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Whether to Work in Multilevel Marketing

6/1/2025

4 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 
Marketing ethics demands special care for vulnerable consumers – individuals who are at greater risk of being deceived or treated unfairly because they have less life experience, diminished senses, reduced cognitive skills, etc. While children, people with disabilities, and older adults are often considered vulnerable, one group that’s rarely included is college students; however, these young people are particularly susceptible to the practices of a specific category of employment: multi-level marketing.
 
I was glad to receive an email a few weeks ago from a student who had recently completed my business ethics course, “Morality in the Marketplace.” Rachel Sealover was an excellent participant who continually asked good questions, made insightful comments, and challenged my own thinking. However, my gladness turned to sadness as Rachel shared she had endured two very uncomfortable interviews with individuals attempting to recruit her for multilevel marketing (MLM). She then asked if I had ever written a Mindful Marketing article about MLM.
 
Having authored more than 320 ethics pieces during the last decade, I sometimes forget which issues I have/haven’t addressed. MLM seemed like one I had treated, but when a search of my master file produced no hits, I realized my recollection wasn’t from a Mindful Marketing article but from an email exchange I had with a fellow Messiah University professor more than ten years earlier.
 
In January of 2015, Professor of Philosophy Tim Schoettle contacted me after one of his former students asked to meet with him to talk about the multilevel marketer Primerica. Tim was troubled because he had seen several other MLM companies target recent college grads with unrealistic promises of clear paths to success and wealth. What’s more, just before his wife entered college, some of her mother’s Amway “upline,” higher-ups in the pyramid, told his wife that she would be more financially successful if she skipped college in favor of a career as an Amway “Independent Business Owner” (IBO).
 
Coincidentally, just a few days after I received Rachel’s email, I was seated at a table with Tim for an end-of-year “Ethics and the Common Good” retreat, as we each teach an ethics course in our university’s new general education curriculum. Without prompting or remembering our correspondence ten years earlier, Tim again brought up the topic of MLM. I was happy he did and told him that I planned to write a long overdue article on MLM and would invite his input. This, of course, is the article!
 
If you’re unfamiliar with the term, multilevel marketing refers to business models that sell directly to end consumers through independent distributors (i.e., non-employees). Moreover, the distributors are sometimes highly incentivized not just to sell products but to recruit others to do the same, as a portion of the earnings from their “downline” gets paid to those above them in the hierarchy.
 
Selling directly to end-consumers is not uncommon, for instance, thousands of automotive salespeople and real estate agents rightfully earn commissions on the cars and houses they sell to new buyers each day; however, those agents don’t typically try to recruit other agents in order to increase their earnings through passive income, which is a primary objective in much multilevel marketing.
 
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Still, there’s not necessarily anything wrong with someone who loves what they do recruiting others to do the same work. What becomes problematic, though, is when new recruits are promised income streams that are unrealistic for anyone far down in the expansive triangular organizational structures. It’s in such situations that MLM can become a pyramid scheme.
 
In pyramid schemes, a small number of initial, top-level ‘investors’ earn above average returns on their investments, which are funded by the contributions of a  larger number of newer second-tier investors. However, each subsequent level of the pyramid requires more investors to support the level above it, all while returns become increasingly difficult to deliver. Eventually, it becomes impossible for those in the lower levels of the pyramid to recoup their investments, and the pyramid collapses.
 
Some distinguish pyramid schemes from Ponzi schemes. Both share the triangular hierarchy. The main difference is that Ponzi schemes rely specifically on a continual flow of lower-level financial investors while pyramid schemes require the perpetual onboarding of new recruits who must pay significant entry fees to join the organization. In that sense MLM that prioritizes recruiting new representatives over the sale of products can rightly be called a pyramid scheme.
 
Such objective descriptions and definitions are useful; however, what’s even more meaningful is to hear from people who have experienced MLM firsthand. For that close-up perspective we turn to Rachel and Tim.
 
Given the multitude of moral issues that exist in business and marketing, we unfortunately didn’t discuss MLM in our ethics class; still, when Rachel interviewed for positions with MLM firms, her moral foundation informed her that things were not right.
 
A first red flag was the ease at which interviews were granted – She received an invitation to apply through the mail with minimal requirements: “No experience necessary, just apply using the QR code.”
 
Similarly, Tim has been alarmed by MLM firms’ aggressiveness in recruiting college students. In fact, he was so concerned by what he heard from former students, he decided to attend an Amway recruitment meeting so he could see the tactics himself. The meeting’s leader leveraged rhetoric in promising a path to wealth and independence, while avoiding any meaningful discussion of tangible business metrics like costs, customer demand, or return on investment. To Tim, the gathering felt more like “a motivational rally” than any kind of serious business seminar.
 
Rachel likewise observed a lack of financial transparency: “MLMs are usually not upfront with what employees are making for their first few paychecks, or how much you’ll make once you start.” Yet, when they do talk about results it’s “hyping up outcomes by highlighting the small percentage of people who do really well.”
 
For Tim, who maintains that “approximately 99% of participants in MLM lose money,” this practice of presenting the few best cases to prospective distributors is clearly deceptive.
 
In her interviews, Rachel also was unnerved by the firms’ “sketchy” emphasis on recruiting other distributors over selling their products:
 
“Selling the product to your target market is what every business does, but not every business is encouraging you to bring people in from your network or asking you to handover people's numbers.”
 
Tim’s many observations of MLM firms concur:
 
“The vast majority of profits in MLMs come not from selling products to customers, but from recruiting others and expanding one’s ‘downline.’ In practice, this model closely resembles a pyramid scheme.”
 
Rachel learned firsthand that MLM firms make much of their money from new recruits who they ask to pay “some sort of fee or startup cost” as a condition of employment. In that way, it doesn’t really matter how long new distributors last – the companies realize significant revenue just from what the recruits pay to sign-on.
 
Perhaps what troubled both Rachel and Tim most was seeing MLM firms make college students and recent grads their target market. As someone who knows this group better than most, Rachel acknowledged that many in the demographic are “vulnerable to get rich quick opportunities,” given their low economic means, their great desire to be hired, and their limited experience reasoning about vocational pros and cons.
 
Concerned about the lure of MLM on his students – past, present, and future – Tim laments, “The incentives to mislead are strong and baked into the system, making the bankruptcy of MLM difficult to detect, especially for those drawn in by the promise of personal success.” It’s not surprising, therefore, that he calls the business model “predatory.”
 
Are all MLM firms morally deficient? Probably not, but to synthesize Rachel’s and Tim’s reflections, ones that do one or more of the following five things offer reason for ethical pause:
  1. Incentivize the recruitment of new distributors over selling products
  2. Paint vague and/or unrealistic pictures of participant success
  3. Use rhetoric to play on prospects’ emotions, e.g., fear, excitement, unrealistic optimism
  4. Charge new enrollees significant nonrefundable startup fees
  5. Require new distributors to share contact information of individuals in their networks
 
In keeping with the fifth point, even if someone is successful in MLM, a downside is the potential strain their work can place on relationships with family members and friends who feel continual pressure to support their loved one’s sales and/or recruitment goals.
 
Regrettably, there will always be new moral issues for Mindful Marketing to analyze. It’s also regrettable that it took me over ten years to tackle multilevel marketing. However, thanks to Rachel’s and Tim’s insights, this article should provide a helpful rubric for determining when MLM firms are only looking out for themselves and, therefore, are guilty of Single-Minded Marketing.
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Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out the book, Mindful Marketing: Business Ethics that Stick
4 Comments

Apps that Imagine People Undressed

5/1/2025

3 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 
Disgusting, deplorable, despicable? For more than a decade, I’ve written about ethical issues in marketing, at times exposing certain organizations’ shameful strategies that have disgraced the discipline and hurt people. However, in this instance I’m at a loss for an adjective that can aptly describe the collective disdain there should be for AI that digitally undresses people: nudify apps.
 
Among the worst practices in marketing I’ve discussed over the years, two that immediately come to mind are Ernst & Young (EY) encouraging its employees to cheat on ethics exams (Cultures of Corruption, July 16, 2022) and Volkswagen integrating a “defeat device” in certain cars in order to trick vehicle emissions readers (Dirty Diesel was No Accident, September 26, 2015). While EY’s behavior was deplorable because of its utter irony, VW’s actions involved painstakingly planned manipulation, the likes of which is seldom seen.
 
However, neither of these approaches is any more appalling than the newest encroachment on moral sensibility: nudify apps.
 
What are nudify apps? Kerry Gallagher, the education director for ConnectSafely, as well as a school administrator, a teacher, and a mom of two, succinctly describes them as apps that “take a regular clothed photo of a person and use artificial intelligence to create a fake nude image.”
 
Although using a nudify app to create such images should alone seem improper, what makes matters worse is that the apps’ users routinely share the fake photos with others, often teens as young as middle school, who then use the deepfake photos to harass and humiliate classmates.
 
The most infamous case of such shaming occurred in June 2024 in Australia where deep-faked nude images of about 50 girls in two private schools were widely distributed. The perpetrator was a male student, formerly of one of the schools.
 
As one can imagine, the victims of nudify apps, who are often the last to know what’s been done, are devasted. The National Center for Missing and Exploited Children (NCMEC) is “deeply concerned about the potential for generative artificial intelligence to be used in ways that sexually exploit and harm children.” More specifically, NCMEC issues a stern warning about the damage nudify apps do:
 
“These manipulative creations can cause tremendous harm to children, including harassment, future exploitation, fear, shame, and emotional distress. Even when exploitative images are entirely fabricated, the harm to children and their families is very real.”
 
It might seem that creating a fake nude image of someone would clearly be illegal, but as often happens with new technology, laws lag behind individuals’ and organizations’ actions. In the United States, a provision in the Violence Against Women Reauthorization Act of 2022 made the sharing of intimate images without consent grounds for civil action in federal court, but if the images shared are fakes, i.e., not real explicit images, has the civil law truly been broken?
 
Regardless of that potential legal loophole, using nudify apps legally doesn’t mean doing so is ethical.

The significant psychological and social harms the images cause their victims are certainly moral concerns. However, such negative outcomes aren’t the only ethical grounds on which nudify apps should be judged. The behavior also violates at least two time-tested values:
  • Fairness: Every person has rights to privacy, including for their body. Even though they are not actual photographs, the images that nudify apps create look “hyper-realistic” because the algorithms that create them have been trained on “large datasets of explicit images,” which produces for viewers the effect that they are actually seeing the victim naked. It’s unfair to have the right to physical modesty ‘stripped away’ without consent.
  • Decency: The human body is a beautiful thing, not inherently indecent. However, over millennia, most cultures have adopted rational norms that limit physical exposure in public by prescribing what people should wear, from loincloths to leggings. Many societies have codified their norms into laws aimed at guiding behavior, like statutes against public indecency and the Motion Picture Association’s film rating system (PG-13, R, etc.). The point is, abundant precedent suggests that the primary end of nudify apps, to indiscriminately publicize human nakedness, including among minors, is fundamentally indecent.
 
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So far the focus of this article has been on the users of nudify apps, who are certainly culpable for their shameful acts. At the same time, when the perpetrators are themselves children, it’s especially important to ask: Who else should bear responsibility? Those accountable should include:
  • Parents: Although it’s impossible to monitor everything one’s kids do on their laptops and phones, parents must establish at least some safety limits. Moreover, parents should model and discuss appropriate behaviors more broadly so their children assimilate values that will positively guide their daily choices.
  • Institutions: Schools should be proactive in addressing nudify apps with their students, letting them know that the apps are off-limits and warning students of the consequences for violations.
  • Government: Legislatures at all levels should consider how then can limit if not eliminate nudify apps. Some states like New Jersey are making the use of nudify apps a criminal offense.
  • Associations: For the benefit of their fields, professional groups can take stands against nudify apps specifically, and more generally they should clearly the communicate the values of fairness and decency that are fundamental to rejecting the apps, as well as future technology based on similar impropriety.
 
There’s one other set of responsible parties not mentioned above because they deserve accountability above any other – the apps’ creators.
 
It’s hard to imagine how the dozens of marketers of nudify apps justify their products. Maybe some rationalize, “They’re for people to nudify themselves,” but who needs to do that? In most imaginable instances, the apps’ purpose is to undress others without their knowledge or consent, then to share the sordid deepfakes with others.
 
As often happens in cases where business strategy goes awry, money has likely overshadowed any plausible mission for the creators of nudify apps and woefully skewed the tech entrepreneurs’ ambitions. Likewise, the apps’ creators seemingly failed to self-censure, or follow the moral mandate, Just because we can doesn’t mean we should.
 
One entity that can’t reasonably be held responsible is AI. Artificial intelligence is basically a value-neutral tool, often used for good purposes but sometimes for nefarious ones, as nudify apps illustrate. AI largely does what it’s told to do without questioning the ethicality of the instructions, which is the obligation of people.
 
As I’ve found through my own experiences using AI and as the following articles expound, it’s up to humans to hit pause when potential ethical issues arise and to ask the moral question, “Is this something we should be doing?”
  • Who will be the Adult in the Room with AI?
  • What Sales AI Can and Can't Do
  • Questions are the Key to AI and Ethics
 
Abominable, egregious, heinous, indefensible, reprehensible – maybe all these adjectives are needed to adequately describe the destructive nature of nudify apps. One other descriptor that should be included is Single-Minded Marketing.


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Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out the book, Mindful Marketing: Business Ethics that Stick
3 Comments

Who will be the Adult in the Room with AI?

4/1/2025

11 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 
“Like a kid in a candy store” – If you’ve ever experienced unlimited access to your most desired indulgences, you may have appreciated someone stepping in to help you ‘know when to say when.’ AI quickly has become that candy store for many whose mouths are open wide to the technology’s amazing treats but who entertain few thoughts of the actions’ broader impacts. So, who will help AI users ‘know when to say when’?
 
Individuals and organizations are rapidly embracing AI to enhance productivity, from personalizing emails, to providing customer service, to optimizing delivery routes, to predicting machine maintenance, to trading stocks. In fact, several of the AI examples in the last sentence came courtesy of ChatGPT.
 
A financial sign of AI’s rocketing popularity is the report that OpenAI, ChatGPT’s parent, expects its revenue to triple this year to $12.7 billion. That expectation likely stems in part from the current U.S. administration’s promised $500 billion investment in AI infrastructure in an industry partnership called Stargate.
 
It’s not surprising that AI has come so swiftly into widespread use. Criteria that predict how fast consumers adopt new products, or how quickly they diffuse into the market, suggest rapid acceptance of AI:
  • Relative advantage: Compared to the time and effort it takes to draft a report, create a complex image, etc., AI is much quicker, giving it a great economic advantage.
  • Compatibility: AI tools like ChatGPT work well with many of the productivity tools we already use, such as our smartphones’ apps, and the new technology is increasingly integrated directly into other tools.
  • Observability: AI is easy to see around us, from voice assistants (Siri, Alexa), to autocomplete functions (Messages, Word), to map apps (route optimization and traffic updates). We can often observe friends, family, and coworkers using those tools. The challenge, if any, is to realize that those commonplace applications are AI.
  • Complexity and Triability: Although AI is among the most sophisticated technologies humans have ever created, it is very easy to use, e.g., as simple as typing or speaking a command. It’s also easy to experiment with many basic AI tools, e.g., several chatbots, offer free versions, including ChatGPT, Claude, and Copilot.
 
In sum, AI helps individuals and organizations accomplish two of life’s most prized goals: to work more effectively and efficiently. Beyond that practicality, many AI applications are exciting and fun. Some possess a jaw-dropping wow-factor that makes one wonder how the technology can do something so challenging so fast.
 
But just as too much candy can be bad for one’s teeth, too much AI is proving problematic for some of its users, as well as for individuals who barely know about it.
 
Even as many individuals and organizations dive headlong and uninhibited into AI, many others feel some, if not much, dissonance about its use. In a recent survey of knowledge workers that included 800 C-suite leaders and 800 lower-level employees, Writer/Workplace found a wide disparity in perceptions of generative AI, for instance:
  • 77% of employees using AI indicated that they were an “AI champion” or had potential to become one.
  • 71% of executives indicated there were challenges in adopting AI.
  • More than 33% of executives said AI has been “a massive disappointment.”
  • 41% of Gen Z employees were “actively sabotaging their company’s AI strategy.”
  • About 67% of executives reported that adoption of AI has led to “tension and division.”
  • 42% of executives indicated that AI adoption was “tearing their company apart.”
 
Why did AI produce so much angst for these research participants? Unfortunately, the article summarizing the study’s findings didn’t identify the causes; however, I have good guesses of what some of the reasons were.
 
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In May 2024, I wrote “Questions are the Key to AI and Ethics” which identified a dozen areas of moral concern related to AI use: Ownership, Attribution, Employment, Accuracy, Deception, Transparency, Privacy, Bias, Relationships, Skills, Stewardship, and Indecency.
 
Looking back 10 months later, a long time in the life of technology, it seems the list has aged well, unfortunately. There are increasingly pressing concerns in each of the areas, such as:
  • Ownership, Attribution, Employment: Google and Open AI recently asked the White House “for permission to train AI on copyrighted content.” Over 400 leading artists, including Ron Howard and Paul McCartney, signed a letter voicing their disapproval.
  • Stewardship: AI is notoriously an “energy hog” whose data centers require far more electricity than that of their predecessors. Jesse Dodge, a research analyst at the Allen Institute for AI, shared that “One query to ChatGPT uses approximately as much electricity as could light a lightbulb for about 20 minutes.” Energy production for AI is the reason Microsoft has signed a deal to reopen the infamous nuclear power plant Three Mile Island.
  • Bias, Indecency: In his article, “Grok 3: The Case for an Unfiltered AI Model,” Shelly Palmer compares AI models that learn from sanitized datasets to xAI’s Grok 3, which has an “unhinged” mode that doesn’t restrict “harmful content—adult entertainment, hate speech, extremism.” Using the opening metaphor, Grok 3 seems like a wide-open candy shop with no adult supervision.
 
Certainly, some people have practical inhibitions about AI because they’re not sure how, when, or why to use it. Others, though, likely have moral concerns, including the ones above. I believe much of that AI dissonance stems from values embedded in every person, regardless of their worldview: principles that include decency, fairness, honesty, respect, and responsibility.
 
Granted, we don’t see these values in everyone all the time, but they’re there. Rational people know it’s indecent to show sexually explicit material in public, it’s dishonest to lie, it’s unfair to steal, etc. So when they see AI generating indecent content, creating misleading deepfakes, or appropriating others’ intellectual property, those innate values rightly spur feelings of unease.
 
So, back to the question that opened this piece: Who will keep rapidly advancing AI in moral check? Here are those influencers in reverse order of impact:
 
5) AI Itself: Over time and if trained on the right types of data, AI may become better at identifying and addressing moral issues. However, from my experience, although the technology is good at answering questions, it’s ill-equipped to ask them, especially ones involving ethical issues.
 
4) Laws: Clear-thinking senators and representatives often enact legislation that’s in the public’s best interest. However, given the time it takes to envision, propose, and pass such laws, they inevitably lag behind the behavior they aim to constrain, especially when the actions involve fast-moving tech.
 
3) Industry Associations: These organizations play useful roles in identifying opportunities and challenges that face their members. It takes time, but they often craft values statements and related documents that can help guide moral decision-making. Unfortunately, though, their edicts usually can’t be enforced the ways governments’ laws can, so compliance may be minimal.
 
2) Organizations: When they want to, business and other types of organizations can make decisions quickly. Morally grounded leaders can create policies to promote ethical behavior. The challenge is that even this guidance may not be specific enough for new or very nuanced moral dilemmas, and it’s usually impossible to speak into every action as it occurs.
 
1) Individuals: They are able to address issues as they occur and can be specially equipped for those ethical challenges. When moral issues arise, they are the ones who can and must hit pause and ask, “Yes, AI can do this, but should it?”
 
Rational principle-driven people, who embrace their innate senses of decency, fairness, honesty, respect, and responsibility, can quickly question AI's potential ethical encroachment as they see it and pump the brakes on strategies that seem likely to violate one or more of these values.
 
In the candy store that is AI, each of us needs to be the adult in the room. While we need to understand and encourage the many good things AI offers, we also need to know when to say, “That’s enough.” Ensuring that AI rightly serves humanity makes for Mindful Marketing.

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Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out the book, Mindful Marketing: Business Ethics that Stick
11 Comments

What Sales AI Can and Can't Do

3/1/2025

2 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 
From writing a simply reply email to creating an $8 million Super Bowl ad, AI is impacting virtually every element of marketing. But what about the area that relies more heavily on human interaction than any other – sales? How much should personal selling embrace machine learning?
 
I received some helpful answers to this question a few weeks ago when I attended a symposium on AI in Sales, hosted by Penn State University, Harrisburg. Although I’ve worked in sales, taught a Personal Selling class for more than 20 years, and given my own presentations about AI, I hadn’t considered many of the potential uses of AI in sales that I learned at the symposium – I took several pages of notes!
 
The event’s keynote speaker was Dr. Michael Rodriguez, an accomplished sales professional who in recent years has transitioned to academia and into his current role as an assistant professor of marketing in East Carolina University’s College of Business.
 
I appreciated how Rodriguez considered the entire sales process, from Prospecting  to Follow Up & Nurture, providing examples that distinguished traditional AI use from generative AI and hybrid applications.
 
Rodriguez also offered some useful specific suggestions for how human sales professionals might lean on AI in their daily work, such as by using the technology to:
  • Aid in prospecting and effectively identifying potential new clients
  • Personalize emails, which Rodriguez said can increase response rates by 70%
  • Help prepare for sales calls so one enters such meetings better informed
  • Identify potential client objections and receive recommendations for overcoming them
  • Customize proposals to a potential client’s specific needs
 
As I listened to these and other recommendations I imagined how they may have helped me when I sold professionally, as well as how they might serve my students as they learn to sell.
 
However, as the symposium neared its close, during a time of Q & A with Rodriguez and a panel of other sales professionals, it was interesting to hear a countervailing theme emerge:
 
Despite the considerable benefits that AI offers sales, salespeople will gain the greatest competitive advantages for the foreseeable future from their unique human inputs.
 
The idea behind this thesis, which seemed to gain widespread agreement among panelists and audience members, was that over time AI will act like many new technologies, first offering advantages to early adopters but eventually entering almost everyone’s repertoire and leveling the playing field for most competitors.
 
Or, to use a poker metaphor, AI will become table stakes – something everyone must have just to get in the game. Determining who ‘wins’ will be the unique intellectual and emotional skills that people bring to the game.   
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As a flesh-and-blood being, I like the idea of people playing the pivotal role. But more objectively, it does seem like there are several selling activities that AI can’t reliably replicate, at least not now and possibly ever. Based on my experience working in sales and teaching it, these are some of those exclusively anthropic actions:
 
  • Hold a Real Conversation: AI can be very effective at helping salespeople practice selling dialogue by serving as a roleplay partner. However, as the old adage goes, “You can’t take it with you,” meaning in this case, when it comes to an actual selling situation, the salesperson must fly solo, relying on their own experience, intellect, and emotional intelligence to help move the conversation productively forward.
  • Tell a Story: In communication situations, storytelling is one of the most effective ways of gaining and retaining attention and for deducing key learning points that people will remember. Although AI is great at retrieving stories others have shared and compiling “new” ones, it can’t share original anecdotes from lived experience because, of course, it has none. That limitation is unfortunate for AI because personal stories are often the best ones.
  • Interpret Contextual Cues: Does the customer’s facial expression show that they’re happy, sad, or angry? Does their body language suggest that they’re reluctant to proceed or eager to move forward? At some point Meta AI Glasses or other wearable tech may make these inferences and share them in real-time, but at least one communication expert believes they’ll still be inferior: Megan Madsen, Chief Officer, Strategic Communications at Bravo Group in Harrisburg, PA, says, “I don’t think AI will ever replace contextual thinking on a human level.”
  • Find Common Ground: People like identifying things they have in common with others, whether they’re individuals they know, places they’ve visited, sports they follow, or restaurants they enjoy. Shared experiences and affinities help us know others better and relate to them on a more personal level – engagement that isn’t possible for virtual beings.
  • Feel and Express Emotion: How should a salesperson respond when their client mentions that their spouse just lost their job or that their daughters’ soccer team won the state championship? People are uniquely wired to feel empathy (e.g., sadness or joy) and to return emotionally appropriate responses based not just on what was shared but on the client’s emotional state and how well the salesperson knows them.  
  • Laugh: I was at a networking event recently, talking with a marketing professional, when a well-intentioned college student abruptly broke into our conversation held out his hand and said, “Hi, I’m Bob, a junior marketing major at State; what do you do?” I quickly grasped his hand and as I shook it replied, “Not much.” We all laughed. I’m not sure what led me to say that – perhaps it was understanding the context and knowing that the line, which I probably heard someone else say years ago, would offset the awkwardness. Anyway, it seemed like the right humor at that moment, with no assist from AI.
  • Socialize: A very small percentage of all sales are made on golf courses or in stadium club boxes, but it is common for salespeople to get to know customers and discuss business over a meal, in order to save time but more importantly to build relationships. Good things often happen when people break bread together.
  • Identify Moral Concerns: From my experience, AI is not on the lookout for possible ethical infractions, and as several of the preceding bullets have suggested, it usually can’t be present to help make real-time choices. So, if a purchasing agent asks a salesperson to increase their proposal by $500 so the purchasing agent can pocket the excess, what should the salesperson do? Their human knowledge should alert them that they’re being asked to pay a bribe and prompt them to reject the appeal outright.
 
AI applications are redefining the ways marketing is done. Salespeople should use those technological tools to work more efficiently and effectively while also remember that it’s their uniquely human aptitudes that ultimately set them apart. Technological proficiency paired with a genuine personal touch is the best approach for Mindful Marketing.
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Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out the book, Mindful Marketing: Business Ethics that Stick
2 Comments

Birkin vs. Wirkin: Are Knockoff Products Ethical?

2/1/2025

55 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 
If “Imitation is the sincerest form of flattery,” should one of the world’s most renowned  luxury brands feel honored that an upstart company created a knockoff product and sold it to the masses through a full-line discount retailer for a fraction of the price?
 
Such was the “flattery” paid recently to Hermès, the French fashion house known for finely tailored leather and silk goods and other exquisitely crafted, high-priced items. The specific focus of the emulation was one of Hermès most prestigious products, its Birkin handbag, “the epitome of luxury and style, a true icon in the realm of high fashion.” Surprisingly, the flattery came through . . . Walmart.
 
In choosing a retail strategy, marketers often consider three levels of distribution intensity, or selectivity:
  • Intensive: a product is available virtually everywhere in a very wide variety of retail outlets (e.g., many snack foods are intensively distributed).
  • Selective: the product’s manufacturer more carefully chooses specific retailers that align with the item’s brand image and positioning (e.g., brand-named athletic apparel is often selectively distributed)
  • Exclusive: there are only one or two retail options for purchasing the product (e.g., new cars usually can only be purchased through the manufacturer’s own dealerships)
 
Birkin bags, which sell for $10,000 and up, introduce a whole new level of distribution intensity, even more restrictive than exclusive, that might be called elusive distribution.
 
First, Birkins can’t be purchased through Hermès own website; they must be acquired in-store, and even then, they are very difficult to obtain. Apparently, the bags are not displayed. Someone wanting to buy a Birkin first needs to establish themself as a brand-loyal customer by purchasing a significant dollar value of other Hermès products and by building a relationship with a Hermès sales associate. Only then, the strictly qualified customer might be given the privilege of buying a Birkin.
 
That’s the context that inspired a Chinese firm to create a knockoff bag bearing a striking resemblance to a genuine Birkin, likely with less of the fine craftsmanship and also for a small percentage of Hermès’ price. The company successfully sold many of the bags on Walmart’s website until the page suddenly disappeared, replaced by a "no-longer available" message.
 
However, before the knockoffs were knocked out, many people purchased the Walmart-distributed bags and posted their shrewd finds on social media, leading to a multitude of  lookalike likes and shares and to the coining of the clever name: Walmart + Birkin = “Wirkin.”
 
Helping fuel the knockoff bags’ viral rise was a phenomenon some have dubbed “dupe culture,” which describes the trending consumer tendency of buying less expensive product facsimiles in favor of more prestigious and pricey originals.
 
Saving money and being content with less are often good consumer outcomes, but do they make it right for one organization to cash-in on another’s’ innovation and hard-earned reputation? To answer the moral question, it’s helpful to ask a few factual and legal questions:
 
Q1: Are knockoff products the same as counterfeit products?
No, while knockoff products bear some or even a close resemblance to the originals, counterfeits are designed to be as indistinguishable as possible from the real thing, including specific logos and other proprietary branding. Consequently, counterfeit products typically infringe on companies’ trademarks, making them illegal.
 
Knockoff products, in contrast, are not illegal, in fact, they are commonly found in all types of retail stores, including on supermarket shelves where private label, or store, brands are often placed right next to the manufacturers’ brands they emulate.
 
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Some may argue that the intent of both product types is to deceive, but that argument is more tenable for counterfeits, whose creators want consumers to believe they’re purchasing the authentic product. While a knockoff certainly banks on perceived similarities, it’s not pretending to be the original.
 
Q2: Can a handbag be patented?
 
Of the three patent types, utility, design, and plant, a design patent is the one most applicable to a bag. Given that handbags of all types and sizes have been used for centuries for similar purposes, it’s not easy for a bag’s design to meet the criteria for “ornamentality,” which requires that “no alternative designs could have served the same function.”
 
Despite that challenge, Hermès does have a patent claiming unique “ornamental design” for a handbag that appears to be its Birkin.
 
Q3: Can a handbag be trademarked?
 
Trademarks can be secured for a unique word, phrase, symbol, or design used to identify an organization’s products or services. As might be expected, Hermès has trademarked the Birkin name. However, knockoffs like the “Wirkin” bag intentionally avoid using trademarked names, which shifts the question to the product itself.
 
Fortunately for Hermès, it also has for its Birkin bag the less often referenced trademark design coverage called trade dress protection, which is used “to protect the overall appearance of a product or company” and can include “features like color, shape, design, packaging, and more.” Like other types of trademarks, trade dress ultimately helps consumers distinguish one company’s product from another’s.
 
More specific to the Birkin bag, trade dress offers protection for the handbag’s overall distinct design and its unique elements, including the bag’s rectangular sides, rectangular bottom, dimpled triangular profile, and “rectangular flap having three protruding lobes, between which are two keyhole-shaped openings that surround the base of the handles.” Furthermore, “Over the flap is a horizontal rectangular strap having an opening to receive a padlock eye. A lock in the shape of a padlock forms the clasp for the bag at the center of the strap.”

Handbags have a virtually limitless number of design possibilities, but legally, no bag can combine the elements identified above, unless it is a genuine Birkin by Hermès. That’s what the law says, but what about ethics?
 
We always should be careful not to assume that what’s legal is ethical or what’s illegal is unethical. Historically, there have been plenty of exceptions to complete moral/legal overlap, e.g., slavery, segregation.
 
However, in the case of counterfeit and knockoff products, U.S. laws have considerable moral sensibility.
 
Of the five universal values Mindful Marketing routinely applies (decency, fairness, honesty, respect, and responsibility), the operant ones here appear to be honesty and fairness. It’s dishonest for a counterfeit product to pretend it’s the authentic item – Like someone claiming a reproduction of a painting is the artist’s original work.
 
In addition, counterfeit products are unfair because their sellers benefit from the original designer’s hard work and creativity with relatively little effort of their own. Counterfeit products also can be considered unfair in that their typically lower quality can tarnish the image, or reputation, of the original brand, particularly among people who thought they had purchased the real thing.
 
In terms of responsibility, one also might argue that counterfeit products enact a broader cost on society as a whole because they disincentivize innovation and entrepreneurship.  
 
As mentioned above, knockoff products are usually legal, unless the item walks too close to the line of the original, in which case it essentially becomes a counterfeit. However, the legality of knockoffs doesn’t make them moral; again, it’s important to view them through the lenses of the five values.
 
Knockoffs tend to uphold honesty in that they don’t pretend to be originals but maintain some visual/verbal separation from them. Shoppers who buy the grocery store brand of chocolate chip cookies know that they’re not getting Nabisco’s Chips Ahoy!
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Fairness is more complicated and shouldn’t be evaluated as if one-size-fits all. In the case of chocolate chip cookies, even though the supermarket makes its store brand loosely resemble Chips Ahoy! by way of product name and package design, Nabisco also benefits by being allowed to sell its cookies in the store, which might represent legal consideration.
 
However, in many cases there is no express benefit-sharing, and to some extent, sales of the knockoff product come at the expense of the original. In these common situations, though, several other factors should be considered.
  • Different Target Markets: Knockoff products often cater to a distinct target market, e.g., people who want slightly different product features or a lower price point, or they don’t want to buy the name brand or what everyone else has.
  • Product Category Growth: The markets for most products start small and grow as more people realize the benefits the products bring. Competing products, including knockoffs, often accelerate that growth and expand primary demand, i.e., they make the market larger than it could become with just one company.
  • Insufficient Supply: When a product category becomes very popular and really blossoms, the market’s first mover often can’t meet all the demand by itself, so it helps to have competitors’ product offerings.
  • Increased Exclusivity: The presence of knockoff products tends to increase awareness of the product category and accentuate the original product’s exclusivity, e.g., Kia’s production of luxury vehicles, some of which resemble those of Lexus, probably encroaches little on Lexus’ sales but rather helps to enhance Lexus’ exclusive image.
  • Makes Companies Better: Few companies would say they want competition, but all benefit from it, maybe for the reasons mentioned above and certainly because competition forces them to become better. As the adage goes, “Iron sharpens iron.”
 
Counterfeits and knockoff products are not the same but are closely connected. The “Wirkin” bag likely disappeared quickly because it flew too close to the sun, legal and morally, i.e., it was a knockoff that too closely resembled a counterfeit Birkin. In an age of rapidly advancing AI and increasingly sophisticated 3D printing, it’s a good reminder that it’s never right to deepfake, or counterfeit, another’s intellectual or physical property.
 
Although there are exceptions, knockoff products can bring a variety of benefits, including ones for the original products their imitation “flatters.” Increased supply, more variety, and fair competition tend to be good things that make for Mindful Marketing.
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Resolving to be More Moral

1/5/2025

4 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 
With a new year come resolutions, often aimed at life-changing actions like exercising more and working less. Any effort to become the best version of ourselves is commendable, so why haven’t we heard this resolution? “In 2025, I want to be more ethical.”
 
As 2024 ended, it was interesting to read articles that curated top headlines from the prior twelve months, which reminded us of major life-altering and world-shaping events. Like other years, 2024 saw continued war and devastating natural disasters, and who can forget the contentious U.S. presidential election or the inspiring Paris Olympics?
 
Certain people commanded news coverage in good ways, while others did for the wrong reasons:
  • P-Diddy was accused of sex trafficking that involved drug-fueled orgies. 
  • Luigi Mangione has been charged with the murder of UnitedHealthcare’s CEO.
  • Former U.S. congressman Matt Gaetz purportedly paid tens of thousands of dollars to women for sex and drugs, including to a minor. 
  • Dominique Pelicot was sentenced in France to 20 years in prison for drugging and abusing his then wife while also inviting dozens of strangers to rape her.
  • A fifteen-year-old girl in Madison Wisconsin reportedly killed a fellow student and a teacher.
 
Regrettably, poor moral choices weren’t restricted to individuals. Several large companies pooled employee maleficence, leading to these newsworthy corporate scandals:
  • Mineral water producer Perrier utilized banned water purification processes.
  • Commodity trader Trifugura engaged in data manipulation, inflated payments, and concealing overdue receivables – fraud that will account for approximately $1.1 billion in losses.
  • The U.S. Justice Department found multinational software company SAP guilty of bribery in violation of the Foreign Corrupt Practices Act (FCPA), fining the company $220 million. 
  • The U.S. Public Company Accounting Oversight Board (PCAOB) fined the Netherlands affiliate of accounting giant KPMG $25 million for cheating on mandatory internal training exams. 
 
Of course, there were also millions of other unscrupulous acts that were too trivial to be newsworthy or that evaded public scrutiny for other reasons. However, in terms of morality, 2024 was not much different than 2023, and 2025, unfortunately, probably won’t see significant improvement.
 
So, given people’s proclivity to mess up and our perennial need for moral development, why don’t individuals make New Year’s resolutions to be more ethical?
 
Of the many plausible explanations, here are several that are most likely:
  • People don’t see a need: If asked if they’re ethical, most people would probably respond that they are, which by and large is true. Although we all make mistakes, it’s likely a small percentage of people who commit unethical acts routinely.
  • It’s a very broad pledge: Without a detailed action plan, it’s hard to even begin to approach such a far-reaching and expansive goal, i.e., “It’s a good objective, but how exactly do I accomplish it?”
  • It’s difficult to measure: At year’s end, how does one know if they’ve been more ethical? The goal’s ambiguity and lack of clear benchmarks make it hard to easily see success. How exactly do you quantify and appraise ethical behavior?
  • It’s daunting: Possible failure is likely why many potential resolutions never occur. No one likes to fall short of goals, particularly if they share them with other people.
 
That said, the most challenging goals are sometimes the most worthwhile ones, which is certainly the case for ethics. As rational, caring humans, we should want:
  • To be the best version of ourselves, which connects closely to our moral choices
  • To be true to our values and employ consistency across moral decisions
  • To be good stewards of our actions, realizing their impact on others, including on our family, friends, the organizations we serve, as well as on our world.
  • To avoid the major moral meltdowns described above that profoundly altered individuals lives and/or came at tremendous costs to organizations.
 
Fortunately, most people don’t face significant ethical choices each day. However, moral dilemmas are unpredictable: They’re like tornados that can arise with little warning and quickly become severe.

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People who live in Tornado Alley understand the uncertainty and danger of the weather, so many there take necessary precautions and “have a safety plan in place.”
 
We each should follow that example and have a plan for moral decision-making, so when issues arise, we’re ready for them. Such a plan should involve specific actions like:
  • Adopting a model for ethical decision-making, i.e., a set of moral standards that can be used for any ethical dilemma.
  • Keeping ethics top-of-mind by reading thought-provoking opinion pieces and engaging with others who are interested in moral decision-making
  • Enlisting others to act as sounding boards for our decisions and to help hold us accountable
  • Making moral choices preemptively, or deciding before we actually need to decide.
 
These are several of the specific action steps I unpack in the final chapter of my new book (shameless plug), Mindful Marketing: Business Ethics that Stick.

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Yes, we should resolve to make more moral choices, but do such resolutions really help? The Theory of Planned Behavior (TPB), which I used for my doctoral dissertation and hundreds of other researchers also have used successfully, suggests that they do.

According to the TPB, our intentions are the main determinant of our behavior. There are very few actions people take that they don’t first intend to take.
 
Have you made a New Year’s resolution? Any time of year is a good time to resolve to act ethically. Doing so brings many benefits, including more “Mindful Marketing.”

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Subscribe to Mindful Matters blog.
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Can AI Advertising be the Real Thing?

12/1/2024

14 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing 
Coca-Cola has a long history of very memorable holiday ads, from its iconic Coke-swigging Santa to the surprisingly peaceful polar bears. This year’s campaign seeks to capture similar feelings of goodwill, warmth, and cheer but with AI-generated output, which raises the question: Should the company that’s touted its product as the real thing for more than a century now be creating advertising that’s not?
 
Longer-tenured consumers like me remember Coca-Cola’s longstanding tagline “The Real Thing,” which the company leaned on heavily in the 1970s following its successful 1969 campaign, “Can’t Beat The Real Thing.” Actually, the company had articulated the theme even earlier, e.g., on painted signs in the 1940s.
 
The notion that Coke is the real thing, or the original cola, can be traced to the late 1800s: Coke came to market in 1886, 12 years before its archrival Pepsi, giving Coca-Cola not only first-mover advantage but the right to boast that any cola coming after it was a mere facsimile.
 
The word real hasn’t appeared in all the company’s advertising, yet Coca-Cola has always sought to position itself as authentic and genuine – distinct branding threads that have woven their way through the company’s varied promotion, particularly in its holiday ads.
 
For instance, the look of the Santa Claus character that many know and love is largely a Coca-Cola creation. In 1931, the company and D'Arcy Advertising Agency tapped Haddon Sundblom, a Michigan-born Illustrator, to create images of Santa Claus for the firm’s ads.

Before then, Santa Claus was often depicted as “everything from a tall gaunt man to a spooky-looking elf.” Sundblom, however, took inspiration from Clement Clark Moore's 1822 poem "A Visit From St. Nicholas" (aka “Twas the Night Before Christmas”) to transform Santa’s image into what’s typical today – “a warm, friendly, pleasantly plump and human Santa.” Such an inviting persona meshed seamlessly with Coca-Cola’s wholesome brand image and helped to further propagate its portrayal as the real thing.

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Beside his appealing personality, Sundblom Santa’s bright red hat and coat, their white trim, and his full white beard also placed him squarely on-brand in terms of colors, and the company used the holiday character heavily over the next several decades.
 
In 1993, Coca-Cola introduced another endearing creation – animated polar bears. Although the company had used a polar bear in a French print ad in 1922, the bears that Coca-Cola creator Ken Stewart designed in the early 1990s developed a much longer-lasting legacy.

In their first television commercial, about sixteen furry white polar bears, each holding a bottle of Coke, sat contently on the artic tundra, oohing and ahhing as they watched the aurora borealis (northern lights). Near the end of the 30-second spot, they sipped their sodas, smacked their lips, and let out one more collective ahh. The commercial culminated with a close-up of one particularly pleasant bear with plump cheeks and friendly eyes that seemed to smile for the camera as it held its frosty soda bottle high.
 
In another 90-second spot from around 2005, the bears crashed the Christmas party of a pack of penguins that were dancing to the Beach Boys’ holiday favorite “Little Saint Nick.” At first the penguins were startled, but after one of their chicks shared a bottle of Coke with a bear cub, everyone smiled and happily joined the festivities. Leave it to Coca-Cola to make even one of the world’s fiercest predators fit its brand.
 
Even as the polar bears’ popularity grew, in 1995 the company unfurled another memorable campaign called “Holidays are Coming” that featured a seemingly endless caravan of light-bedazzled and ornately decorated 18-wheel big rigs sporting Coca-Cola’s trademark script lettering and larger-than-life images of its affable Santa Claus.
 
The spectacular line of long haulers rolled down country roads to the chant of “holidays are coming,” lighting up forests and bridges as they passed and pleasantly surprising a variety of delighted onlookers. Although certain parts of these mid-1990s ads leveraged special effects, much of what viewers saw was real, including the people in the spots. 
 
Thirty years later, these “Holidays are Coming” ads are the inspiration for the company’s new AI-generated campaign, which carry the same name and decked-out trucks but haven’t engendered the same warm response as the original ads.
 
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Produced by three different AI studios, the three new AI-generated ads, have received some very frosty reviews. As the New York Times has reported, one critic called the ads “slop” that “ruins the Christmas spirit,” while another claimed the company has significantly lowered its standards with the “heartbreaking” campaign, and a third, Alan Hirsch, the creator of the animated TV show Gravity Falls, suggested Coca-Cola’s signature red represents “the blood of out-of-work artists.”     
 
So, why risk messing with a good thing and the Real Thing by using AI to produce the new ads? A main motivation was likely money, as Garrett Sloan writing for AdAge suggested: “Backers of the technology are excited about how it could bring more creative tools to more people, more cheaply.”
 
It’s easy to imagine that Coca-Cola’s original “Holidays are Coming” ads, with their elaborately decorated trucks, remote outdoor settings, and abundant special effects, were very expensive to produce – probably millions of dollars – and took a long time to script, schedule, shoot, and edit. Why shouldn’t the company leverage technology’s cutting edge to save time and trim expenses?
 
Asking that question seems to fly in the face of the conclusion of my last Mindful Marketing article, “Does Human Made Matter?” in which I deduced, Yes, it matters. So, why was AI use out-of-bounds a few weeks ago but in-play now?
 
While some suggest that AI shouldn’t be used for anything and others argue that all AI use is acceptable, I stand between the two extremes. I’m firmly in the middle but will lean a little closer to one side or the other based on the efficacy of the application and the ethics of the situation.
 
As the last Mindful Marketing article suggested, many value originality in art and appreciate a sense of personal connection with the art’s creator, such as ones stemming from shared life experiences. Human connections and true originality are both things that are difficult if not impossible for AI to replicate.
 
On the other hand, most people probably don’t mind if AI generated a promotional email they received or was used to create a billboard they read.
 
The ultimate purpose of most advertising is to sell products, so although advertising is part science and part art, it doesn’t have the same thresholds for originality and personal connection as pure art does. Most people probably feel a deeper human connection with a favorite painting or song than they do with a Coca-Cola promotional piece. The notion that there’s a different standard for commercial content opens the door for AI use in advertising.
 
Someone who sees firsthand the effective and ethical use that marketing can make of AI is Matt Caylor, Account Director with Martin Communications, Inc., located near Harrisburg, PA. While he warns against blindly accepting AI output, which can be dangerous because it’s not always correct, Caylor also has experienced many productive uses of the technology including copy iteration, data analysis, and design assistance, as he explains:
 
“The technology can save time in editing and design, taking some of the mundane or tedious work off our plates. It can work as a partner in the initial iteration of messaging, often acting as an agent to bounce ideas off. It can be an agile assistant that reviews and analyzes large data sets, crunches numbers, or helps develop new queries.”
 
Does human input matter to Caylor and others at Martin Communications? It surely does, and like many others working in marketing, Caylor and his colleagues are continually learning how to effectively integrate their own insights with the technology tools – just as humans have done for millennia.
 
So, does it matter if Coca-Cola’s “Holidays are Coming” ads aren’t the Real Thing. Yes and no.
 
It matters in that consumers’ perceptions, whether correct or not, are their reality. For instance, some viewers seem to believe that all the people in the ads are AI-generated, even though Pratik Thakar, Coca-Cola’s VP and global head of generative AI, says at least some are not. Still, when people perceive a little AI in an ad, their tendency is to extrapolate that everything in it is AI.
 
On the other hand, Coca-Cola is only doing what Caylor and individuals in many other fields do each day – use AI selectively and responsibly to leverage their own time and talents. As Thakar explains: “Our human creatives make decisions and use AI as a tool.”

There’s nothing inherently wrong with Coca-Cola’s using AI as a tool to help create its new “Holidays are Coming” ads. However, given individuals’ current impressions of AI, because people have special expectations for authenticity around the Holidays, and since Coca-Cola has built a reputation for realism, the company’s AI use in the ads may have been too much too soon, or a case of Simple-Minded Marketing.

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Does Human-Made Matter?

11/2/2024

5 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing 
How do you position a business ethics book versus dozens of others on the market? That’s been a top-of-mind question and exciting opportunity while writing my book on Mindful Marketing. One point of differentiation I wouldn’t have imagined when I started blogging about ethics 10 years ago is this: My book is written by a human.
 
A few weeks ago, I came across the interesting and apropos news that the Author’s Guild, “the nation’s oldest and largest professional organization for published writers,” has plans to offer a new “Human Authored Label” that it’s 15,000 members can place directly on the covers of books they write.
 
The impetus for the initiative, of course, is to distinguish works written by real people from those compiled by AI. Apparently, the surge in AI-authored books has become so strong that Amazon has set a policy limiting self-published Kindle eBooks to three per day.

A related concern is that the purveyors of some AI-written books are trying to scam readers by pretending that real people wrote them, which is part of the bigger issue of AI appropriating others’ work.
 
As a human author, my first reaction to the proof of personhood label was “That’s great!” Then, I glanced around my home office space and started considering all the things I use each day that weren’t handcrafted by humans, which made me wonder:
 
Does human-made matter?
 
I doubt that one specific person made the MacBook on which I’m typing. Considering the hundreds of different parts that comprise a computer, it’s likely that dozens of people played different roles in designing, manufacturing, and delivering the laptop, which I still don’t think of as human-made, but in some ways it is.
 
Humanity has a long history of inventing specific tools and automating entire production processes to accomplish work more efficiently and effectively, for instance: the spear, the wheel, plows, harvesting machines, moveable type, internal combustion engines, excavating equipment, assembly line machinery, microchips.

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These innovations and many others have been integral to the advance of civilizations and improved quality of life. Along the way, technology also has made obsolete certain jobs, e.g., digging with shovels, while creating new ones, e.g., designing, selling, operating, and servicing excavating equipment.
 
Like most people, I’m grateful for the innovative goods and services, some not available just a few decades ago, that make work more productive and life more enjoyable. I’m also thankful for the technological tools that have made many of these products possible, sometimes with little human input.
 
Lack of human intervention is a main difference between artificial intelligence and other technology to-date. Take this article, which I’ll write over the course of several days or more and will end up being about 2,000 words. Yet I know if I were to give ChatGPT the prompt, “Write a 2,000-word Mindful Marketing article on the topic ‘Does Human-Made Matter?’” it could probably compose a coherent piece in about five seconds.  
 
Could I claim authorship of the essay? Well, if the chatbot trained on the more than 300 Mindful Marketing articles I’ve written over the past decade, yes. Otherwise, I wouldn’t feel right taking credit for the piece. Doing so would kind of be like asking Einstein to explain the theory of relativity, then claiming ownership of his answer.
 
Asking a question, even a very good one, isn’t the same as answering it. In most cases the latter is a much, much heavier lift.
 
In terms of who or what’s doing the lifting, we might envision a continuum. On one end are tangible goods like laptops and services like haircuts that require interaction with the physical world. Although AI can show us digitally what we’d look like with a different hairstyle, actual hair cutting/styling is still a people-intensive service that needs real scissors and actual human hands, at least for now.
 
On the other end of the spectrum are intangible/digital products like this article, cover letters, and work emails that AI can crank out with no more than a simple human prompt. Apple’s new “Apple Intelligence” ad spoofs how easy it is for AI to turn human-made trash into supervisor-pleasing treasure.
 
The 60-second spot shows an utterly incompetent employee, Warren, typing this message into his iPhone 16: “Hey, J, this project might need a bit of zhuhzing  . . . but you’re the big enchilada. Holler back, Warren.” Before sending it, he taps the writing tool icon “Professional,” which metamorphosizes the mess.
 
Moments later J, who appears to be Warren’s boss, receives the transformed message: “Hey J, Upon further consideration, I believe this project may require some refinement. However, you are the most capable individual to undertake this task. Please let me know your thoughts. Best regards, Warren.”
 
J is noticeably impressed as he reads the memo aloud, then pauses with surprise at the signature, “Warren? Huh.” His tone and facial expression suggest he thinks he may have been underestimating his seemingly inept subordinate. Meanwhile, Warren celebrates his tech-enabled victory, boldly twirling a USB cable in the air to the sound of an upbeat Apple music bed with lyrics “I am genius, whoaaa . . ”
 
Human made didn’t seem to matter to Warren. Will it matter to J? Stay tuned.

Of course, on the digital end of the continuum, there are more profound, spirit-moving, and sense-stimulating things AI can create than a work email: AI also can make art.
 
AI’s creation of visual and aural art has been a point of contention for artists who understandably don’t want blatant forgeries and veiled facsimiles of their work sold without proper recognition and reward.
 
But what if AI makes art that appears, for all intents and purposes, to be original, i.e., it doesn’t infringe in any noticeable way on any specific artist’s intellectual property? In those cases, should human-made matter?
 
Since my own artistic background is limited, I recently reach out to two people who very legitimately hold the title artist and asked each to answer the question, “Why does human-made matter?”
 
One artist I approached was Susan Getty, a freelance artist, writer, and editor. Full disclosure, our home proudly displays several of her paintings.
 
In describing why human-made matters to her as an artist, Susan emphasized that art’s value stems not just from the finished work but from the process of making it. She extolled fulfilling “an inborn impulse to create” that comes from working with her hands in tangible, physical materials.
 
She also pointed to the value of what she learns through the art-making process, like “understanding how colors mix, how paper folds, how a brush spreads different kinds of paint.” This constant learning stimulates her imagination and helps keep her “connected to the physical world,” which she laments may be lost by a society that spends too much  time in virtual space.
 
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Susan also appreciates art’s value in allowing a person to learn from their mistakes and cope with failure:
 
“There’s something crucial about a deep personal investment of time, money and effort and experiencing either an enthusiastic reception or apathetic dismissal from others.  I believe that every human ought to, at some point in life, come to their own terms on what success and failure mean.”
 
Although Susan appreciates technology and uses the web to find reference photos, learn about different artistic techniques, and gain inspiration from the work of artists around the world, she doesn’t believe artmaking is intended to be the quick and easy process that AI tries to make it.
 
As an art appreciator, she wants to feel a connection with the artist, which comes from seeing energy, spontaneity, and individual interpretation in the work. Ultimately, she wants herself and those who appreciate her art to have what AI can’t provide – a shared human experience.
 
The other artist I asked to answer the question “Why does human-made matter?” is one I know especially well – my son Daniel Hagenbuch, who is both a musician (violin and piano) and a composer. He’s currently completing a Master of Music in Composition at Peabody Institute in Baltimore.
 
Daniel believes music is a gift that composers create very intentionally for their audiences: “[Music composition] is a time-based art form that both requires composers to spend time thoughtfully crafting ideas and time for listeners to hear those ideas unfold.” He adds that a gift a person carefully and specifically makes for someone else naturally has more meaning than one given with little reflection or effort.
 
He contrasts quick-and-easy AI-generated music to human composers spending “hundreds of hours transcribing music by hand, using notation software, engraving, creating parts, and rehearsing music with live performers in order to create the best experience for audience members.”
 
Daniel believes this intimate involvement with their craft gives human composers “a more nuanced approach and understanding of the compositional process from start to finish,” which allows them to make writing choices that defy computer algorithms and depart from the formulaic patterns by which AI operates.
 
He maintains that composers, like all humans, have distinct personalities that are functions of their personal experiences and that show through in their music, “reflecting their individual musical tastes and intuition.” Listeners, he contends, are drawn to those personalities and connect with them through the music.
 

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He concludes: “People are wired with a desire for human connection and only human composers can fulfill that longing.”
 
Oil paints and C sharps – Their art is very different, but many similarities exist between Susan’s and Daniel’s responses to the question of why human-made matters. For instance, both emphasize the importance of the creative process, for artists and for those who appreciate their art.
 
Each also suggests that art becomes more meaningful when there’s an artist-appreciator relationship, i.e., a human connection. That doesn’t necessarily mean that the two ever meet, yet the appreciator feels like they know the artist by virtue of learning the artist’s story and/or being familiar with their other work.
 
The bottom-line is human-made does matter, maybe less for some things, like my laptop’s components, but very much for other things, like art. It’s good to lean into technology in ways that make sense, but we also need to be careful not to become like Apple’s Warren and depend on devices to the detriment of our own personal and professional development. Even Apple hinted that Warren’s ineptitude will be found out.
 
In the book-writing process, I’ve asked AI a couple of specific questions and enlisted its help in formatting bibliography references, but I haven’t had it write any of the manuscript. Maybe that’s a mistake – ChatGPT is much smarter than I am. However, AI hasn’t enjoyed the special experiences and rewarding relationships I have that form the stories and fuel the insights that are the backbone of much of the narrative.
 
As technology becomes increasingly pervasive in our lives, there will be more opportunities to use it productively and to position against it by appealing to the unique impact of personhood. Human-made is not a fail-safe, but it will always hold potential for Mindful Marketing.


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A Decade of Very Demure, Very Mindful Marketing

10/1/2024

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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing 
It’s hard to believe that Mindful Marketing has been shining a light on ethics in the field for ten years! TikTok didn’t exist in September 2014, when I wrote “CVS Quits Smoking,” the very first article on MindfulMarketing.org. Likewise, the appetite for influencer content, such as Jools Lebron’s “Very demure, very mindful” viral videos, was just starting to grow. The world looked different in many ways during the fall of 2014:  
  • Barrack Obama was a year-and-a-half into his second term as president.
  • Prince Harry was still single and part of the British royal family.
  • Tom Brady had won just three of his seven Super Bowls.
  • Instagram was only six years old.
  • Apple’s newest phones were the iPhone 6 and 6 Plus.
  • On May 23, Tesla stock closed at a mere $13.82 a share.
  • Russia had invaded Crimea just a half year earlier.
  • George Floyd was still alive.
  • The #MeToo movement was several years away.
  • The world didn’t know what a global pandemic would be like.
  • It was still a year before Volkswagen’s notorious Dieselgate.
  • The URL MindfulMarketing.org was still available.
  • I had less gray hair
 
When I created the Mindful Marketing concept and Mindful Matrix ten years ago, I dreamed of doing the impossible: moving the needle on ethics in my field. As most people realize, marketing unfortunately has a reputation for being among the most morally suspect professions.
 
Each year Gallup conducts a poll in which it asks respondents to rate the honesty and ethical standards of 20 or so occupations. Inevitably, at the top of the list are jobs like doctor, nurse, and pharmacist, while near the bottom are several marketing occupations such as telemarketer, advertising practitioner, and car salesperson.
 
High-profile morale lapses like Volkswagen developing a defeat-device to trick emission tests, Wells Fargo employees creating fake accounts, and Turing Pharmaceutical’s CEO Martin Shkreli increasing the price of a life-saving drug by 5,000%, have suggested that marketing ethics are easily forgotten.
 
Several other fields like accounting and law have continuing education requirements that include focus on ethics. Unfortunately, marketing does not. Consequently, a main aim of Mindful Marketing has always been to make ethics sticky.
 
A research paper I coauthored by Laureen Mgrdichian, published in Marketing Education Review, explains how Mindful Marketing utilizes a common analytical tool, a 2 x 2 matrix akin to the Boston Consulting Group’s portfolio matrix, to encourage conversations about ethical issues. The article also describes how Mindful Marketing leverages branding – a tool that organizations large and small use to differentiate their products from those of competitors and make them more memorable, i.e., stickier.
 
Admittedly, in ten years Mindful Marketing hasn’t come close to grabbing the incredible social media attention that Jools Lebron has gained in a few months – 2.2 million followers on TikTok – but it has received other significant recognition and exposure including:
  • Dozens of articles republished on CommPro.biz
  • Interviews by The New York Times, Fast Company, U.S. News & World Report, National Public Radio, and The Boston Globe
  • Many speaking opportunities such as at the American Marketing Association’s annual Leadership Summit, the Marketing & Public Policy conference, the Marketing Management Association conference, and a special AI-focused conference of the British Academy of Management.
 
The most exciting new development is that there will soon be a Mindful Marketing book!

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I’ve signed an agreement with Kendall Hunt to write “Mindful Marketing: Business Ethics that Stick,” which should be published this December. I am grateful to have been granted a sabbatical from teaching this fall to work on the book, which is now 80 percent complete.
 
Over the years, several people have asked me whether I might write a book on Mindful Marketing. Initially, I brushed off the suggestions, but as the site’s marketing ethics content continued to grow and gain traction, I began to give the idea more serious consideration.
 
A few years ago, I traveled back in the Mindful Marketing archives to September 2014, reviewed all the articles from that time forward, and curated them into specific categories to match topics I teach in my business ethics class. There are now over 320 Mindful Marketing articles, which provide a wealth of choices for engaging real-world applications to almost any ethical issue in marketing imaginable.
 
The articles have served my business ethics students well for discussions of topics ranging from utilitarianism, to economic and social justice, to decency. So, I thought if Mindful Marketing works for my course, it might work for others' classes. Moreover, a book seemed like the logical way to extend Mindful Marketing’s reach.
 
Some may wonder why marketing should be the focus of a business ethics book. Among other strong support, there are the arguments that marketing:
  • “Is the distinguishing, unique function of business”
  • “Is the lifeblood of any company”
  • Touches every business area
  • Directly impacts consumers many times a day
  • Is used by business leaders (e.g., CEOs, VPs, partners)
  • Is used by everyone (e.g., market their ideas, themselves)
  • Is replete with moral issues to which students can readily relate
 
While students are the primary audience, I believe the book also will have value for marketing practitioners, who are the ones making the moral decisions that ultimately determine the ethical perceptions and realities of the field. Of course I’m biased, but I believe the book also will be an interesting read for anyone who is intrigued by, or concerned about, marketing’s unique impact on our world.
 
Most important, my hope is that the book will encourage more students-turned-marketing-professionals to hit pause and ask if the strategies they see or plan to use are Mindful Marketing.
 
Our world will be a better place when there are more professionals like Kaylee Enck, who even when hearing about a rom-com’s unconventional promotional approach, remembered the Mindful Marketing conversations she engaged in a few years earlier as a student, felt moral dissonance, and questioned the film producer’s strategy. Kaylee’s experience and others like hers show that Mindful Marketing’s stickiness offers strong hope for making an impact on ethics in the field.
 
It’s interesting to see how much more often the word mindful is used now than it was a decade ago. Sometimes the contexts are physical health, or mental well-being, or even demure attire. Although those uses are different, they’re complementary – they’re all about being thoughtful and principled.

​It’s good for us to be mindful in many different ways. Given the breadth and depth of marketing’s reach, our world will especially benefit from more Mindful Marketing.

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How Should Companies Handle Underconsumption?

9/1/2024

2 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing 
I was fascinated to see video recently of a remote Amazonian tribe, deep in the rain forest of Peru, that’s one of the world’s last uncontacted people groups. Interestingly, while its members live successfully with very little, influencers in other parts of the world are suggesting minimalist lifestyles, being called underconsumption. Any trend of people buying less is troubling for many consumer-dependent companies, but it’s a great opportunity for firms to consider how they might diversify their goods portfolios and better meet consumers’ intangible needs.
 
The underconsumption movement apparently grew from a few people put off by the proliferation of self-proclaimed spokespeople using social media to promote an endless array of “must-have” products to their thousands or millions of followers. What’s more, the influencers receive many of the products they promote for free from the companies that market them, which makes their testimonials less trustworthy.
 
In contrast to those typical influencers whose bathrooms are bursting with new cosmetics and closets are cluttered with the latest workout gear, individuals advocating underconsumption show how little they own and how they find ways of doing more with less.
 
For instance, one TikTok user describes how for years she’s used the same tub of Vaseline for cracked hands, scrapes, and itchy skin. Vaseline smartly leaned into the content of this self-proclaimed brand advocate and included her clip on its TikTok site.

One can image how other brands with multifunctional products might take a similar tack. That’s what Arm & Hammer is doing on its TikTok site, which features videos of its iconic baking soda used for everything from cleaning dog toys, to washing pesticides from food, to relieving insect bites.
 
Of course, most brands don’t have the Swiss-army-knife utility of baking soda – there aren’t nearly as many varied uses for a Stanley Tumbler or Lululemon Leggings. Also, even brands like Vaseline and Arm & Hammer have product line extensions they also want to sell, e.g., Vaseline Hand Cream and Arm & Hammer Toothpaste.
 
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Companies obviously need product sales in order to bring in revenue and earn income. Furthermore, that profit isn’t just self-enrichment. The money firms make allows them to pay taxes, provide employment, and pay dividends to shareholders, some of whom depend on the passive income during retirement.
 
So, how should companies that want to market mindfully respond to the underconsumption trend? Anytime there’s a challenge or problem, a good starting point is to ask why, in this case:
 
Why does underconsumption resonate with people?
 
There likely are several motivations for underconsumption, which may differ from person to person:
  • Money: Gen Zs, especially, may not have the discretionary income to spend on many non-necessities. Part of the problem is debt, which continues to rise nationwide: In the second quarter of 2024, U.S. credit card balances rose by $27 billion to $1.14 trillion. Some families are even going into debt to take Disney vacations.
  • Simplicity: Even for people who can afford more, the idea of decluttering and simplifying their life can be very appealing. It can provide peace of mind. Also, just like more money, more problems, one can argue that the more you own, the more things can go wrong, i.e., more possessions, more problems.
  • Stewardship: Some people feel that consuming less is something they can to do protect the environment and support sustainability. Fewer goods produced helps conserve natural resources, reduce carbon emissions, and lessen trash going to landfills.
  • Self-esteem: Staying out of debt, living a simpler life, and being a good steward also can make people feel good about themselves. Of course, individuals’ esteem also receives a boost when social media friends and followers like and share their unique posts.
 
Given the many compelling reasons for buying less, what should companies, which depend on people buying more, do? Here are four suggestions:
  1. Understand how the motivations above apply to their own consumers. Some firms’ customers may be much more interested in saving the environment than in simplifying their lives. For others, it may be all about money. There’s little reason for an organization to discuss needs that don’t matter to its own customers.
  2. Make multifunctional products: Stanley probably doesn’t want to promote that its tumbler also can be used as a flowerpot, but it has given the item some versatility by developing different interchangeable lids that allow the same bottle to be used in different ways, e.g., at work, in a car, while hiking, etc.
  3. Give options for product disposal: People who are concerned about stewardship are probably more likely to buy products that they know they can trade in, resell, recycle, or upcycle into something else.
  4. Understand what else people are doing with their money: For consumers whose motivation for buying less is not lack of funds but simplicity, stewardship, or self-esteem, there’s probably money they’re not spending on products that they’re using in other ways, like the four below. Granted, the examples may be more feasible for some firms than for others, but all are worth considering.
    1. Paying off debt: Partner with a financial institution that provides debt consolidation services.
    2. Saving: Work with a bank or other institution that offers savings instruments.
    3. Spending on experiences: Develop marketable services, ideally ones related to the company’s goods, or partner (e.g., cobrand) with an organization that offers them. For instance, there are many kinds of goods makers, e.g., luggage, clothing, shoes, technology, that could consider opportunities related to travel.
    4. Giving: Help customers find good causes to which they can donate. This approach is unlikely to be a direct revenue producer for the firm, but it is a worthwhile strategy that can count as corporate social responsibility, earning the firm goodwill and eventually new customers.
 
No matter what our worldview, we all should agree on several truths related to goods, that:
  • You can’t take them with you.
  • People are more important than things.
  • Life does not consist in an abundance of possessions (Luke 12:15, NIV).

​Those living successfully in the Amazon rainforest with very little should remind us that it’s possible to survive without continually purchasing products from the other Amazon. Still, most companies that produce goods do help make our 21st century lives healthier, more productive, and more stimulating. These firms need to make money for our benefit and for theirs.
 
The four diversification strategies described above are general but might spark thoughts of how companies can complement their tangible product offerings with intangibles. Considering more carefully what one buys is mindful consumption. Understanding those consumer desires and building strategies to support them is Mindful Marketing.

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