Justice requires that the price to be paid for a good should be commensurate with its value. The main challenge this idea poses is how to determine the value of a good, and what it is worth. Some people believe that the economic value of a product should be determined based on the costs that have to be incurred in producing it and making it available, including perhaps a moderate profit and this is called the cost theory of value. In my view, however, the economic value of a product is best indicated by the price it fetches in an open market which is called the market theory of value. It is always good to use a fair pricing strategy for your products and services.
Trek-ation is an online travel agency based in Portland and their business was to help travelers. They had a lot of traffic on their websites that helped customers to book their flights, hotel reservation, and taxis. The business analyst in the company came up with an idea, the idea was to use the information gotten from customers accepting cookies on their website to influence the price they give to each customer. Unfair pricing is unethical and unfair.
Trek-ation’s action was unethical because the customers did not give the organization consent to use their information, and the cookie did not state that the organization will be using their information to determine the price. Trek-ation faced competition, it is important to note that we would always face competition in life but this does not mean that we should take advantage of other people. They violated their customer’s privacy which makes it not only unethical but also illegal. You must always do things that will earn your customer’s trust, Trek-ation thought that the customers would not know that they practiced unfair pricing because they make use of cookies, cookies store your information on the browser without your knowledge.
Some unethical pricing strategies are:
- Predatory Pricing: The practice of charging a very low price for a product with the intent of driving competition out of business.
- Price Gouging: This is an unethical pricing strategy of hoarding a product and selling it later. It is a pejorative term referring to a situation in which a seller prices goods or commodities at a level much higher than is considered reasonable or fair.
- Price Fixing: This is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. For instance, when you are trying to create a monopoly.
We have ethical responsibilities to our customers. There are two approaches:
- Service Approach: It focuses on the customer, it focuses on creating value for the customer. When you create value for the customer there will be customer retention.
- Warfare Approach: This approach focuses on extracting value from the customer. For instance, sometimes as organizations we usually have hidden charges or sell a product that will harm others.
Reference
Trek-ation (no date) Darden Business Publishing Cases. Available at: https://www.emerald.com/insight/content/doi/10.1108/case.darden.2021.000027/full/html?skipTracking=true (Accessed: November 17, 2022).
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