MRKT 661 Week 4 DB Forum 2 Thread Example

Discussion Board Forum 2 Thread: Pricing Law, Fairness and a Theme Park's New Model

MRKT 661 Ethical and Legal Issues in Marketing, Discussion Board Forum 2 Thread

Thread by [Student Name]

The prompt and the theme park are composites standing in for the course's own forum; the statutes, scholarly sources and textbook are real; the requirements follow Liberty's public course guide for MRKT 661.

Thread

A family-owned theme park in the Blue Ridge foothills has charged a single gate price of $64 for twenty years. Next season it plans to change. Admission will be priced by date, from $39 on a rainy Tuesday in May to $89 on a Saturday in July, with prices adjusted weekly according to forecast demand. The park's app will also send personalized offers, using each visitor's purchase history and browsing to decide who receives a discount and how large it is. The owners expect higher revenue and smaller crowds on peak days. The prompt asks what the law and ethics say about such pricing, and the answer differs for the two parts of the plan.

The law first. Pricing falls under both antitrust law and consumer protection law, two of the bodies of law Oswald (2011) surveys, and the statute that comes to mind first, the Robinson-Patman Act, turns out to be largely irrelevant. The act prohibits price discrimination in sales of commodities of like grade and quality between competing purchasers when the effect may be to lessen competition (Robinson-Patman Act, 1936). It was written to protect small retailers against suppliers who gave large chains better prices. Theme park admission is a service sold to consumers, who are not competing with one another in resale, so the act does not reach either part of the plan.

Other laws still apply. The federal ban on deceptive and unfair business practices reaches consumer pricing directly (Federal Trade Commission Act, 1914). If the park advertises "tickets from $39" while nearly every date costs more, or adds mandatory fees at checkout that were not shown earlier, it risks a deception claim. Many states also have price-gouging statutes that limit price increases on necessities during declared emergencies; theme park admission is unlikely to be covered, but a park that also sells bottled water during a heat emergency should check its state's law. Finally, personalized prices raise a quieter legal risk. If the algorithm's offers turn out to correlate with race, national origin or another protected characteristic, for example because they track neighborhood, the park could face claims under civil rights laws that govern places of public accommodation, even without intent. The date-based prices, which apply to everyone equally on a given day, carry none of that risk.

The ethics next. Kahneman et al. (1986) surveyed members of the public about the fairness of pricing decisions and proposed a principle of dual entitlement: customers are entitled to a reference price and firms to a reference profit. Raising prices to cover higher costs was widely seen as fair, but raising prices to exploit a shift in demand was not. In their best-known example, most respondents judged it unfair for a hardware store to raise the price of snow shovels after a snowstorm. Date-based admission prices look like demand-based pricing, which the principle would treat with suspicion. Yet the park can frame them as discounts on slow days rather than surcharges on busy ones, and the reference price of $64 that customers remember sits near the middle of the new range.

Research on dynamic pricing sharpens the distinction between the two parts of the plan. Haws and Bearden (2006), in three studies, compared how consumers perceived price differences that arose from the seller, from comparisons with other consumers, from timing and from auctions, and found that such differences could reduce perceived fairness and satisfaction, with differences between customers among the most damaging. A visitor who learns that the family in the next car paid $20 less for the same Saturday will feel worse than one who knows Tuesday was cheaper. Garbarino and Lee (2003), in an experiment on internet retail, found that experiencing dynamic pricing significantly lowered consumers' trust in a seller's benevolence, its concern for their interests, and increased the weight they gave to benevolence in their overall trust. A family park whose brand rests on goodwill has more to lose from that effect than a discount airline.

The research points to a clear line: prices that vary by date and are open to everyone can be fair, while prices that vary by person and are hidden from others corrode trust. I would recommend that the park keep the date-based prices and publish the full calendar for the season, so that families can choose a cheaper day in advance and no one is surprised at the gate. I would drop the individually personalized offers and replace them with open discounts anyone can claim, such as a season pass, a weekday discount for local residents and a reduced price for groups. If the park wants to reward loyalty, it can do so through a published program whose rules apply to every member. If the owners insist on keeping some personalization, they should at least audit the offers each month, comparing the average discount received in different ZIP codes and age groups, and stop any pattern that tracks a protected characteristic. They should also cap the gap between the highest and lowest price offered for the same day, so that no visitor pays dramatically more than a neighbor. These safeguards would not remove the trust problem the research describes, but they would reduce the legal exposure and the chance of a story about unfair prices spreading through the community the park depends on.

The park should also explain the change. A short message saying that weekday prices fall so that more families can visit, and that peak-day prices help keep Saturdays from becoming unpleasantly crowded, gives customers a reason that fits the dual entitlement principle, since smaller crowds are a benefit to them as well as a cost.

Scripture's concern with honest weights applies here too. The law of Moses forbade keeping two different weights, a heavy one and a light one, in the same bag (English Standard Version Bible, 2001/2016, Deuteronomy 25:13). A seller who quietly charges one customer more than another for the same thing on the same day comes close to keeping two weights. Open prices that change with the calendar are a single, public measure.

Classmates: would you judge the park's plan differently if the personalized offers only ever lowered prices and never raised them?

References

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Federal Trade Commission Act, 15 U.S.C. § 45 (1914).

Garbarino, E., & Lee, O. F. (2003). Dynamic pricing in internet retail: Effects on consumer trust. Psychology & Marketing, 20(6), 495-513. https://doi.org/10.1002/mar.10084

Haws, K. L., & Bearden, W. O. (2006). Dynamic pricing and consumer fairness perceptions. Journal of Consumer Research, 33(3), 304-311. https://doi.org/10.1086/508435

Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1986). Fairness as a constraint on profit seeking: Entitlements in the market. The American Economic Review, 76(4), 728-741.

Oswald, L. J. (2011). The law of marketing (2nd ed.). South-Western Cengage Learning.

Robinson-Patman Act, 15 U.S.C. § 13 (1936).