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 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.
Solution
Introduction
In the contemporary business era, retailers intend to come up with different attractive pricing strategies to enhance the visibility of customer’s attention and satisfaction. Typically, customers perceive that bargaining deal is better to get the product at low prices. Several marketing tactics have been adopted by retailers to increase sales and generate high revenue streams. However, the study revolves around pricing ethics. The emphasis is on the shopping experience, which may help to determine whether the pricing was ethical or misleading.
Retail Shop
I use to shop at Wal-Mart stores. This retail chain is in the limelight due to its discount offerings. “Everyday low prices” is an attractive tactic or strategy of the company to make products available at low prices. However, I have some reservations over this typical pricing tactic. The company is using the penetrating pricing strategy to keep the profit margins low. The purpose is to facilitate customers. On the other hand, sharp analysis of the pricing tactics tells the different story.
Bargain Deal or Overpaid
Shopping at Wal-Mart is always a wonderful experience, as I can have many products at low prices as compared to other retailers. Besides, it has been revealed that the company does not keep the prices of new products low. For Instance, when a new product comes in the store, the company sells it at high or traditional retail price. For a while, the product is available at a high price (Boyle, 2018). However, after generating the revenue, the management offers a discount by facilitating the bargain deal. I think I have to overpay, as the product should always be sold at a discounted price. I can be a bargain a deal if I get the new product at a discount. Thus, selling at low prices is not hitting the profit margins because the firm has already gotten its margin.
Is Retailer is Sacrificing Revenue
Wal-Mart, a prominent retail chain in the United States is not sacrificing revenues for the customer’s benefit. It can be understood through staring two scenarios. First, the penetration pricing strategy can keep the revenues and profit margins low. However, if the sale increases, the company can still meet its financial targets. Thus, if the company wants the customer benefits, it must sacrifice its revenue and profitability targets. On the other hand, the firm is not sacrificing the revenue because it is raising the prices of other retail products. Also, a shift in a product price goes in favor of the company, as far as a revenue stream and better profit margins are concerned.
Ethical and Beneficial or Unethical and Misleading
Being a customer of this retail chain, I think I am overpaying. The company is misleading customers. The company has successfully created the perception that it always intends to sacrifice its profit or revenues. Interestingly, Wal-Mart is one of the largest retailers of the world by revenues. The company is falsifying the information regarding pricing and margins. The shift in price is not unethical, but instead of creating confusion, the firm must come up with clear intentions. If the firm decides to keep the margin low, it must mean it in the competitive market to get the customer’s trust (Schmalbruch, 2015).
Conclusion
In the end, it is to conclude that everyone can have a different shopping experience. The study was based on my personal shopping experience in Wal-Mart store. In my opinion, a bargain deal is a right of the customer, and the firm must consider it when shaping its pricing strategy. In the retail market, customers have become aware of the pricing tactics of the company, and it can also become the primary consideration when setting the price.
References
Boyle, M. (2018, August 14). Prices Are Rising for Walmart and Consumers May Feel the Pain. https://www.bloomberg.com/news/articles/2018-08-14/walmart-may-find-even-its-size-not-a-shield-from-rising-prices
Schmalbruch, S. (2015, January 7). How Stores Manipulate Prices So You’ll Spend More. https://www.businessinsider.com/stores-manipulate-prices-2015-1
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