sona l deta ils (Kr ishna mur thy 2001).Although Customers with strong comfort issues have a genera l negative mindset to all types of customized communication (Martin, Borah, and Palma tier, 2017). Many customers are anxious that information about their personal life is more easily available on Internet as compared to off-line technological innovation. Specific problems include unexpected email, bank card scams, identification scams etc. Robert and Angel (2001). Privacy or the right to be left alone is the most important ethical issue related to digital marketing and has gathered attention from both the internet marketers and customers. Most of the studies on ethical issues of digital marketing have been centered around privacy concerns. Privacy "the right to be left alone" was first documented by Louis Brandies a supreme court justice America

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in 1890.An important documentation 'The right to privacy' compiled by Warren and Brandies in 1980 was the first attempt to voice individuals' need for privacy, need to control information related to self from being shared with the public at large. In USA 'privacy' incorporates everything from anonymity to control personal information.In Europe 'Privacy' refers to 'data pr otection' a nd toda y these ter ms a r e used interchangeably across the world. Miler and Wockert(2000), & Bette Ann Stead &Jackie Gilbert pg 75-85, 2001have given a framework to describe the privacy concerns of online marketing, that includes aspects such as non interference in an individual's personal space(Bette Ann Stead &Jackie Gilbert pg 75-85, 2001) ,not using the information shared by the users with the third parties.information choice in terms of product selection and transaction details should not be made public without the consent of the user.Internet marketers cannot stealthily gather user information and share it with third parties for the purpose of profiling. Internet marketers support the sharing in favor of consumer stating it as an important tool for achieving customized marketing and achieving consumer sa tisfa ction.Consumer s dislike this ' monitored browsing' that is enabled by peeping through technological windows of cookies and other data mining techniques. Details of the web transactions between the buyer and seller should be considered private i.e. closed to public (Fergusson, 2001). Considering the three different stakeholders of privacy concerns, three doma ins ha ve been identified: Consumer,corporations,public policy.( Jochen Wirtz May O. Lwin Jerome D. Williams) Besides unsolicited usage of web cookies and junk e-mails, the other important issues of privacy stem from the ways in which the information is collected, used or shred mostly without the consent of the user, there are errors made in compiling data or access point for information r equir ed a r e not fea sible. Fr om viewpoint of organizations, information available through digital means is an important source of power and competitive advantage. But this leads to problems when information is shared without user permission or shares content that users do not want to disclose.Policy regulation is

the most discussed privacy concerns as it has not been taken seriously by both the business organizations and the regulating agencies.The need for well-regulated privacy policy is realized in various studies(Nash,1993, Gulman,1999).two main aspects to a regulation of privacy policy: Self-imposed industry regulation, Government imposed regulation. Privacy Issues Two significant moral disputes with regards to marketing exercise and customer privacy include I. Discrepant opinions between organizations and

customers about who should manage consumer details and

II. The conflict between customer privacy and other business rights. These disputes are amplified by consumers' deficiency of knowledge about the uses to which details relating to them may be put a nd the a bsence of r ecour se when details pertaining to them is abused.

Trust Trust is one of the essential principles on which the present society exists. Trust is the core of our everyday associations. The thing about trust is; you can't counterfeit it. You need to care. Furthermore, this is the place activities talk louder than words. As indicated by Charles Green, the creator of The Trusted Advisor, trust can be measured and consolidates Credibility, Reliability, and Intimacy - everywhere throughout the denominator of Self Orientation. A study was conducted to determine whether trust could be a source of competitive advantage. The study showed that trust is significantly related to sales, profits, and turnover. E- commerce will go as far as customers will allow it to develop. That, in turn, depends on the level to which industry partners feeds its relationships with customers and enhances trust in their business activities. Trust, a major aspect that affects online marketing (Kimery and McCord, 2002).Although, research reveals privacy disclosure published on a website decrease consumers' views of privacy-related threat, lead to beneficial encounters with a company, and improve customers perception that the company can be reliable (Culnan and Remedy, 1999).

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High level of trust encourages customer involvement and commitment leading to the long term satisfactory customer relationship. The main characteristics of online medium "depersonalization" lack of physical environment keep pressing the question of buying or not to buy in front of the customer. Thus the ability of marketers to build and maintain trust with buyers can lea d to positive a nd long-ter m customer engagement.(Wang and Emurian,2005).The Internet has added a new dimension to business environment that's vulnerable to unethical behaviour(Freestone and Mitchell, 2004).

Consumer Strategies Customers can follow certain techniques to protect both their useful information and their right to be let alone. However, these techniques require significant cautious and are subject to several restrictions. Consumer- originated safety measures of convenience vary in their functionality and efficiency. To prevent Caller ID/ ANI, customers might contact from a pay phone or someone else's phone. To prevent phone calls from telemarketers, consumers can use answering devices as testing gadgets. Usually, the only control customers can generally apply is in determining whether or not to offer the specific information; once the details limitations in, customers hardly at any time have a say in its further use. Security Concern Customers that purchases products online are becoming more and more concerned about the protection of websites they look at. As per "Paul J. Dowling, Jr. in Web Advertising and Marketing." it's your responsibility to reduce their actual risk. Your customers have entrusted their money to your company; the least your company can do is safeguard it." However, small businesses involved in online marketing are most insecure to Internet security software risks. The same applications that accomplish digital shopping also make a potentia l ga p in computer secur ity (Emer y). Consumer s a r e a lso concer ned with conveying their financial information like debit and credit card information, and will also leave yourself open to attacks by hackers or competitive spies. If

ma r keter dea lt with client data negligently or purposefully circulate to other companies may induce ethical concerns among online shoppers leading to an adversely accepted moral behavior. Deception Deception on part of the internet marketers in a major ethica l issue a ffecting consumer 's perceptions.Influencing consumers to engage in the purchase process is compatible with the profit-making and sustained existence objective of business. The digitized medium of marketing has amazing capabilities to influence consumer decision making and behavioral issues.(Conversionxl.com).This ability grants power to online providers to manipulate the customers to influence their purchase decision making.Deceptive practices take place when consumers are forced to buy products on false claims through misleading advertisements, fake or paid reviews (Yam B. Limbu Marco Wolf Dale L. Lunsford, 2011).Customers expect online marketers to be nondeceptive,nondeception refers to consumers believe that they will receive the accurate information and services related to products and services they want to buy online. Deceptive practices like false claims, paid and fake reviews , hiding costs a nd, hidden ter ms and conditions in the transactions, sometimes result in inaccurate judgments of the consumers leading to dissatisfaction and dissonance.( Gomaa Agag, et al 2016).Studies found an important relation between non deception and consumer satisfaction.( Yam B. Limbu,Marco Wolf et al,2012). Non deception has not achieved much attention within online marketing literature.Recent studies have established the direct relation between fair marketing and consumer trust and satisfaction, especially in case of first-time buyers.(Long-Chuan Lu et al, 2012).Marketing through word of mouth (WOM) is more deceptive as compared to the solicited product reviews announced by the websites(Silke Bambauer- Sachse et al,2013).companies get paid reviews to manipulate consumers. Service Recovery Service recovery measures consumers' perception of transparency of digital marketing companies recovery

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effort during the online transaction process.Consumers expect certain gains for the costs incurred by them(. McColl-Kennedy et al, 2003) when they find the costs incurred to be more than the gains they translate their unhappy experience to the unfair deal. Digital marketing is more prone to service failure issues such as on time delivery of goods, easy navigation,( Benedetta Crisafulli, Jaywant Singh,2017).Digital platform of marketing, therefore, represents a highly pertinent context for service recovery.Ethical marketing practices involve hassle-free and convenient for goods and services, consumers expect fast and easy resolution of service fa ilur es(Ka ng, Johnson, 2015, Schumma nn et al,2012).The inability of digital marketers to positively respond to consumer complaints about service failure is an important ethical issue. Online shopping includes more varied causes of service failures such as problems with website design, ina ccur ate or incomplete information and problems with payment methods. (Na Young Junga, et al 2017). The digital platform being inter a ctive in na tur e ma kes consumer s mor e dema nding for r esponse to ser vice fa ilur e complaints.(Shanker et al,2003).compensation is an important aspect of recovery that is of two types- Ta ngible r ecover y including r efund, pr oduct replacement or exchange, gifts, coupons etc. The psychological recovery that includes an apology, explanation, commitment for future improvement, acknowledgment of consumer's feedback. (Miller et al 2000), (Kho &Wu, 2012). Fulfilment/Reliability An essential characteristic of digitized media for marketing leads to inability to provide for pre-trial before actual purchase as in traditional marketing for commonly bought goods like clothing, furniture, toys, appliances etc.Hence beca use of only virtual or intangible experiences with goods that consumers intend to buy, reliability is a major determinant for making a purchase.(Grewal et al 2004).Studies indicate that online consumers expect certain standards of dealer service from online marketers such as the Positive image of the website, quality associations in terms of product delivery, adherence to a time frame for product delivery. Compatibility in goods shown and delivered

and consistency in maintaining these qualities determine whether a website is reliable or not. (Sergio Roman, 2006).

Conclusion

Digital marketing is a dynamic field that has enormous opportunities for growth of business in terms of increased scope, wide reach, increased productivity and efficiency of operations.It has the strength to empower the customer with more options and more efficient transactions and above all a contribution to strategy formulation. After exploring various research papers it can be concluded that there are seven main ethical concerns that restrain customers from increased engagement these concerns are: Privacy, Trust, security, customer strategies, non-deception, service recovery and reliability.it is clear from previous studies that implications of fallout on these issues are serious and long-term and can be ignored only at the cost of survival of business firms. Another conclusion is regarding the area of studies. Most of the studies included for the review include USA, Turkey, Egypt, China Taiwan, and Hungary.Australia. Limited studies on the topic are related to Indian context presenting future scope of study. References 1. Moran.J Terrence, Weinroth Jay, Invasion of Privacy on the

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