ETHICAL ISSUES IN PRICING STRATEGIES

Ethical Issues in Pricing Strategies

Abstract

In this paper, we try to explore the concept of Ethical Issues in pricing strategies. We use Scholarly research paper using a number of journal articles supporting the ethical issues in pricing strategies. We have recognized thesis statement and five supporting sub points. Research project consists of two parts: research section and faith integration section. Faith-integration discussed from a biblical perspective references, to support the discussion. In last we conclude the paper by scripture apply to the topic.

Ethical Issues in Pricing Strategies

Introduction

In many cultures and among various who promulgate ethical principles, such a goal is morally reprehensible. Although this opinion was once held by the majority, its popularity has declined over the last three centuries due to the success of capitalism and the failure of collectivism to deliver an improvement in material well-being. Still, many people, including many in business practice and education, believe that there are legitimate, "ethical" constraints on maximizing profit through pricing.

Thesis Statement A business operating in today's competitive environment might be tempted to try a variety of unethical pricing strategies to increase market share and profits. Operating just to pursue the company's self-interest can result in decreased trust by customers and lawsuits that take up company time and money to defend. Developing an "ethical" pricing strategy from the start can help avoid these pitfalls.

Discussion

It is important to clarify your own and your customers' understanding of those standards before ambiguous situations arises. The topology of ethical constraints in pricing illustrated in Table A is a good place to start. Readers should determine where to draw the line concerning ethical constraints—for themselves and their industry and determine as well how other people (family, neighbors, and social groups) might view such decisions.

Table A: When Is a Price Ethical?

Ethical Constraints

Level

The Exchange Is Ethical When

Implication/Proscription

1

The price is paid voluntarily.

“Let the buyer beware.”

2

“...and is based on equal information.”

No sales without full disclosure (used-car defects, risks of smoking).

3

“...and does not exploit buyers' 'essential needs'.”

No “excessive” profits on essentials such as life-saving pharmaceuticals.

4

“...and is justified by costs.”

No segmented pricing based on the value. No excessive profits based on shortages, even for nonessential products.

5

“...and provides equal access to goods regardless of one's ability to cover the cost.”

No exchange for personal gain. Give as able and receive as needed.

Most people would reject the idea of zero ethical constraints, in which the seller can dictate the price and terms and force them on an unwilling buyer. Sale of “protection” by organized crime is universally condemned. The practice of forcing employees in a one-company town to buy from the “company store” is subject to only marginally less condemnation. Even when the government itself is the seller that is forcing people to purchase goods and services at a price (tax rate) it sets, people condemn the transaction unless they feel empowered to influence the terms. This level of behavioral constraint was also used to condemn the “trusts” that, before the antitrust laws, sometimes used reprehensible tactics to drive lower-priced ...