Ethics Assignment Premier Fitness The actions in question regarding Premier Fitness Clubs were proven to be misleading and in violation of the competition act as well as the basic consumerism trend that has aimed to empower consumers and increase their rights. In their quest to meet the firm’s profit oriented objectives, objectives of being economically usefull, and to earn enough profit to survive, Premier Fitness seemingly decided that they could forgo the objective of being socially useful.
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Misleading/false advertising and marketing was employed that drastically reduced or eliminated social usefulness by underhandedly convincing customers to enter contracts with the fitness club that resulted in materially higher fees, undisclosed costs, and high total net costs than the advertising would lead their customers to believe. Information was not adequately disclosed to portray the true costs associated with gym membership and cancellation of membership was found to be excessively difficult. Premier Fitness also was found to be withdrawing money from cancelled customer accounts which is also unethical behavior on their part.
It is ironic that focusing on profit oriented objectives and the resulting unethical activity lead to the payment of a $200,000 fine by Premier Fitness for their unethical actions. Social usefulness was sacrificed by producing misleading advertisements that would lead customers to come to incorrect conclusions regarding total fees. This action violates the competition act and gave Premier Fitness and unethical advantage over their direct competition in the competitive business of fitness establishments.
The competition act is structured to limit monopolistic behavior that could be damaging to smaller competitors and protect consumers, and by violating it, Premier Fitness could have negatively affected the competition in an unethical fashion as well as harmed consumers who ended up suffering greater financial losses than they had expected based on the advertising that they would have thought they fully understood. Premier Fitness’ false/misleading advertising and marketing would have left customers to believe that Premier Fitness was giving lower prices than the competition, which was not necessarily the case.
Customers would therefore wrongly choose Premier Fitness’ services over those of the competition based on the superior price-point that Superior Fitness was seemingly offering. The result is that Premier Fitness’ acts harmed both the customers themselves as well as the competition that was advertising in a more ethical manor and losing business to Premier because of it. Advertising produced by Premier Fitness was misleading in that it violated many of the ‘do’s and don’ts’ of advertising.
For example, using of fine print that was excessively small and possibly not legible. The impression created by the ad was much different than what the fine print conveyed. Also, not all material information was disclosed in all advertising, as some information was strategically left out of some advertisements. Premier’s misleading advertising and fine-print resulted in the charging of higher prices when multiple prices were appearing on their advertised product. With the misleading nature of the advertisements, customers were seemingly charged above the advertised price.
The result of legal actions taken against Premier Fitness has undoubtedly affected their reputation considerably. Wide-spread negative publicity toward the company has unquestionably had a negative impact on the company’s operations. Websites designed to promote consumerism are a breeding grounds for the spreading of negative publicity towards unethical business operation. Although Premier continues to operate and has been in business for many years, it is conceivable that their reputation has been tarnished in a way that offsets any financial gains obtained through their unethical actions.
Lost business due to poor reputation could easily have negatively impacted their financial objectives far more than gains achieved through misleading and false advertising. In order to fully recover from the negative effects on reputation that this incident has caused, Premier Fitness may benefit from re-aligning its objectives towards more of a customer oriented focus. Its marketing objectives must also be evaluation in order to be in line with such changes in the focus of the company objectives since marketing objectives often go hand-in-hand with company objectives.
It is clear by the results observed in this case that Premier Fitness should have paid closer attention to the legal environment. Closer attention would have yielded the knowledge and understanding of the laws that inevitably were broken and could have guided Premier in a more ethical direction that would have bypassed the requirement for legal action and all the following negative publicity and financial ramifications that have haunted Premier Fitness thereafter.