Desjardins5e ppt ch8

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  • 1. CHAPTER EIGHT: MARKETING ETHICS: PRODUCT SAFETY ANDPRICINGCopyright 2014 by McGraw-Hill Education. All rights reserved.

2. Introduce a range of ethical issues that arise in marketing Provide an ethical framework for evaluating marketing ethics Explain the ethical dimensions of products liability law rangingfrom caveat emptor to strict products liability Examine the ethical issues surrounding the concept of negligence Provide an ethical analysis of strict products liability Examine some ethical issues involved in product pricingCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-2 3. Products liability law in the United States has long held abusiness liable for harms caused by its products if thoseharms were foreseeable and avoidable The concept of life-cycle responsibility holds that business canbe held responsible for the entire life cycle of a product Some European countries have imposed take backregulations that require a business to take a product backfrom a consumer at the end of the products life for recycle,reuse, or responsible disposalCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-3 4. Defenders of life-cycle responsibility believe it will provide anincentive for manufacturers to design products that are moreeasily recycled or reused, are less toxic, and last longer Some critics raise practical problems with this approach,including: some durable products and components have a life-cyclethat could easily outlast the existence of a manufacturer;and requiring individual manufacturing firms to take-backdangerous products might actually increase risk as these productsare spread widely rather than collected in a centralized locationCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-4 5. Electronic product concerns Product liability laws and approachesCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-5 6. The essence of marketing is product, pricing, promotionand placement (the 4 Ps)- Before a product is created, the question is who willbuy it.- Once created, the product must be priced so thatpeople will buy it.- Once priced, the producers must consider under whatconditions the product will be soldCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-6 7. A single exchange between two individuals is primafacie ethically legitimate.- Kantians: Upholding respect for individuals bytreating them as autonomous agents- Utilitarians: Agreement is evidence thathappiness is increasedCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-7 8. In general it is useful to keep three concerns inmind regarding Marketing:1. To what degree are the participants respectedas free and autonomous?2. To what degree does the transaction provideactual benefits?3. What other values might be at stake in thetransaction?Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-8 9. How do you determine when someone is treatedwith respect? Free ConsentPractices aimed at children and the elderly raisequestions of voluntariness. Informed ConsentThe complexity of many consumer products andservices can mean that consumers may notunderstand fully what they are purchasing.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-9 10. How do we understand the benefits accrued byconsumers? Impulse buying Bankruptcies AffluenzaSimple customer satisfaction is not a conclusivemeasure of the benefits of market exchange.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-10 11. What values exist other than those served in themarketing exchange? Fairness Justice Health SafetyCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-11 12. What are the true costs of production?Externalities show that even if both parties to theexchange receive actual benefits from theexchange, other parties external to the exchangemight be adversely affected.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-12 13. Market Exchange is prima facie ethically legitimatebecause of: Respect for the autonomy/freedom of individuals Mutual benefit for each party to the exchange But, this ethical judgment is conditional because: The transaction must be truly voluntary Informed consent of each party is needed Benefits might not occur Other values might conflictCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-13 14. The preceding 4 conditions therefore imply thefollowing questions, each of which requiresconsidering several factors:1. Is exchange voluntary?2. Is consent to exchange really informed?3. Are people truly benefited?4. Do competing values over-ride?Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-14 15. Three senses of responsibility Who or what caused something to happen? To whom should we assign blame? Who is accountable? Negligence Strict Product LiabilityCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-15 16. Caveat emptor understands marketing as a simpleexchange between a buyer and a sellerevery purchase is assumed to involve the informedconsent of the buyer and is assumed to be ethicallylegitimate.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-16 17. What are the problems with this approach? Adequate understanding Implicit promise of safety Limited or expressed warrantiesCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-17 18. Negligence, a concept from tort law, provides asecond avenue of defense for consumers. Ethical Duty Ethical Neglect Involves the ability to foresee the consequences ofour actions and failing to take steps to avoid the likelyconsequences.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-18 19. The Reasonable Person StandardA reasonable person does what we could expectthe ordinary, average person to do.- Assumes thoughtfulness- Assumes judicious decision-making- May assume more of the average person thanthey are capable ofCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-19 20. Focuses not on the actions of the peopleinvolved but on the performance of the product Some harms occur in ways that can only be describedas an accident; neither the producer nor theconsumer acts negligently, but the consumer isinjured nonetheless In the absence of fault, the strict products liabilitystandard assigns this responsibility to producersCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-20 21. Three options The consumer can be made accountable for theirown harms (tough luck standard) Hold society in general accountable for the harmssuffered by the consumer Hold the producer accountable for harms suffered bythe consumerAre these arguments persuasive?Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-21 22. John McCall: Strict liability is no more unfair than it would be tohold the injured consumers accountableCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-22 23. Fairness refers to externalities that arise. Injured consumers have not voluntarily accepted theinjury as part of the cost of the product they arepurchasing The injuries should be paid by those who arebenefiting from the exchange, other users of theproduct and stockholdersMcCallCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-23 24. Strict liability standard does not entail thatproducers are accountable for every injurycaused by their products Some products are inherently dangerous andmight reasonable be expected to cause injuryCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-24 25. A fair price is a price that both parties to anexchange agree uponbut a products price also affects third parties,thusfairness and equal opportunity are relevantto pricing ethicsCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-25 26. Informed consent can be missing in some pricingsituations- Price gouging- Monopolistic pricing- Price fixingCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-26 27. Price gouging occurs when the buyer has fewpurchase options for a needed product and theseller uses this situation to raise pricessignificantly. Energy companies Gasoline stations and 9/11Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-27 28. Monopolistic pricing and price-fixing are similar Either individual companies or a group of conspiringcompanies use their market power to forceconsumers to pay a higher price than they wouldhave if there were real competition in themarketplace Microsoft and Windows Operating System Prescription Drugs Credit Card Interest RatesCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-28 29. Could consumers ever be benefited from higherprices than they could otherwise pay? Wal-Mart and small communitiesThe economic model that suggests that individuals arebetter off whenever they pay lower prices may betoo simplistic.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-29 30. Predatory pricing occurs when a product istemporarily priced below the actual costs as ameans of driving competitors out of business. The price of economic efficiency may involvesocial and political costs to the widercommunity.Copyright 2014 by McGraw-Hill Education. All rights reserved. 8-30 31. Lessons to be learned Do not assign blame or praise The lowest, mutually acceptable price alone isinsufficient for determining legitimate pricing policies The economic system is part of a much larger socialand political system; when there are social costsinvolved in a transaction, then costs not reflected inthe price agreed upon make the price unfairCopyright 2014 by McGraw-Hill Education. All rights reserved. 8-31