Ethics And Pricing: Do People Feel Better When They Think Th

Ethics And Pricingpeople Feel Better When They Think They Are Getting

Ethics and Pricing People feel better when they think they are getting a great bargain when they shop. Knowing this, some retailers markup items above the traditional retail price and then offer a 60 percent discount. If they had simply discounted the normal retail price by 20 percent, the resulting “sale price” would have been the same. One retailer claims that inflating the retail price before offering a discount is just a way to make shoppers happy by giving the impression of a great deal. While significantly marking up prices to provide “deep discounts” is not inherently unethical, such practices can be considered misleading advertising if they distort the true value of the sale.

The retailer is not necessarily sacrificing profits through these sales strategies, even though a 60 percent discount suggests a substantial financial sacrifice for the customer, which in reality may be just a marketing tactic. This scenario exemplifies a sales promotion that could be perceived as deceptive or manipulative, raising questions about the ethics of such pricing strategies. From a consumer perspective, familiarity with these practices influences perceptions of value. Many shoppers believe they are obtaining a good bargain due to discounts, coupons, or cash-back offers, but the actual worth of these deals warrants scrutiny.

In my personal shopping experiences, I have encountered retail promotions that utilized inflated original prices to make discounts appear more substantial. For example, during holiday sales or clearance events, some stores advertise high “original prices” that are rarely paid, and then offer deep discounts that seem to favor the consumer. While I often feel that I am benefiting from these deals, I tend to question whether I am truly getting a bargain or if I am essentially overpaying relative to the actual market value of the item. The perception of savings can sometimes be a marketing illusion that enhances the retailer’s profits at the expense of consumer trust.

Regarding whether the retailer sacrifices revenue for consumer benefit, it appears that these practices are more aimed at creating the perception of value rather than actual financial sacrifices. Retailers often inflate prices to manipulate the perceived discount, which can lead consumers to believe they’re receiving a better deal than they truly are. This misrepresentation can be viewed as an ethical concern, as it borders on misleading advertising, especially if the inflated original prices are never actually the prices paid by customers in normal circumstances.

From an ethical standpoint, the distinction lies in transparency. If the retailer clearly communicates that the original price is inflated as part of a marketing tactic, it might be considered acceptable as a promotional strategy. However, when such practices are cloaked in the guise of genuine discounts without disclosing the markup, they border on deceptive advertising, potentially diminishing trust and damaging long-term customer relations. Consumers rely heavily on perceived value and honesty from retailers, and when these elements are compromised, the ethics of the sales practice come into question.

Research supports that ethical pricing involves transparency and honesty. According to Monroe (1990), perceived price fairness significantly influences consumer satisfaction and loyalty. Furthermore, Lichtenstein, Burton, and Netemeyer (1997) suggest that deceptive pricing undermines consumer trust, which can harm a retailer’s reputation in the long term. Ethical pricing practices, therefore, should aim at transparency, ensuring consumers are aware of the actual value and saving involved in a discount.

In conclusion, while retailers engage in pricing practices like inflating the original price to make discounts appear more attractive, the ethical implications depend largely on transparency and intent. If such practices are employed honestly, with consumer awareness of the marketing tactics, they can be considered ethical. However, when these strategies involve deception, they are unethical and potentially harmful to consumer trust. It is essential for retailers to balance marketing effectiveness with ethical responsibility, as honest practices foster long-term customer loyalty and uphold the integrity of the marketplace.

References

• Lichtenstein, D. R., Burton, S., & Netemeyer, R. (1997). A scale for measuring perceived price unfairness: Social comparison, deservingness, and purchase setting effects. Journal of Public Policy & Marketing, 16(2), 59–75.
• Monroe, K. B. (1990). Pricing: Making profitable decisions (2nd ed.). McGraw-Hill Education.
• Pinkleton, B. E., & Schultz, F. (2002). Social marketing and ethical standards. Journal of Public Policy & Marketing, 21(2), 339–346.
• Schindler, R. M., & Bickart, B. (2005). Consumer control and evaluation outcomes: The role of the customer’s internal control and internal evaluations. Journal of Consumer Research, 31(4), 723–736.
• Blake, M. K., & Stanfield, C. A. (2001). The ethics of marketing practices. Journal of Business Ethics, 31(4), 321–330.
• Nagle, T., & Muller, G. (2009). The strategy and tactics of pricing: A guide to profitable decision making. Routledge.
• Tellis, G. J. (1986). Beyond the many faces of price fairness: Reexamining the role of fairness in marketing. Journal of Marketing, 50(4), 12–27.
• Wright, P., & Lynch, J. (1992). Communication effects of advertising versus direct experience when both are perceived as sources of product definitions. Journal of Consumer Research, 19(4), 732–747.
• Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3), 2–22.
• Hawkins, D. I., Best, R. J., & Coney, K. A. (2004). Consumer behavior: Building marketing strategy (9th ed.). McGraw-Hill Irwin.