Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) The “Four Ps” of marketing include product, price, promotion, and placement.
⊚ true ⊚ false
2) While approaching an ethical issue in marketing, the utilitarian tradition would ask to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale.
⊚ true ⊚ false
3) A condition for respect requires that consent be not only voluntary, but also informed. ⊚ true ⊚ false
4) The condition where lesser consumption leads to unhappiness is termed “affluenza.”
⊚ true ⊚ false
5) Unsafe products do not further the utilitarian goal of maximizing overall happiness.
⊚ true
⊚ false
6) A transaction is ethically legitimate as long as someone wants to buy something and someone else is willing to sell it.
⊚ true ⊚ false
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7) Externalities show that even if both parties to an exchange receive actual benefits from the exchange, other parties external to the exchange might be adversely affected.
⊚ true
⊚ false
8) In a strict liability case, if it can be proved that a business was as careful as possible about its product or service, it is not held liable for the harm that results from its use.
⊚ true ⊚ false
9) The implied warranty of merchantability holds that in selling a product a business implicitly offers assurances that the product is reasonably suitable for its purpose.
⊚ true ⊚ false
10) Most courts allow a business to completely disclaim the implied warranty of merchantability.
⊚ true ⊚ false
11) Under a contract model, the duties that a person owes are not merely those explicitly promised to another party, but also those that are implied.
⊚ true
⊚ false
12) Negligence involves the ability to foresee the consequences of one’s acts and failing to take steps to avoid the likely harmful consequences.
⊚ true ⊚ false
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13) When consumers are injured by a product and no one is at fault, the legal doctrine of strict product liability holds manufacturers accountable.
⊚ true
⊚ false
14) The utilitarian tradition in ethics would have the strongest objections to manipulation.
⊚ true
⊚ false
15) Consumer vulnerability occurs when a person has an impaired ability to make an informed consent to the market exchange.
⊚ true
⊚ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.
16) Which of the following is a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit an organization and its stakeholders?
A) procuring
B) branding
C) marketing
D) copywriting
17) Which of the following is one of the “Four Ps” of marketing?
A) purpose
B) planning
C) promotion
D) people
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18) The ________ ethical tradition would see a simple situation of an agreement for an exchange between two parties as upholding respect for individuals by treating them as autonomous agents capable of pursuing their own ends.
A) role-based
B) rights-based
C) rules-based
D) strategy-based
19) The ________ ethical tradition would take an agreement between two parties as evidence that both are better off than they were prior to the exchange and thus conclude that overall happiness has been increased by any exchange freely entered into.
A) utilitarian
B) hedonic
C) consequential
D) deontological
20) A simple situation in which two parties come together and freely agree to an exchange is only prima facie ethically legitimate because
A) research studies prove that a simple exchange does not involve unethical situations.
B) it involves the consent of both parties involved and leaves no room for unethical acts.
C) certain conditions must be met before it can be concluded that autonomy has been respected and mutual benefit has been achieved.
D) it rejects the assumption that individuals are capable of pursuing their own ends.
21) Which of the following is true of the rights-based tradition while approaching an ethical issue in marketing?
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A) It asks to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale.
B) It focuses on the benefits and costs of each exchange.
C) It attempts to find out about other values that are affected by an exchange.
D) It focuses on knowing the degree to which a transaction provided actual as opposed to merely apparent benefits for each participant.
22) While approaching an ethical issue in marketing, the utilitarian tradition would want to know
A) the degree to which individuals freely participate in an exchange.
B) the degree to which a transaction provided actual as opposed to merely apparent benefits.
C) about other values that are affected by the exchange.
D) about the personal characters of the parties that are involved in the exchange.
23) A consumer’s consent to purchase a product is not informed if that consumer is
A) unwilling to listen to the product details from the salesperson.
B) injured after using the product and filed a product liability suit.
C) asked to buy the product without a warranty.
D) being misled or deceived about the product.
24) According to empirical studies, greater consumption is likely to lead to unhappiness. This condition is called ________.
A) affluenza
B) caveat emptor
C) caveat lector
D) merchantability
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25) Identify a true statement about the legal doctrine of strict liability.
A) It frees manufacturers from any kind of liability as soon as a product is sold to a consumer.
B) It allows consumers to assume that products are safe for use.
C) It is favored by business corporations in the United States.
D) It holds a business accountable for paying damages whether or not it was at fault.
26) Which of the following approaches holds that the only responsibility of a business is to provide a good or service at an agreed-upon price?
A) the merchantability approach
B) the implied warranty approach
C) the caveat emptor approach
D) the caveat venditor approach
27) In selling a product, a business offers tacit assurances that the product is reasonably suitable for its purpose. The law refers to this as the
A) doctrine of caveat emptor.
B) implied warranty of merchantability.
C) doctrine of caveat lector.
D) implied warranty of productivity.
28) Identify a true statement about the implied warranty of merchantability.
A) It assumes that every purchase involves the informed consent of a buyer.
B) It shifts the burden of proof from producers to consumers.
C) It allows a business to completely disown any promise or warranty.
D) It holds that a business has a duty to ensure that its products will accomplish their purpose.
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29) The ethics implicit within the ________ approach assumes that when consumers adequately understand products well enough, they can reasonably be expected to protect themselves.
A) contract
B) caveat venditor
C) tort
D) caveat lector
30) The implied warranty of merchantability shifts the burden of proof from
A) producers to consumers.
B) producers to suppliers.
C) consumers to producers.
D) suppliers to consumers.
31) Which of the following is the ethical basis for implied warranty of merchantability?
A) Manufacturers would not sell a product if they had reason to believe that their product would harm consumers during normal use.
B) Consumers would not consent to purchase a product if they had reason to believe that they would be harmed by it during normal use.
C) Consumers understand products fully, and they are free to choose not to purchase certain things.
D) A prudent business will never seek to limit its liability by explicitly disowning any promise or warranty.
32) Unlike tort law, contract law states that
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A) the only duties that a person owes are those that have been explicitly promised to another party.
B) one owes other people certain general duties, even if one has not voluntarily assumed them.
C) no matter how careful a business is in its product, if harm results from use, the business is liable.
D) the reasonable person standard can be interpreted in various ways.
33) ________, a concept of tort law, provides an avenue for consumers to hold producers responsible for their products.
A) Extortion
B) Negligence
C) Malpractice
D) Battery
34) Tort law holds that
A) the only duties that a person owes are those that have been explicitly promised to another party.
B) manufacturers are accountable in cases where consumers are injured by products and no one is at fault.
C) consumers need complex contracts to protect themselves from all harms that products might cause.
D) people do not owe other people any general duties, if they have not voluntarily assumed them.
35) Which of the following statements is true about negligence?
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A) It is not a central component of tort law.
B) One can be negligent by doing something that one should not.
C) One cannot be held negligent by failing to do something that one should have done.
D) It excludes acts of both commission and omission.
36) In the context of negligence, by applying the standard of ________, a person could escape liability by not actually thinking about the consequences of his or her acts.
A) caveat emptor
B) strict liability
C) respondeat superior
D) actual foresight
37) Which of the following is the ethical perspective that underlies tort law?
A) If it is unfair to hold businesses accountable for harms caused by their products, it is equally unfair to hold injured consumers accountable.
B) Every purchase involves the informed consent of the buyer, and, therefore, it is assumed to be ethically legitimate.
C) We all owe other people certain general duties, even if we have not explicitly and voluntarily assumed them.
D) Consumers would not give their consent to a purchase if they had reason to believe that they would be harmed by it when used in a normal way.
38) BuildWell Constructions Co. is in the process of building a road through a suburb. While building the road, the crew comes across a rocky promontory and decides to blast it irrespective of being aware of a nearby housing district. Flying debris from the blast hit a child playing in a nearby yard and cause a deep laceration on his face. Although BuildWell Constructions was responsible enough to take the usual precautions for such blasting, the child’s parents sue the company for the medical bills, as well as for the child’s distress and misery. Since BuildWell Constructions is held accountable in this scenario, which of the following is the legal approach to product safety that is exemplified here?
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A) caveat emptor
B) normative myopia
C) moral imagination
D) strict liability
39) Identify a true statement about strict product liability laws in the United States.
A) They are highly favored by the business community.
B) They hold that the government must pay consumers in situations where neither the producer nor the consumer is at fault.
C) They hold a business responsible for any harm from product use, even if it is not the result of business negligence.
D) They are similar to the strict liability standards adopted by the European Union.
40) Society creates a strong incentive for businesses to produce safer goods and services by holding them responsible for any harm their products cause. This claim supports the
A) strict product liability standard.
B) actual foreseeability standard.
C) reasonable person standard.
D) consent and informed decision standard.
41) Along with product safety, ________ is another area of marketing that has received significant legal and philosophical attention within business ethics.
A) customer service
B) distribution
C) advertising
D) manufacturing
42) Manipulation focuses on ________.
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A) total control of direction or management
B) deceiving a person
C) taking total control over an individual’s actions
D) guiding or directing the behavior of something
43) A major element of marketing is ________, the attempt to influence a buyer to complete a purchase.
A) sales promotion
B) marketing automation
C) lead nurturing
D) attribution reporting
44) Which of the following are important elements of product placement that seek to determine which audience is most likely to buy and which audience is mostly likely to be influenced by product promotion?
A) lead management and marketing automation
B) target marketing and marketing research
C) pricing strategy and price mix
D) sales pitch and sales promotion
45) The strongest objections to manipulation come from
A) pragmatic ethics.
B) virtue-based ethics.
C) principle-based ethics.
D) consequential ethics.
46) Which of the following statements about manipulation would a strong believer of the principle-based ethical tradition most likely support?
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A) Cases of paternalistic manipulation, in which someone is manipulated for their own good, are acceptable.
B) Manipulation executed without deception is acceptable.
C) Even unsuccessful manipulations are guilty of ethical wrong.
D) The ethical consequence of manipulation depends on the personal characteristics of the manipulator.
47) Marketing practices targeted at elderly individuals for goods, such as supplemental health insurance, and funerals, are subject to criticism because
A) that population is vulnerable.
B) interest gained on such investments are not highly profitable.
C) they target the considered and rational desires of the consumers.
D) they do not abide by the principles of welfare economics.
48) In the context of ethical issues in advertising, which of the following is true of manipulation?
A) Utilitarians would be inclined to think that manipulation increases overall happiness.
B) It is mainly done to further the needs of those manipulated at the expense of the manipulator.
C) It can undermine the very social practices that it is thought to promote as the reputation of sales is lowered.
D) The principle-based tradition in ethics would have the least strong objections to manipulation.
49) According to economist John Kenneth Galbraith, advertising and marketing were creating the very consumer demand that production then aimed to satisfy. The assertion that consumer demand relies upon what producers have to sell is termed
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A) the Hawthorne effect.
B) the dependence effect.
C) the reverse channel effect.
D) the supplemental effect.
50) Which of the following is an implication of the “dependence effect"?
A) Advertising and marketing create consumer wants that result in supply being a function of demands.
B) Advertising and marketing create consumer wants that support the entire economy.
C) Consumer autonomy is being improved by advertising.
D) Consumers are being manipulated by advertising.
51) By creating consumer wants, advertising and other marketing practices violate
A) rights-based ethical tradition.
B) consumer autonomy.
C) free market economy.
D) consumer demand.
52) Advertising distorts the economy by
A) manipulating prices for promotion to gain a foothold in a market.
B) preventing free market economy.
C) internalizing market externalities.
D) creating irrational and trivial consumer wants.
53) A behavioral psychologist is most likely to claim that advertising
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A) cannot create non-autonomous behavior in consumers.
B) cannot violate consumer autonomy by controlling consumer behavior.
C) can control consumer behavior by providing them with all the relevant information.
D) can control consumer behavior by controlling their choices.
54) Consumer vulnerability occurs when
A) a person has an impaired ability to make an informed consent to the market exchange.
B) a person has access to too much information about a product and the market exchange process.
C) the consumer is treated as an end in itself.
D) there are too many manufacturers in the market.
55) Identify an example of consumer vulnerability.
A) Elderly people are susceptible to expensive health care bills.
B) Alcoholics are susceptible to alcohol abuse.
C) Children are susceptible to any bright, attractive items of no practical value.
D) Single women walking alone at night are susceptible to sexual assault.
56) Which of the following is true of general vulnerability?
A) It occurs when a person has an impaired ability to make an informed consent to the market exchange.
B) It occurs when a person is susceptible to some specific physical, psychological, or financial harm.
C) It results from an unsatisfactory market exchange.
D) It results from manufacturers’ inability to satisfy consumer desires.
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57) Consumers are vulnerable when they are not aware that they are subject to a marketing campaign. This type of campaign is called
A) imminent marketing.
B) word-of-mouth marketing.
C) network marketing.
D) undercover marketing.
58) Stealth marketing occurs when
A) consumers receive too much information about a product or service.
B) consumers are subjected to directed commercial activity without their knowledge.
C) consumers fail to properly respond to advertising.
D) consumers understand the true marketing element of an interaction.
59) Marketing experts consider stealth marketing extraordinarily effective because
A) a consumer does not question the message as she might challenge a traditional advertising campaign.
B) a consumer’s guard is not down while accepting a message.
C) consumers do not see the communication as too personal and often tend to trust an advertisement or other marketing material much more than they would trust the communicator.
D) consumers seek out the communicator’s vested interest.
60) An employer is held liable for damages caused by an accident involving an employee driving the company car on company business. Identify the law underlying this decision.
A) the doctrine of caveat emptor
B) the doctrine of respondeat superior
C) implied warranty of merchantability
D) the doctrine of caveat lector
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61) UniCo a multinational corporation that specializes in designing, developing, and selling consumer electronics—outsources manufacturing products to a third-world country company. Human rights activists have criticized UniCo for operating inhumane sweatshops at the manufacturing plants to gain profits. Although UniCo is not directly liable for the labor exploitation, it threatens to pull out its business from the contracted company if the laborers are not provided with dignified wages and good working conditions. Which of the following responsibilities did the company fulfill in this scenario?
A) caveat emptor
B) implied merchantability
C) respondeat superior
D) strict liability
FILL IN THE BLANK. Write the word or phrase that best completes each statement or answers the question.
62) ________ is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
63) While approaching an ethical issue in marketing, the ________ tradition would want to know the degree to which a transaction provided actual as opposed to merely apparent benefits.
64) ________ has received a great deal of attention in the medical ethics literature because patients are at a distinct informational disadvantage when dealing with health care professionals.
65) An adequate ethical analysis of marketing must consider ________, those costs that are not integrated within the exchange of the buyer and the seller.
66) According to the ________ approach, every purchase involves the informed consent of the buyer and therefore it is assumed to be ethically legitimate.
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67) In a(n) ________ case, no matter how careful the business is in its product or service, if harm results from use, the individual or business is liable.
68) The ________ standard of tort law focuses on the sense of responsibility that involves liability or fault.
69) Economist John Kenneth Galbraith claimed that advertising and marketing were creating the very consumer demand that production then aimed to satisfy. Dubbed the ________, this assertion held that consumer demand relied on what producers had to sell.
70) ________ occurs when the harm is other than the financial harm of an unsatisfactory market exchange.
71) Marketing campaigns that are based on environments or activities where the subject is not aware that he or she is the target of a marketing campaign are included under ________ marketing.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
72) List out all the factors considered and the decisions made in the process of marketing.
73) Identify the “Four Ps” of marketing.
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74) Explain the rights-based and the utilitarian perspectives on the situation of an exchange between two parties coming together freely.
75) Summarize the three issues pertaining to marketing ethically.
76) Outline the implication of the social contract tradition within business.
77) Explain the contractual standards for product safety.
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78) Describe the ethical manifestations associated with a contractual standard of product safety.
79) Outline the duties under a contract model, and the ethical perspective that underlies tort law.
80) Explain the concept of negligence.
81) Discuss the constraints of the concept of negligence and explain the reasonable person concept.
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82) Outline how the “reasonable person” concept can be interpreted in different ways. How can it lead to one interpreting this concept normatively?
83) Discuss the claims made by the defenders of the strict product liability standard to justify strict product liability.
84) Explain what the ethical and the unethical means of influencing others include. What is its impact in advertising?
85) Explain the utilitarian perspective of manipulation.
86) Discuss the ethical issues associated with advertising.
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Answer Key
Test name: Test8
1) TRUE
Four general categories product, price, promotion, placement are sometimes referred to as the “Four Ps” of marketing.
2) FALSE
While approaching an ethical issue in marketing, the rights-based ethical tradition would ask to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale.
3) TRUE
A condition for respect requires that consent be not only voluntary, but also informed.
4) FALSE
Empirical studies provide evidence that suggests that greater consumption can lead to unhappiness, a condition called “affluenza.”
5) TRUE
Unsafe products do not further the utilitarian goal of maximizing overall happiness.
6) FALSE
Just because someone wants to buy something and someone else is willing to sell it does not mean that the transaction is ethically legitimate.
7) TRUE
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Externalities show that even if both parties to an exchange receive actual benefits from the exchange, other parties external to the exchange might be adversely affected.
8) FALSE
In a strict liability case, no matter how careful the business is in its product or service, if harm results from use, the business is liable.
9) TRUE
The implied warranty of merchantability holds that in selling a product a business implicitly offers assurances that the product is reasonably suitable for its purpose.
10) FALSE
Most courts will not allow a business to completely disclaim the implied warranty of merchantability.
11) FALSE
Under a contract model, the only duties that a person owes are those that have been explicitly promised to another party.
12) TRUE
Negligence involves the ability to foresee the consequences of one’s acts and failing to take steps to avoid the likely harmful consequences. In many ways, negligence simply codifies two fundamental ethical precepts: “ought implies can” and “one ought not harm others.”
13) TRUE
There are cases in which consumers can be injured by a product and no one is at fault. The legal doctrine of strict product liability holds manufacturers accountable in such cases.
14) FALSE
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The principle-based tradition in ethics would have the strongest objections to manipulation.
15) TRUE
Consumer vulnerability occurs when a person has an impaired ability to make an informed consent to the market exchange.
16) C
The American Marketing Association defines marketing in a way that also suggests that it is at the heart of business activity, “an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”
17) C
The four general categories product, price, promotion, placement are sometimes referred to as the “Four Ps” of marketing.
18) B
The rights-based ethical tradition would see a simple situation of an agreement for an exchange between two parties as upholding respect for individuals by treating them as autonomous agents capable of pursuing their own ends.
19) A
The utilitarian ethical tradition would take an agreement between two parties as evidence that both are better off than they were prior to the exchange and thus conclude that overall happiness has been increased by any exchange freely entered into.
20) C
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The simple situation in which two parties come together and freely agree to an exchange is prima facie ethically legitimate. This assessment is only prima facie because, like all agreements, certain conditions must be met before we can conclude that autonomy has in fact been respected and mutual benefit has been achieved.
21) A
When approaching any ethical issue in marketing, the rights-based ethical tradition would ask to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale.
22) B
When approaching any ethical issue in marketing, the utilitarian tradition would want to know the degree to which a transaction provided actual as opposed to merely apparent benefits.
23) D
A consumer’s consent to purchase a product is not informed if that consumer is being misled or deceived about the product.
24) A
Empirical studies provide evidence that suggests that greater consumption can lead to unhappiness, a condition called “affluenza.”
25) D
The legal doctrine of strict liability is ethically controversial exactly because it holds a business accountable for paying damages whether or not it was at fault.
26) C
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The caveat emptor approach assumes that every purchase involves the informed consent of the buyer; therefore, it is assumed to be ethically legitimate.
27) B
Implied warranty of merchantability holds that in selling a product a business implicitly offers assurances that the product is reasonably suitable for its purpose.
28) D
Many businesses issue a disclaimer of liability (e.g., products are sold “as is"), or offer an expressed and limited warranty (e.g., the seller will replace the product but neither offers any other guarantees nor seeks to cap liability damages) to limit their liabilities by explicitly disowning any promise or warranty.
29) A
The ethics implicit within the contract approach assumes that when consumers adequately understand products well enough, they can reasonably be expected to protect themselves. But consumers don’t always understand products fully and they are not always free to choose not to purchase some things.
30) C
The implied warranty standard shifts the burden of proof from consumers to producers by allowing consumers to assume that products are safe for ordinary use. By bringing goods and services to the market, producers are implicitly promising that their products are safe under normal use.
31) B
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By bringing goods and services to the market, producers were implicitly promising that their products were safe under normal use. The ethical basis for this decision is the assumption that consumers would not give their consent to a purchase if they had reason to believe that they would be harmed by it when used in a normal way.
32) A
Unlike tort law, contract law states that the only duties that a person owes are those that have been explicitly promised to another party. Otherwise, that person owes nothing to anyone. The ethical perspective that underlies tort law holds that one owes other people certain general duties, even if one has not explicitly and voluntarily assumed them.
33) B
Negligence, a concept from the area of law known as torts, provides a second avenue for consumers to hold producers responsible for their products.
34) B
The negligence standard of tort law focuses on the sense of responsibility that involves liability or fault. There are cases in which consumers can be injured by a product in which no negligence was involved. In such cases where no one was at fault, the question of accountability remains. The legal doctrine of strict product liability holds manufacturers accountable in such cases.
35) B
One can be negligent by doing something that one should not (e.g., speeding in a school zone).
36) D
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Negligence involves having the ability to foresee the consequences of our acts and failing to take steps to avoid the likely harmful consequences. The standards of what can be foreseen, however, raise interesting ethical challenges. One standard would hold people liable only for those harms they actually foresaw occurring. But this standard of actual foresight is too narrow because it would imply that unthoughtful people cannot be negligent. By applying this standard, a person could escape liability by not actually thinking about the consequences of his or her acts.
37) C
The ethical perspective that underlies tort law holds that we all owe other people certain general duties, even if we have not explicitly and voluntarily assumed them. Specifically, I owe other people a general duty not to put them at unnecessary and avoidable risk.
38) D
Strict liability is a legal doctrine that holds an individual or business accountable for damages whether or not it was at fault. In a strict liability case, no matter how careful the business is in its product or service, if harm results from use, the individual or business is liable.
39) C
Strict product liability laws in the United States hold a business responsible for any harm from product use, even if it is not the result of business negligence. It raises unique ethical questions. Within the United States, calls to reform product liability laws, and in particular to ease or eliminate the strict product liability standard, have been common.
40) A
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Defenders of the strict product liability standard claim that by holding businesses strictly liable for any harm their products cause, society creates a strong incentive for businesses to produce safer goods and services.
41) C
Along with product safety, advertising is a second area of marketing that has received significant legal and philosophical attention within business ethics. The goal of all marketing is the sale, the eventual exchange between seller and buyer.
42) D
To manipulate something is to guide or direct its behavior. Manipulation need not involve total control, and in fact it more likely suggests a process of subtle direction or management.
43) A
The goal of all marketing is the sale, the eventual exchange between seller and buyer. A major element of marketing is sales promotion, the attempt to influence the buyer to complete a purchase.
44) B
Target marketing and marketing research are two important elements of product placement, seeking to determine which audience is most likely to buy and which audience is mostly likely to be influenced by product promotion.
45) C
The strongest objections to manipulation come from principle-based ethics. This is because when a person manipulates someone, he or she treats him or her as a means to one’s own ends, as an object to be used rather than as an autonomous person in his or her own right.
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46) C
The principle-based tradition in ethics would have the strongest objections to manipulation. Because the evil rests with the intention to use another as a means, even unsuccessful manipulations are guilty of this ethical wrong.
47) A
Marketing practices targeted at elderly individuals for goods, such as supplemental health insurance, and funerals, are subject to criticism because that segment of the population is vulnerable.
48) C
In general, because most manipulation is done to further the manipulator’s own ends at the expense of the manipulated, utilitarians would be inclined to think that manipulation lessens overall happiness. A general practice of manipulation, as critics claim often occurs in many sales practices, can undermine the very social practices (e.g., sales) that it is thought to promote as the reputation of sales is lowered.
49) B
In his book, The Affluent Society, economist John Kenneth Galbraith claimed that advertising and marketing were creating the very consumer demand that production then aimed to satisfy. Dubbed the “dependence effect,” this assertion held that consumer demand depended upon what producers had to sell.
50) D
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One of the three implications of the “dependence effect” is that by creating consumer wants, advertising and other marketing practices violate consumer autonomy. Consumers who consider themselves free because they are able to purchase what they want are not in fact free if those wants are created by marketing. In short, consumers are being manipulated by advertising.
51) B
By creating consumer wants, advertising and other marketing practices violate consumer autonomy. Consumers who consider themselves free because they are able to purchase what they want are not in fact free if those wants are created by marketing.
52) D
Advertising and marketing tend to create irrational and trivial consumer wants and this distorts the entire economy. The “affluent” society of consumer products and creature comforts is in many ways worse off than so-called undeveloped economies because resources devoted to contrived, private consumer goods are therefore denied to more important public goods and consumer needs.
53) D
Psychological behaviorists and critics of subliminal advertising, for example, would claim that advertising can control consumer behavior by controlling their choices. But this is an empirical claim and the evidence suggests that it is false.
54) A
Consumer vulnerability occurs when a person has an impaired ability to make an informed consent to the market exchange. A vulnerable consumer lacks the intellectual capacities, psychological ability, or maturity to make informed and considered consumer judgments.
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55) C
A vulnerable consumer lacks the intellectual capacities, psychological ability, or maturity to make informed and considered consumer judgments. Children would be the paradigmatic example of consumer vulnerability.
56) B
General vulnerability occurs when someone is susceptible to some specific physical, psychological, or financial harm.
57) D
Consumers are vulnerable when they are not aware that they are subject to a marketing campaign. This type of campaign is called stealth or undercover marketing and refers to those situations where we are subject to directed commercial activity without our knowledge.
58) B
We are each vulnerable when we are not aware that we are subject to a marketing campaign. This type of campaign is called stealth or undercover marketing and refers to those situations where we are subject to directed commercial activity without our knowledge.
59) A Marketing experts consider stealth marketing extraordinarily effective because a consumer does not question the message as she might challenge a traditional advertising campaign.
60) B
The doctrine of respondeat superior, Latin for “let the master answer,” holds a principal (e.g., an employer) responsible for the actions of an agent (e.g., an employee) when that agent is acting in the ordinary course of his or her duties to the principal.
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61) C
There is a legal parallel to the idea that a business should be held responsible for the actions of its suppliers. The doctrine of respondeat superior, Latin for “let the master answer,” holds a principal (e.g., an employer) responsible for the actions of an agent (e.g., an employee) when that agent is acting in the ordinary course of his or her duties to the principal.
62) Marketing
According to the American Marketing Association (AMA), marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
63) utilitarian
While approaching an ethical issue in marketing, the utilitarian tradition would want to know the degree to which a transaction provided actual as opposed to merely apparent benefits.
64) Informed consent
Informed consent has received a great deal of attention in the medical ethics literature because patients are at a distinct informational disadvantage when dealing with health care professionals. Similar disadvantages can occur in marketing situations. Outright deception and fraud clearly violate this condition and are unethical.
65) externalities
An adequate ethical analysis of marketing must consider externalities, those costs that are not integrated within the exchange between buyer and seller.
66) caveat emptor
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The caveat emptor approach understands marketing on a simple model of a contractual exchange between a buyer and seller. This perspective assumes that every purchase involves the informed consent of the buyer and therefore it is assumed to be ethically legitimate.
67) strict liability
In a strict liability case, no matter how careful the business is in its product or service, if harm results from use, the individual or business is liable.
68) negligence
The negligence standard of tort law focuses on the sense of responsibility that involves liability or fault.
69) dependence effect
In his 1958 book, The Affluent Society, economist John Kenneth Galbraith claimed that advertising and marketing were creating the very consumer demand that production then aimed to satisfy. Dubbed the dependence effect, this assertion held that consumer demand depended upon what producers had to sell.
70) General vulnerability
General vulnerability occurs when someone is susceptible to some specific physical, psychological, or financial harm.
71) stealth
We are each vulnerable when we are not aware that we are subject to a marketing campaign. This type of campaign is called stealth or undercover marketing and refers to those situations where we are subject to directed commercial activity without our knowledge. Stealth or undercover marketing includes marketing campaigns that are based on environments or activities where the subject is not aware that he or she is the target of a marketing campaign.
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72) Even before a product is created, a producer might first consider who, if anyone, is interested in purchasing it. The product might then be redesigned or changed in light of what is learned about potential buyers from market research. Once the product is ready for market, the producer must decide on a price that will be mutually acceptable. At first glance, the minimal asking price should be the production cost plus some reasonable profit. But the producer might also consider who the buyers are and what they can afford, how price might influence future purchases, how the price might affect distributors and retailers, and what competitors are charging before settling on a price. The producer might also consider advertising the product to attract new potential purchasers and offer incentives to promote the product among buyers.
The producer might also consider the lost production that results from the trip to the market and therefore consider hiring someone else, a salesperson, or delegating someone, a “retailer,” to handle the actual exchange itself. Producers might be more concerned with cash flow than profit and therefore be willing to ask a price that is below production costs. They might consider where and under what conditions the product is sold, and they might decide that the best chance for a sale will occur only among certain people. The producer might also consider issues of volume and price the product in such a way to ensure profit only after certain sales targets are met. The producer might also consider how such factors as price, convenience, reliability, and service might contribute to sustaining an ongoing relationship with the customer. Finally, throughout this entire process the producer might conduct market research to gather information and use that information in production, pricing, promotion, and placement decisions.
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73) All of the factors considered and each decision made throughout this process are elements of marketing. What, how, why, and under what conditions is something produced? What price is acceptable, reasonable, fair? How can the product be promoted to support, enhance, and maintain sales? Where, when, and under what conditions should the product be placed in the marketplace? These four general categories product, price, promotion, placement are sometimes referred to as the “Four Ps” of marketing.
74) The simple situation in which two parties come together and freely agree to an exchange is prima facie ethically legitimate. The rightsbased ethical tradition would see it as upholding respect for individuals by treating them as autonomous agents capable of pursuing their own ends. This tradition presumes that each individual will abide by fundamental principles.
The utilitarian ethical tradition would take the two parties’ agreement as evidence that both are better off than they were prior to the exchange and thus conclude that overall happiness has been increased.
This assessment is only prima facie because, like all agreements, certain conditions must be met before we can conclude that autonomy has in fact been respected and mutual benefit has been achieved.
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75) It will be helpful to keep three concerns in mind as one approaches any ethical issue in marketing: The rights-based ethical tradition would ask to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale. It is not always easy to determine if someone is being treated with respect in marketing situations. As a first approximation there are two conditions. First, the person must freely consent to the transaction. A second condition for respect requires that the consent be not only voluntary, but also informed.
The utilitarian tradition would want to know the degree to which the transaction provided actual as opposed to merely apparent benefits. This looks to the alleged benefits obtained through market exchanges. Economics textbooks commonly assume that consumers benefit whenever they make an exchange in the marketplace. But this assumption won’t bear up under close scrutiny. Both parties to the marketing exchange are also not benefited in situations in which one party is injured by the product. Unsafe products do not further the utilitarian goal of maximizing overall happiness. It would also be the case that consumers are not benefited if the desires that they seek to satisfy in the market are somehow contrived or manipulated by the seller.
Every ethical tradition would also wonder what other values might be at stake in the transaction. Such primary social values as fairness, justice, health, and safety are just some of the values that can be jeopardized by some marketing practices. An adequate ethical analysis of marketing must ask who else might be affected by the transaction. One must also ask what the true costs of production are. An adequate ethical analysis of marketing must consider externalities, those costs that are not integrated within the exchange between buyer and seller. Externalities show that even if both parties to the exchange receive
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actual benefits from the exchange, other parties external to the exchange might be adversely affected.
76) The social contract tradition in ethics holds that all ethical responsibilities can be understood with this contractual model, and that the only duties we have are those that we have freely taken on within a social contract. Individual contracts and promises are the basis of ethical duties. The implication of this within the business sphere is that unless a seller explicitly warrants a product as safe, unless, in other words, the seller promises otherwise, buyers are liable for any harm they suffer.
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77) The caveat emptor approach understands marketing on a simple model of a contractual exchange between a buyer and seller. This perspective assumes that every purchase involves the informed consent of the buyer and therefore it is assumed to be ethically legitimate. Buyers have the responsibility to look out for their own interests and protect their own safety when buying a product. From this perspective, business has only the responsibility to provide a good or service at an agreed-upon price.
The social contract tradition in ethics holds that all ethical responsibilities can be understood with this contractual model, and that the only duties we have are those that we have freely taken on within a social contract. Individual contracts and promises are the basis of ethical duties. The implication of this within the business sphere is that unless a seller explicitly warrants a product as safe, unless, in other words, the seller promises otherwise, buyers are liable for any harm they suffer.
In the United States, courts moved away from this caveat emptor approach and recognized an implicit promise, or implied warranty, that accompanies any product that is marketed. What the law refers to as the implied warranty of merchantability holds that in selling a product a business implicitly offers assurances that the product is reasonably suitable for its purpose. Even without a verbal or written promise or contract, the law holds that business has a duty to ensure that its products will accomplish their purpose. In effect, the implied warranty standard shifts the burden of proof from consumers to producers by allowing consumers to assume that products were safe for ordinary use.
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78) Even the simple model of a contractual market exchange would place ethical constraints on the seller. Sellers have a duty not to coerce, defraud, or deceive buyers, for example. Consumers who were injured by a product that was deceptively or fraudulently marketed would have legal recourse to recover damages from the seller. In the United States, courts moved away from this caveat emptor approach and recognized an implicit promise, or implied warranty, that accompanies any product that is marketed. What the law refers to as the “implied warranty of merchantability” holds that in selling a product a business implicitly offers assurances that the product is reasonably suitable for its purpose. Even without a verbal or written promise or contract, the law holds that business has a duty to ensure that its products will accomplish their purpose.
The ethics implicit within the contract approach assumes that consumers adequately understand products well enough that they can reasonably be expected to protect themselves. But consumers don’t always understand products fully and they are not always free to choose not to purchase some things. In effect, the implied warranty standard shifts the burden of proof from consumers to producers by allowing consumers to assume that products were safe for ordinary use. By bringing goods and services to the market, producers were implicitly promising that their products were safe under normal use. The ethical basis for this decision is the assumption that consumers would not give their consent to a purchase if they had reason to believe that they would be harmed by it when used in a normal way.
If law will hold business liable for implicit promises, most businesses will seek to limit its liability by explicitly disowning any promise or warranty. Thus, many businesses will issue a disclaimer of liability (e.g., products are sold “as is"), or offer an expressed and limited warranty (e.g., the seller will replace the product but neither offers any other
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guarantees nor seeks to cap liability damages). Most courts will not allow a business to completely disclaim the implied warranty of merchantability.
79) Under a contract model, the only duties that a person owes are those that have been explicitly promised to another party. Otherwise, one owes nothing to anyone. The ethical perspective that underlies tort law holds that we all owe other people certain general duties, even if we have not explicitly and voluntarily assumed them.
80) Negligence is a central component of tort law. As the word suggests, negligence involves a type of ethical neglect, specifically neglecting one’s duty to exercise reasonable care not to harm other people. Many of the ethical and legal issues surrounding manufacturers’ responsibility for products can be understood as the attempt to specify what constitutes negligence in their design, production, and sale.
Negligence can be characterized as a failure to exercise reasonable care or ordinary vigilance that results in an injury to another. In many ways, negligence simply codifies two fundamental ethical precepts: “ought implies can” (we cannot reasonably oblige someone to do what they cannot do) and “one ought not harm others.” People have done an ethical wrong when they cause harm to others in ways that they can reasonably be expected to have avoided. Negligence includes acts of both commission and omission. One can be negligent by doing something that one ought not or by failing to do something that one ought to have done.
Negligence involves the ability to foresee the consequences of our acts and failing to take steps to avoid the likely harmful consequences.
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81) The standards of foreseeability raise interesting challenges. One standard would hold people liable only for those harms they actually foresaw occurring (actual foreseeability). Thus, for example, a company would be acting negligently if it brought to market a car that it knew, on the basis of engineering tests, had a fuel tank that would puncture and explode during crashes at speeds below 30 miles per hour. But this standard would also imply that unthoughtful people cannot be negligent, since one escapes liability by not actually thinking about the consequences of one’s acts. “I never thought about that” would be an adequate defense if we used this standard of negligence. Yet this surely is not an ethically adequate excuse for harming innocent people. A preferable standard would require people to avoid harms that, even if they haven’t actually thought about, they should have thought about had they been reasonable. This “reasonable person” standard is the one most often used in legal cases and seems to better capture the ethical goals of the very concept of negligence. People are expected to act reasonably and are held liable when they are not.
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82) We expect people will act in ways that would be normal or average. A “reasonable” person does what we could expect the ordinary, average person to do. But the average person doesn’t always read, or understand, warning labels or terms of service. The average person standard when applied to consumers might exempt too many consumers from responsibility for their own acts. Especially when applied to producers, the average person standard sets the bar too low. We can expect more from a person who designs, manufacturers, and sells a product than average, especially if the product is intended to an adolescent or teen consumer.
These factors lead many to interpret the reasonable person standard as a standard of thoughtful, reflective, and judicious decision making. The problem with this, of course, is that we might be asking more of average consumers than they are capable of giving. Particularly if we think that vulnerable consumers deserve greater protection from harm, we might conclude that this sense of reasonable is too stringent a standard to be applied to consumer behavior. On the other hand, given the fact that producers do have more expertise than the average person, this stronger standard seems more appropriate when applied to producers than to consumers.
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83) Critics single out the strict product liability standard as especially unfair to business because it holds business responsible for harms that were not the result of business negligence. The rationale often used to justify strict product liability is problematic. Defenders of the strict product liability standard, including juries who decide in favor of injured consumers, often reply with two major claims. First, by holding business strictly liable for any harm their products cause, society creates a strong incentive for business to produce safer goods and services. Second, given that someone has to be accountable for the costs of injuries, holding business liable allocates the costs to the party best able to bear the financial burden.
84) There are ethically good and bad ways for influencing others. Among the ethically commendable ways to influence another are persuading, asking, informing, and advising. Unethical means of influence would include threats, coercion, deception, manipulation, and lying. Unfortunately, all too often sales and advertising practices employ deceptive or manipulative means of influence or are aimed at audiences that are susceptible to manipulation or deception.
85) The utilitarian tradition would offer a conditional critique of manipulation, depending on the consequences. According to this tradition, there can be cases of paternalistic manipulation, in which someone is manipulated for their own good. But even in such cases, unforeseen harms can occur. Manipulation tends to erode bonds of trust and respect between persons. It can erode one’s self-confidence and hinder the development of responsible choice among those manipulated. In general, because most manipulation is done to further the manipulator’s own ends at the expense of the manipulated, utilitarians would be inclined to think that manipulation lessens overall happiness.
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