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Legal/Ethical Factors

13 May, 2016 - 13:23

Every marketing organization's activities are influenced by ethical and legal factors that establish the rules of the game. These laws, agencies, policies, and behavioral norms are established to ensure that marketers compete legally and ethically in their efforts to provide want and need-satisfying products and services. The various US legal issues with which marketers must be knowledgeable include the following:

  • Monetary and fiscal policy: Marketing decisions are affected by factors like tax legislation, the money supply, and the level of government spending. The tendency of a Republican Congress to spend on defense materials and not on the environment is an example.
  • Federal legislation: Federal legislation exists to ensure such things as fair competition, fair pricing practices, and honesty in marketing communications. Anti-tobacco legislation affects the tobacco and related industries.
  • Government/industry relationships: Agriculture, railroads, shipbuilding, and other industries are subsidized by government. Tariffs and import quotas imposed by government affect certain industries (e.g. automobile). Other industries are regulated (or no longer regulated) by government (e.g. rail, trucking, and airlines). Deregulating the utilities industry had a tremendous negative effect on the California power industry in 2001.
  • Social legislation: Marketers' activities are affected by broad social legislation like the civil rights laws, programs to reduce unemployment, and legislation that affects the environment (e.g. water and pollution). The meat processing industry has spent billions of dollars trying to comply with water pollution legislation.
  • State laws: State legislation affects marketers in different ways. For example, utilities in Oregon can spend only 1/2 per cent of their net income on advertising. California has enacted legislation to reduce the energy consumption of refrigerators and air conditioners. In New Jersey, nine dairies have paid the state over USD 2 million dollars to settle a price-fixing lawsuit.
  • Regulatory agencies: State regulatory agencies (e.g. the Attorney General's Office) actively pursue marketing violations of the law. Federal agencies like the Federal Trade Commission and the Consumer Product Safety concern themselves with all facets of business.

Literally every facet of business is affected by one or more laws. It would be impossible to adequately cover them all in the space allotted. However, we will briefly discuss the three areas receiving the most notice in marketing: product liability, deregulation, and consumer protection.