Thursday, 17 November 2011

Ignorance Of The Law Is No Excuse… For a Marketing Manager

Are companies following marketing laws or just stretching the truth? Have you ever stopped to think about the savings companies boast in their ads and thought, can that be true? The truth is that companies are sometimes deceptive. There are several ways companies go about ignoring pricing laws.
One of the ways companies mislead consumers is by Misleading Price Claims (MSLP) (CMIA). This is when a manufacture suggests a price point to a retailer but the store sells it for a lower price and then has a sale. The retailer advertises that you save X number of dollars, but the number of dollars saved is from the manufacturer’s suggested price to their sales price.
For example: -Manufacture suggests product is worth 500$
                        -Retailer sells it at 400$
                        -Retailer has sale, and sells for 300$
 Then in the flyer retailer says you save 40% because 500$ to 300$, but it should be 400$ to 300$ which would be 25% savings.

Another way company’s trick customers, is the Bait and Switch (CMIA). This is where a company has a sale on a product, but has little in stock. When the company runs out of the product they show the customer a similar, but more expensive product. Most consumers fall for it because their already in the store and they wanted the product.
Occasionally, different companies with similar products have met with each other to set a high price, so no matter which brand the consumer gets they’re paying a high price for the product. This is called Price Fixing (CMIA).
Another method is Predatory Pricing (CMIA). This is when a company sets the price so low no competition can compete. The downfall if doing this is that the company doesn’t make a lot of money. This is illegal for companies to do, but it is really hard to prove.
All of the marketing methods above are illegal. Though these deceptions can seem inconsequential the company and consumer should be on level ground. The laws are safe guards for consumers so that they can make informed decisions.

This is a video of more marketing laws that were not discussed in my report that I found to be interesting. (Guide to Money - Immutable Laws of Marketing)
Canadian Marketing in Action (CMIA) 8th edition Keith J. Tuckwel

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