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Lecture 9

MGSC14H3 Lecture Notes - Lecture 9: Caffeine, Deontological Ethics, Sustainable Development


Department
Management
Course Code
MGSC14H3
Professor
Prof.Constantinou
Lecture
9

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Advertising Headaches
The aspirin market is basically an oligopoly market with 4 main players:
1. American Home Pharmacy with Anacin,
2. Bristol-Myers (mai-ur) with Bufferin,
3. Johnson and Johnson with St. Joseph,
4. and Sterling (stur) with Bayer (be-uh).
The key point is that they are all aspirin – a medicine for pain reliever, so technically
they contain the same ingredients. Another way to say is that they can only compete with
each other over price or advertisements
1. “Fast, fast relief. The greatest pain fighter ever discovered, Recommended by
doctors”
2. “Twice as fast as aspirin” (Bufferin)
3. “Faster than other leading pain relief tablets” (St Joseph)
4. “Bayer: Fastest relief of pain” ( Bayer)
None of these claims have been proven, no evidence provided by any of the
companies
Its essentially the same product, so how can one be better or faster?
Stakeholder Analysis
1. Competitors - ethical dilemma - to compete or not to
1.a. Oligoply
1.b. Forced to make appealing & deceptive ads to attract customers
1.c. If companies choose not to make such ads, they will be kicked out of the
cycle , lose market share
2. Producers
1.a. Should they offer puffery ads or be authentic
1.b. Way more appealing, leads to better sales
1.c. Widely used products, loyal customers
1.d. Does have an effect for pain relief
2. Customers
1.a. Most imp.
1.b. Adversely affected
2 types -
1. Reasonable - thougtful, experienced, knowledgable, sceptical
2. Ignorant - little experience, lack of info, vulnerable
Class discussion:
Are you a reasonable or ignorant customer?
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3. I would feel cheated when ignorant when I find out that Ive paid more for the
same thing
4. If price same - I just think its harmless puffery
5. It is the norm to have puffery in ads
6. I would feel cheated if they lied abt doctors reccomending it when it was being
supplied dirt cheap to the hospital
7. We're used to the no # and such claims but we don’t like being cheated regarding
misleading ads or increased prices
5 Q APPROACH
8. Profitable
For shareholders 'perspective, the main target is to maximize the profits!
Now, let’s take Bayer’s Aspirin as an example, who claims to be the fastest pain reliever, to
look at early 1960s of aspirin industry. For the global sales of Bayer Aspirin in billions of
euros from 1995 to 1999, we can see the overall was constantly in an upward trend
9. Legal
1.a. FTC has rules,
1.b. Firstly, for all companies claim their products are the best, must show
evidence to prove it. If not, they are likely investigated by the authority.
ex: Bayer used to claim that Bayer is the best aspirin. Lets look at how Bayer
advertised their products in 1960s.
1. A federal judge later ordered Bayer to stop the advertisements because
Bayer was unable to prove that it is the best aspirin
1. Secondly, for the companies include scientists, professionals or experts in their
claim, they must support their claim to the standard required by government. For
example, companies have to prove if the experts are qualified, independent and
conduct sufficient examination on the product
2. Illegal ads
3. Fair -
3.a. Is it fair for companies to use puffery advertisements?
3.b. They think its fair
3.c. Oligopoly market, fair to defend themselves
4. Is it fair for the customers?
5. Lack of information
6. Not fair, they don’t know abt the technicalities
7. Customers loyal to brands, but companies take advantage so not fair to be
cheated as a means for them to make money
8. Right?
8.a. Not right to have deceptive ads especially for medical items which require
greater than average amt of knowledge
8.b. Ex: not many of us know that, aspirin & other ingriedients combo makes
no diff. to our health
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