MarketingLesson 5 of 5 in the course Pricing Products and Services

Ethical Pricing: Competition, Discounts, and Customer Choice

5 flashcards · 5 quiz questions · 5 match pairs · 5 fill-in sentences · English

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Summary

Pricing decisions affect consumers’ choices, trust, and access to products. This lesson introduces ethical pricing and examines two practices that can mislead or harm customers: price fixing and deceptive price advertising.

Ethics concerns behavior guided by values and beliefs about right and wrong. In marketing, pricing choices are ethical when they treat customers honestly and comply with applicable laws. Unethical conduct can damage customer trust, reduce repeat business, and lead to lost profits or legal consequences.

All flashcards

Ethical pricing
Pricing that treats customers honestly and complies with applicable laws.
Price fixing
An agreement among competitors to set prices or coordinate pricing instead of competing independently.
Deceptive price advertising
A pricing claim that misleads customers about a reference price, discount, or deal.
Why does a low price alone not establish predatory pricing?
Low prices may result from efficiency or promotions; exclusionary intent and likely harm to competition also matter.
How can perceived unfair price differences affect customer relationships?
Customers who feel exploited may become less loyal.

Quiz questions

  1. Which description best captures predatory pricing?Answer: Pricing intended to exclude competitors, with potential harm to competition over time.
  2. A seller charges different customers different prices based on what it believes each will pay. What practice is this?Answer: Price discrimination
  3. Which statement best describes the legality of price discrimination?Answer: It is not automatically illegal; legality can depend on economic harm and applicable rules.
  4. Why are price increases by a seller with few or no competitors a particular ethical concern?Answer: Customers may have few realistic alternatives when prices rise.
  5. In the Naked Wines model, what do customer contributions help provide to independent winemakers?Answer: Funding, alongside customer feedback about wine preferences.

Based on Principles of Marketing by Dr. Maria Gomez Albrecht, Dr. Mark Green, Linda Hoffman (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.

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