The increasing efforts by marketers to target diverse groups of consumers call for a closer examination of the ethical implications of market segmentation and differentiated marketing. Previous research suggests that marketers and consumers often differ in their perceptions of marketing ethics. Based on contingency theory, this research proposes an integrated framework--which includes the nature of the product, consumer characteristics, and market selection--to analyze the ethical complexities of the marketing exchange. Interactions among these factors lead to various contingencies with different ethical implications for marketing managers and public policy makers. Marketers should assess consumer interests and the ethics of marketing programs before their implementation
In the last several decades, targeting distinctive consumer segments with differentiated marketing has been a popular strategy among many marketers. The distinctive nature of various consumer groups such as children, the elderly, women, and ethnic minorities has made them attractive market segments (Macchiette and Roy 1994). However, market segmentation and targeted marketing have, from time to time, met with tremendous difficulties. Targeting potentially harmful products at vulnerable and disadvantaged consumers such as children, the elderly, and inner-city residents has received negative publicity and been subjected to damaging litigation (Karpatkin 1999; Sautter and Oretskin 1997). The increasing willingness of some large corporations to exploit vulnerable consumers indicates unfair treatment of these consumers and a lack of justice in the marketplace (Karpatkin 1999; Laczniak 1999).
On the other hand, cases of discrimination and redlining still occur in certain product and market areas, such as the discrimination directed at minority consumers by insurance and mortgage companies (Harrington and Niehaus 1998; Schafer and Ladd 1981). Disenchanted consumers are increasingly rallying consumer interest groups to put pressure on firms that they consider to be predatory or discriminatory in their marketing practices. Companies such as R. J. Reynolds, Prudential Insurance, and Texaco Oil Company have suffered from tarnished images, consumer boycotts, and court penalties of hundreds of millions of dollars.
Although the modern marketing concept emphasizes its mission to satisfy consumer needs and wants, that promise, in reality, is sometimes lost or misplaced, resulting in outcomes that are not in the best interests of either the customers or society (Rotfeld 2001). A lack of understanding of the ethical issues associated with market segmentation and selection has contributed to these problems, which have tremendous social and economic costs. While targeting harmful products at vulnerable consumers has received harsh criticism, restricting the marketing of certain products and labeling some consumers as vulnerable are considered equally troublesome, suggesting that the ethical implications of marketing practices are complicated. Although researchers have examined the ethics of market segmentation and selection (Karpatkin 1999; Smith and Cooper-Martin 1997), effort is lacking in synthesizing various issues to provide a holistic understanding of the ethical implications of the marketing exchange.
Based on contingency theory, we integrate previous research and propose a three-dimensional framework--which includes the nature of the product, consumer characteristics, and market selection--to analyze the ethics of market segmentation and related marketing strategies. Interactions among these variables lead to various scenarios with different ethical implications for marketing management and public policy making. Particular attention is given to areas in which marketers and consumers differ in their perceptions of ethical propriety with respect to the nature of the product and market selection. To avoid ethical conflicts in marketing, we suggest that companies consider consumers' interest and assess the ethical implications of their marketing plans before implementation. …