Question

In: Operations Management

Consider the concept of marketing product to the affluent: 1-is this business practice ethical in nature?...

Consider the concept of marketing product to the affluent:

1-is this business practice ethical in nature?

2-should the concept of overpricing products to the affluent population be considered unethical?

Solutions

Expert Solution

1. Yes. The business practice of marketing product to the affluent is ethical in nature. When a product has values that can satisfy human needs of the affluent such as status, ego etc. it is natural to market the product to the particular segment to make more money. A company is marketing its product to people who can afford the luxury which is very much ethical given the amount of research and development may have gone into the product. For example - Apple targets itself to the affluent and the sense of exclusivity + cutting edge technology is why people buy it. If everyone can afford an iPhone , maybe people won't buy as it will be so common.

2. No, the concept must not be considered unethical. A company is charging affluent based on the value they can deliver to affluent population. If there is no value that is satisfied by the product, even affluent people won't buy the product. Further, such products have a lot of sunk cost in the form of R&D and a premium is charged to cover and innovate in future.


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