250 words for each chapter.
Chapter 19 – Advanced Bio Medics (ABM) has invented a new stem-cellbased drug that will arrest even advanced forms of lung cancer. Development costs were actually quite low because the drug was an accidental discovery by scientists working on a different project. To stop the disease requires a regimen of one pill per week for 20 weeks. There is no substitute offered by competitors. ABM is thinking that it could maximize its profits by charging $10,000 per pill. Of course, many people will die because they cant afford the medicine at this price.
1. Should ABM maximize its profits?
2. Does the AMA Statement of Ethics address this issue? Go to http://www.marketingpower.comand review the Statement. Then write a brief paragraph on what the AMA Statement of Ethics contains that relates to ABMs dilemma.
Chapter 20 – ETHICS EXERCISE
People feel better when they think they are getting a great bargain when they shop. Knowing this, some retailers mark up 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.
1. What do you think about the situation?
2. Does the AMA Code of Ethics address this issue? Go to http://www.marketingpower.comand review the code. Then write a brief paragraph summarizing what the AMA Code of Ethics contains that relates to retail pricing.
Should ABM maximize its profits?
ABM should not maximize its profits because this would be done at the expense of people’s lives, which is unethical. In other words, maximizing profits by increasing the price amounts to price gauging, which is morally wrong as it does not work in the best interest of the customers. Ideally, maximizing profits knowing very well that doing so would result in many people losing their lives is morally wrong and hence uncalled-for. Furthermore, price gouging is a moral wrong since it is somewhat a failure of respect for others since it prejudices equitable access to essential needs of clients. Also, engaging in gouging implies a lack of respect for clients because it interferes with autonomous decision-making of the potential customers. What’s more, charging $10,000 will prevents the poor clients from accessing the drugs, hence reflecting inequitable results, which is immoral. Gauging is like neglecting those who cannot afford the drugs, hence denying them their rights to health care, which is obviously not ethical. Instead of just focusing on profit maximization, ABM should also mind about the welfare and freedom of the people who use the drugs. Charging what the customers cannot afford is greedy and denying the society allocation of goods that they need. AMA Statement of Ethics address this issue under ‘Fairness’, which is associated with balancing “justly the needs of the buyer with the interest of the seller” (AMA, 2013). In this regards, the code of ethics stipulates that firms and organizations should desists from price gouging, because this is a tactic that can harm their own welfare.
Chapter 20 – ETHICS EXERCISE
My position is that retailers should not inflate the sales price so they can make the customers happy by giving them a significant discount, because this is being unfaithful to the customers whose interest the business community purport to protect. In other words, making the customers to believe that they are being offered big discount while the truth of the matter is that this is a strategy to merely make them happy is unethical and uncalled –for. What’s more, such a strategy gives an opportunity for unscrupulous retailers to exploit their customer who do not negotiate for the discounts, or by sometimes failing to grant them the discount by the amount that has been inflated. Also, setting the prices at extremely high levels before reducing puts off some customers who hope to purchase the products in future, and sometimes this interferes………………………………………..
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