CHAPTER 8

Consumer Relations

Consumer Stakeholders

• These are individuals who purchase, use, and dispose of products for themselves and their homes.

• In the 1980s and 1990s “green marketing” was very popular.

• There is no true consensus around issues such as environmental responsibility, and companies face complex decisions about how to respond to them.

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. – In the early 1900s “let the buyer beware” typified the power

that business- not consumers- wielded in exchange relationships. This is still true in less developed parts of the world.

Company Use of OnlineFraud Prevention Tools

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.

Motivations forIllegitimate Consumer Complaints

Consumer Legal Issues

• With respect to U.S. consumers, legal issues fallunder the domain of the Federal Trade Commission (FTC), which enforces federal antitrust and consumer protection laws.– Bureau of Consumer Protection works to protect consumers against

unfair, deceptive, and fraudulent practices.

• Food & Drug Administration (FDA) monitors foods,drugs, medical devices, cosmetics, veterinary products, and potentially hazardous consumer products.

• Consumer Product Safety Commission monitors injuriesresulting from consumer products.

Major Consumer Laws

Major Consumer Laws (cont.)

Major Consumer Laws (cont.)

Major Consumer Laws (cont.)

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

Red Flags: Bogus Weight Loss Claims

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. – Some consumers believe this means that the

manufacture and sale of firearms should be outlawed.

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 notmeet 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

• Consumers are increasingly concerned with organizations’ social responsibility.

• Organizations are increasingly linking philanthropic efforts with consumer interests in order to strengthen ties to consumers.– Avon—breast cancer fundraising– Home Depot—Habitat for Humanity– Eastman Kodak—World Wildlife Fund

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

Business in the Community Marketplace Responsibility