Ethical marketing strategies: the unique Nash equilibrium

Abstract

PurposeCan industrial marketers afford to choose unethical strategies? To answer this question, this study aims to use game theory to analyze whether an industrial marketer choosing and implementing an unethical strategy is successful in maximizing her market share across her strategies.Design/methodology/approachThe competition between two industrial marketers is modeled as a strategic game for the market share of a product that is identical in all attributes except the production process. Each industrial marketer’s objective is to choose to implement either the ethical or the unethical production process to maximize her market share.FindingsThe study finds that both industrial marketers choosing to implement ethical strategies is the unique Nash equilibrium of the game. That is, an industrial marketer choosing to implement an unethical strategy in the production process will be unsuccessful in maximizing her market share when both the industrial marketers are rational.Research limitations/implicationsThe study contributes to the literature on industrial marketing ethics, particularly that on product ethics, by showing that industrial marketers gain market share if they choose ethical strategies.Practical implicationsThe study has implications for industrial marketing executives, as organizational consumers are increasingly aware of the strategies of industrial marketers. Failure to implement ethical strategies will cause industrial marketers to forgo their best possible market shares.Originality/valueThis study’s novelty lies in using a game theoretic approach to demonstrate the positive implications of ethical strategies for industrial marketers.