Chapter 9, Problem 1ED

Summary Introduction

Summary:

Grocery chains are looking continuously to improve their layout so that they can maximize the payoff they receive from their business. The layout of the stores will include a marketable commodity and shelf space and they also charge for it. The name of this charge is known as the slotting fee. Slotting fees have known to increase the manufacturer's cost.

To explain: The ethical nature of slotting fees.

Explanation of Solution

Ethical nature of slotting fees:

Slotting fees are the payments made by the manufacturers to the store owners for using the shelf space. It is mainly done to proliferate new products, increasing the power of the retailer, and so on. Slotting fees are seen as an unethical means as it could drive up manufacturers cost especially smaller and upcoming organizations who fail to get the premium shelf space for better product exposure

Slotting fees can be termed as ethical as it is inevitable due to the inevitable nature of the free market. It is more like a “given and takes” between a seller and buyer. Slotting fees help the grocer to make profits as they can sell the products to customers at low prices. Slotting fees take up many forms such as discounts, advertising fees, return policies, and so on. All these help the grocer to sell products to customers at low prices while making good profits as an overall business. Hence, slotting fees can be termed as an ethical practice.