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Wanna learn how to lie more profitably? Go shopping!

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» Wanna learn how to lie more profitably? Go shopping!

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The prices at the mall were marked way down for practically everything this Christmas. The stores advertised discounts up to 60% off the regular prices. How could we resist? Many of us decided we would be foolish not to take advantage of this great opportunity. So, out we went and bought lots of extra stuff and spent lots more money than we had planned.

What does that have to do with ethics, you ask? It has to do with business ethics, I reply. More specifically it has to do with lying, known in business often as deceptive advertising and not often enough as fraud.

I could go on ranting and raving about this subject but --. Would someone else care to say something?

@Dewey phil,

Hmmm, a merchant lies about his product...
That has been business-as-usual as long as there has been business.
It is up to YOU to be armed with sufficient knowledge to prevent getting cheated.
Remember;
"You can't cheat an honest man."

And, "business ethics" is an oxymoron if ever I heard one... like 'government intelligence'! heh

@Dewey phil,

I fail to understand what is deceptive in this example. A merchant offers to sell a product at a price less than the one established prior to that time, and a customer may choose to buy it or not. If the customer overspends or buys too much, isn't it his responsibility (or lack thereof)?

This is not an example of deceptive advertising nor fraud in any legal sense, and certainly not about "lying," unless the company in question could not prove that the original price was legitimate (and there are specific legal criteria to do so).

@nameless,

nameless wrote:

And, "business ethics" is an oxymoron if ever I heard one... like 'government intelligence'! heh

Code number one of business ethics--"Screw or be screwed."

@Theaetetus,

One thing to keep in mind is that when these end of the year sales come up, it's not because the stores fell magnanimous and wish to pass the savings on to you. At the end of the fourth quarter fiscal year, all businesses are taxed on direct inventory. Best buy for example would be better off selling a LCD T.V. at half the price to you than keeping it in stock, getting taxed on it (I believe nearly a quarter of its value becuase corporations are double taxed on the same thing), keeping it in inventory (which costs money), running the risk of having cold merchandise and selling it to a wholesaler who probably buys it at half cost anyway devalued.

Another interesting tidbit is just how greedy (or absent minded) the majority of stores really are. But I really shouldn't say that, they are caught in the same hole we are, only its substantially larger. At the beginning of the fiscal year (before the crisis) companies like Best Buy determined a potential earnings growth where, judged on past earnings of the previous season, they forecast that they would make so many percent more this year than last. WHAAMMM! Economic crisis. People don't buy as much, demand declines and supply for the season increases. Here is the point. Companies like best buy set relatively high profit margins for the year, and when the recession hit they still had to post those profit margin forcasts. The media picks up on those posted forecasts and says "look how bad our economy is" when they don't take into account the forecasts general principle "all things being the same"(ceteris parabus) which had no idea the recession would happen. So greed in part of the high profit margins but sympathy because they are caught with a high bid for a market with low buyers.

Dewey,

@Dewey phil,

First, most retail business finance their inventory through borrowing money, so it is not just year-end inventory taxes that prompt them to reduce inventory at the expence of profit. The formula for GMROI is Gross Margin (roughly, profit) times Turnover, and most business are aware that increasing turnover is more effective than increasing profit to increasing the bottom line.

Second, with some traditional exceptions, most retailers are lucky to work on 35-40 percent initial profit; anything they sell below that percent is at a loss. They make no money, and the consumer benefits.

Third, we have to consider the other side of the traditional picture of "greedy capitalism." Most retail corporations are contributors to many charities, provide major support to opera, symphonies, and museums, and donate goods or services in the communities they serve (e.g. Ronald MacDonald houses).

Revision: GMROI is gross margin by the average cost of inventory, as noted by another poster below.

@jgweed,

Hi Nameless and Theactetus,

Your readers may all say you're justified (to whatever extent each of them feels) in your opinions that lying by merchants is endemic and that buyers simply have to expect it and put up with it. But what do you say if someone asks:

1. Should we resign ourselves to unsatisfactory conditions simply because they have existed a long time?

2. Why should we exempt the citizens who serve the community's mercantile needs from our general standards and aspirations of morality?

@Dewey phil,

Dewey;40737 wrote:

1. Should we resign ourselves to unsatisfactory conditions simply because they have existed a long time?

The universe never asks me whether the present manifestation is 'satisfactory', to me, or not. Awareness of life, as it is, simply unfolds, sometimes comfortable, sometimes not. I accept what is as what is. What is, is that people will take advantage of other people. Those that are educated and aware will find themselves less 'victimized' by the 'victimizers'.

Quote:

2. Why should we exempt the citizens who serve the community’s mercantile needs from our general standards and aspirations of morality?

We don't exempt business from our consensus ethics; that is what 'laws' are about. Fraud is against the law. False advertising is against the law. Deceptive advertising, psychological and emotional manipulation is a 'grey area', where an educated person is less likely to become victimized.

@nameless,

other divided by average inventory cost.

@jgweed,

jgweed wrote:

I fail to understand what is deceptive in this example. A merchant offers to sell a product at a price less than the one established prior to that time, and a customer may choose to buy it or not. If the customer overspends or buys too much, isn't it his responsibility (or lack thereof)?

This is not an example of deceptive advertising nor fraud in any legal sense, and certainly not about "lying," unless the company in question could not prove that the original price was legitimate (and there are specific legal criteria to do so).

Both you and VideCorSpoon show familiarity with the retail business. I have an "insider" question for you. But first, I'll respond to your comment.

What is deceptive, in my opinion at this point, is this. The "discounts" are alleged to be markdowns from "original", "established" or "regular" prices that never actually existed. The same merchandise has never been offered at the same location at the higher price as is being alleged. Some may claim this practice is mere puffery - acceptable exaggeration -- but it's not. Go and watch those mobs of avid shoppers scurrying after the "markdowns". They are like lambs to the slaughter - but they are not lambs and shouldn't be treated that way..

I have personally known some folks in the retail business. They go to church. They live generally respectable and self-respecting lives. As you say, they even give a lot to charity. Does that make it OK for them to lie to their customers? Quite the opposite, I would say. Doesn't your reference to "corporations" hints of a feeling that the individual has a degree of relief from personal responsibility?

Now to the question. VideCorSpoon's information about inventory considerations was helpful. But can you tell me anymore about how Sears, Macy's, Ann Taylor, et al, go about this process of discount pricing? Store clerks have told me they mark down things already in the store only "once in a while". I'm also aware of the Federal Trade Commission's Guides Against Deceptive Pricing, which denounce in specific terms the unsavory practices I think are going on. (Obviously, however, there ia little if any FTA enforcement.) More evidence supporting my view (or, OK, your view) will be appreciated.

Thanks.

@Dewey phil,

This conversation brings this article from the consumerist to mind. It... is... hilarious. This is what happens when a store posts a price, covers that price up with a higher price, yet doesn't remove the lower price from the item. Somewhere in between, they expect the consumer not to peek under the tag and put the item on sale! LOL! It is less greed than stupidity.

Markups: Kohl's Marks Up Jewelry, Then Discounts It

@VideCorSpoon,

Is it ethical for businesses to use psychologically aggressive tactics in the process of convincing people to buy goods?

@Didymos Thomas,

Didymos Thomas;40772 wrote:

Is it ethical for businesses to use psychologically aggressive tactics in the process of convincing people to buy goods?

Interesting. I would imagine that if whatever method of 'persuasion/conversion' is used by the merchant can be effectively countered by an 'informed and aware' customer, I might be inclined to consider it 'fairplay'.
Then, of course, the same tactics that can be negated by intellect and awareness would be simply predatory when applied to our less 'intellectually inclined' brethren. Shall we throw them to the wolves even if we might be 'immune'?
So, like everything that i examine, the answer is yes.
And no.
A matter of Perspective.
Where could one possibly draw the line, legally, (in the USA, for instance, that uses and condones torture of its own citizens and others) between where "psychologically aggressive tactics" begin, and 'psychologically passive' tactics leave off. Is there even such a thing as 'psychologically passive' tactics of 'conversion/brainwashing/advertising'? A good argument can be made against it.
Caveat emptor indeed.
It's good that people believe in karma, and hell...

@nameless,

nameless wrote:

The universe never asks me whether the present manifestation is 'satisfactory', to me, or not. Awareness of life, as it is, simply unfolds, sometimes comfortable, sometimes not. I accept what is as what is. What is, is that people will take advantage of other people. Those that are educated and aware will find themselves less 'victimized' by the 'victimizers'.

We don't exempt business from our consensus ethics; that is what 'laws' are about. Fraud is against the law. False advertising is against the law. Deceptive advertising, psychological and emotional manipulation is a 'grey area', where an educated person is less likely to become victimized.

I conclude from your answers that you believe that many if not most members of your community are inherently unethical in their business dealings and perform ethically only to the extent prescribed and enforced by law. Your personal ethics, as indicated by your posts in other threads, seem higher than those you see around you. Why do you think that is so? Why do you think others are incapable of ever reaching that level?

(Concerning your distinction between false advertising and deceptive advertising, check again. I think you'lll find that the legal term for the forbidden kind is "deceptive advertising".)

@Dewey phil,

Thanks, VCS for the correction, which I have noted in the original post. My point was not to say that corporations were all angels in their activities, but to point out that all of them were not dishonest merchants unconcerned with anything but the bottom line, and thus to promote a more balanced perspective.

Most national retail chains are extremely careful to comply with the rules established for determining deceptive pricing, and have their own policies in place for doing so. State A-Gs are always scrutinizing advertising, and the last thing a chain wants is a large fine from one or more A-Gs and the bad publicity that follows it.

Retailers generally have different discounting methods. They may temporarily advertise, for example, an offer at a lower price. Buy one get another 1/2 off (which is more like 25 percent off on two), save X number of dollars, and so on. The merchandise strategy, usually at line level, determines the frequency of items within it, and the amount of discount. Item or category promotions are both used to increase line or store sales. Note that certain categories of merchandise, such as fine jewelry, paint, and furniture traditionally are never sold at full price. There have been many attempts to change the pricing of these items to an "everyday low price" but these have always been disastrous to sales.

The second kind of "sale" is a permanent markdown, generally made in increments, to reduce unwanted inventory (past-seasonal merchandise, discontinued, or display items). These reductions may or may not be specifically advertised, but included in special "store-wide" sales that will cover a wide and differing range of items at store location level.

@Dewey phil,

Dewey;40788 wrote:

I conclude from your answers that you believe that many if not most members of your community are inherently unethical in their business dealings and perform ethically only to the extent prescribed and enforced by law.

Not only 'my community' but business in general, and most blatantly so with 'big business'.
The government, big business, that actively and routinely engages in deception and propaganda cannot be trusted to protect the same manipulable herd upon which it feeds/predates. Caveat emptor indeed!

Quote:

Your personal ethics, as indicated by your posts in other threads, seem higher than those you see around you. Why do you think that is so?

I happen to be relatively (depends when you look) honest. I have nothing to lose. No 'customers' to cozen...
No 'why', I simply manifest my nature as it appears from moment to moment. Some moments I can appear rather 'unethical'. No 'why', what is, is. I have no 'choice' or 'free-will' in the matter (or any other matter).
Even the most apparently 'unethical' people will manifest 'ethical' moments. What parts of 'humanity' do we individual humans not 'contain'? The killer is also a healer; depends on timing and Perspective.

Quote:

Why do you think others are incapable of ever reaching that level?

I think no such thing. 'Ethicality' is a whole spectrum on which we all pop up from time to time, here and there, as observed...
I am also not a merchant and do not have that 'context' in which to feel to 'tempted'.

Quote:

Concerning your distinction between false advertising and deceptive advertising, check again. I think you’lll find that the legal term for the forbidden kind is “deceptive advertising”.

I'm not thinking so. Ever seen the Subway (sandwich restaurant) ad for it's sandwiches? They are piled with fresh meats, lots of verdant glistening veggies, fresh bread, lots of cheese, etc... Are these images reflective of what you will actually receive on paying the price? Hardly. That is 'deceptive'. The 'grilled chicken' with the painted on grilling marks, the salad sprayed with oil to make it shine, the oiled tomatoes in the produce section, etc... are all meant to 'deceive'; making you think that you are getting 'better quality' than you actually are getting. 'Deceptive advertising' of that nature is both legal and quite common.
'False advertising' is saying that you will receive something that you will not receive (beyond 'images'). Saying that if you buy vitamin D and take it you will loose lots of weight is false advertising. Saying that your product will do what it will not do, is what it is not... is 'false' advertising.
Ethically, I don't see much difference between the two.

@nameless,

Well, from the above exchange of ideas we see we don't feel the same about our merchants' pricing tactics. I wonder if we can go a step beyond our differences. Let's suppose that:

1. The discounts offered by retailers are fictitious but the prices are fair.
2. Though misled, the customers do not buy beyond their means.

What do you think? Is this lying by the retailers immoral conduct? Why or why not?

@Dewey phil,

Yes, they lied. Not only that, but the set out to lie for no other reason than to make money. Swindlers, hoodlums, cheap hustlers. The custom is not relevant to the discussion if the question is about the moral conduct of the retailer.

@Didymos Thomas,

Didymos, if I understand you correctly (and you understood me correctly), you would judge the retailers' conduct immoral because of their lying regardless of whether or not it leads to monetary losses by the unknowing customers.

Under the conditions I have assumed, there seems to be only one unfair pecuniary consequence. The retailers advertising the fake discounts would draw away regular customers of the legitimate retailers. The bad guys would profit unfairly at the expense of the good guys. Is that your basis for condemning these liars? If not that, what? Some non-pecuniary misbehavior, perhaps?

@Dewey phil,

Dewey;40934 wrote:

Is this lying by the retailers immoral conduct? Why or why not?

Conduct is neither moral nor immoral.
Morality (or immorality) is a judgement, a filter through which the 'conduct' appears to an observer/Perspective (that 'sees things' in those terms). Then, for that observer, at the time of that observation, the perceived conduct would be considered moral or immoral, to him, in his 'reality'.
Perhaps a rewording of the question?

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