Marketing Ethics: Enhancing Firm Valuation and Building Competitive Advantages

Abstract

Marketing ethics plays a critical role in forming, maintaining and sustaining long-term customer relationships. An ethical marketing practice is a key factor of organization’s success because it affects the organizations’ capability to build strong relationships with customers, and accordingly, it is one of the organizational drivers enhancing Customer Lifetime Value (CLV). The CLV of a customer represents the amount the customer will contribute to the bottom line of the firm over the span of the business relationship with them. Ethical marketing are 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. The ethical reputation of the organization results in customer trust which in turn leads to satisfaction and commitment to the organization and hence builds competitive advantages. Research provides various marketing ethics frameworks and valuation matrix along with numerical illustrations to understand how marketing ethics help organizations in improving overall performance and ultimately firm valuation.

Keywords: Marketing ethics, Customer satisfaction, Customer trust, Customer loyalty, Customer lifetime value, Firm valuation