Leader pricing strategy
I consider the loss leader pricing strategy as an unethical move for various reasons. The method involves treachery to win customers. Organizations using this strategy focus on their eventual needs, not reflecting on the implications of the strategy on their customer. For instance, customers are tempted to continually buy in organizations using this strategy, a scenario, which can make customers overspend on one commodity (Duff, 2018). I also consider the strategy as unethical because it promotes unfair competition in business. Organizations using this strategy snatch customers from their competitors, using unfair grounds. Hence because of its application of treachery, lies, and unfair competition, I consider the strategy unethical.
The principal beneficiaries of this practice are the organizations that apply it in their business. Most customers think that buying products under the loss leader pricing is benefitting; however, the massive benefit falls on the organizations (Solomon et al. 2020). The loss leader product is usually placed alongside another product, which organizations aim to us in recovering the loss made by loss leader product. The loss leader product aims at inviting customers into a store, and when these customers are in the store, there is a higher chance they will buy other products. Customers and competitors get hurt massively by this practice. Customers end up buying excessively from a store and spending more than they intended on a product. For instance, a customer may decide to buy in bulk to take advantage of the lowered prices. Competitors who cannot match the loss leader pricing strategy by rival organizations make massive losses. However, the company using the loss leader marketing strategy may also experience massive losses. For instance, customers may take advantage of the loss leader product and avoid buying other products in the organization (Duff, 2018). The outcome is that the organization incurs massive losses on this product.
Loss leader pricing strategy should be made illegal for various reasons. The strategy encourages unfair competition, whereby organizations that adopt the strategy outshine the others with usual pricing strategies. Customers move to stores with loss-leader strategies to save money for other products (Fleisher, 2017). The strategy also encourages big companies to prey on the small business that cannot uphold the loss leader pricing strategy. Prolonged use of this strategy implies that it prevents small businesses from flourishing; hence should be abolished. The loss leader pricing strategy also leads to the hurting of customers by the individual organizations using it (Fleisher, 2017). Unplanned purchases lead to massive losses, with customers being enticed to buy products at lower prices, contrary to their shopping plans.
Bait-and-switch pricing strategy is a type of fraud commonly used in retail sales to attract customers. In this strategy, customers are first baited by traders advertising for goods at relatively lower prices. However, when these customers visit the stores to buy the lowly-priced commodities, they are stunned to find that the advertised products are not available. Salespersons within the stores take this opportunity to convince the customers to buy other products, similar to the missing ones. The bait-and-switch pricing strategy looks similar to the loss leader pricing strategy; however, the dynamics involved in the two strategies differ widely. In the loss leader pricing strategy, customers buy the exact products they are promised at lower prices, while in the bait-and-switch pricing strategy, a customer does not find the intended commodity (Solomon et al. 2020). The bait-and-switch pricing strategy aims to sell other products, while the leader pricing strategy aims at outshining a competitor and drive customers into a market.