business ethics discussion replies

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You will see the original questions presented to the class underlined below. I need responses to the following students’ posts #1-4. The #5 post is the instructor’s reply to my post. Every response to #1-5 should be at least a paragraph or two. This is for Business Ethics 400 class so please read the attached links. You need to only reference the links provided at the bottom for your sources. Please don’t forget page numbers in your citations if applicable. It is for a forum setting so please do not use, …”This student’s post….”. Please write as if you are responding to the student. Also, please complete citations for each response separately in order for me to keep each one organized. Only use the attachments I provided for sources please.

THE FOLLOWING IS THE QUESTIONS THAT WERE ANSWERED BY THE STUDENTS. PLEASE DO NOT REPLY TO THEM JUST USE THEM FOR REFERENCE.

Learning Activity #1
Baby Needs a New Crib

An on-line retailer that sells home and children’s items, such as children’s furniture, clothing, and toys, was seeking a way to reach a new audience and stop the declining sales and revenue trends it was suffering. A market research firm hired by the retailer identified a new but potentially risky market: lower-income single parents. The new market seemed attractive because of the large number of single parents, but most of these households were severely constrained in terms of their monetary resources.

The research firm proposed that the retailer offer a generous credit policy that would allow consumers to purchase up to $500 worth of merchandise on credit without a credit check, provided they signed up for direct payment of their credit account from a checking account. Because these were high-risk consumers, the credit accounts would carry extremely high interest rates. The research firm believed that even with losses, enough accounts would be paid off to make the venture extremely profitable for the on-line retailer.

Should the retailer pursue this new marketing strategy? Why or why not?

Learning Activity # 2

Advertising and Children: Do We Need Special Rules?

It is widely believed that businesses reap the benefits of billions of dollars in revenue that can be attributed to consumer spending on behalf of children. That children often influence the buying decisions of their parents has not been lost on businesses and in their advertising and marketing strategies, businesses realize that the way to the parents is frequently through their children. In older children who have access to funds, their spending has been a cash cow for businesses. The influence of children on buying decisions and spending in their own right have led to some ethical questions in the way goods and services are advertised and marketed to children (for our purposes you may consider anyone 17 and under as the target group).

The question of advertising and marketing to children has produced at least two schools of thought. There are some who believe that the advertising and marketing rules and laws that apply to everyone are sufficient to protect children. The other school says children are a special category and deserving of special laws and rules aimed specifically to protect them from inappropriate forms of advertising and marketing efforts.

Which side of the debate is the more persuasive to you and why? If you believe there should be separate laws and rules, what would you include in such? If you believe existing rules and laws adequately protect children, explain why this is the case, providing specific examples of how the general laws protect children. In your response, identify and discuss what you believe to be the ethical dilemma, and at least two related ethical issues. Are there any ethical theories that might support your position?

THE FOLLOWING #1-#4 ARE STUDENT RESPONSES YOU SHOULD RESPOND TO.

1
“The on-line retailer is considering targeting lower-income single parents to increase sales and revenue, but the concern is the lack of monetary resources for this particular group of consumers. I believe the retailer should move forward with this marketing strategy. It is important that the advertising and promotional materials have been thoroughly evaluated by the retailer to avoid any unethical acts to occur towards the consumer. The advertising of the credit policy should be clearly presented with special attention paid to the financially unsophisticated. The advertising materials must also include both the benefits and any potential risks involved. The marketing strategy should not use fine prints, separate statements, or any disclosures that are inconspicuous as these can be potentially misleading headlines (Federal Reserve, 2016). As long as this marketing strategy is fairly describing the terms and benefits while disclosing all information of this credit policy, I feel that the retailer should pursue the marketing strategy to lower-income single parents.

Federal Reserve. (December 2016). Federal Trade Commission Act Section 5: Unfair or Deceptive Acts or Practices. Retrieved from https://www.federalreserve.gov/boarddocs/supmanual/cch/ftca.pdf”

2
“
Learning Activity # 1 Baby Needs a New Crib

The retailer should pursue this new marketing strategy since it will aid in the increase of revenue to the company. Payment options play a vital role in improving the customer experience, as well as increasing customer retention, and encouraging repeat business. The store cards, with steep interest rates that are often twice that of the average credit card, generate a rich profit stream for retailers at a time when many of America’s traditional retailers are losing the battle for sales against Amazon and other e-commerce rivals. Those profits on plastic are helping obscure the true extent of the industry’s pain, a major pressure point for a piece of the economy that employs one in 10 Americans. For example, At Macy’s, the money from branded credit cards accounted for 39 percent of the company’s total profit of $1.9 billion last year, up from 26 percent in 2013, according to an analysis by Morgan Stanley. (Corkey & Silver-greenberg, 2017)

Corkery, M., & Silver-greenberg, J. (2017, May 11). Profits From Store-Branded Credit Cards Hide Depth of Retailers’ Troubles. Retrieved June 20, 2019, from https://www.nytimes.com/2017/05/11/business/dealbo…”

3
“
The side of the debate that is more persuasive to me is the one that sides with the children. I believe that children are a special category and deserving of special laws and rules aimed specifically to protect them from inappropriate forms of advertising and marketing efforts. Children are a vulnerable population and have not formed the judgment and discernment that adults have formed. Marketers realize that their lack of judgment and discernment is a billion dollar industry worth targeting and exploiting through clever marketing efforts (Fettes, 2016, para 1). Separate laws and rules that I would include that protect children are that marketing efforts should not include cartoons characters, animations that look like a cartoon, using kids in the advertisement, or using specific flavors that may resonate with children’s taste buds. Also, laws and rules that I would include are advertising or marketing that refrains from kids in mind as the major consumer. For example, refraining from using characters that children would be familiar with that promote dangerous habits or unhealthy nutrition. The current laws and rules do not protect children because of government oversight with no limitations on advertising found in retail or lack of oversight for practices aimed at children (Fox, 2016, para 20,23).

The ethical dilemma is whether marketers should be confined by special rules in advertising to children, at the risk of revenue loss, or maintain current advertising rules at the risk of inappropriate influence on young minds. One of the ethical issues is the lack of full disclosure when advertising to children. This lack of disclosure is one that hides the true intention behind the advertisement through sensory methods aimed at children (Fettes, 2016, para 7). Another ethical issue is where it is driven by greed, where one must market to children for the potential revenue this may generate for a company. The revenue is a potential piece of the pie in a 40 billion industry for children under 14 years old (Fettes, 2016, para 1).

The ethical theory that may support my position is Kant. The reason is one ought to do the right thing regardless of the consequence. Because of the unfair insolence especially for dangerous products marketers would be treating children as a means to an end. The means to an end is to sell a product at any cost and use sensory or recognizable objects to sale the product, exploiting children (Fettes, 2016, para 7). Through Kant’s Categorical Imperative, one is normalizing exploitative and deceptive forms of advertising to adults if one agrees that it is okay to market using these strategies with children (Westacott, 2019, para 16).

References:

Fettes, A. (2016, April 04). Exploitative advertising campaigns are targeting our children. Retrieved June 20, 2019, from https://mpk732t12016clusterb.wordpress.com/2016/04…

Fox, M. (2016, January 05). E-cigarette ads target millions of kids, CDC says. Retrieved June 20, 2019, from https://www.nbcnews.com/health/kids-health/e-cigarette-ads-target-millions-kids-cdc-says-n490601

Westacott, E. (2019, January 24). What you should know about Kant’s ethics in a nutshell. Retrieved June 20, 2019, from https://www.thoughtco.com/kantian-ethics-moral-philosophy-immanuel-kant-4045398”

4
“Learning Activity # 1

This situation is a bit of a win-lose situation in both cases. As a bank manager and a mother, I can see the benefits of this opportunity because it allows the parents to provide toys to their children and the parents win in this case because their children will be happy while they will also be able to provide a safe and comfortable living environment because they will be able to purchase toys, clothes, and furniture for their children. However, they will lose because since they are single parents in households constrained in terms of their monetary resources it will only add to the debt of the parents on a monthly basis until (if) they are able to afford to pay off the toys, clothes, and furniture despite the extremely high-interest rates. The company could possibly report the late or even unpaid payments to a collection agency in order to collect the funds which will result in the credit scores of the consumers being impacted negatively. With a bad credit score, it would make it harder for the consumer to receive loans at decent interest rates. The store also has a win-lose situation if they pursue this new marketing strategy.

The store would also potentially be impacted if the payment falls into a defaulting payment, meaning that the consumers are unable to fulfill their obligation of paying off the credit and they close out and reopen new checking accounts elsewhere. If the consumer goes about this method, then the responsibility of paying off the rest of the credit will ultimately fall on the company which could potentially cause them to go into debt or even possibly file for bankruptcy if too many consumers do this. Since the company does not perform a credit check for the consumer it is considered an unsecured loan meaning that there is no collateral or assets attached to the loan to ensure that it is being paid off.

Learning Activity # 2

The ethical dilemma, in this case, is that companies are having to decide whether or not they are willing to risk the lives and safety of children and families in order to make a profit despite how misleading their advertisements can be or if they are against targeting children and value the lives of children above making a profit. One of the main ethical issues in this case is deception. Many companies while they target children in order to reach the parents and gain their attention do not go about this method in the right way because they often times omit details or are deceptive in their advertising by making claims that are not true and or have yet to be tested/proven. Companies should consider the safety aspects of their advertisement goals because children are our future and these brands make an ultimate and long-lasting impression on children that can last for the rest of their lives. This I believe would fall under the golden rule theory or the virtue theory in that a good person does good things, and that you should only do to other what you would want done to you (CrashCourse, 2016). I know that I do not want companies taking advantage of me by omitting details or being misleading and falsely advertising their products to me or my children so as a business owner/leader I would never do the same to others. Children are extremely important in today’s economy because they help to shape it in a multitude of ways.

Children are said to be the most important customer of all because of how much they influence household spending. As a mother of 5 I am well aware of exactly how much my own children influence my spending habits, when I go to the grocery store, the mall, toy stores, etc…I always have to consider what my children would want or like, what they would or would not eat, what I believe is healthy for them and what is not, the list goes on. Even when they’re in the house and they see something on the T.V, or when we are out in the store and they see something they like or would want they are always sure to say “mom can I please get this, mom can you please buy this, etc….” Companies market to children in a variety of ways that entice them to ask their parents to buy a specific product or service. By targeting children as consumers when they are young it shapes their buying behavior for the future because they develop brand loyalty, even to the brands that they are used to seeing their parents buy their entire lives. T.V advertisements create stereotypes and biases within children making for dangerous social consequences (Ajfet, 2016).

I do not believe that the currents rules and laws accurately protect children from inappropriate forms of advertising and marketing. As a mother several of the products that are being sold in today’s environment to kids are very misleading and deceptive, in that they can be very misleading to the customers (FTC, n.d). However, the FTC is actively trying their best to crackdown on many of these scams and deceptive businesses (FTC, 2010). For example, a popular cereal by the name of Kellogg’s Rice Krispies at one point in time claimed to have immunity boosting properties due to an abundant amount of vitamins A,B,C, and E. This was extremely misleading and deceptive to parents and children alike, which caused the FTC to order Kellogg to stop advertising that claim sines it was not in fact true. New Balance is an example of another company who had deceptive advertising because at one point in time the company claimed that their shoes helped consumers to burn calories by simply wearing the shoe. This proved to be untrue very quickly once studied were shown that there were no added benefits, in fact it was discovered that the shoe was actually a safety hazard (Weinmann, & Bhasin, 2011). In some of the separate laws I would include something along the lines of having companies specify If the claims that they are using for their products have been tested or not, in addition to ensuring that none of their advertisements or marketing strategies are in any way misleading, wrongly interpreted, etc..by consumers.

References:

Ajfet. (2016, April 04). Exploitative Advertising Campaigns are Targeting our Children. Retrieved from https://mpk732t12016clusterb.wordpress.com/2016/04/04/exploitative-advertising-campaigns-are-targeting-our-children/

CrashCourse. (2016, December 05). Retrieved May 31, 2019, from

FTC. (n.d.). Federal Trade Commission Act Section 5: Unfair or Deceptive Acts or Practices[PDF].

https://www.federalreserve.gov/boarddocs/supmanual…

FTC. (2010, February 28). FTC Action Puts Deceptive Marketer Out of the Debt Relief Business. Retrieved from https://www.ftc.gov/news-events/press-releases/201…

Weinmann, K., & Bhasin, K. (2011, September 16). 14 False Advertising Scandals That Cost Brands Millions. Retrieved from https://www.businessinsider.com/false-advertising-…”

THE FOLLOWING IS THE #5 WHICH IS THE INSTRUCTOR’S COMMENTS. I WILL POST MY COMMENTS FIRST THEN HIS COMMENTS FOLLOWING THAT. REPLY TO HIS COMMENTS.

MY POST:
Learning Activity # 1

The research firm’s proposal to the online retailer to target lower-income single parents seems viable and profitable despite its huge risk. The risky part is allowing lower-income single parents to purchase up to $500 worth of merchandise on credit without a credit check. However, the retailer plans to offset this risk by charging extremely high interests rates — which, according to the research firm, would ensure the retailer remains highly profitable even if some accounts fail to pay off. This strategy can be compared with Uber’s controversial surge pricing. Uber increases prices in areas with high demands or during peak seasons to the distaste of some customers. In an article titled Uber’s Surge Pricing: Is it Ethical? Crowley (2017) argues that raising prices with high demands is not unethical unless when done during a crisis that forces people to demand a specific product or service.

In our case, low-income single parents could be said to be in a crisis of monetary constraints. Therefore, despite the strategy appearing good for the retailer as it would help stop its declining sales and revenue trends, it could be argued to exploitative to the lower-income single parents. Giving credit with exorbitant interest rates to a group that is already struggling with finances is only likely to drive them deep into bad loans. It can also be argued that it is ethically inappropriate and unfair to capitalize on the target group’s low financial standing and lack of an alternative to charge them the high-interest rates. Section 5(a) of the Federal Trade Commission Act (FTC Act) (15 USC §45) prohibits “unfair or deceptive acts or practices in or affecting commerce” (“Federal Trade Commission Act Section 5: Unfair or Deceptive Acts or practices,” n.d., p. 1). According to the Act, “unfair acts include practices that are not outweighed by countervailing benefits to consumers or to competition, cannon be reasonably avoided by consumers, or can cause substantial injury to consumers” (“Federal Trade Commission Act Section 5: Unfair or Deceptive Acts or practices,” n.d., p. 1).

The high-interest rates strategy the retailer plans to impose on its new target market is not only deceptive but also unfair. The rates are deceptive because the company only plans to make profits from the few accounts that will pay without caring to drive the rest into bad debts. The strategy is also unfair because it capitalizes of the group’s lack of an alternative to charge the exorbitant interest rates. In my view, the ‘generous credit policy’ is only meant to serve as a persuasive stimulus intended to lure the financially constrained families and benefit of the retailer at the expense of some of the families. AJFET (2016) argues that it is common for companies to exploit consumers after subjecting them to persuasive stimuli that are only meant to meet the companies’ marketing goals.

Learning Activity # 2

Over time, children are increasingly being socialized as consumers. According to AJFET (2016), children under the age of 14 years have been found to be spending about $40 billion annually; making them an attractive target market for a considerable number of companies. Companies have also realized that by tailoring their adverts to appeal to children, they can then influence the consumption patterns of their families. Mostly, the idea is to encourage the child to force their parents to buy them a specific product — by creating a phenomenon that AJFET (2016) calls ‘Pester Power’ — where children will constantly nag their parents for the latest children’s products. However, children-targeted marketing creates an ethical dilemma: is it ethical or not?

I am of the perception that it is unethical to use children to influence the spending patterns of their parents. Apart from that, a child is more likely to be influenced into impulsive buying — unlike a grown-up who might pause to review their current financial standing. Financially unstable parents might be forced by their children into spending for things they had not planned for, further sinking them into financial chaos. A related ethical issue is the controversy around the exorbitant interest rates businesses tend to impose on low-income earners as a strategy to offset the losses caused by a section of those who default. There have also been concerns that some of these child-targeted adverts tend to undermine the authority of parents over their children by capitalizing on themes that center around independence and rebellion (AJFET, 2016). This brings up another ethical issue: how much influence do online games have on children since they also tend to be founded on similar themes?

I believe the marketing and advertising rules and laws that apply to everyone are insufficient to protect children. Unlike adults, children are more likely to perceive adverts as accurate, truthful, and unbiased. Some adverts are even influencing children into bad behaviors, such as consuming unhealthy foods or cigarette smoking. For instance, to entice teenagers, e-cigarette companies have been found to portray their cigarettes as flavored with flavors that appeal to teens (Fox, 2016). Consequently, e-cigarette smoking among high school and middle school student have risen considerably. Between the years 2011 and 2014, e-cigarette use among high school teen rose from 1.5 percent to 13.4 percent (Fox, 2016). Monster Beverage Corp. is the other company that has been found culprit of targeting children with their adverts despite the health hazards posed by their highly caffeinated drinks (Harris, 2014). Hence, there should be special rules and laws aimed to specifically protect children against unethical adverts. An example of a good law to protect children will be one that bars any misleading or falsehood adverts that might only appeal to children.

References

Harris, J. (2016) Monster drinks: Are the energy drinks marketed to children? Los Angeles Times. Retrieved from https://www.latimes.com/food/dailydish/la-dd-monst…

Fox, M. (2016) E-Cigarette Ads Target Millions of Kids, CDC Says. Nbcnews. Retrieved from https://www.nbcnews.com/health/kids-health/e-cigar…

AJFET (2016) Exploitative Advertising Campaigns are Targeting out Children. Deakin Business School. Retrieved from https://mpk732t12016clusterb.wordpress.com/2016/04/04/exploitative-advertising-campaigns-are-targeting-our-children/

Federal Trade Commission Act Section 5: Unfair or Deceptive Acts or practices” (n.d.) Retrieved from https://www.federalreserve.gov/boarddocs/supmanual…

Crowley L. (2017) Uber’s Surge Pricing: Is it Ethical? Retrieved from https://blogs.pugetsound.edu/econ/2017/02/17/ubers…

INSTRUCTOR’S COMMENTS ( THIS IS WHAT YOU MAKE A REPLY TO!)
“
If the retailer discloses all of the material terms of the promotion, why shouldn’t this consumer group have the right to decide if the promotion is right for them?

What do you say to those who argue that it is up to the parents to protect their children from questionable marketing campaigns?”

SOURCES TO BE USED FOR YOUR REFERENCES:
Theme 1: Ethical Issues Related to Marketing

Offensive/Exploitive/Insensitive/Violent—short of illegal

False Claims to Making One Healthier, Richer, Younger–illegal

Exploitive/Dangerous to Children & Vulnerable Populations

Stealth Advertising/Conflicts of Interest/Biased Reviewers

Theme 2: Ethical Issues Related to Brand Protection

Controversial Ingredients and Testing of Ingredients

Assembly & Manufacturing Problems

Consumer Privacy

Pricing

Theme 3: Ethical Issues Related to Food & Drink Production

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