Lecturer, Madawalabu University, Addis Ababa, Ethiopia
Received date: June 08, 2015 Accepted date: June 27, 2015 Published date: June 30, 2015
Citation: Abdulnasir AM (2015) Marketing Ethics Practices of Small Businesses and their Effect on Consumer Purchase Intention: An Empirical Investigation from Addis Ketema Sub-city. J Account Mark 4:133. doi:10.4172/2168-9601.1000133
Copyright: © 2015 Abdulnasir AM. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
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Marketing ethics is the subset of business ethics, which deals with the systematic study of how moral standards are applied to marketing decisions, behaviors and institutions. Within the marketing ethics field, the presumption of the unit of analysis as a large firm has always been the norm. In recent years, however, recognition that this narrow approach is in appropriate has been rising. This paper also investigates marketing ethics practices of small business firms, in Addis Ketema sub city and their effect on consumers’ purchase intention. In order to do so, the researcher first collected data from consumers and used both qualitative and quantitative type of research to know the effect of unethical marketing practice of cloth shops on consumers purchase intention. In the process of collecting data, the researcher took 291 small sized cloth shop consumers using a Time Location sampling technique. After data collection, it was analyzed using descriptive statistics techniques, like tables and percentages, mean, standard deviations, graphs, frequency and logistic regression (inferential statistics). The result of this study showed that small sized cloth shops in Addis Ketema sub-city exhibit unethical marketing practice in the area of product and price ethics. Additionally, it was found that consumers have purchase intention even if firms’ behavior was found to be unethical. Finally, the researcher concluded that the unethical practice of marketers may lead to consumers’ lack of confidence in the market and recommended awareness programs, strengthening consumer protection act as well as establishment of consumer associations in the area.
Marketing ethics; Unethical practices; Small businesses; Cloth shops; Purchase intention; Logistic regression
Business enterprises today are acting as a center for entertaining community needs not only for their profit but also with the expectation to meet standards of responsible business conduct that go beyond what had been expected traditionally. Although people more often than not still speak of business in terms of products, jobs, and profits, the world understood and accepted that a business enterprise always remains a member of its community . Because of being member of the community and the growing need of consumers, business enterprises main concern for ethical problems in business, and particularly in marketing have increased over the past decades. Additionally, globalization of economies and the growing internationalization of companies brought an increasing number of managers to confront with various ethical problems in the markets they are operating . Marketing ethics is the sub set of business ethics  which shares similar terms and concepts with business ethics. Accordingly, Marketing ethics deals with the systematic study of how moral standards are applied to marketing decisions, behaviors and institutions. According to Vermillion, et al.  the awareness of marketing ethics have created a general trend in business thought and practice towards focusing greater attention upon the parallel or intersecting interests of buyers and sellers within marketing interactions. Value, formerly conceptualized within the context of discrete transactions (a “transactional focus”), is now often comprehended to derive primarily from the development and maintenance of long-term relationships with customers, suppliers, and other stakeholders.
Within the marketing ethics field, the presumption of the unit of analysis as a large firm has always been the norm. In recent years, however, recognition that this narrow approach is in appropriate has been rising. Hence, studies on the topic of smaller businesses and ethics can be found in both business and ethics journals, but have been regional in perspective . Addis Ketema sub-city is one of the densely populated areas in Addis Ababa city where many small business enterprises dominate the market area. According to micro and small enterprise development agency a small enterprise can be defined as an enterprise having the number of employees from 6-30 and with capital of Br 1,500,000 for manufacturing and Br 500,000 for service sector. The importance of small businesses in Ethiopia can be seen by the great focus of government to the sector. Not only Ethiopian and other African countries but also governments world-wide have come to terms with the fact that Small Business Enterprises (SBEs) contribute enormously to the growth and development of a nation’s economy . Having the fact that small business enterprises contribute enormously to the growth and development of nation’s economy, there are various sectors under this enterprise, which need proper control in their marketing activity. Among those sectors, which are found in Addis Ketema sub-city is clothing sector of which retailing clothing stores, generally referred to as ‘boutiques’, dominate the market. Despite the great contribution of small businesses, there are ethical issues in the market, which create problems to the consumer. Among those problems, the mixing of new and secondhand clothes , price fixing, and selling poor quality products are some. Thus, the researcher aimed to assess ethical issues arising in the marketing ethics practices of small sized cloth shops in Addis Ketema sub-city and their effect on consumers’ purchase intention.
The general objective of this study is to assess the marketing ethics practices of small businesses and their effect on consumers purchase intention in Addis Ketema sub-city.
While assessing marketing ethics practice of small businesses, the study focused on the following specific objectives:
a. To describe the issue of product safety among small sized cloth shops in Addis Ketema sub-city.
b. To assess the ethical issues in small sized cloth shops regarding pricing (like price fixing, skimming price, and price discrimination).
c. To examine business firms’ product assortment practice in Addis Ketema sub-city.
d. To analyze the effect of unethical marketing practice of small sized cloth shops on consumers’ purchase intention in Addis Ketema sub-city.
Definitions and concepts
The ability to recognize and deal with complex business ethics issues has become a significant priority in twenty-first-century companies. In recent years, a number of well-publicized scandals resulted in public outrage about deception and fraud in business and a demand for improved business ethics and greater corporate responsibility .
Business ethics comprises the principles, values, and standards that guide behavior in the world of business. While discussing about business ethics it covers a vast area like human resource, finance, operations, and marketing. For the sake of this study, only the marketing area was covered.
Marketing and marketing ethics
Marketing: A key focus in the marketing discipline is the boundary-spanning role between the firm and its ever-changing environments, or more precisely to foster exchange of its outputs, i.e. products and services with the environment, where customers represent a key constituency. Furthermore, the marketing discipline is not static rather it can be- considered “a living organism” addressing new phenomena as they emerge, creating and adapting new concepts, theory and methodologies to create new insights and influencing the firms’ activities . According to Perreault, et al.  defined Marketing as the performance of activities that seek to accomplish an organization’s objectives by anticipating customer or client needs and directing a flow of need satisfying goods and services from producer to customer or client. Despite the idea of satisfying customer needs, the practical market situation exhibited the interaction of customers and organizations for the sake of achieving profitability by giving less consideration for customer satisfaction.
Marketing ethics: Scholars define marketing ethics from different angles but the essence is similar. While applying moral standards scholars used different approaches. For example, Laczniak  defined Marketing ethics from a normative perspective approach as practices that emphasize transparent, trustworthy, and responsible personal and organizational marketing policies and actions that exhibit integrity as well as fairness to consumers and other stakeholders. On the other side, Laczniak  explained marketing ethics from Positive perspective as the principles and standards that look at marketing practices from the standpoint of “what is.” From the stakeholder point of view Pride and Ferrell  defined Marketing ethics as principles and standards that define acceptable marketing conduct as determined by various stakeholders. In general, marketing ethics is defined as the systematic study of how moral standards apply to marketing decisions, behaviors, and institutions . Despite the application of marketing ethics in different organizations, the media’s focus has related primarily to large, publicly traded corporations. However, the issue of ethical behavior and indiscretion in business is a concern for all companies, regardless of size . Therefore, the concept of marketing ethics is equally important for both small and large enterprises but its application differs from small to large enterprises.
According MSEDA micro and small enterprises were defined as follows; Micro enterprises involved in industry sector are those enterprises with the number employees less than five and Total Asset of less than Br 100,000.00. Additionally, for service sector the Total Asset is less than Br 50,000.00 with the same number of employees. For Small enterprises involved in the industry sector, the number of employees is between 6-30 with Total Asset of Br 1,500,000.00 and for service sector, the Total Asset is Br 500,000.00. Additionally, it is on the strategy paper that if conflicting situation exist between the number of employees and total asset to define the sector total asset takes place in the first place.
Theories of marketing ethics
From the definitions of marketing ethics, we can understand that the aim of marketing ethics is not mere legal compliance; rather it is about moral judgments. Besides this, the definitions show us that there are different approaches and theories in marketing ethics. Because of the vast nature of ethical theories, however, this study will focus on Consequentialist theory and deontological theories.
One of the philosophical theories which is consequence based is consequentialist theory. According to Ferrell, et al., consequentialist theory is sometimes referred to as teleological and when you are attempting to decide what is right or wrong, consequentialist theories focus attention on the results or consequences of the decision or action. In other words, Trevino and Nelson  explained this theory as a moral philosophy in which an act taken as morally right or acceptable if it produces some desired result such as pleasure, knowledge, and career growth, the realization of self-interest, utility, wealth, or even fame. Among the most widely known consequentialist theories, utilitarian theory and egoism are the major ones. Egoism defines right or acceptable behavior in terms of its consequences for the individual. As stated by Trevino and Nelson , Egoists believe that they should make decisions that maximize their own self-interest, as defined differently by each individual. Depending on the egoist, self-interest includes constructs as physical well-being, power, pleasure, fame, a satisfying career, a good family life, wealth, or something else. In an ethical decision making situation, an egoist will probably choose the alternative that contributes most to his or her self-interest. On the other hand, unlike egoism, utilitarian theory seeks to make decision that maximizes group interest. Ferrell explained this idea, as ‘Utilitarianism is probably the best-known consequentialist theory. According to the principle of utility, an ethical decision should maximize benefits to society and minimize harms. What matters is the net balance of good consequences over bad for society overall’ .
On the opposite side of consequentialist theory is deontological theory, which is interested on the right of individuals and on the purposes associated with a particular behavior. ‘Deontology (from the Greek word for “ethics”) refers to moral philosophies that focus on the rights of individuals and on the intentions associated with a particular behavior rather than on its consequences. Fundamental to deontological theory is the idea that equal respect must be given to all persons. Unlike utilitarian’s, deontologists argue that there are some things that we should not do, even to maximize utility. For example, deontologists would consider it wrong to kill an innocent person or commit a serious injustice against a person, no matter how much greater social utility might result from doing so, because such an action would infringe on that person’s rights as an individual. The utilitarian, however, might consider as acceptable an action that resulted in a person’s death if that action created some greater benefit. Deontological philosophies regard certain behaviors as inherently right, and the determination of this rightness focuses on the individual actor, not society. Thus, these perspectives are sometimes referred to as non-consequentialism an ethics based on respect for persons’ . Deontological theory does not focus on consequences of an issue and a decision passed by deontologists may not be appropriate by consequentialists as their view of ethics is different. However, if we combine the good aspect of the two theories it will be better to understand ethical decision making in its broad sense.
Marketing practices and ethical issues
Business practices are often under attack because business situations routinely pose tough ethical dilemmas . Therefore, at the heart of marketing ethics are decisions that marketing practitioners make about ethical questions. Ethical questions most often arise in marketing when a stakeholder group or some segment of the public feels that the actions taken by some (or many) marketers might be judged morally inappropriate.
According to Kotler and Armstrong  product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. One of the most common faults in ethical decision-making is to ignore the long-term consequences of a decision. Although most organizations try hard to produce a product or service of high quality, many do not take the time to identify all stakeholders and think long term about the consequences of their decisions . Ethical issues surrounding the management of products are central to marketing because the marketing process generally begins with a product (broadly defined to include goods, services, or ideas). The most common ethical concerns in this area pertain to the safety of products . Having the fact that product safety is central to marketing failing to think long term may bring firms to be out of the market. Supporting this Trevino and Nelson  stated that; ‘Obviously, a major ethical obligation of any organization is to produce a quality product or service. Just as obviously, nothing will put a company out of business faster than offering a product that is dangerous, poorly produced, or of inferior quality. Competition in the marketplace generally helps ensure that goods and services will be of a quality that is acceptable to consumers’.
Pricing raises ethical issues in the market. Among the areas, Blythe  identifies price fixing, predatory pricing (pricing below the cost of production in order to bankrupt competitors) and not revealing the full cost of purchase as the major ethical issues in pricing. Supporting the above-mentioned idea Laczniak  stated that ‘Perhaps no area of managerial activity is more difficult to assess fairly and to prescribe normatively in terms of morality than the area of pricing. The given price of a product or service commonly results from the confluence of three factors: demand, competition, and cost. Each of these factors can be central to ethical questions about pricing fairness. For example in an attempt to gain dominant market share, strong competitors may use predatory pricing (below cost pricing) to drive economically challenged sellers from the marketplace.
Most retailers and retail stores must decide on three major variables for their success : product assortment, services mix, and store atmosphere. Product assortment refers to the arrangement of products in a shelf so that buyers will be attracted to it. The retailer’s product assortment should differentiate the retailer while matching target shoppers’ expectations. One strategy to meet customer expectation is to offer merchandise that no other competitor carries. Some of the ethical issues raised in product assortment include mixing of low quality product with high quality, arranging only high priced products, and arranging products and selling them separately that should be delivered in set.
Firm behavior and purchase intention
Studies of consumers’ increasing interest in obtaining information related to ethical issues are encouraging. However, contradictory researches exist with respect to consumers’ tendency to support or reject ethical and unethical practices of firms irrespective of their awareness levels . Business firms’ ethical behavior is understood to be the behavior or action of firms that should be performed and can be considered as right, which can affect consumers’ perception about the firm . As stated by Schermerhorn, et al.  perception was defined as the process by which people select, organize, interpret, retrieve, and respond to information from the world around them. Perception is a way of forming impressions about oneself, other people, and daily life experiences. It also serves as a screen or filter through which information passes before it has an effect on people. Because perceptions are influenced by many factors, different people may perceive the same situation quite differently. And since people behave according to their perceptions, the consequences of these differences can be quite substantial in terms of what happens next. Consumers should not value ethical behaviors highly if all they do is meet the reference point, or expectation. On the other hand, if ethical behavior is the reference point against which corporate behavior is evaluated, unethical behavior should be seen as a failure to attain the reference point and thus viewed as a loss. When we come to marketing ethics, it is generally accepted that customer satisfaction is one of the most important factors in successful business strategy. Although a company must continue to develop, alter, and adapt products to keep pace with customers’ changing desires and preferences, it must also seek to develop long-term relationships with customers and its stakeholders. According to Ferrell et al.  for most businesses, both repeat purchases and an enduring relationship of mutual respect and cooperation with their customers are essential for success. By focusing on customer satisfaction, a company continually deepens the customer’s dependence on the company, and as the customer’s confidence grows, the firm gains a better understanding of how to serve the customer so the relationship may endure. Therefore, being ethical yields profit for business organizations is it small or large.
Based on the above theoretical and empirical literatures the researcher has developed the following conceptual framework. Transactions between consumers and business firms take place in the market. While making the transaction business firms may behave either ethically or unethically in their marketing practice. In this study, three marketing ethics practices (issues) are selected and firms behavior toward those practices are taken in to account. Hence, consumers may have purchase intention if the firm behaves ethically. On the contrary, consumers may not have a purchase intention if firms behave unethically. However, there are situations where consumers possess a purchase intention even if the firm behaves unethically. That is why a broken line was drawn from unethical firm behavior to consumer purchase intention (Figure 1).
Description of the study area
According to the finance and economic development bureau report on demography addis Ketema sub-city is neighbored by Gullele subcity in north, Arada sub-city in east, Lideta in south, and Kolfe Keranio sub-city in west. Besides this, the sub-city has 10 kebeles and 6 market places in its kebeles. The sub-city has a total population size of 255,092 within 8.98 km2 area. This shows that this sub-city is the most densely populated area in Addis Ababa with 25,560 populations per km2.
The study used both qualitative and quantitative approaches in order to assess unethical marketing practices and their effect on consumer purchase intention.
The target populations in this study, hence, were consumers of male and female clothes in Addis Ketema Sub-city who attended Merkato area from March 30 to April 27, 2013 within the daytime excluding Sunday.
Sample size and procedure
Sample size: As the number of consumers is infinite and is difficult to prepare source list, the researcher used survey from infinite population. In this case, the researcher calculated sample size from the total population using
n=sample size of small business owner managers
Z=Standardized normal variable and its value that corresponds to 95% confidence interval equals 1.96
e=Allowable error (0.06)
Accordingly, the sample size was determined to be 267 plus 10% contingency (294 consumers) to compensate invalid responses.
Sampling procedure: The researcher used time location sampling as a probability sampling technique that can solve the problem of constructing sample frame. The researcher organized and conducted the data collection along with three assistants on days of the week except Sunday. While doing this, the researcher first gathered information on high traffic cloth market places in Merkato area and selected four areas, namely ‘Adarash area’, ‘Tana gebeya’, ‘Amede tera’, and ‘Dubai tera’ assigning A1, A2, A3, and A4 respectively as a code for the areas. Accordingly, the researcher used lottery method to decide on the location, where the chosen area was selected on the first free day of the week and the data was collected from all respondents who were available and willing to respond between 8:30 am and 5:00 pm.
Data type and sources
The study used both primary and secondary sources of data in order to gather relevant information.
Data collection technique and instruments
In this study, the unit of analysis was made at individual level whereas; the unit of data collection was the consumers of small business products (cloth). The data was gathered from 294 consumers in Addis Ketema sub-city using time location sample. Self-administered questionnaire was used as a tool in order to collect primary data. Moreover, the researcher reviewed documents from secondary data.
The instruments were developed based on the objectives of the study and research questions. The principles of questionnaires such as, use simple and clear languages, statements should not be too long and use of appropriate punctuations is also considered when developing the instrument. In this study the researcher used a 5 point likert scale questionnaire and firms’ ethical or unethical behavior was determined using the mean score of items in the questionnaire as used by Singhapakdi et al. . That is, for the first specific objective (product safety and information) there are eight items and the likert scale is expected to have a minimum mean score of 8 (1*8) and a maximum of 40 (5*8). Therefore, a total mean score nearer to the maximum range implies there is unethical behavior and a minimum score implies ethical behavior. The remaining items in the likert scale follows similar pattern as discussed above.
A pilot study was conducted to refine the methodology and test instrument such as a questionnaire before administering the final phase.
An internal consistency reliability test was conducted (yielding a cronbach alpha value of 83.57) in Addis Ketema sub-city with a sample of 291 consumers.
Data processing and analysis
Data processing: The researcher performed the data editing, coding, data entry and data cleaning activity in order to check the consistency of the data that were collected from the respondents. As far as data entry is concerned, the researcher used EpiData version 3.1 to enter the data gathered using questionnaire.
Data analysis: The researcher employed both qualitative and quantitative methods of analysis. The researcher applied qualitative method of analysis for short answers collected from respondents though the designed questionnaire. Quantitative way of analysis was also applied for the data, which were collected from small sized cloth shop consumers through structured questionnaire. Additionally, the researcher used statistical analysis tool (logistic regression) and descriptive statistic to interpret the results, which were calculated using SPSS 16 software.
Demographic characteristics of the respondents
According to the survey result of the researcher, there were 161 male respondents and 80 female respondents who participated in the study totaling 241 respondents. From this, female respondents account 33.2% whereas male respondents account 66.8% (Figure 2).
With regard to the age of respondents the survey result shows that 72 female and 121 male respondents fall in the category of 18-29 forming 80.1%, 8 female and 39 male respondents fall in the category of 30-49 forming 19.5%, and 1 male respondent fall in the category of 50-64 forming only 0.4% (Table 1). This shows that most of the respondents were in young age group category (Figure 3).
|% within sex||90.0%||75.2%||80.1%|
|% within sex||10.0%||24.2%||19.5%|
|% within sex||.0%||.6%||.4%|
|% within sex||100.0%||100.0%||100.0%|
Table 1: Age of the respondent by sex.
The other item, education, reveals that majority of the respondents were under the category of diploma and above. To explain this, 5 of the respondents with 2.1% were illiterate whereas 10 of the respondents were categorized under 4-8 class forming 4.1%. The other 65 of the respondents with 27% were under the category of 8-12 class, 105 of the respondents were under the category of diploma forming 43.6%, and the remaining 56 respondents with 23.2% were under the category of first degree and above. This shows that most of the respondents can easily be communicated (Figure 4). In relation to the purchase frequency of respondents 52 of them said they are frequent buyers accounting for 21.6%, 163 of them said they are moderate accounting for 67.6%, and the remaining 26 respondents said they rarely purchase cloth items from the small businesses accounting for 10.8%. This shows majority of the respondents were frequent and moderate purchasers (Table 2).
Source: survey, 2014
SD=strongly disagree, D=disagree, U=undecided, A=agree, SA=strongly agree, X=mean, M=mode, SD=standard deviation, PQ=providing poor product quality,OP=outdated products, AT=absence of truth telling, SSC= selective service for some consumers, SAS=sell products as if unavailable in other stores, PC=pressuring consumers to purchase poor quality product, NRD=not returning defective product
Table 2: Product safety issues.
Product safety and information among small sized cloth shops
As stated by Laczniak  ethical issues surrounding the management of products are central to marketing because the marketing process generally begins with a product (broadly defined to include goods, services, or ideas). Hence, the most common ethical concerns in this area pertain to the safety of products. Accordingly, 8 issues pertaining to product safety (product quality, outdated product, absence of truth telling, excuse for timing problem, selective service for some clients, sell product as if unavailable in other stores, pressuring consumers, and not returning defective products) are described below.
Based on the survey result of the researcher 87 consumers with 36.1% showed their agreement on provision of poor quality products by small sized cloth shops while 84 respondents with 34.9% disagreed on the provision of poor quality products by small sized cloth shops. The remaining 70 respondents with 29% remain undecided on this issue. Holding the above results, the product quality issue scored a mean of 2.96. From the above finding, it is clear that small sized cloth shops in Addis Ketema sub-city provide poor quality products to their consumers. In countries, like Ethiopia, it is common practice to provide inferior quality products with low cost, mainly because of the economic status of the society. This was supported by a comment from one of the respondents saying ‘I have been active consumer from the small sized cloth shops but what makes me feel bad is the inferior quality of products they provide and I am forced to purchase that product because I do not have enough money’. In fact, we cannot conclude economic capacity alone forces people to purchase inferior quality products. However, there are many factors, one of which is absence of consumer protection act. Some business firms provide inferior quality products at a price where good quality product should be provided (like providing Chinese jeans trouser instead of Turkish jeans at a price of Turkish jeans). Concerning this, another respondent commented that ‘I am forced to purchase inferior quality products while I am expecting good quality products mainly because no one is controlling firms’ activities’. The issue of controlling firms’ activity is one of the major ingredients in consumer protection act. This is in line with what Reddy and Rampersad  addressed in their study about consumer protection act in South African businesses.
The survey result shows 93 respondents with 38.5% showed their disagreement that small sized firms provide outdated products. Whereas, 72 respondents wit 29.9% showed their agreement that firms provide outdated products. The remaining 76 respondents with 31.5% remain neutral. Overall, the item scored a mean value of 2.82. Even though providing outdated products is unethical whether in food and medical products or cloth products, it is more critical in food and medical products. However, as the study is about being ethical or not it is necessary to look at the provision of outdated products in cloth shops. The survey result shows that the ethical practices outweigh unethical ones in small sized cloth shops. That is, the finding shows that most of small sized cloth shops do not provide outdated products. Hence, small sized cloth shops seem to be ethical in this aspect.
Absence of truth telling
With regard to absence of truth telling the survey shows that most of the respondents (104 respondents) showed their agreement that small sized cloth shops do not tell truth about the product yielding 43.1%. On the contrary, 93 respondents showed their disagreement that small sized cloth shops do not tell truth about the product yielding 38.6%. The remaining 44 respondents are in dilemma whether to say they agree or disagree yielding 18.3%. Overall, the item absence of truth telling scored a mean of 3.05. Table 2 above describes the summarized results. According to Vermillion et al.  the awareness of marketing ethics have created a general trend in business thought and practice towards focusing greater attention upon the parallel or intersecting interests of buyers and sellers within marketing interactions. Consumers, being one of the stakeholders, need to get accurate information about what they are purchasing. If they do not get true information, then they get dissatisfied. Accordingly, the above finding shows that small sized cloth shops do not tell the complete truth about product, implying small business firms’ loss credibility and in the long run their market might be collapsed (Figure 5).
Do not excuse for timing problem
As Figure 4 above shows majority of the respondents (109 respondents) showed their disagreement that small sized cloth shops do not excuse for timing problem, which yields 45%. Whereas, 94 respondents showed their agreement that small sized cloth shops do not excuse for timing problems yielding 39%. The remaining 38 respondents remain neutral with only 16%. Additionally, this item has a mean score of 2.9. Business firms sometimes face the problem of delay in products that can cause dissatisfaction of consumers. However, business firms try to reduce the dissatisfaction of consumers by giving excuse. As indicated in the finding, most small sized cloth shops excuse for consumers when they face delay. This implies that most small sized cloth shops tend to be ethical by excusing to their consumers for timing problem.
Selective service for some clients
When consumers purchase commodities, they may face discrimination from the marketers. This was supported by the survey result among cloth consumers in Addis Ketema sub-city. Accordingly, 112 respondents showed their agreement on the existence of selective service for some clients yielding 46.5%. Whereas, 83 respondents showed their disagreement that small sized cloth shops give selective service for some clients yielding 34.5%. The remaining 46 respondents remain neutral on the issue with 19%. The mean score for this item was found to be 3.1. From the above finding, we can understand that discriminating consumers exist among small sized cloth shops in the sub-city. Discriminating consumers involves providing a good service or product to one consumer and denying it to the other where the two consumers should be treated equally. Especially, in small business firms, where most of the businesses are family owned, marketers may provide superior satisfaction to what they claim their best friend or relative. This paves the way to be unethical in business environment.
Sell products as if they are unavailable in other stores
As indicated in Table 3 most of the respondents (127 respondents) showed their agreement that small sized cloth shops sell products as if the products are unavailable in other stores yielding 52.7%. On the other hand, 81 respondents showed their disagreement that small sized cloth shops sell products as if unavailable in other stores yielding 33.6%. The remaining 33 respondents were neutral having only 13.7%. According to Table 2, this item has a mean score of 3.23. Deceiving consumers is one of the unethical marketing practices that make consumers dissatisfied. One way of deceiving consumers is to tell them one of the products in their store is unavailable everywhere in the market and sell it to them. As indicated in the finding of the study majority of the respondents think they are deceived by small sized cloth shops implying the existence of unethical practice in this aspect.
Source: survey, 2014
CSP=charge set price or a single item
PHP=providing high priced products deliberately
CSP=charge skimming price
FP=fixing price of products
CDP=charging different price for similar product
Table 3: Pricing issues.
Pressuring consumers to make purchase
Pressuring consumers to make purchase is one of the issues that create uncomfortable situation for purchasers. According to the survey result, however, majority of the respondents with 101 respondents showed their disagreement that small sized cloth shops pressure consumers to make purchase of poor quality products yielding 41.9%. On the contrary, 93 respondents showed their agreement those small sized cloth shops pressure consumers to make purchase yielding 38.6%. The remaining 47 respondents with only 19.5% reported that they are neutral. The above Table 3 briefly depicts that this item accounted 2.91 mean score. Sometimes marketers persuade consumers to purchase products that they do not intend to buy. In fact, one of the objectives of marketing is persuading and marketers try to persuade consumers to achieve their marketing goal. However, some business firms over utilize their persuading skill to pressure consumers in to making poor quality product and they become un-ethical. The finding on this aspect indicates that pressuring consumers in to making poor quality product does not exist at large in small sized cloth shops. This implies unethical behavior in this aspect does not exist in small sized cloth shops.
Not returning defective products
According to the response of consumers, 121 respondents with 50.1% showed their agreement that small sized cloth shops do not return defective products when in fact they have to return it. Whereas 83 respondents showed their disagreement that small-sized cloth shops do not return defective products yielding 34.5%. The remaining 37 respondents with 15.4% remain neutral. Overall, this item in the scale of product safety accounts 3.28 mean score. Business firms may sometimes deliver defective products to consumers and some consumers request business firms to return the defective products. Ethical business firm does not want to argue on defective products; rather they accept the return with excuse. However, unethical firms do not want to accept the return. In case of small sized cloth shops in the sub-city, most respondents took the affirmative side. That is, they affirmed that not returning defective products exist among small firms. This implies that firms are in unethical practice in this aspect. In general, the eight items mentioned above scored a total mean of 24.25, which is above the average and near to the maximum score. As stated in the methodology a maximum total mean score among unethical issue implies unethical behavior. Thus, product safety (expressed in terms of product quality, outdated products, absence of truth telling, not excusing for timing problem, selling products as if unavailable in other stores, provide selective service for some clients, pressuring consumers, and not returning defective products) have a tendency towards the maximum score. This implies the existence of unethical practice in the product safety aspect (Table 3).
As indicated at the beginning, pricing ethics consists five items in it, namely; charging set price for a single item, providing high priced product deliberately, charging skimming price, price fixing, and charging different price for the same product. Therefore, results of each of the five items are discussed above and the summary is described in Table 3.
Charging set price for a single item
According to the survey result of the researcher majority of the respondents (111 respondents) showed their disagreement that small sized cloth shops charge set price for a single item or product which accounted for 46.1%. On the other hand, 71 respondents with 29.5% showed their agreement that small sized cloth shops charge set price for a single item or product. The remaining 59 respondents with 24.5% remain neutral. Overall, the first item exhibited a mean score of 2.81. Kotler and Armstrong  defined product as anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Most of the time, a group of products under a single package appear in the market. One example could be a mobile phone with accessories. In the case of clothes, a trouser with shirt or jeans with belt and perfume appear in the market. However, some marketers separate the sets and sell them separately, each set having the set price. Therefore, the above finding indicates that small sized cloth shops are not largely involved in selling a set of products separately at high price, which implies non-existence of unethical behavior in charging set price for a single item.
Providing high priced products only
The other pricing issue is providing high priced products deliberately whereas low priced products were available in the shop. With respect to this issue majority of the respondents (110 consumers) with 45.6% showed their disagreement that small sized cloth shops provide high priced products deliberately. On the contrary, 98 respondents with 40.7% showed their agreement that small sized cloth shops provide high priced products deliberately. The remaining 33 respondents with 13.7% remain neutral. This item, from the list of pricing issues, scored a mean of 2.91. Normally speaking, any business is expected to satisfy consumers by providing products that they desire. The above finding also shows that most respondents think small business firms do not provide high priced products only, rather they provide other choices for consumers. This implies unethical behavior does not exist among small sized cloth shops in this aspect.
Charging high price
The third item from the list of pricing issues is charging high price (skimming price) for products whereas the products should be sold at normal price. Accordingly, the survey result shows majorities of the respondents (94 consumers) with 39% showed their agreement that small sized cloth shops charge high price for products. However, 88 respondents with 36.5% showed their disagreement that small sized cloth shops charge high price for products. The remaining 59 respondents with 24.5% remain neutral and the overall mean score for this item was found to be 3.01. Charging high price for products that should be sold at normal price is common among marketers who think they will get very high profit within a short period. However, most consumers resist such a pricing strategy as it makes purchasing difficult to them. The above finding also shows that charging high price exists among small sized cloth shops, which implies the existence of unethical behavior in small business firms.
The other element, which majority of the respondents said it exists is price fixing. According to the survey result, 112 respondents with 46.4% showed their agreement that small sized cloth shops fix price with their associates. On the opposite side, 69 respondents with 28.7% showed their disagreement that small sized cloth shops fix price. The remaining 60 respondents with 24.9 % said they are neutral making the overall mean score of this item 3.24. In times where there is no tight control on the environment, some business firms form a group. This group serves them to decide on business issues and to manipulate the market for their purpose. One of the major effects of this group (cartel) is price fixing where firms decide on products price and consumers will be forced to purchase at the designated price. The above finding also implicated that small sized cloth shops are involved in this unethical act.
Charging different price for the same product
Finally, The survey result for pricing issues showed that charging different price for the same item or product exist among small sized cloth shops. This was supported by the response of consumers in which 141 respondents with 58.5% showed their agreement that firms charge different price for the same product, 58 respondents with 24% showed their disagreement that firms charge different price for the same product, and 42 respondents with 17.5% remain neutral. Overall, this item scored a mean value of 3.49.
In situations where small business firms sell a product to different consumers at different prices, consumers trust on small business will be degraded. The loss of trust among consumers on the other hand creates unethical market behavior. Hence, the above finding implies that consumers are discriminated by small sized cloth shops in Addis Ketema sub-city, which is unethical practice. In general, the abovementioned issues that are related to price have scored a total mean score of 15.46. As stated in the methodology part, a five item has a minimum of five and a maximum of twenty five score and a mean score near to the maximum is perceived as unethical. Therefore, price ethics, with a mean score of 15.46, tend to be unethical market practice.
Product assortment issues
The survey result on product assortment issue holds the result of three items, namely changing brand of product, providing high priced products only, and providing products separately from its set (Table 4).
Source: survey, 2014
CHP = combine high quality with low quality product
AHP = arranging high priced products only
SPS = selling products separately that should be provided as a set
Table 4: Product assortment issues.
Combine high quality with low quality product
According to the survey result of the researcher, majority of the respondents (107 respondents) with 44.4% showed their agreement that small sized cloth shops change the brand of products. On the other hand, 69 respondents with 28.6% showed their disagreement that firms change brand of the product. The remaining 65 respondents with 27% remain neutral. In general, this item scored a mean value of 3.18. Some business firms deceive consumers by providing a product that is similar to the original one. By providing the counterfeited product business firms try to get abnormal profits and behave unethically. The above finding also shows that small sized cloth shops in Addis Ketema sub-city change brand of forfeited cloth with the original one and sell it as an original cloth. Hence, there is unethical business practice in this aspect.
Arranging high priced products only
With respect to providing high priced products majority of the respondents (111 consumers) with 46.1% showed their disagreement that small sized cloth shops provide high priced products only. However, 65 respondents with 26.9% showed their agreement that firms provide high priced products only and the remaining 65 respondents with 27% remain neutral. This item scored a mean value of 2.79. The above finding shows that small sized cloth shops in Addis Ketema subcity do not exhibit unethical practices in the area of arranging high priced products only.
Selling products separately from the set
The last item from placement issues, providing products separately from the set, scored a mean value of 3.11. Additionally, 106 respondents with 44% showed their agreement that small sized firms provide products separately from the set. On the other hand, 84 respondents with 34.8% showed their disagreement that firms provide products separately from the set. The remaining 51 respondents with 21.2% remain neutral.
The above finding shows that small sized cloth shops try to hide or separate products that are to be sold together and they sell it individually. This implies business firms tend to be unethical in the area of providing products separately from the set. Overall, the issue of product assortment ethics scored a mean value of 9.08. As stated in the methodology part, this issue has a minimum mean score of 3 and a maximum score of 15. Therefore, a mean score of 9.08, which is near to the maximum score, implies the existence of unethical product assortment practice among small sized cloth shops in Addis Ketema sub-city.
The effect of unethical marketing practices on purchase intention of consumers: econometric analysis
Consumer purchase intention: According to the survey result, majority of the respondents reported that they intend to purchase cloth products from market areas in Merkato market. That is, 206 respondents with 85.5% said that they intend to purchase cloth from small sized cloth shops. On the other hand, 35 respondents with 14.5% said they do not intend to purchase cloth from small sized firms. This can be seen from Table 5 below. The above finding shows that most of the respondents were having intention to purchase men and women cloth products from Addis Ketema sub-city.
|Not intending to purchase||35||14.5|
|Intend to purchase||206||85.5|
Source: survey, 2014
Table 5: Purchase intention of consumers
In order to answer the fourth specific objective, the researcher tried to use Econometric analysis, with the help of SPSS software, in addition to descriptive statistics. Due to this, as indicated in methodology part, the researcher applied logistic regression model to this particular study. Moreover, for multicollinearity test, the researcher used correlation matrix; in this test result, as a rule of thumb, if the correlation between two independent variables is less than 50%, or Variance Inflation Factor (VIF) is less than 10, it is free from multicollinearity problem. Hence, the data and variables met the assumption underlying the logistic regression model. Accordingly, as per the data indicated by multicollinearity test, the researcher- excluded outdated product from the regression. This is because of the existence of association between outdated product and product quality. Therefore, the researcher decided to drop off outdated product from logistic regression.
Factor analysis: Before fact or analysis is conducted, the adequacy of the data collected from the sample were checked using Bartlett’s Test of Sphericity and Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy. In this study, factor analysis was performed on 15 items (variables) that measure unethical marketing practice. Accordingly, these variables were checked for sampling adequacy using Bartlett’s Test of Sphericity and Kaiser-Meyer-Olkin (KMO). From Table 6 Kaiser-Meyer-Olkin (KMO) test shows that there are probably significant relationships among the unethical marketing practices. As Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy is close to 1 the factors are reliable, 0.845>0.5, Field  and Bartlett’s Test of Sphericity, χ2=848.047, p=0.000<0.05 is statistically significant, which shows that the variables are correlated highly enough to provide a reasonable basis for factor analysis. Hence, it is possible to perform factor analysis for the variables under study. An exploratory factor analysis using principal components has been applied using fifteen items that were obtained from patients. Factors were obtained using varimax rotation and only those factors with an Eigen value greater than one are considered. For factor analysis in varimax rotation convergence established after eight iterations and 54% of the total variance was explained by the first four factors with Eigen values greater than one. According to the result of principal component analysis, four components were extracted with ten items in it using a cutoff point of 0.6. They are Product quality, Absence of truth telling, Excuse for timing problem, Pressuring consumers, Not returning defective products, Fixing price, Store products and sell when price is high, Combine high quality with low quality product, Arranging high priced products only, and Selling products separately from the set (Figure 6).
|Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy||.845|
|Bartlett's Test of Sphericity||Approx. Chi-Square||848.047|
Source: survey, 2014
Table 6: KMO and Bartlett’s test.
From total variance explained table, it was found that the first factor is the most significant which accounts for 16% of the variance of the original items. This is largely loaded with safety of products and thus, this factor is labeled as firms’ product safety ethics. The second factor, which captures 15% of the total information, comprised of two items, and largely loaded by sales; hence, it is labeled as sales ethics. The third factor that comprised of two attributes that shows high loading on pricing issues; so it is labeled as pricing ethics. The fourth factor explains 13.6% of the total variance and is loaded by product assortment. Accordingly, it is labeled as product assortment ethics (Table 7).
|Absence of truth telling||0.667|
|Excuse for timing problem||0.734|
|Not returning defective product||0.715|
|Store products and sell when price is high||0.666|
|Combine high quality with low quality product||0.702|
|Arranging high priced products only||0.727|
|Selling products separately from the set||0.682|
Source: survey, 2014
Table 7: Rotated component matrix.
Binary logistic regression analysis: The four constructs obtained from factor analysis were used for binary logistic regression. Accordingly, each explanatory variable was regressed with the dependent variable and those significant variables were brought to the final model. The result shows that three of the explanatory variables were found to be significant predictors of consumers purchase intention. These are product safety, pricing ethics, and product assortment ethics. Before giving interpretation, it is necessary to assess the model for goodness-of- fit. The model summary of Cox and Snell and Nagelkerke R2 provide some approximations of R2 statistic in logistic regression (Table 8). Cox and Snell’s R2 attempts to impersonate multiple regression’s R2 based on likelihood. In this study, Cox and Snell R2 indicate that 23.9% of consumers purchase intention is explained by the explanatory variables. Nagelkerke’s R2 has a score of 42.5%, which indicates that 42.5% of the variability in the consumers purchase intention was explained by the explanatory variables. Another way of assessing the goodness of the fit model is to see how well the model classifies the observed data. Therefore, we often want to look at the proportion of cases we have managed to classify correctly. The overall accuracy of the model to predict consumer’s purchase intention is shown in Table 9 below. Out of the 241 sampled consumers, 90% were correctly predicted (Table 9). The results of logistic regression analysis are given in Table 10 below. The results revealed that product assortment ethics, product safety ethics, and pricing ethics contributed significantly to the prediction of consumers purchase intention. The results in Table 10 show that unethical product safety, unethical product assortment, and unethical price have a positive relationship with consumers purchase intention with significance at 5%. Therefore, the effect of each of the explanatory variables on the dependent variable is described and discussed as follows. Consumers who strongly agree with the existence of un-ethical product safety practice were 3.560 times more likely to purchase clothes from small sized cloth shops than the reference category (those who strongly disagree with the existence of un-ethical product safety practices) at 5% level of significance. As indicated in the methodology part unethical product safety practice was expected to have a negative effect on purchase intention. However, the finding revealed that firms unethical product safety did not reduce (negatively affect) purchase intention of consumers. This implies that consumers were not punishing unethical cloth shops and in the future, this might cause in the growth of unethical marketers.
|Step||-2 Log likelihood||Cox & Snell R Square||Nagelkerke R Square|
Source: survey, 2014
Table 8: Model summary.
|Purchase intention (v)||Percentage Correct|
|No intention to purchase||Intention to purchase|
|v||No intention to purchase||17||18||48.6|
|Intention to purchase||6||200||97.1|
Source: survey, 2014
Table 9: Classification Table.
|Predictor variables||B||S.E.||Wald||df||Sig.||Adjusted Odds Ratio||95.0% C.I.|
|Product safety ethics (Ref)||14.548||4||.006|
|Price ethics (Ref)||9.765||4||.045|
|Price ethics (1)||.048||.679||.932||1||.334||.501||.123||2.039|
|Price ethics (2)||.518||.661||8.980||1||.003||.163||.050||.533|
|Price ethics (3)||1.568||.776||4.043||1||.044||.284||.084||.969|
|Price ethics (4)||2.447||.915||4.658||1||.031||.327||.119||.902|
|Product ass. ethics (Ref)||11.410||4||.022|
|Product ass. ethics (1)||.067||.596||.487||1||.485||.526||.087||3.193|
|Product ass. ethics (2)||.711||.713||1.354||1||.245||2.363||.555||10.064|
|Product ass. ethics (3)||3.045||1.165||4.353||1||.037||4.830||1.100||21.200|
|Product ass. ethics (4)||3.123||.949||2.485||1||.115||3.325||.746||14.812|
Source: Survey, 2014
Table 10: Variables in the equation.
The relationship between unethical price practice of firms and purchase intention of consumers was also found statistically significant at 5% level of significance. The odds ratio shows that consumers with strong agreement on the existence of unethical price practice are 0.501 times more likely to purchase than consumers with strong disagreement on the existence of unethical price practice. This finding also shows that firms’ unethical price practice did not reduce consumers purchase intention. This was supported by a study conducted in UK under the title “the effect of ethics in purchase behavior”. Hence, the researcher’s prior assumption about the effect of firms’ behavior on consumers purchase intention was not applicable in Addis Ababa context. The finding implies that consumers are non-responsive to unethical product safety practices and this act may lead to loss of product safety in the market. Another variable, which was found statistically significant, was product assortment ethics of small sized cloth shops. Comparing the odds of purchase intention of the consumers based on their agreement, those who strongly agree with the existence of unethical product assortment practice were 0.526 times more likely to purchase from small sized cloth shops than those who strongly disagree with the existence of unethical product assortment practice. This implies that consumers are paying for unethical product assortment practice of marketers and unknowingly they are demoralizing ethical marketers. The above mentioned findings complies with Carrigan and Attalla’s  research result which stated that consumers did not boycott a product which is not from ethical firm. Hence, poor ethical conduct has no effect on purchase intention under UK consumers. Additionally, De Pelsmacker, et al. found out that Belgian consumers’ buying behavior is not consistent with their positive attitude toward ethical products. According to White, et al.  consumers report positive attitudes toward ethical goods, while their intentions and behaviors often do not follow suit. This incompatibility happened because of various reasons, like attitude behavior gap, which is outside the scope of this study. However, Boulstridge and Carrigan, in Carrigan and Attalla  stated that although consumers express willingness to make ethical purchases, the reality is that social responsibility (specifically, marketing ethics) is not the most dominant criteria in their purchase decision.
Outliers and influential diagnostics: The adequacy of the fitted model was checked for possible presence and treatment of outliers, and influential cases. The diagnostic test results for detection of influential values are presented in Appendix I. The minimum and maximum values of the test results for Cook’s influence statistics were 0.00001 and 0.29764, respectively. The DFBETAs for model parameters and Cook’s influence statistic were both less than unity. DFBETAs less than unity implied no specific impact of an observation on the coefficient of a particular predictor variable, while Cook’s distance less than unity showed that an observation had no overall impact on the estimated vector of logistic regression coefficients.
Most of the consumers responded that the small sized cloth shops provide poor quality products that can create dissatisfaction among users of the product. Small sized cloth shops in Addis Ketema sub-city do not tell the complete truth about product to consumers. This implies that small business firms perform un-ethical practice by not telling the complete truth about a product to consumers and hence dissatisfying them. Discriminating consumers exist among small sized cloth shops in the sub-city. Discriminating consumers involves providing a good service or product to one consumer and denying it to the other where the two consumers should be treated equally. Especially, in small business firms, where most of the businesses are family owned, marketers may provide superior satisfaction to what they claim their best friend or relative. This paves the way to be unethical in business environment. One way of deceiving consumers is to tell them one of the products is unique to their store only or it is unavailable in other areas in the market and sell it to them. As indicated in the finding of the study majority of the respondents think they are deceived in such a way by small sized cloth shops implying the existence of unethical practice in this aspect.
Most respondents affirmed that not returning defective products exist among small firms implying that firms are in unethical practice in this aspect. There was unethical behavior from small business firms by charging high price for products that should be fair enough if charged with normal price. Price fixing by forming a group is another unethical practice, which was exhibited among small sized cloth shops. This practice makes firms more powerful than consumers and it narrows the opportunity to purchase freely. The survey result for pricing issues showed that charging different price for the same item or product exist among small sized cloth shops which could create discrimination among consumers. Small sized cloth shops change the brand of products while arranging them, which is common practice now a day. By doing so, firms tell consumers that they have good brand clothes and they sell forfeited ones. Unethical business firms, most of the time, separate products from their accessories that should be delivered as one product. Respondents reported that small sized firms in Addis Ketema sub-city arrange and sell products separately from the set that should be delivered in one set. Unethical product safety, unethical price, and unethical product assortment were reported to have a positive relationship with consumers purchase intention at 5% significance. Theoretically, unethical marketing practices are negatively related to purchase intention of consumers. However, low awareness level about unethical firms, among other things, may reverse the relationship in to a negative one as indicated in the finding.
This section presents researcher’s recommendation based on the finding and conclusion of the study. Therefore, based on the conclusions made in the above section the researcher recommends marketers, consumers, and concerned government bodies the following. It is advisable for concerned government bodies to bring more ethical and competitive firms to the market so that high competition in the market will benefit consumers in a way that small business firms in Addis Ketema sub-city provide quality cloth products. One way to accomplish this could be bringing competitive cooperative firms.
It is better for marketers to tell consumers the complete truth about the product that they are selling. This can be done by establishing a proper information system for cloth products so that the information about products (price, grade, country of production, etc.) can be displayed in major malls. Additionally, the information board help consumers to differentiate those items with supplementary packages. It is worth for small business owners to attach a price tag in the cloths so that they can provide products to consumers without price discrimination. It is highly recommendable for small business owners to establish assurance policy on defective products. This warranty policy helps consumers to return defective cloth products to shops where they purchase the product. The warranty policy not only benefits consumers but also it benefits small business owners in a way that small business owners also get trust from consumers.
It is also advisable for consumers to form a consumer association that can monitor unethical marketing practices in the market like charging high price for products that should be fair enough if charged with normal price. Concerned government bodies like ministry of trade and industry need to speed up the implementation of consumer protection act in the country so that the act protect consumers from price fixing and other unethical market practices. Cloth manufacturers need to attach a sticker to clothes that cannot be easily altered or faded so that their brand may not be easily counterfeited. Additionally, it is better if manufacturers add special tags in the clothes to differentiate them from others. The relationship between firms’ unethical practice and consumers purchase intention brought unexpected result that shows a positive relationship between them. Purchasing products from unethical firms may encourage unethical practices. As a result, it is advisable for chamber of commerce, trade and industry office, and other institutions to conduct a wide range of awareness program for consumers.
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