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  • Published on: 14th September 2019
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Ethics for the Professions

Marketing Ethical Issue

Red Bull Deceptive Advertising

Fall-2017-PHIL-32400-005

Dr. Schlossberger

Jonny Harkin

Red Bull

Red Bull are a company from Austria who produce energy drinks and their famous slogan was ‘Red Bull gives you wings'. The ethical issue in this case is that an american customer, named Benjamin Careathers, sued Red Bull North America Inc for deceptive advertising. This was because Red Bull does not give you wings and contains on average the same amount of caffeine as a cup of coffee. Furthermore, he had been drinking their energy drinks for 10 years and had not seen any improvements in his academic or athletic performance. Therefore, the word ‘wings' and they way in which Red Bull energy drinks were marketed insinuated that the consumer would be lifted more than a cup of coffee with insufficient scientific evidence to support this claim.

Step 1:

Identify the options and define the problem

The ethical problem in this case was whether or not red bull deceptively advertised their energy drink. Clarksons Business Law states that it is Deceptive Advertising ‘if a reasonable consumer would be misled by the advertising claim.' (Clarkson, 2014). Each party in this situation has two options. The first party is Benjamin Careathers and his options are that he can decide to sue or not sue Red Bull. His individualistic decision put pressure on a company to make a decision they were not expecting to have to make. The next party is Red Bull Inc, and their options are to reject or accept the claim that they deceptively advertised their product. The third and final party in this situation is the judge in the U.S legal system, and their options are to find Red Bull Inc guilty or not guilty.

Step 2

Identifying relevant factors and How they apply

Given the options that are available to each party I would say that there is a conflict of interests. Careathers' fits with the individualist model proposed by Milton Friedman which states that business decisions should ‘maximize shareholder value by any legal means' (Friedman, 1962) . This is because he is only interested in the effect on himself. Whereas, Red Bull Inc fit with the Schlossberger Community model that business decisions should ‘increase shareholder value by serving society' (Schlossberger, 1993) This is because they identified a target audience for their product and have advertised collectively to those whose lifestyles require access to energy. In order to ensure the most ethical and fair decision can be made all parties should adopt the universality principle which is ‘a common ground of rules and regulations that apply to everyone, if everyone then follows along' (Schlossberger, 1993).

Step 3:

Analyze the Situation

Red Bull Inc marketed their energy drink as superior over any other source of caffeine. This was the reason that Careathers decided to sue them as there is no proof that this is true. However, Red Bull does contain on average the same amount of energy as a cup of coffee, therefore does it really matter that it does not contain more, there would be more of an ethical sue if it were to contain less. Moreover, the marketing could lead to a placebo effect where consumers experience an increase in energy merely based on the fact that they were told that they would. In order to support this Red Bull could conduct research on the effect of energy levels with caffeine and placebos.

Step 4:

Weigh the Ethical Factors

Benjamin Careathers sued Red Bull for deceptive advertising, and he was the only customer out of millions to do so, therefore showing the individualism of taking Red Bull Inc to court. Because of this, could it be seen as unethical of Careather? As he is trying to get money out of a profitable organization after supporting them as a customer for 10 years. If Careathers really had such a problem with Red Bull then surely he would not have continued to purchase the product and continue to support the company. Moreover, the Red Bull Slogan was obviously metaphorical and they were in no way insinuating that after drinking their product, consumers would develop wings. Alternatively, yes Red Bull may have stated that they have benefits over other energy drinks, but doesn't every company do that in a competitive market? Red Bull are also well known for their corporate social responsibility, through the sponsoring of extreme events by providing free products and also sponsoring up and coming athletes. Moreover, it is key to note that although their product is not better than alternatives, it is also no worse. If a customer bought a red bull for energy, they would feel energized.

Step 5

Calculate the Results

The result of this ethical issue was that Red Bull were found guilty of Deceptive Advertising and the company agreed to pay out around $13.5 million after settling the lawsuit.

Conclusion

The way in which the company settled the lawsuit was very utilitarian. This was because any customer who purchased a Red Bull product between 2002 and 2014 would be given a $10 refund or $15 worth of Red Bull products. Therefore, if no one would have sued Red Bull then the same would have applied to all, and no one would have received anything. However, because one person came forward, Red Bull decided to ethically apply and involve all of their customers in their decision. In my opinion, this was a smart move as by settling it they avoided any confrontation or bad publicity. Also, Red Bull got to be seen to be the good guys by giving out free products to consumers who never would have known, or even cared, that their products had no real benefit over alternatives such as a cup of coffee. Moreover, most customers were fully aware that after drinking a can they would not be developing wings! Since the settlement Red Bull have moved away from the ‘Gives you wings' slogan and now market with the safer option of ‘Vitalizes body and mind'.

Bibliography

Clarkson, Kenneth W., et al. Business law 13th Edition. Cengage Learning, 2014.

Friedman, M. Capitalism and freedom. Chicago: University of Chicago Press, 1962. Schlossberger, Eugene. The ethical engineer. Temple University Press, 1993.

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