Anticompetitive
To create entry barriers, the use of reservation systems and frequent user programs has been identified as potentially anticompetitive. For example, how should a frequent flyer’s free-trip award be considered, particularly when the passenger has been traveling on business at corporate expense? The IRS is considering taxing the free trip as income in kind, and corporations believe that the free tickets belong to the company. The long-run implication, however, is the removal of price competition in air travel.
Fairness
Perhaps the easiest way to start a riot is asking airline passengers on a flight how much their tickets cost. Under yield management, ticket prices can change every hour; therefore, price is a moving target and the ticketing process a lottery. At the extreme, is yield management fair and equitable to the public, or has every service price always been negotiable? Are customers only now becoming aware of their buying power?
Invasion of Privacy
The concept of micromarketing has the potential to create the most violent backlash from consumers because of the perceived invasion of privacy. When a record of your every purchase at the local supermarket is shared with eager manufacturers, very manipulative sales practices, such as targeting buyers of a competitor’s soft drink with enticements to buy an alternative, could result. Lotus Development Corporation felt the sting of consumer displeasure after announcing the availability of its MarketPlace household database to anyone with a PC and modem. Lotus received more than 30,000 requests from irate persons wanting to be removed from this database. Lotus subsequently withdrew its offer of general availability, but it continues to sell access to the database to large corporations.
Data Security
Allowing information to get into hands of others for inappropriate use is a significant problem for government agencies such as the IRS; however, releasing personal medical records to insurance firms or potential employers without the consent of the patient is far more common and damaging. Some businesses market lists of people who have filed worker compensation claims or medical malpractice suits, and such databases can be used to blackball prospective employees or patients.
Reliability
To create entry barriers, the use of reservation systems and frequent user programs has been identified as potentially anticompetitive. For example, how should a frequent flyer’s free-trip award be considered, particularly when the passenger has been traveling on business at corporate expense? The IRS is considering taxing the free trip as income in kind, and corporations believe that the free tickets belong to the company. The long-run implication, however, is the removal of price competition in air travel.
Fairness
Perhaps the easiest way to start a riot is asking airline passengers on a flight how much their tickets cost. Under yield management, ticket prices can change every hour; therefore, price is a moving target and the ticketing process a lottery. At the extreme, is yield management fair and equitable to the public, or has every service price always been negotiable? Are customers only now becoming aware of their buying power?
Invasion of Privacy
The concept of micromarketing has the potential to create the most violent backlash from consumers because of the perceived invasion of privacy. When a record of your every purchase at the local supermarket is shared with eager manufacturers, very manipulative sales practices, such as targeting buyers of a competitor’s soft drink with enticements to buy an alternative, could result. Lotus Development Corporation felt the sting of consumer displeasure after announcing the availability of its MarketPlace household database to anyone with a PC and modem. Lotus received more than 30,000 requests from irate persons wanting to be removed from this database. Lotus subsequently withdrew its offer of general availability, but it continues to sell access to the database to large corporations.
Data Security
Allowing information to get into hands of others for inappropriate use is a significant problem for government agencies such as the IRS; however, releasing personal medical records to insurance firms or potential employers without the consent of the patient is far more common and damaging. Some businesses market lists of people who have filed worker compensation claims or medical malpractice suits, and such databases can be used to blackball prospective employees or patients.
Reliability
Are the data accurate? Data kept on individuals can be corrupted and create havoc in people’s lives. For example, a new law ameliorates such dilemmas by requiring credit-reportagencies to allow individuals to review their credit records for accuracy.
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