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I’ve been liking the discussions related to ethical issues…and since you aren’t covering such issues most of the MML assignments, I’m going to focus on ethics again in discussions this week. Here’s three pricing-related ethical issues…what do you think?
1. Some online stores sell products to consumers at different prices based on the user’s information, such as geographical location – which determines your proximity to competitors and your area’s average income. Although this practice, known as Internet price discrimination, is not illegal, some would say it is unethical. Do you believe this practice is unethical? Should this practice be illegal? If you think the practice should be legal, should retailers be required to put a disclaimer on their site? Explain your reasoning.
2. Many very successful retailers use a loss leader pricing strategy, in which they advertise an item at a price below their cost and sell the item at that price to get customers into their store. They feel that these customers will continue to shop with their company and that they will make a profit in the long run. Do you consider this an unethical practice? Who benefits and who is hurt by such practices? Do you think the practice should be made illegal, as some states have done? Why or why not? How is this different from bait-and-switch pricing (which is illegal in most states)?
3. Some retailers have used decoy pricing to increase the number of sales of a higher priced alternative. What is decoy pricing? What are some products that would be good choices for decoy pricing? Is this practice ethical? Why or why not?
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