Transcript Consumer Economic Issues

CHAPTER 8
Consumer Relations
Chapter Objectives
•
•
•
•
To describe customers as stakeholders
To investigate consumer protection laws
To examine six consumer rights
To discuss the implementation of
responsibilities to consumers
Consumer Stakeholders
• Individuals who purchase, use, and dispose of
products for themselves and their homes
Consumer Economic Issues
• Consumers are primary stakeholders because their
awareness, purchase, use and repurchase of products
is vital to a company’s existence.
• Consumers and business are connected by an
economic relationship.
• Consumers exchange money for goods or services.
• Consumers expect the products they purchase to
perform as guaranteed by the sellers.
Consumer Economic Issues
• Consumer fraud results from intentional deception to derive
unfair economic advantage from an organization.
–
–
–
–
Shoplifting
Collusion
Duplicity
Guile
• Buyer/seller disagreement can result in
fraudulent activities.
– Products not meeting expectations
• Inventory shrinkage is estimated to cost U.S. businesses more
than $40 billion per year.
Consumer Legal Issues
• With respect to U.S. consumers, legal issues fall
under the domain of the Federal Trade Commission (FTC)
which enforces federal antitrust and consumer protection laws.
• Food & Drug Administration (FDA) monitors foods,
drugs, medical devices, cosmetics, veterinary products, and
potentially hazardous consumer products.
• Consumer Product Safety Commission monitors injuries
resulting from consumer products.
Additional Legal Issues and Relevant
Laws
• Health and safety
– Pure Food and Drug Act
• Credit and ownership
– Home Ownership and Equity Protection Act
• Marketing, advertising, and packaging
– Federal Trade Commission Act
– Telemarketing and Consumer Fraud
and Abuse Prevention Act
Additional Legal Issues and Relevant
Laws (cont.)
• Sales and warranties
– Magnuson-Moss Warranty Act
• Product liability- a business’s legal
responsibility for the performance of its
products
– Toy Safety Act
• International issues
Ethical Issues
• Consumerism
– The movement to protect consumers from an
imbalance of power with business and to maximize
consumer welfare in the marketplace
Ethical Issues
• Consumer Bill of Rights
–
–
–
–
–
–
Right to choose
Right to safety
Right to be informed
Right to be heard
Right to seek redress
Right to privacy
Right to Choose
• To the extent possible, consumers have the
opportunity to select from a variety of products
at competitive prices. This right is based on the
philosophy of the competitive nature of
markets, which should lead to high-quality
products at reasonable prices.
Right to Safety
• This means that businesses have an obligation
not to knowingly market a product that could
harm consumers.
Right to Be Informed
• Any information, whether communicated in
written or verbal format, should be accurate,
adequate, and free of deception so that
consumers can make a sound decision.
Right to Be Heard
• This right relates to opportunities for
consumers to communicate or voice their
concerns in the public policy process. This
implies that governments have the
responsibility to listen and take consumer
issues into account.
Right to Seek Redress
• Consumers have the right to express
dissatisfaction and seek restitution from a
business when a good or service does not
meet their expectations.
Right to Privacy
• Consumers need to be aware of how personal
data are collected and used; and firms must
protect this information.
Philanthropic Issues
• Organizations are increasingly linking
philanthropic efforts with consumer interests
in order to strengthen ties to consumers.
Strategic Implementation
• Include community views in corporate
planning
• Manage, nurture, and continuously assess
community relations and needs
• Educate and listen to consumers; run surveys
to discover strengths and weaknesses in
stakeholder relations; hire consumer affairs
professionals; and develop a community
relations office