Marketing 1

Question 1

Marketing

Answer 1

• The process of selling a product or service that a company produces or provides
• Looking to solve a variety of problems that may inhibit the sale of a product or service
• Market research attempts to determine market demand and the most efficient means of meeting this demand

Question 2

Justification for marketing

Answer 2

• Efficiency in satisfying wants

- Exchange is efficient if it is voluntary

Question 3

Holley’s Model

Answer 3

• Three important areas for voluntary exchange:
  1. KNOWLEDGE: both buyer and seller understand what they giving up and receiving
  2. NON-COMPULSION: buyer is not compelled to enter into the exchange as a result of coercion, restricted choice or constrained ability to choose
  3. RATIONALITY: buyer and seller able to make rational judgments about costs and benefits of exchange

Question 4

Holley’s Model of Acceptable Exchange

Answer 4

• In real world, conditions of perfect competition are not met. Therefore an exchange is acceptable if it is:
• adequately informed
• adequately rational
• free from compulsion

Question 5

Holley’s model: What is adequate information?

Answer 5

Misinformation undermine the adequacy of the information conditions
-also truths that intend to mislead, undermine this condition

Question 6

Holley’s model: What is adequate rationality?

Answer 6

• recently bereaved person and children may not be able to make rational decisions
• emotional appeals to factors that may be subconscious may not be rational (e.g. attractive ppl smoking cigarettes)

Question 7

Holley’s model: What is a choice free from compulsion?

Answer 7

-When there is no coercion in the choice

Issues: monopolies/cartels, water and electicity

Question 8

Holley’s continuum of levels of disclosure

Answer 8

1. Minimal information rule: buyer responsible for acquiring information about the product
2. Modified information rule: seller only obliged to give information to buyer regarding risk of injury
3. Fairness rule: seller must give the buyer information needed to make a reasonable judgment, and which the buyer wouldn’t know otherwise without the seller
4. Mutual benefit rule: seller responsible for giving information needed to make a reasonable judgment as to whether to buy the product
5. Maximal information rule: seller must give any information relevant to deciding whether to purchase

Question 9

Holley’s position

Answer 9

• the Mutual benefit rule is the appropriate standards

- in car purchasing example, this may entail telling the buyer that next year there will no spare parts available

Question 10

Advertising: the institution and functions of

Answer 10

• What argument support the practice of advertising? It tells ppl what is available
• Why is it important to inform the public? allows them to select the product that best satisfies there needs/wants
• Ethical issue: it is okay to INFORM the public of the availability of the product, but to PERSUADE maybe not so much

Question 11

Galbraith’s Argument on advertising

Answer 11

• Central function of advertising is to CREATE wants or desires - to bring about wants that previous did not exist.
• Production itself can passively create desires
• Therefore one cannot defend production as satisfying wants if that production creates the wants
• Separation of innate wants from created wants: e.g. ANY food will satisfy a starving man, but only a BMW will satisfy the rich man

Question 12

Reply to Galbraith: Hayek

Answer 12

1. To say that a desire/want is not important because it is not innate is to say that the whole cultural achievement of man is unimportant (music, painting, literature)
2. Even if production creates wants, this does not show that particular producers (advertisers) can deliberately determine the want of particular consumers (choice comes from a complex set of causes) - producer cannot DETERMINE what the consumer wants

Question 13

Determination vs manipulation

Answer 13

• Does advertising have to be deterministic for it to be ethically unacceptable? maybe not
• If it were only manipulative of our choices, it may still be ethically unacceptable
• Manipulation: when are we free to act/choose? To the extent that external controlling forces influence or constrain

Question 14

Controlling Influences (3)

Answer 14

• Coercion: when one person uses force or threat of harm to compel another response from another
• Persuasion: situation where good reasons are offered for accepting the desired alternative
• Manipulation: non-coercively modifying choices available, or by non-persuasively altering another person’s perceptions of choices (difference with persuasion is that information manipulation is based on deception)

Question 15

Beauchamp, Bowie and Arnold on controlling influences

Answer 15

• Advertising should not prevent informed choice
• Advertisements should be persuasive
• Coercion=very wrong, manipulation=wrong, persuasion=acceptable

Question 16

Paternalism

Answer 16

• Interference with a person’s liberty of action that is justified in terms of the wellbeing of the person interfered with
  e. g. forcing children to go to school, obligatory seatbelts, restricting the sale of alcohol

Question 17

Objections to parternalism

Answer 17

• they violate some individual liberty
• they work against personal autonomy
• Mill: only justification for interfering with the liberty of another individual is the prevention of harm to OTHERS
  
  • other person’s good does not justify our interference

Question 18

Mill continued

Answer 18

• Argument only applies to adults of normal intelligence
• we are not justified in interfering with an individual when doing so is in his own best interests
• we are allowed to, at most, explain to the individual why he should act in this way (e.g. saving for retirement)
• Interference is only justified when an individual’s actions will cause harm to others
• Utilitarian view: each (normal adult) is best able to just what is in his best interests

Question 19

Paternalism and CSR: Shareholder and Stakeholder view

Answer 19

• SHAREholder view: society better off if individuals pursue their own self-interests, is seen as overly antipaternalistic.
• STAKEholder view: does not seem to justify paternalistic interference since the interests of the stakeholder groups would be STATED interests of those groups

Question 20

Strong vs Weak Paternalism

Answer 20

S: we are justified in interfering to prevent a person from harming himself even if his decision is fully voluntary or unimpaired (Mill disagrees)
W: can interfere only when there is a defect in his decision to engage in a self-harming activity (Mill agrees)
-Mill gives broken bridge example, can stop the uninformed man, but once he knows, cannot stop him
-Reasons for impaired decision-making (wkpat): lack of relevant piece of knowledge, or person may be impaired (child, mentally-ill, addicted etc)

Question 21

Paternalism in the marketplace

Answer 21

• Relationship between salesperson and buyer can range from caveat emptor (buyer beware) to strong paternalism
• Ebejer and Morden argue that only paternalism justified is when an uninformed decision may be detrimental to the customer, but once informed, he is free to act