Ethics And Pricing: People Feel Better When They Think They

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 retailer’s 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 says that he is just making shoppers happy that they got a great deal when he inflates the retail price before discounting. Significantly marking up prices in order to offer “deep discounts” is not an unethical pricing practice per se, but it may be considered misleading advertising.

The retailer is not really reducing its profits as a result of offering the sale price, even though a 60 percent discount implies a financial sacrifice on the part of the retailer for the benefit of the customer. The situation described above could, perhaps, be considered a sales promotion that uses deception or manipulation. As a consumer think of a place you like to shop at because of the so-called great bargains, coupons, cash back and or discounts they offer. From your shopping experience explain if the discounts you received on your purchase you feel was a bargain deal or do you feel you overpaid. Did you believe the retailer is sacrificing revenue for you the consumers’ benefit?

Why or Why not? Do you find their sales practices to be ethical and beneficial to the consumer or perhaps unethical and misleading?

Paper For Above instruction

In the realm of retail sales and marketing, the perception of getting a good deal plays a significant role in influencing consumer purchasing behavior. Retailers often employ pricing strategies that create the illusion of significant savings, such as inflating the original retail price before offering a substantial discount. This practice leverages psychological factors associated with perception and value, but it also raises critical questions about ethics and honesty in advertising.

One common strategy involves marking up the original retail price substantially and then offering a heavy discount, such as 60%, which appears highly attractive to consumers. When compared with straightforward discounts—say, reducing the original price by 20%—the final sale prices can be identical. However, the inflated original price enhances the perceived savings, making the deal seem more lucrative. While this approach may be legal and widespread, ethical concerns arise when the inflated price is not reflective of the true market value, resulting in a form of deception or manipulation.

From a consumer perspective, this marketing tactic can be viewed ambiguously. On one hand, consumers appreciate discounts and perceive themselves to be benefiting from a bargain. This perception can lead to increased sales and customer satisfaction, fostering loyalty if consumers believe they are getting value. On the other hand, when consumers discover that the original retail price was artificially inflated, they may feel misled, which erodes trust and compromises the retailer’s ethical standing.

Empirical studies suggest that consumers are prone to interpret large percentage discounts as indicators of savings, even if the initial pricing was artificially inflated. Psychological research indicates that framing effects significantly influence consumer decisions, making discounts appear more attractive than they objectively are (Kahneman & Tversky, 1979). Therefore, while such pricing strategies are effective in boosting short-term sales, they may also be ethically questionable if their primary purpose is to deceive rather than inform consumers.

Furthermore, the issue of whether retailers are sacrificing profits to benefit consumers is complex. Some retailers might maintain high markups to cover operational costs or maintain margins, and their discounts may not significantly cut into profits. Others may use artificially inflated prices merely as a marketing tactic without genuine intent to give a true discount,aking consumers believe they are receiving a better deal than they actually are.

Considering personal shopping experiences, many consumers have encountered discounts that felt genuinely beneficial—such as coupons or clearance sales—yet some of these deals involved inflated original prices. If consumers perceive a price as a fair and honest reflection of value, they are more likely to feel satisfied and trusting. Conversely, if they feel misled, they may question the retailer's integrity and avoid future purchases.

Ethically, transparent pricing strategies are preferable because they foster trust and long-term customer relationships. Price deception, even if legally permissible, undermines consumer confidence and may be considered unethical because it manipulates perception rather than providing honest value. It is essential for retailers to balance business objectives with ethical considerations, ensuring that their promotional practices do not exploit consumer psychology dishonestly.

In conclusion, while tactics such as inflating retail prices before offering discounts can boost sales and create a perception of savings, they pose ethical questions about honesty and transparency. Consumers should remain vigilant and informed, recognizing that not all discounts are as beneficial as they appear. Retailers, in turn, have a responsibility to market their products truthfully and ethically, maintaining integrity to foster trust and consumer loyalty over the long term.

References

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