Fingerhut’s Price strategy

The importance of ethics cannot be gainsaid as far as the
sustainability of any business entity is concerned. Indeed, business
ethics has a bearing on the appeal that a particular business has in the
eyes of customers, both current and potential, and involves the
application of ethical behavior to or values to business behavior. This
application would encompass every other aspect of business conduct
including the strategies that are used in the boardroom to the treatment
that companies give their employees, suppliers and customers, as well as
the accounting practices and sales techniques. Of particular note is the
fact that ethics would go beyond the realm of the legal requirements
placed on the company, in which case it would revolve around the
discretionally decisions that the company makes, as well as the behavior
that dictates the values that it holds or spouses. However, there are
instances where the application of business ethics would seem to
contradict the legal requirements for the companies (Ferrell et al.,
2011). The fact that companies may not necessarily required by law to
act in a certain way often breeds controversial issues or cases that may
threaten the sustainability of a company, as is the case for Fingerhut`s
price strategy. The determination of the ethical or unethical nature of
Fingerhut`s price strategy would necessitate the examination of the
“autonomy and creation of desire” by Roger Crisp.
Treviño & Nelson, 2011). According to Roger Crisp, the marketing
technique used by Fingerhut denied its customers of an opportunity to
act autonomously, especially considering the fact that the specialized
catalogues had specific goods that were aimed at creating a desire
thereby forcing the customers to buy the goods rather than making them
want the same. Complementing this notion is the fact that the catalogs
incorporated information on easy and low payment structures. These
eventually masked the real prices that the clients would end up paying,
a strategy that Crisp would see as amounting to deception of the
clients. Indeed, Roger Crisp would see this as amounting to the
brainwashing of the customers so as to create the impression that the
items were cheaper than they were while, in fact, the goods thus sold
could even have been about 100% more expensive compared to those of
their competitors (Ferrell et al., 2011). Of particular note is the fact
that the target customers were essentially low income individuals, in
which case they can be assumed to have been less educated, and even less
informed about the prices in the market, in which case they had no idea
as to the variations in the prices of the goods that they paid and the
prices that they should have paid in a perfect or fair market (Treviño
& Nelson, 2011). This underlines the fact that the marketing techniques
and motives used by Crisp were aimed at exploiting the ignorance of the
customers, in which case it had acted unethically.
Treviño & Nelson, 2011). The extension of the credit line by Fingerhut
not only gave them an opportunity to obtain the items that they needed
without saving, while also assisting them in building up their credit,
an aspect that would eventually assist them in purchasing other
necessities in the future (Ferrell et al., 2013). The variations in the
price offerings by the company would essentially be justified on the
basis of the risk that it was taking with this group. Indeed, other
companies may have stayed away from this group thanks to the high
probability that the individuals may be unable to make their payments.
Indeed, Friedman would insinuate that high risks attract or necessitate
high profits in a capitalist system, in which case the exorbitant
pricing of Fingerhut’s goods would essentially not amount to the
flouting of the ethics by which businesses should abide.
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ply providing information on the options that are available to them. On
the same note, it is essentially offering them a way of building their
creditworthiness, in which case they can have the capacity to make
further purchases in the future.
Using the principled reasoning approach, Jane would come up with the
way forward. The problem in this dilemma is the pricing strategy, with
the company having to make profits while meeting the requirements of
business ethics. The company, as a stakeholder would need profits and a
reduction of risks, while the customers would need the goods provided in
fair market prices. Abolishing the pricing strategy, as an option, would
essentially eliminate the only appeal that the company has as providing
low income earners with an option, while keeping it intact may invite
more legal problems. Nevertheless, irrespective of the strategy used,
it is likely that there will always be disgruntled members of the
public, in which case keeping the system intact would be the best
option, while ensuring that the customers are aware of the other options
in case they choose to pay in full.
References
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business ethics:
Ethical decision making and cases. Mason, OH: South-Western Cengage
Learning.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics:
Ethical decision making and cases. Mason, OH: South-Western/Cengage
Learning.
Treviño, L. K., & Nelson, K. A. (2011). Managing business ethics:
Straight talk about how to do it right. New York: John Wiley.

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