Chapter 11 Marketing, Advertising,

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Chapter 11Marketing, Advertising, Product
safety

• Marketing concept consumerism
• Ethical issues of advertising persuasion
  behavior control, deceptive advertising
• Product safety
• Product liability due care, the contractual
  theory, and strict liability

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Marketing

• The performance of business activities that
  direct the flow of goods and services from
  producer to consumer or user
• Ethical issues occur in product development,
  distribution, pricing, promotion, and sales

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Producers Rights

• 1. To make decisions regarding the products
  offered for sale (e.g. design and style)
• 2. To set the price for products and all other
  terms of sale, including warranties
• 3. To determine how products will be made
  available to consumers
• 4. To promote products in any way that producers
  choose.

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Buyers Rights

• Be protected from harmful products
• Be provided with adequate information about
  products
• Be offered a choice among products that they
  truly want
• Have a choice in the making of marketing decisions

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Packaging Labeling

• Consumers need information to make rational
  choices
• Identity of product, the name and location of the
  manufacturer, packer or distributor, the net
  quantity, the number of servings, applications,
  relevant nutrition information and limits the use
  of health claims, such as low fat, light, healthy

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Pricing

• The true price of products?
• The proliferation of products at different
  prices, price codes that can be read only by
  sales personnel, the omission of essential
  extras, hidden costs, all prevent consumers
  from calculating the true price

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The Obligation to Provide Information

• Manufacturers have an obligation to provide
  information that consumers cannot reasonably
  obtain themselves

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Deceptive Manipulative Marketing practices

• Deceptive involves creating or taking advantage
  of false beliefs that significantly interfere
  with the ability of consumers to make rational
  choices.
• Include suggested retail price, cents off
  and introductory offers, bogus clearance sales,
  deceptive packaging and labeling, complicated
  warranties

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Manipulation

• Non-coercive shaping of the alternative available
  to consumers or their perceptions of those
  alternatives which effectively result in
  consumers being deprived of a choice
• Include customary pricing, bait and switch,
  high-pressure sales techniques

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Marketing Research

• Participants are deceived about the purpose of a
  study, when the research is done to make a
  sales pitch (sugging), or when retailers, through
  the use of database marketing, are able to
  construct

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Anticompetitive Marketing Practices

• Price fixing, price discrimination, resale price
  maintenance, reciprocal dealing, tying
  arrangements, and exclusive dealing
• Lead to the formation of monopolies, drives
  competitors out of business and increases prices
  to consumers
• Distort market mechanism for setting prices

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Advertismg

• A paid form of nonpersonal communication about an
  organization and/or its product that is
  transmitted to a target audience through a mass
  medium
• Other types PR, Sales promotion, and personal
  selling
• Product, corporate, and advocacy advertising

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Advertising

• Criticized for exaggerated claims, irritating
  repetition, objectionable products, creation of a
  culture of consumerism
• A wasteful and inefficient activity that stifles
  competition and leads to monopoly conditions
• Appeals to emotions
• Behavior control through the exploitation of
  psychological research into human motivation

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Persuasion and Behavior Control

• Subliminal communication product placement
• Rational Nonrational persuasion

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Deceptive Advertising

• An ad is deceptive if it causes a significant
  percentage of potential consumers to have false
  beliefs about the product (Carson)
• Deception occurs when a false belief, which an
  ad either creates or take advantage of,
  substantially interferes with peoples ability to
  make rational consumer choices
• Substantial interferes (1) the ability of
  consumers to protect themselves and make rational
  choices and (2) the seriousness of the choice
  that consumers are making.

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Theories of Product Liability

• The Due Care Theory manufacturers are obligated
  to take all reasonable precautions to ensure
  their products are free of defects likely to
  cause harm.
• Negligence the probability of harm, the severity
  of the harm, and the burden of protecting against
  the harm.

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Contractual Theory

• The obligations of a manufacturer to a consumer
  are contained in an implicit or explicit sales
  contract
• Implicit implied warranty of merchantability and
  an implied warranty of fitness
• Express warranty any affirmation of fact or
  promise made by the seller to the buyer
• Principle fairness

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Strict Liability

• Manufacturers are responsible for all harm
  resulting from a dangerously defective product,
  even when due care has been exercised and all
  contracts observed.
• Privity does not require that a victim of an
  accident be in a direct contractual relation with
  the manufacturer