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.

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The situation described above could, perhaps, be considered a sales promotion that uses deception or manipulation.

1. 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.
2. 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.
3. Did you believe the retailer is sacrificing revenue for you the consumers’ benefit?
4. Why or Why not?
5. Do you find their sales practices to be ethical and beneficial to the consumer or perhaps unethical and misleading?