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 Second sense Third 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

What would a reasonable person expect an “average person to know” 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?