1- Medical Innovations: The Health of the Consumer OR Company
Saymeer Jain was a first-year sales associate at RMD, a medical devices company that specialized in developing MRI (magnetic resonance imaging) equipment. For years, RMD's model XR-U72 had been the standard imaging device found in most hospitals. But RMD's R&D department had just made an internal announcement that the company had produced a new model, MR-S72, which was much less expensive to produce and much more effective (studies showed that it was 30% more effective in imaging than the XR-U72 model).
As the marketing manager of RMD's MRI equipment, Jain had a difficult challenge: to unload the seven remaining XR-U72 models. At nearly $2.9 million per unit, the XR-U72 model commanded a very high price compared with its competitors (the range for MRI equipment was anywhere from $1 million to $3 million). Given RMD's high fixed costs (primarily R&D expenditures) and the high cost of parts, Jain realized that it was not feasible to drop the model's price. In fact, his boss had given the mandate that the price could not be reduced-there could be no "bargain basement" pricing to unload the XR-U72s.
Jain pondered his options. What kind of advertisements could he create for the old product, knowing very well that the new model was 30% more effective? Should he wait to sell the new model until after the old ones were sold out? If so, what would the ethical implications of his actions be?
Questions to consider:
1. How should Jain advertise the old and new models? Explain price, place and promotion choices.
2. Who are the stakeholders in this case?
3. In making the decision about this situation, which stakeholder do you consider: the company, the stakeholder your decision might affect; or both?
4. How does short-term versus long-term affect your decision?
If you were Saymeer Jain, given the facts outlined in this case, what would you do?
2 - Little White Marketing Lies: Challenges with Changing the Product
For the past year, Ginger Harrison had been the assistant brand manager for the Italian Foods Division at Klein's Foods, a high-value food manufacturer. Since she started at the company, her division had been extremely successful selling Klein's Foods brand of Italian meatballs both direct-to-consumer and business-to-business. Overall, business with the brand was booming. But with the rising costs of ingredients across all brands, the company had not performed well during the previous two quarters.
With a mandate to cut costs in her division and submit a recommendation to management in a week, Harrison was perplexed about what she should do. Her options were limited. Cutting staff and lowering pay were not options, given that the division was already operating as leanly as possible. Additionally, it would cost too much to change the marketing strategy and the packaging on the product. Further, she could not consider increasing the product's price because it would probably deter customers from purchasing it (market research suggested that the company's meatballs were a high-value-based purchase decision; thus, any price increase would significantly decrease sales).
With one week to come up with a recommendation, the Italian Foods Division staff members met to discuss their ideas. During a three-hour meeting, the room voted (majority rule) that the only way to cut costs was to put less meat in the bags. To remain truthful in their marketing, they would still include the same weight of product, but instead of protein, they would add more sauce and spices. In essence, the customer was receiving exactly what was advertised (four pounds of meatballs and sauce per bag), but Harrison knew this would be misleading the consumers.
Harrison wondered about the ethics of this decision.
1) Even though the product's marketing was going to be the same, and was in fact accurate, was it ethical to change what the customer received?
2) Did such an action engender ill will in the customer?
3) How would this affect business in the long run?
If you were Ginger Harrison, given the facts outlined in this case, what would you do?