Consumers don't always behave ethically. Unethical behaviour may range from the relatively trivial – such as accepting too much change when given in error, using expired coupons, or using and then returning a product – to the definitely illegal, such as shoplifting or credit card fraud.
And while most consumers accept that the above acts are unethical, the purchasing of counterfeit products, or the illegitimate sharing and copying of copyrighted products, are seen by many perpetrators as completely legitimate activities.
"While each act may be small, when you aggregate the small amounts of money involved, it's huge," says Nitika Garg, an associate professor in the school of marketing at UNSW Business School.
"Other consumers suffer the losses, as the costs are ultimately passed on to them."
Garg has conducted an experiment to investigate the impact that emotions – specifically, anger and fear – have on the propensity of a consumer to behave ethically.
Essentially, subjects were asked to recall a situation where they had experienced anger or fear – and were then presented with a scenario with an ethical dilemma about receiving too much change in a restaurant.
The experiment discovered that subjects experiencing fear were more likely to behave ethically, and own up to receiving too much change. Conversely, those experiencing anger were less likely to behave ethically.
Moreover, if the amount of money involved was increased, this increased the propensity of the 'fearful' group to behave ethically, while having no impact on the 'angry' group.
'Part of being ethical is having your inner moral compass, but it's also about social norms'
– nitika garg
Garg believes her research can give pointers to retailers and marketers in how to encourage consumers to behave more ethically. On one level, this may just be about putting shoppers in a better state of mind.
"Positive emotion in general is helpful, and anger is stubborn – so make shopping more pleasant, with nicer employees, and more pleasant surroundings," Garg says.
At the other end of the scale, it's about a company clearly communicating with its consumers.
"The big message is, you really need to make consumers aware of the harm being caused by unethical behaviours. The true cost of small transgressions by individuals is staggering. It's not just your two dollars – it's billions."
Garg feels there is a particular issue with illegal downloading, as there is a strong perception from consumers that no one is being harmed. This in turn is driven by the remoteness of the process.
"Part of being ethical is having your inner moral compass, but it's also about social norms," she says. "If you're in the online world, with no one likely to catch you, it makes you bolder."
Ultimately, though, Garg believes any successful attempt to improve ethical behaviour in consumers rests on a company's wider message. If businesses are – and can be seen to be – part of the community, consumers will feel more connected, and so behave more ethically.
"The key issue from the research is that emotions impact on us in many ways, and can not only be used to drive down unethical behaviour, but also to drive up or promote positive behaviour," says Garg.
Fight emotion with emotion
Rumi Shah, founder of Panthera Marketing Agency in Melbourne, notes that the unethical behaviour in the experiment was passive, and wonders whether active unethical behaviour – such as shoplifting – would be different.
"With shoplifting, the fear is there, irrespective of the amount of money involved. Also, with being caught shoplifting, there's a strong element of shame, in that other people will see when you're caught."
Importantly, the decisions being made in the experiment occur in a split second. "These kinds of decisions can't be affected by corporate communications, but they can be affected by atmosphere of the shop," Shah says.
He contrasts two kinds of shopping experience to illustrate the point. In the first case, imagine shopping in a hardware store, where you're not sure what you want, and the busy staff aren't as helpful as you would like them to be. In this scenario, Shah suggests many consumers wouldn't return any extra change offered.
The second case is a store such as cosmetics retailer Sephora or coffee emporium Nespresso, which, in Shah's words, "engage all the five senses".
"These places smell incredible, with lots of people who want to help you. You're already feeling good, and if you were given too much change, you'd give the money back," Shah says, while pointing out that consumers pay a premium for this level of service.
"You have to fight emotion with emotion. If you send out a corporate newsletter, saying 'we're losing money because of …' no one will take any notice."
'If you appeal to people's sense of fairness, as opposed to instilling fear … you may get a better result'– fred schebestA
Appeal to fairness
For Fred Schebesta, CEO and co-founder of financial comparison website Finder.com.au, when it comes to something your business is doing, it's very important to know where your customers' emotional responses are positioned.
"From a customer services and product delivery perspective, you want to smooth out as fast as possible the places where customers can get angry," he says. "The people who know this best are airlines."
Similarly in the case of fear, Schebesta cites the example of how some consumers are using virtual private networks (VPN) to circumvent the geo-blocking on services such as Netflix.
"If you put out a press release about virtual private networks to an audience that is majority compliant, like those already paying for Netflix, then you'll generate compliance. However, if you're dealing with a non-compliant audience, such as people who routinely use BitTorrent to access free content, it will have the opposite effect."
Schebesta cites the example of the distributors of the award-winning film Dallas Buyers Club, who took legal action against individual illegal downloaders. While the action led to compliance in some, others were just made angry.
Interestingly, though, as Schebesta points out, in countries where there is a lot of fear, there can also be massive non-compliance. "Authoritarianism breeds rebellion. In a country like Vietnam, everyone pays in cash, in order to avoid paying tax," he says.
Schebesta believes that if a company is thinking about the emotional responses of their customers, perhaps the most powerful is an appeal to fairness. Telcos are a case in point here, which routinely offer unlimited deals, in the knowledge that few customers will really explore what this allows.
"Telcos appeal to a sense of fairness – they don't use fear, and definitely not anger," Schebesta says.
"In our business, we hope that people will click through to services from our site, as opposed to contacting companies directly – because that's how we make money. The split of people doing this is around 50/50, although customers are not actually saving any money by not clicking through."
Finder.com.au has now put up messaging on its site to explain this, which has led to a 2% to 5% increase in customers clicking through.
"In general, I believe people are pretty ethical," says Schebesta. "They could get away with a lot more. If you appeal to people's sense of fairness, as opposed to instilling fear – such as the distributors of the Dallas Buyers Club movie appealing to illegal downloaders in a different way – you may get a better result."