Marketing Ethics Product Safety and Pricing Jerry Estenson

Marketing Ethics – Product Safety and Pricing Jerry Estenson

Four “Ps” of Marketing • • Product Pricing Promotion Placement

Basic Concept of the Market • A place where a seller brings a product or service and where a buyer is willing to “exchange” something of value for the product or service.

Big Questions • Who would be interested in buying the good or service? • What price would they be willing to pay? – How much can they afford? • How will the price affect other stakeholders (distributors, retailers, competitors) • Who is responsible for the product should harm occur? • Are requirements different if selling in other countries?

Ethical Perspectives • A free exchange is “Prima Facie” (On its face) ethically legitimate – Kantian – respect for individual because they are seen as capable of pursuing their own interests.

Issue Occur When • Exchange was a result of informed or voluntary consent – No Fraud – No Deception – No Coercion

Kant Again • Were participants treated simply as means to an end? • Are there real benefits from the transaction? • What other values maybe at stake (societal concerns)

Coercion • The more an individual needs the product the less free they are to decide (addicts or very ill people) • Informed consent – What about buyers with impaired skills (reading, math, life experience)? • Addition to “Affluenza” (higher degree of consumption will lead to higher degrees of happiness)

Values beyond needs of buyer • • • Fairness Health Justice Safety There is a market for children

Product Liability • First sense – Who or what caused the problem • Second sense – Assignment of blame or fault “who is responsible? ” • Third sense – Who is accountable? Such as who is responsible for paying an elderly persons bills

Negligence • Contract – only what is promised • Contractarian view – I have duties to what I have narrowly and explicitly assumed • General duty: Not to put others at unnecessary or avoidable risk – One does not neglect their duty to exercise reasonable care not to harm other people • Ought not reasonably oblige someone to do what they cannot do • One ought not to harm others

• One standard – liable only for harms they could actually foresaw occurring – Recklessness or even intentional harm are far beyond simple negligence • A higher standard – Avoid harm that even if not actually thought about they should have thought about. • What would a reasonable person expect an “average person to know” • Higher your knowledge the greater your obligation

Product Liability • Strict – Product performance. Therefore responsibility is on producers • Who pays – Tough luck – consumer pays – Society – Socialized insurance – Manufacturer • Deep pockets and ability to pass on cost • “compensatory justice” Those who caused the harm or have benefited from the transaction should compensate people harmed • Guns and Cigarettes

Caveat Emptor • You are required only to live up to your end of the bargain. Pay the price – Deliver the goods or services

Pricing • A fair price is one that both parties agree to – What about availability of buyers and sellers? If either limited then no market equilibrium • Knowledge of buyers – AIDs drugs in Africa • What about patents? • What about monopolistic pricing? – Wal-Mart, COSTCO, Target, Safeway • What about stair-step pricing in auto industry? • What about government subsidies?