Ethics in Product Price, Placement & Promotion in Marketing
Ethics is a prime concern in marketing, and the areas of price, placement and promotion are no exception. Pricing refers to the way in which prices are set for consumers, considering the cost of inputs, distribution and overhead. Placement involves the strategic positioning of products within retail stores. Promotions involve short-term price discounts or giveaways. Each of these areas presents its own set of ethical dilemmas, challenges and legal guidelines to navigate. Understanding the role of ethics in product price, placement and promotion in marketing can help you to stay on the right side of the law while developing a reputation for setting high ethical standards.
Price collusion can be a major source of ethical pressure in many industries, and artificial price-fixing is illegal in a wide range of countries. Price collusion exists when a number of competitors agree to set prices at a certain level, bypassing the natural market forces of supply and demand and creating an unfair advantage over consumers. Artificially inflating prices of necessary consumer goods such as gasoline or basic food goods can breach consumers' ethical expectations, as well. Setting different price points for different consumers for the same goods can be considered an unethical move and can land a company on the wrong side of the law and consumer sentiment. Favor fair-market pricing whenever possible to maintain ethical pricing structures, and refuse to do business with suppliers or cooperate with competitors who offer price-fixing deals.
End-caps, point-of-sale displays and demo kiosks are all examples of positioning techniques that are inherently harmless, but which can be used in arguably unethical ways. Candy distributors, for example, are known for placing bright displays at children's eye level right before checkout counters in grocery stores, knowing that the combination of children's pleas and parents' stress while standing in line will result in increased sales. There is nothing illegal about this tactic, but some consumers consider such emotional manipulation to be highly unethical, especially when it involves children. Slotting allowances can be considered unethical by some, as well. Slotting allowances are cash payments paid by large and financially strong brands to secure the best shelf space in retail stores, making it artificially difficult for small brands to gain shoppers' attention.
Promotions are designed to boost short-term sales by providing irresistible value propositions to consumers. Coupons, holiday sales events, mail-in rebates and giveaways all fall under the promotions category. The "bait and switch" tactic is widely considered unethical, yet many companies still practice this promotions technique. With bait and switch, a company advertises a significant discount on a valuable product, but stocks only a small number of that item in stores. Customers are lured in by the great deal, only to discover that a completely different and often inferior product is being promoted instead. Avoid this tactic at all costs. Even though it is legal, the bait-and-switch tactic can tarnish your ethical reputation quickly.
Other areas of marketing present their own distinct ethical challenges. The areas of advertising and sales serve as prime examples. Advertising ethics are highly regulated by law when it comes to honesty, discrimination and young audiences, but advertisers need to go the extra mile to avoid offending viewers even within the boundaries of the law. Sales practices such as cold calling, canvassing and door-to-door solicitation are regulated by local, state and federal regulations.