M: Marketing
5th Edition
ISBN: 9781259737749
Author: Grewal
Publisher: MCG
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Question
Chapter 14.8, Problem 1CY
Summary Introduction
To determine: The common pricing practice which is considered illegal.
Introduction: The strategy used by the companies to set the price of their products and services is known as the pricing strategy.
Expert Solution & Answer
Explanation of Solution
Even though it is always unethical to mislead in advertisements, a particular amount of puffery would be allowed. Apart from this allowed exception, there are certain points which are considered unethical; these points are explained as follows:
- Deceptive reference pricing: Deceptive reference price means where the reference prices are deflated or fictitious which might harm the consumers. This kind of reference prices is considered to be unethical or illegal.
- Loss-leader pricing: Loss-leader pricing is the tactics used by the store owners to mislead the customers. This store owners lowers the price to below store’s cost but with a markup of 100%. This type of discount does not consider to be legal in some states if the manufacturer is captivating the promotion cost of the firm.
- Bait and switch: In this strategy, sellers advertise deceptive prices without any intention to sell it. This type of strategy is also considered unethical in the country.
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Students have asked these similar questions
What common pricing practices are considered to beillegal or unethical?
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, marketing and related others by exploring similar questions and additional content below.Similar questions
- Explain the pricing strategy and argue about the reasons that motivate companies to sell a product below its normal price (dumping).arrow_forwardExplain customary pricing.arrow_forwardMany organisations use transfer pricing when transferring products between different divisions of the same organisation. You are required to critically discuss the advantages and disadvantages of the following methods: Should include critical evaluation of the models and concepts proposed outlining their merits and limitations. You may incorporate logical assumptions with regard to the company and use numerical examples to illustrate the models and concepts that you propose to adopt Market based transfer prices; Full cost transfer prices; Marginal/variable cost transfer prices; Cost-plus a mark-up transfer prices; and 5) Negotiated transfer prices.arrow_forward
- Under what environmental conditions are price wars likely to occur in an industry? What are the implications of price wars for a company?arrow_forwardIn terms of pricing principles, why do rental companies often display the retail price alongside the rental price for products they feature?arrow_forwardWhich pricing practices are covered by the Sherman Act?arrow_forward
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