Swoopo Case

Swoopo was an online auction site that allowed users to bid their ideal products at a low price. As Dziuba (2009) indicated, Swoopo was different from the traditional auction site and it required users to pay for each bid. The winner of the bid could get the product at a low price. However, all of the participants of the bid would not get the bidding fee back.

The marketing activity concerned is the price that Swoopo determined. The price of Swoopo established should strike a balance between gaining acceptance of potential customers and making a profit for Swoopo. Although Swoopo was a bidding platform, their profits were not generated by selling the product itself, the income source was mainly from bidding surcharge. The initial bidding floor was exceptionally low that could attract numerous bidders. For instance, the initial bidding floor of a mac book is 80%off of the retail price. Bidders are required to buy bidding chances by real money. Swoopo charged bidders 60 cents per bid. Once a bid is made, the auction time would extend by 10-20 seconds (Aamodt, 2009). Theoretically, the auction could be endless. Therefore, Swoopo gained a huge amount of income from abundant bidders. In the year of 2008, Swoopo recorded 20 million profits. The more bids customers made, the more profits Swoopo earned. That was the pricing strategy Swoopo applied.

The marketing activity of Swoopo was considered unethical. The pricing strategy of Swoopo involved tricky elements that would potentially harm the customers. I am going to use AMA code of ethics to judge the marketing activity of Swoopo, proving the activity was unethical.

The pricing strategy of Swoopo was to make money from the greed of their customers. Swoopo set exceptionally low bidding price of lots to attract numerous bidders. Bidders were willing to pay for the bids because they thought they could win the bids with a relatively low price. The pricing method used by Swoopo and gambling were similar