Ethical Considerations versus Marketing
Recalling a product is potentially an expensive operation and can have a negative impact on the reputation of a business. If a business is to recall a product, they must carefully consider the implications of doing so, but conversely they must also consider the implications of not doing so.
Consider the example of Toyota who failed to recall a car which had a known issue with its accelerator, resulting in the death of a family driving one of their cars. The reputational damage to Toyota in the United States was significant and was largely attributed to the delay in recalling the vehicles to rectify the problem (Dietz and Gillespie, 2012).
Jolly and Mowen (1985) performed a study which examined the factors influencing the decision to perform a product recall and found that companies that were seen to be acting in a socially responsible manner were considered more positively than those who did not, so a product recall can be in the best interest of the company and the customer. In the case of Toyota, a prompt product recall would have resulted in significantly less negative publicity and potentially prevented the death of a customer.
We have established that modern marketing is not just about selling but building a relationship with customers and sustaining these relationships. To ensure that relationships are sustained companies must operate in an ethically acceptable manner for the culture in which they are operating. Kotler and Armstrong (2014, pp.623) argue that good ethical marketing practices are the key to sustainable business, acknowledging however that it is often subjective as the appropriate moral stance.
To recall or not to recall?
Kumar and Budin (2006) argue that marketing and public relations are key to a business surviving a recall crisis.
In the scenario of being tasked with making the decision to manage a product recall, it is hard to know which decision to make without first knowing the type of product and the potential level of danger to the consumer. A responsible marketer will consider the implications of a product recall on the safety of consumers but should also consider the reputational damage which could be caused. The risk of recalling a low value product with a high potential for reputation damage may be worth taking but a high value product with a low potential for reputation damage may not be worth recalling.
If we decide not to recall the product and hope that an improved product will quietly replace the faulty product over time without impact to customers, then a marketer must consider the following questions: What is the financial cost of a product recall? What if the “cover-up” is discovered? Would the damaging publicity outweigh the negative publicity of a product recall? Does the company not have a duty to protect its customers?
The same questions should also be considered if the opposite decision were to be made. However, what is clear is that the outcome must be managed carefully by the marketing team to minimise reputational damage (Burnett, 1999).
Burnett, J. (1999) ‘A strategic approach to managing crises’, Public Relations Review, 24(4), pp. 475–488, ScienceDirect. [Online]. Available from: http://www.sciencedirect.com.ezproxy.liv.ac.uk/science/article/pii/S036381119980112X (Accessed: 25 January 2014).
Dietz, G. & Gillespie, N. (2012) ‘The Recovery of Trust: Case studies of organisational failures and trust repair’, Institute of Business Ethics. [Online]. Available from: http://www.ibe.org.uk/userfiles/op_trustcasestudies.pdf (Accessed: 26 January 2014).
Jolly, D. & Mowen, J. (1985) ‘Product Recall Communications: the Effects of Source, Media, and Social Responsibility Information’, Advances in Consumer Research, 12, pp. 471-475. [Online]. Available from: http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=6436 (Accessed: 26 January 2014).
Kotler, P. & Armstrong, G. (2014) Principles of Marketing, 15th Edition. London: Pearson Education Ltd.
Kumar, S. & Budin, E. (2006) ‘Prevention and management of product recalls in the processed food industry: a case study based on an exporter’s perspective’, Technovation, 26(5), pp. 739–750, ScienceDirect. [Online]. Available from: http://www.sciencedirect.com.ezproxy.liv.ac.uk/science/article/pii/S0166497205000817 (Accessed: 26 January 2014).