1.1 Background to the study

This study was about ethical marketing and customer satisfaction in telecommunications companies using MTN Nigeria as a case study. The application of ethics in marketing is a very complex area that involves some very tough questions about what is right or wrong. Marketing managers more specifically are being increasingly examined and disapproved by the people. They are quizzed on issues such as making false claims about products, manufacturing inferior products, charging the consumer more than the product is worth, using deceptive advertising practices and using irresponsible sales techniques (Hisrish and Peters, 2002). Ethical marketing involves activities that ensure that the products meet and exceed their needs. A company that uses ethical marketing  will  gain  the  respect  and  trust  of the customers they target and interact with and will result in overall customer satisfaction over the long term as well as translate to greater benefits all round.

The study is important because it examined the effects of ethical marketing and customer satisfaction in telecommunications companies and ethical marketing as in any big company like MTN is important in marketing because marketing staff are the representatives of the organization in its dealing with buyers. Secondly, sound ethical code in dealing with buyer is essential to the creation of long term relationship and the establishment of customer goodwill and satisfaction as noted by Drucker, (1994). More so, marketing staff are probably more exposed to the temptation to act unethically than most other employees. Generally, many people cannot distinguish between temptation and opportunity. Many employees including marketers had misconstrued temptation to be opportunities, thereby involving themselves in sharp practices that denied them of their lucrative jobs.

 The historical development of ethical marketing can be traced back to the early 20th century during which businesses in the developed world were faced with the antitrust and consumer protection concerns. Sharp and Fox (1937) in their work on business ethics based on the concept of “fair service” stated “it was possible to reduce their study of fair service to the principles of fair salesmanship”. They looked at commercial coercion, the limits of persuasion, fair pricing, and the ethics of bargaining. Within the academic history of marketing, one of the first articles that appeared in the Journal of Marketing was an article by Phillips C. F. (1939) entitled, “Some Theoretical Considerations Regarding Fair Trade Laws.” In this article, ethics was not directly addressed, but the impact of resale price maintenance on competition, especially channel members and customers, was addressed. Following these works, most academic publishing  in the 1950s focused on issues such as fair trade, antitrust, advertising and pricing.

In the 1960’s, the Consumers’ Bill of Rights and 70's that addressed the growing ecological problems, such as pollution and the waste disposal saw the rise of marketing ethics and the rise of consumerism and in 1962, President John F. Kennedy delivered a “Special Message on Protecting the Consumer Interest,” in which he outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard in what is known as the Consumers’ Bill of Rights (Ferrell, Fraedrich, and Ferrell, 2005). In 1967, Bartels introduced the first comprehensive model for ethics in marketing. This model explained the variables that influence marketing ethics decision making and tried to determine the logical basis of ethical thinking and a scheme to analyze these variables thus providing a framework for social and personal ethics in marketing decisions.

Ferrell and Weaver (1978) provided insights into organizational relationships that influence marketing mangers’ ethical beliefs and behavior. Empirical research in the 1970s set the stage for frameworks that describe ethical decision making within the context of a marketing organization. From 1980’s to 2000's, Ferrell and Gresham (1985) emphasized the importance of organization culture, coworkers, and explained how ethical decisions are made, their model has been tested to provide a grounded understanding of ethical decision making. In following years, many models and frameworks for ethical decision making were developed. In the 1990s, Gundlach and Murphy (1993) built a normative framework for relational marketing exchanges based on the ethical exchange dimensions of trust, equality, responsibility, and commitment.

 In addition, Gundlach and Murphy (1993) concluded that ethical marketing exchanges require a managerial emphasis on ethical corporate culture, ethics training programs, and on ethical audits. Using virtue-based theories of ethics, they point out that ethical marketing exchanges require a managerial emphasis on ethical corporate culture, ethics training programs, and on ethical audits. They note that virtue-based ethics focuses on the individual and the organization (i.e., relational partner) rather than just the decision-making process or the problem laden with contextual moral dilemmas and in so doing, customer satisfaction can be achieved. While trust and commitment are essential elements for ethical marketing, several ‘moral’ norms, values, and virtues, such as, integrity, fairness and justice, respect, empathy, and transparency can help facilitate customer- brand relationship.

Dunfee, Smith and Ross (1999) suggest the Integrative Social Contract Theory (ISCT) that links the decision-making process, multiple communities and ethical judgments based on the dominant legitimate norms. This framework can be used by marketers who frequently engage in difficult relationships and cross-cultural activities as it emphasizes the exchange relationship between the firm and its stakeholders, including the right to exist and even prosper in society. This theory can be used to bridge normative and descriptive research in marketing ethics (Dunfee, Smith and Ross, 1999) and when used effectively results in trust, repeated sales and hence customer satisfaction. In the 2000's, ethics in the world of business became a major issue with scandals associated with Enron, WorldCom, Tyco, Sunbeam, and Arthur Andersen. These activities resulted with Sarbanes-Oxley Act in 2002. After these scandals, the importance of the ethical issues and the importance of having a relationship based on trust with stakeholders is emphasized by many researchers (Murphy, Laczniak, Bowie and Klein, 2005).