5-1 Discussion: Ethical Concerns and Effective Marketing

Effective marketing can determine the commercial success or failure of a product or service. In order to be effective, marketing strategies and campaigns must develop a competitive edge in order to keep their product or service in the mind of the consumer. Yet marketing strategies that push if not transcend ethical boundaries can cause a business to lose credibility with customers. List three areas of ethical concern that you as a small business owner have about marketing practices. Provide examples to illustrate and clarify your views. How has the increased used of social media in marketing and gathered information affected ethics and impact on business?

Abstract Capilano is the market leader in Australia's honey processing sector. The company exports to 52 countries. accounting for over 90 per cent of all retail-packed honey exported from Australia. making Capilano one at the most widely distributed Australian food brands internationally. Capi- lano differentiates itself on quality - the unique and premium taste of Australian honey. Hmever. it has faced many challenges on the road to market leadership. As the product is in the mature stage of its product lite cycle. targeting new segments. deveIOping new uses and new forms of packaging. is essential. In recent times. Mamaconscious consumers and watchdog groups have called attention to sugar's negative health consequences. linking high levels ol consump- tion to diabetes. obesity. heart disease and high blood pressure. Capilano has. to date. escaped the bacidash against rened sugar and has managed to successfully differentiate its product from other sugar substitutes. However. it has to be caretul that it does not contravene Federal or State advertising laws. Calm Marketing Challenges Capilano's honey is produced by more than 500 beekeepers with hives across New South Wales, Queens- land. Victoria and Tasmania. Between them, production can reach more than 15,000 tonnes of honey, al- though drought can have a detrimental impact on honey production. The honey market is diverging between Page 2 of 9 Capilano Honey SSAGE businesscases SAGE SAGE Business Cases O Breda Mccarthy 2016 a high-end, speciality product and a low-end, low-cost, relatively undifferentiated product. Competition from supermarkets and from their own privately branded lines is also a threat. In some cases, the supermarkets' own brand is sold so cheaply that it is difficult for the producers or processors to make money. Honey is as- sailed by direct and indirect competition such as syrup, sugars, fruit concentrates and spreads. Capilano has successfully segmented the market, differentiated their product and positioned their honey prod- ucts as a way of enhancing health, beauty and well-being. The marketing manager has aligned marketing strategy with its stage in the PLC. The PLC concept asserts four things (Kotler & Keller, 2012): 1. Products have a limited life.Marketing Challenges Capilano's honey is produced by more than 500 beekeepers with hives across New South Wales, Queens- land. Victoria and Tasmania. Between them, production can reach more than 15,000 tonnes of honey, al- though drought can have a detrimental impact on honey production. The honey market is diverging between Page 2 of 9 Capilano Honey SSAGE businesscases SAGE SAGE Business Cases O Breda Mccarthy 2016 a high-end, speciality product and a low-end, low-cost, relatively undifferentiated product. Competition from supermarkets and from their own privately branded lines is also a threat. In some cases, the supermarkets' own brand is sold so cheaply that it is difficult for the producers or processors to make money. Honey is as- sailed by direct and indirect competition such as syrup, sugars, fruit concentrates and spreads. Capilano has successfully segmented the market, differentiated their product and positioned their honey prod- ucts as a way of enhancing health, beauty and well-being. The marketing manager has aligned marketing strategy with its stage in the PLC. The PLC concept asserts four things (Kotler & Keller, 2012): 1. Products have a limited life.Entering New Market Segments and Increasing Usage Rate Among Users. Capilano has developed food products in the sports nutrition category. Sportspeople are encouraged to use honey; the easy-to-use Honey Shotz product is positioned as a sustained energy boost while training, travel- ling, at work or on the go. The former Ironman World Champion, Guy Leech, is the brand ambassador, and he challenges honey fans to take part in the "Capilano Sweet Shape Up", featuring diet tips, exercise, moti- Page 3 of 9 Capilano Honey OSAGE businesscases SAGE SAGE Business Cases Breda Mccarthy 2016 vational weekly plans and videos. On the brand's website, tips are given on how to incorporate honey into a healthy eating plan. There is a growing trend to use honey for therapeutic purposes. Some honey products, such as Manuka hon- ey and jelly bush honey, have antibacterial and anti-microbial properties which stimulates the healing process. These products attract a premium price and are often sold in health food stores. In 1999, Capilano registered and produced Medihoney (it was subsequently sold to Comvita). It produces Active 5+ Manuka. With the ag-These products attract a premium price and are often sold in health food stores. In 1999, Capilano registered and produced Medihoney (it was subsequently sold to Comvita). It produces Active 5+ Manuka. With the ag- ing of the population, and increased amount spent on health care. the promotion of honey as a therapeutic good provides a large opportunity for the company. Capilano continues to make changes to its product line. In 2012, Capilano Honey launched their first Aus- tralian Certified Organic Honey, connecting with one of the fastest growing food trends, following a strong demand for Australian produce straight from Organic Hive sites. The use of honey as part of a beauty regime is highlighted on the company's website, with Active Manuka honey said to function as a natural moisturiser, rich in vitamins, minerals and natural proteins. Capilano even created two beauty recipes for skincare - an exfoliating body scrub made from Manuka Honey and Coffee and a Manuka Honey and Avocado Face Mask. New Uses, New Applications The Australian market for honey is a mature market and Australians are already high consumers of honey per head relative to other countries. Therefore, increasing usage is an important marketing goal. Honey can be used in cosmetics, as a cough medicine for sick children, as an energy boost for sportspeople, and as an ingredient in food products such as yoghurt. Capilano honey is promoted as a substitute for sugar in cooking. and as a separate flavour base for sauces, marinades and stir-frys. Its Facebook page invites viewers to sub- mit recipes and enter competitions to win prizes.Promoting the diversity of the product has also been achieved through joint promotional campaigns with su- permarkets; for instance Coles' "Meal Ideas" help promote the Capilano honey brand by suggesting how it can be used in their free recipes. Page 4 of 9 Capilano Honey OSAGE businesscases SAGE SAGE Business Cases Breda Mccarthy 2016 Packaging Innovation Much of Capilano's success stems from innovative packaging. It has won several Australian Packaging Awards. For instance, Capilano developed a new "twist and squeeze" and the "upside down pack" which makes it easier to get honey out of the jar. The product Honey Shotz was developed with a "snap and squeeze sachet", designed to deliver a natural energy boost for sports and endurance. In 2012, Capilano won the Women's Weekly Product of the Year (Hall of Fame Category) award.New Challenges The promotion of the positive health attributes of Australian honey has helped Capilano hold onto its number one position. On its website, it states "Honey is a healthy choice - it has no fat, is 100% natural, and pro- vides a lasting energy boost for sports". Honey is a natural substance produced by honeybees. It is composed of a complex mixture of carbohydrates, water and a small amount of proteins, vitamins, minerals and phe- nolic compounds. Fructose, glucose and maltose are the types of sugars present in honey (Cortes, Vigil, & Montenegro, 2011). Bees swarm around their environment to collect nectar, which are sugar-rich liquids from plants. Producing honey from the nectar takes place in the bee hive. It is a group activity and the final compo- sition of honey and its nutritional properties depend on the sources of the nectar, i.e. which flowers are in the vicinity of the beehive. While the fat-free claim is truthful, it is irrelevant. The marketing message is selective in nature and it ignores other product attributes such as the sugar content of honey. CBS News ran a report entitled "Is sugar toxic?" on 60 Minutes, a popular TV programme in the US (Gupta, 2012). It featured the work of Dr. Robert Lustig. an endocrinologist, who gained national attention for his lecture titled "Sugar: The Bitter Truth" in 2009. He claimed that the average American consumes 130 pounds of sugar a year and that excessive sugar con- sumption ! was linked to a range of medical conditions. Scientific studies have linked it to cardiovascular illness and diabetes in teenagers (Pollack et al., 2011) and obesity (Bray, Nielsen, & Popkin, 2004). Sugar is alleged to be as addictive as morphine or nicotine and the removal of sugar creates similar withdrawal symp- toms (Colantuoni et al., 2002). When people think of sugar, they often associate it with refined white sugar, fizzy drinks and confectionary. Yet, sugar is an added ingredient in many products such as yoghurt, sauces.fizzy drinks and confectionary. Yet, sugar is an added ingredient in many products such as yoghurt, sauces, bread, peanut butter and other processed foods. As a result, many consumers find it difficult to estimate how Page 5 of 9 Capilano Honey SSAGE businesscases SAGE SAGE Business Cases Breda Mccarthy 2016 much sugar they consume in their daily diet. People who do not even have a "sweet tooth" may end up con- suming a lot of sugar simply because they do not scrutinise packaging labels. In the light of the sugar debate, there has been growing interest from health conscious consumers in "natural" or "unrefined" sweeteners such as honey. Stevia, agave nectar and coconut sugar. These products, along with naturally-occurring sugars found in dates, figs, raisins and fruit, are put forward as better alternatives to refined sugar. However these claims are controversial. There is some evidence in the literature that honey has health-giving properties. In fact it is claimed that it may be a nutritional dietary supplement for healthy individuals and for those suffering from alterations in gly- caemic regulation, i.e. diabetes (Cortes et al., 2011). Manuka honey, a unique strain of honey produced incaemic regulation, i.e. diabetes (Cortes et al., 2011). Manuka honey, a unique strain of honey produced in New Zealand and Australia from the nectar of the Manuka tree, is regarded as having wound-healing attribut- es, due to its anti-bacterial and anti-microbial properties (Ahmed & Othman, 2013). Writers in the area of sustainable marketing (Fuller, 1999; Martin & Schouten, 2014) argue that environmental claims should be as specific as possible, not general, vague, incomplete or overly broad. They should be substantive and supported by competent and reliable scientific evidence. The same guidelines are applica- ble to health claims. Companies also have to abide by various laws governing advertising and fair trading. In Australia, companies operate within the confines of the Trade Practices Act 1974, which is Federal law, ad- ministered by the Australian Consumer and Competition Commission (ACCC). Under the Act, it is unlawful to make false claims about a product or service and operate in a misleading or deceptive way that might mislead or deceive customers. One example given on the website is where "a business predicts the health benefits of a therapeutic device or health product but has no evidence that such benefits can be attained" (ACCC. 2014). When credence claims are misused the damage is done in three ways: . First, consumers are misled into paying more for a premium feature that does not exist . Second, competitors who can legitimately make a credence claim unfairly lose their competitive ad- vantage; and . Third, innovation suffers when consumers and businesses lose trust in the integrity of claims. There is no global standard in place for natural foods and functional foods, which makes it difficult for con- sumers to make informed purchasing decisions. Capilano has to be careful that it does not make false or exaggerated claims to project a healthy image for its honey than is warranted by actual practice. In the foodindustry, health claims are commonplace, but they are often broad, poorly defined and unsubstantiated by easily accessible, supporting information or by reliable third-party certification. The issue for Capilano is how does it differentiate honey from refined sugar? What are consumers' perceptions of honey? How can it market the health properties of honey without contravening the Trade Practices Act? Summary Capilano has successfully stimulated sales by increasing the brand's users and by increasing usage rate per user. This case study shows how targeting new market segments, developing new products and new forms of packaging, can deliver results. However, new challenges remain on the horizon. The backlash against sugar may have ramifications for Capi- lano. Honey promises health benefits, yet is it simply marketing hype and sophistication? Is Capilano building a "natural" brand or just selling a substitute for sugar? How does it make credible promotional claims without contravening the Trade Practices Act