Target marketing is perhaps the foundation of the marketing concept. The modernization of target marketing and its importance on organizational strategy has revolutionized the roles of marketing managers, researchers, and top management officials. However, in numerous situations this process has generated controversy and has even been criticized as unethical. Products that have been recently identified under such criticisms include lottery tickets, fast food, weight loss products, contraceptives, food supplements, financial services, medical devices, auto insurance and credit cards (Martin & Smith, 1997). In the past five years, the target marketing of alcohol and tobacco products has received the most attention from weary consumers, parents, demographic segments, and public policy figures.

This presentation will focus on the organizational and ethical decisions that challenged the G. Heileman Brewing Company in 1990 upon the introduction of PowerMaster, a potent malt liquor beer. The ethical dynamics of the PowerMaster product and the subsequent market selection issues will be dissected. Finally, the conclusion will reveal that the social marketing and self regulation are prudent alternatives when ethical concerns arise in the marketing process.

Problem Overview

At the start of this decade, alcohol producers faced a declining consumption rate in beer within the domestic United States. The trend in this time-period among beer manufacturers was to target heavy users and revitalize market share and consumption. Beer manufacturers were stymied on how and what to produce in order to revitalize the industry. Prior to 1990, the beer industry experienced numerous marketing advancements which included new names and labeling, different flavors, unique brewing processes, and multi-million dollar advertising campaigns to support these endeavors.

In 1990, the G. Heileman Brewing Company experienced a staggering seventh consecutive drop in annual sales volume (Martin & Smith, 1997). The challenge of developing a new product became increasingly important to Heileman and his Research and Development/Marketing team. In 1991, the company announced plans for a new malt liquor called PowerMaster.

During the early 1990’s, malt liquor was identified as one of the few growth opportunities among beer consumers. Malt liquor is a beverage category which is disproportionately consumed by African Americans and low-income individuals (Martin & Smith, 1997). With a 5.9% alcohol level (65% more than regular beer), PowerMaster was 31% stronger than Heileman’s Colt 45, the current market leader at the time.

The introduction of this product caused an unprecedented backlash of criticism from anti-alcohol groups and black leaders. Further pressure was added from consumer activist groups including The Center for Science in Public Interest (CSPI). This organization created an anti-PowerMaster platform by revealing that 40% of black men had a higher death rate from cirrhosis of the liver than did Caucasians. The CSPI demanded an immediate stoppage in distribution, stating, "higher octane alcoholic beverages have no place on the market, especially in communities where residents already suffer disproportionately from alcohol and other drug problems (Bureau of National Affairs, 1991)."

In June of 1991, the G. Heileman Brewing Company experienced additional resistance from legislative regulators. The Bureau of Alcohol, Tobacco, and Firearms announced that its initial approval of the PowerMaster label was a mistake and required Heileman to drop the word "Power" from the brand name.

The manifestation of the consumer movement against PowerMaster led G. Heileman and his marketing team to thoroughly evaluate the events which took place in less than one months time. On July 3, 1991, Heileman decided to abandon the PowerMaster product line and immediately stop distribution and production.

Target Marketing & Ethics

In the theoretical framework of market targeting, an evaluation of different market segments occurs. Major variables for consumer markets are prioritized based on 4 characteristics: geographic, demographic, psychographic, and behavioral responses are associated with consumer purchasing tendencies (Kotler, 1986). These factors can be used singly or in combination. Social and ethical marketing calls for the segmentation and targeting which serves not just the interests of the company, but also the interests of those targeted (Kotler, 1986). An additional concept must be linked to the PowerMaster situation; the right to be a minority consumer without disadvantage is a recent addition to President John F. Kennedy’s guidelines on consumer rights and protection (Assael, 1995). Thus, in market targeting, the issue is not who is being targeted, but rather how and for what.

Ethics & Organizational Decision Making

Within organizations, the burden of such determinations in target marketing rests in the hands of top management officials. The guidance of corporate objectives, philosophies, and ethics stems from an all encompassing conformity within the organization. The character flaws or decisions made by one individual does not fully define corporate misconduct or ethical deviation. According to Pain (1994, p. 106), unethical business strategies involves "the tacit, if not explicit, cooperation of others and reflects the values, attitude, beliefs, language, and behavioral patterns that define an organization’s operating culture." Pain (1994, p. 106) suggests that the inherent responsibility then lies with managers to ensure compliance, "Ethics, then, is as much an organizational as a personal issue. Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds."

In the framework of the Heileman Brewing Company, the ethical issues were spawned in the creation of PowerMaster. However, the downfall of the marketing plan occurred thorough external opposition in conjunction with the negative implications for consumers. The ethical factors (4 P’s Model) surrounding PowerMaster include:

1. Product- high powered alcohol produced in beer format; designed specifically for consumption in a vulnerable target group; designed to entice consumers in a growing category with stronger potency (product positioning).
2. Price- the selection of PowerMaster is based on brand loyalty to malt-liquor products; trading up to PowerMaster is driven from higher alcohol potency at a comparable price to competitors with lower alcohol content.
3. Promotion- advertising designed to penetrate inner city areas; targeted towards low income, under-educated areas, as well as African Americans.
4. Distribution Channels- deep discount sales outlets; corner beer and liquor stores were offered buy one get one case deals through Heileman delivery systems; significant efforts to gain distribution and brand recognition by focusing on inner city sales outlets.

The leading concerns identified by the consumer activists and government agencies in the PowerMaster situation revolved around the targeted consumer. The product was taken to market with the aforementioned factors (4 P’s Model) embedded in the product itself. The consumer information process for PowerMaster features a low level decision making process in reference to purchases. More importantly, the ability and the aptitude of the consumer to make an informed decision was minimal. The marketing framework for PowerMaster consisted of:

1. Capability of the consumer- the target base in this situation was proven to capitalize on the vulnerability of consumers due to income, education, knowledge, age, maturity, and other demographic factors (Martin & Smith, 1997).
2. Information- bolstered by a high alcohol content, the entire premise of consuming malt-liquor is achieved through a PowerMaster purchase. Why purchase a lower content product and drink two bottles when a consumer can drink one bottle of PowerMaster producing the same desired result? The information contained in advertising and labeling capitalized on such an advantage.
3. Choice- competition during the introduction of PowerMaster included a growing Malt Liquor category. The development of PowerMaster was the first and only Malt Liquor that contained such a high level of alcohol. The advantage to "trade up" to PowerMaster was made easier with a pricing structure comparable to regular Malt Liquor products.

The evolution of ethical challenges has prompted organizations to adopt codes of ethical behavior. Gellerman (1989), suggests that a published code of ethics by managers will help protect companies; additionally, a clear code of ethics identifies employee and organizational expectations. This process will have three primary effects:

1. Standards that may have been unstated or unclear are now explicit. There is a sharper distinction between what is permissible and what is not.
2. Employees are on notice as to what actions will land them in trouble. Misdeeds that were due to ignorance of false assumptions are less likely to occur.
3. A code of ethics shifts the blame for bad conduct from the company to the individual. In that sense, a code of ethics can be a way for a company to wash its hands publicly of responsibility for the evils its employees commit.
4. Ethical codes can also be woven into the mission and vision of the organization.

Companies preparing for success in the next millennium must evaluate whether they are truly practicing ethical and socially responsible decision making. Business achievement and continually satisfying the customer and other stakeholders are intimately tied to adoption and implementation of high standards of business operations (Kotler, 1986). The implementation of ethical strategy will become more and more important as companies around the world increasingly abide by a code of serving people’s interests (Pain, 1994).

The analysis of marketing ethics from an external standpoint and from a consumer perspective is related to legality, morality, and good versus evil (Laczniak’s Framework). Clearly in the case of PowerMaster, the brand was plagued with moral failures as well as concerted effort to target a weak segment population. Despite the internal efforts to mandate ethics within organizations, many companies utilize a holistic guideline, encompassing internal and external expectations of the organization.

Social Responsibility & Self Regulation

Numerous product manufacturing companies, including the G. Heilman Brewing Company, subscribe to the standards contained in the American Marketing Association’s (AMA) Code of Ethics. Members of this association must be committed to a variety of rules in 6 categories, each with detailed explanations of conduct and philosophy. The primary categories include: (1) Responsibilities of the Marketer, (2) Marketers’ Professional Conduct, (3) Honesty and Fairness, (4) Rights and Duties of Parties in the Marketing Exchange Process- product development and management, promotions, area distribution, pricing, marketing research, and (5) Organizational Relationships. Adherence to the standards set forth in this document provides a foundation for the decision making process.

Organizational challenges involving ethics can be incurred at various levels, the forces in the socioeconomic, cultural, and natural environments will impose new limits on marketing and business practice. Companies that are able to innovate new solutions and values in a socially responsible way are the most likely to succeed (Kotler, 1997).

G. Heileman’s allegiance to the AMA’s Code of Ethics strictly describes the standards to which the company must follow. If perceived product harmfulness were the sole explanation for criticizing the targeting of PowerMaster, the implications for managers would be well established and the threat to the core tenet of marketing obviated. However, in this case, a fatal link was distinguished between a potentially "harmful" product and a targeting methodology which included "vulnerable" populations. The ethical implications were certainly realized by the team of marketing individuals within Heileman, yet this team knowingly recommended the PowerMaster features and the techniques to improve sales. This development confirms Pain’s philosophy and led to the proper ethical decision made by G.Heileman to ensure organizational integrity.

The Role of Ethics & Management

Clearly the decision to abandon the PowerMaster malt liquor brand was a ethical problem. The essence of this dilemma was rooted with ethical overtones, and the conclusion was handled appropriately by Heileman. Based on the operational definitions contained in social responsibilities and self regulation (Assael, 1995), Heileman acted in an ethical manner.

Heileman’s attention to the consequences indicates that what is a "good business" endeavor may not be ethically sound. Despite the identification of various opportunities and areas of potential improvement to the brand, Heileman realized that the core functions of the marketing process and the product itself did not correlate to the desired perception of the organization. Furthermore, G. Heileman’s allegiance to the AMA’s Code of Ethics strictly describes the standards to which the company must follow. If perceived product harmfulness were the sole explanation for criticizing the targeting of PowerMaster, the implications for managers would be well established and the threat to the core tenet of marketing obviated. However, in this case, a fatal link was distinguished between a potentially "harmful" product and a targeting methodology which included "vulnerable" populations.

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