1. Marketing Ethics – Product Safety and Pricing
Jerry Estenson

2. Four “Ps” of Marketing
Product
Pricing
Promotion
Placement

3. Basic Concept of the Market
A place where a seller brings a product or service and where a buyer is willing to “exchange” something of value for the product or service.

4. Big Questions Who would be interested in buying the good or service?
What price would they be willing to pay?
How much can they afford?
How will the price affect other stakeholders (distributors, retailers, competitors)
Who is responsible for the product should harm occur?
Are requirements different if selling in other countries?

5. Ethical Perspectives
A free exchange is “Prima Facie” (On its face) ethically legitimate
Kantian – respect for individual because they are seen as capable of pursuing their own interests.

6. Issue Occur When
Exchange was a result of informed or voluntary consent
No Fraud
No Deception
No Coercion

7. Kant Again Were participants treated simply as means to an end?
Are there real benefits from the transaction?
What other values maybe at stake (societal concerns)

8. Coercion
The more an individual needs the product the less free they are to decide (addicts or very ill people)
Informed consent
What about buyers with impaired skills (reading, math, life experience)?
Addition to “Affluenza” (higher degree of consumption will lead to higher degrees of happiness)

9. Values beyond needs of buyer
Fairness
Health
Justice
Safety
There is a market for children

10. Product Liability First sense Second sense Third sense
Who or what caused the problem
Second sense
Assignment of blame or fault “who is responsible?”
Third sense
Who is accountable? Such as who is responsible for paying an elderly persons bills

11. Negligence Contract – only what is promised
Contractarian view – I have duties to what I have narrowly and explicitly assumed
General duty: Not to put others at unnecessary or avoidable risk
One does not neglect their duty to exercise reasonable care not to harm other people
Ought not reasonably oblige someone to do what they cannot do
One ought not to harm others

12. What would a reasonable person expect an “average person to know”
One standard – liable only for harms they could actually foresaw occurring
Recklessness or even intentional harm are far beyond simple negligence
A higher standard – Avoid harm that even if not actually thought about they should have thought about.
What would a reasonable person expect an “average person to know”
Higher your knowledge the greater your obligation

13. Product Liability
Strict – Product performance. Therefore responsibility is on producers
Who pays
Tough luck – consumer pays
Society – Socialized insurance
Manufacturer
Deep pockets and ability to pass on cost
“compensatory justice” Those who caused the harm or have benefited from the transaction should compensate people harmed
Guns and Cigarettes

14. Caveat Emptor
You are required only to live up to your end of the bargain. Pay the price – Deliver the goods or services

15. Pricing A fair price is one that both parties agree to
What about availability of buyers and sellers? If either limited then no market equilibrium
Knowledge of buyers
AIDs drugs in Africa
What about patents?
What about monopolistic pricing?
Wal-Mart, COSTCO, Target, Safeway
What about stair-step pricing in auto industry?
What about government subsidies?