Industry Briefing Paper
Introduction
Increased marketing campaigns by government health institutions and private ones aimed at fighting obesity have seen the number of people enrolling in health clubs increase. Also, consumers are increasingly adopting a trend towards improved health and this has also influenced the demand for industry services. Health clubs in the health and fitness industry mainly rely on a gym membership in the form of monthly or annual subscriptions as their main source of revenue (de la Faille-Deutekom, Middelkamp and Steenbergen daM uitgeverij, 2011). The global fitness industry continues to grow in leaps and bounds and now has an estimated value of $ 81.2 billion with approximately 151.47 m people having club memberships worldwide in nearly 186,850 health and fitness clubs (Statista, 2015). However, consumers have become increasingly wary of the subscription fee, and this has created a vacuum that has been filled by pay-as-you-go companies. You only get to pay for the services of the health club on those days that you use it. As newcomer, Get-Fit-Now needs to build brand awareness fairly quickly among its target consumers, who in this case are the customers of other health clubs who are disillusioned by the exorbitant membership fees. In addition, the company intends to ensure that potential customers understand their position in the market. The goal of this briefing paper is to provide the Managing Director with an up-to-date picture of the ethical issues in marketing communications based on existing academic literature, as well as from practitioner insights. Further, the briefing paper seeks to provide the Managing Director with recommendations on the future of the identified communication tool.
Critical Analysis and Discussion
Mutations in the business world have necessitated a change of mentality in terms of how business is done. This has in turn led to the need to view business processes from a moral compass, and hence the conceptualisation of the issue of business ethics. Ethics has found wide application in the various spheres of the business process, including crisis management, human resources management, public relations, publicity, and branding (Vrânceanu, 2007). Marketing ethics ought to be implemented in the entire marketing communication process, including public relations, advertising, and sales promotion, among others. Observing ethics in marketing communication is especially vital because it is through this channel that marketers get to convince consumers to choose their brands over those of their competition.
Marketing communications play an essential role in communicating a company’s ethical stand. In this case, an organisation is expected to make contact with its various stakeholders and convince them of its ethical policies and intentions. This can only be achieved if the company has successfully implemented the two Cs that is, Contact and Convince (Blythe, 2000). According to De Pelsmacker et al. (2001), organisations consider carefully the growing significance of the corporate identity due to various reasons: (i) the swift transformation of the business environment, thereby necessitating that companies keep track of their corporate image; (ii) companies are finding it hard to differentiate, and hence the growing need to develop a unique corporate identity; and (iii) globalisation, and the attendant risks of erratic communications, have seen companies put more emphasis on designing a common corporate identity (Canner and Banu, 2014).
Marketing in general and marketing communication in particular is the one functional area in a business that is most vulnerable to ethical abuse. This is the case according to Maignan, Ferrell, and Ferrell (2005) because the marketing communication function is closest to stakeholders’ views, especially consumers, and is hence exposed to significant societal scrutiny and analysis. Based on a normative approach, ethical marketing can be described as the practices of an organisation that lay emphasis on responsible, transparent, organisational, and trustworthy marketing actions and policies that manifest fairness and integrity to various stakeholders, including consumers (Murphy et al., 2005). The main focus of marketing ethics is on standards and principles that define what an organisation deems acceptable marketing practice.
Marketing ethics encompass an organisational as well as individual perspective. An individual perspective involves personal moral philosophies and values that are central to making ethical decisions in marketing. Accordingly, such values as fairness, honesty, citizenship, and responsibility are regarded as valuable in assisting in making intricate marketing decisions within an organisation. Conversely, an organisational perspective involves organizational codes, training, and value required to offer shared and consistent approaches to ethical decision-making (Ferrell and Ferrell, 2005). Therefore, the relationships between an organisation and a customer in marketing exchanges are due to mutual expectations that hinge on good faith, fair dealing, as well as trust in their interactions (Maignan, Ferrell and Ferrell, 2004). Nonetheless, marketing ethics also calls for steering clear of inadvertent effects of marketing activities by keeping in mind the various stakeholders, along with their pertinent interests and that of the larger society.
Ethics in marketing communications helps to avoid deception that could interfere with consumers' ability to make rational choices. One area in which ethical issues in marketing communication have raised emerged is in health clubs, where some members have become disillusioned with paying high joining and membership fees even though they do not get to use the facilities at such a health club on most days of the year. Luckily, some organisation such as Get Fit Now have identified a gap in the market and developed the pay-as-you-go concept whereby there are no joining fees or monthly/annual subscription fees. Use of case studies and practitioner comments
A firm that successfully integrates ethical marketing communication practices into its activities stands a very good chance to develop, maintain, and promote long-term relationships with its customers. Besides, observing ethical marketing practices is vital for the success of an organisation seeing as it impacts its ability to develop strong customer relationships, and is hence a key driver in advancing CLV (Customer Lifetime Value). In this case, a customer’s CLV refers to the monetary value that a customer constitutes towards the firm’s bottom line in the duration over which they maintain a relationship with the business (Kumar, 2008).
Moreover, ethical marketing practices are an indication of the trustworthiness, transparency, and level of responsibility of a firm over its customers and other stakeholders in that it manifests the ability of the firm to exercise fairness and integrity in dealing with its stakeholders. Accordingly, a firm with a high ethical reputation wins the trust of its customers, resulting in enhanced customer commitment and satisfaction, improved brand loyalty, and thus building competitive advantages (Kumar, 2008).
Despite these benefits associated with ethical marketing practices, some firms have been noted to partake in unethical marketing communication practices, leading to disastrous outcomes. A case in point is Lenskart, a company that sells contact lenses and eyewear via its retail and online stores. The company engaged in guerilla marketing tactics as it sought to take advantage of the Nepal earthquake that took place on 25 April 2015. The company relied on social media to send SMS advertisements to customers in a message that read, "Shake it off like this earthquake" (Khosla, 2015). This message was meant to offer customers who bought the VincentChase brand of sunglasses at the company’s retail and online stores special discounts on this uneventful day in Nepal. The catch was that the customers had to send the message to fifty other people they knew in order to win the special offer. This was a viral marketing strategy aimed at creating a buzz in the market by exploiting the tragedy in Nepal. Although personal recommendation via referencing remains by far the strongest trigger for customers (Sprague and Wells (2010), the actions Lenskart to make more sales by taking advantage of a calamity came under scrutiny on moral grounds, and this acted as a source of criticism for the firm’s SMS advertisement (Khosla, 2015).
A second example involved Troika; an agency involved in talent sourcing. In this case, the company communicated the recruitment of talent who were actively updating their social media status in a building undergoing evacuation owing to the earthquake (Khosla, 2015). The company event went ahead to post pictures of its Facebook page and requested potential candidates who possessed media know-how to apply for possible recruitment to Troika’s social media team (Brahmbhatt).
, 2015). Again, Troika endeavoured to apply guerilla marketing strategies on social media, but their efforts failed and the company came under intense criticism for its lack of marketing ethics.
Discussion of Key Issues
By entrenching ethics in its marketing communication mix, Get-Fit-Now stands to benefit from the aforementioned advantages of this concept. One way through which Get-Fit-Now can entrench ethics into its marketing mix is by incorporating it into its 4Ps. In terms of products, most firms develop and/or market products that meet the needs of their identified market segments. This, in addition to the use of suitable targeting and positioning strategies, would go a long way in enabling the company to maximise its brand equity and sales. It is important that Get-Fit-Now ensure that its products are aligned with the firm's identified values, and whether it undermines or fulfills its stated mission and vision statement (Canner and Banu, 2014).
In terms of price, most marketers settle on a pricing model that boosts their profits and sales, but this is determined by the segment and industry. In the global fitness industry, companies peg their profits on membership subscriptions, and this has led to ethical implications because some consumers are disillusioned by the high joining and membership fees of health clubs even though they do not utilise these facilities as much as they would want to. Moreover, customers may also not get to use these facilities due to ill health or in case they are faced with a financial setback even as the customer wishes that they fulfill the end of their contract. Get-Fit-Now has come to fill this gap in the market with its pay-as-you-go package, which is a subscription-free type of service where a member only pays for the workouts, he/she does. The flexibility and affordability of this concept ensure that consumers have greater opportunities for exercising.
When it comes to promoting the product, Advertising is by far the most discussed aspect of the marketing communication mix. Ethical issues regarding advertising also tend to vary considerably. deceptive, and untruthful advertising knowingly advertises inaccurate and incorrect information. Manipulative advertisements are likely to influence consumers to make certain purchase decisions that they would have not done under normal circumstances. Besides being insulting and vulgar, offensive advertising also tends to be offensive to consumers (Kumar, 2008). Criticism of business ethics in advertising is varied and extensive, though these can be largely categorised into social and individual impacts. At the individual level, there have been growing concerns among consumer critics about the use of deceptive or misleading practices that endeavour to create false beliefs among consumers regarding specific companies or products in the minds of consumers. On the other hand, that the social level, a key concern has to do with the collective cultural and social impacts of marketing communication on the consumer's everyday life, and more so their impact in advancing consumerism and promoting materialism (Crane and Matten, 2007).
Public relations is yet another tool that an organisation can rely on to convey its ethical policies to current and potential stakeholders. Effective PR hinges on two vital requirements: contact and convince (Crane and Matten, 2007). A company's PR's ethical issues entail how it responds to concerns regarding products, and if the company acknowledges product shortcomings, in addition to admitting problems or endeavours to conceal the problem (Shimp, 2010).
Conclusion and Recommendations
The health and fitness industry remains one of the most lucrative sectors of the economy largely due to increased awareness by government, private, and non-governmental health-based organisations on the need to keep fit, as well as a growing need by people to improve their general wellness. However, most health clubs peg their profits on annual subscription fees, and this has raised ethical issues with consumers who are disillusioned by the high fees they have to pay even on days when they do not use their services. Get-Fit-Now has filled the gap in the market by developing the concept of a pay-as-you-go gym in which members only pay for gym facilities used. In order to successfully entrench ethical practices in the company's marketing communication plan, the company must ensure that its stated vision and mission statement aligns with the product that it offers and that they do not use deceptive or untruthful advertising when creating awareness of its product to the target market. Moreover, the company must exercise disclosure and transparency in all aspects of its business operations by having in place a written code of ethics that it follows, in addition to conducting regular ethical audits.
References
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