exercise 2
Chapter 2: consumer well-being
Dr. Jennifer Houston mar4503
Business ethics and consumer rights
Business ethics are rules of conduct that guide actions in the marketplace and are the standards against which most people in a culture judge what is right and what is wrong
Honesty, trustworthiness, fairness, respect, justice, integrity, concern for others, accountability, loyalty
Ethics and legality can overlap, but they are not inherently the same
Businesses that engage in legal but unethical behavior risk losing customers over perceived immoral behavior
Ethical business is good business
The majority of consumers around the world say that they are willing to pay more for products and services from companies that are committed to positive social and environmental impact
Personal morals, ethics, and law
Personal Morals >>
Personal morals are the independent values that a person has about what is right and wrong in any given situation
Ethics >>
In business, ethics is beyond personal morals (in that it represents the beliefs of an entire organization and not just one person), but not necessarily rules of conduct that are legal vs. illegal on a larger scale
Codified Law >>
Codified law is the hard line of what is legal versus illegal under an organizations home government, or the government in which an organization conducts business operations
Needs and wants: do marketers manipulate consumers?
Many questions have come to light as consumers become more independent from companies in the buying process
Do marketers create artificial needs?
Is marketing necessary?
Do marketers promise miracles?
Do marketers sometimes try to convince consumers that their wants are needs?
We are moving from a marketerspace (companies call the shots) and into a consumerspace (the empowerment of consumers to choose how, when, or if they will interact with sellers)
Consumer rights and product satisfaction
There are three general courses of action for consumers who are dissatisfied with a product or service
Voice your response directly to the retailer for a refund
Privately respond your dissatisfaction to friends and boycott the product or store you bought it in
Use a third-party response and take legal action, register a complaint with the Better Business Bureau, or write letters to local media outlets to express your negative marketplace sentiments
If you’re not happy with a product or service, what can you do about it?
Organizations who encourage complaints get the chance to correct the situation, avoid an escalating problem on social media, collect valuable insight about the customers experience, and if all else fails, do a little damage control
Market regulation
Examples of U.S. Regulatory Agencies
Department of Agriculture
Federal Trade Commission
Food and Drug Administration
Securities and Exchange Commission
Environmental Protection Agency
Consumer Product Safety Commission
Interstate Commerce Commission
There are several U.S. government-established federal agencies that oversee consumer-related activities
There are also federal legislations that enhance consumers’ welfare
Individual organizations have also engaged in corrective advertising campaigns
Corporate social responsibility
Types of Corporate Social Responsibility
Stakeholder mapping
Corporate philanthropy & charitable donations
Social initiatives related to the competency of the company
Corporate responsibility in following laws related to making safe products, hiring minorities, etc.
Corporate policies on social and political issues
Corporate social responsibility comprises several types of employee actions within philanthropies, stakeholder communities, and public policy
Engaging in CSR shows that an organization is contributing to the welfare and interests of society, not just the organization
Calvin Klein (ft. Jari Jones) advertising supporting LGBTQIA+ and BLM initiatives
This is an example of a successful cause marketing strategy in aligning the brand with a current/relevant socio-economic cause
Cause marketing is the opposite of slacktivism, or superficial attempts to show interest in causes without follow-through
Major policy issues relevant to consumer behavior
Identity theft occurs when someone steals your personal information and uses it without your permission
Real-time bidding, phishing, and botnets (sets of computers that pass on malware and allow for hacking) are just a few of the ways that information is gathered without a consumers express permission
The prevalence of GPS technology on cellphones raises issues of locational privacy for consumers
Consumer behavior intersects with many of the big issues we read about and debate every day, such as human rights and humane working conditions, what we eat, and the future of our environment
Issue 1: Data Privacy and Identity Theft
How much can and should markets know about their customers?
Major policy issues relevant to consumer behavior
Individuals with disabilities are the largest minority market in the United States
Improvements in technology are bridging the gap between the access that abled and disabled consumers have to products that satisfy their needs
Food deserts exist where there is restricted access to food supplies, making healthy options in these communities hard to find and/or unaffordable
Literacy is another inequality, and media literacy refers to a consumer’s ability to access, analyze, evaluate, and communicate information in a variety of forms
About one in seven U.S. adults are functionally illiterate, and almost half of the people in the U.S. read below a 6th grade level
Consumer behavior intersects with many of the big issues we read about and debate every day, such as human rights and humane working conditions, what we eat, and the future of our environment
Issue 2: Market Access
Are we denying access to communities of individuals unfairly?
Calvin Klein (ft. Jari Jones) advertising supporting LGBTQIA+ and BLM initiatives
This is an example of a successful cause marketing strategy in aligning the brand with a current/relevant socio-economic cause
Cause marketing is the opposite of slacktivism, or superficial attempts to show interest in causes without follow-through
Major policy issues relevant to consumer behavior
Creating a sustainable business model isn’t just about doing good
Successfully sustainable businesses use a triple bottom-line orientation, which strives to maximize return in three ways:
The financial bottom line – providing profit to stakeholders
The social bottom line – returning benefits to the community
The environmental bottom line – minimizing environmental damage and/or improving natural conditions
Consumer behavior intersects with many of the big issues we read about and debate every day, such as human rights and humane working conditions, what we eat, and the future of our environment
Issue 3: Sustainability and Environmental Stewardship
Are our consumer behaviors harming our environmental future?
Major policy issues relevant to consumer behavior
Sustainability is based on the principle that everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment
Green marketing involves the development and promotion of environmentally friendly products
Cost of green products
Greenwashing
Consumer behavior intersects with many of the big issues we read about and debate every day, such as human rights and humane working conditions, what we eat, and the future of our environment
Issue 3: Sustainability and Environmental Stewardship
Are our consumer behaviors harming our environmental future?
The dark side of consumer behavior
Consumer terrorism, such as bioterrorism (an attack on the nations food supply or public health) and cyberterrorism (an attack on the nations computer systems) are serious threats to our society
Consumer behaviors can be harmful, both to the consumer and to those around them
The cultural value placed on money encourages unethical or illegal activity to reach otherwise unattainable ideals of success
The dark side of consumer behavior
Addictive consumption, whether psychological or physiological, can both lead to questionable profits from companies selling addictive products or solutions to addiction
Social media addiction is skyrocketing, and contributes to several negative consumer behaviors
Lack of focus on one’s personal health
Increase in crimes related to technology use
Increase in cyberbullying and other toxic behavior
Phantom vibration system
Consumer behaviors can be harmful, both to the consumer and to those around them
The cultural value placed on money encourages unethical or illegal activity to reach otherwise unattainable ideals of success
The dark side of consumer behavior
Some negative consumer behaviors are tied to compulsive consumption – repetitive and often excessive shopping performed as an antidote to tension, anxiety, depression, or boredom
Gambling is an example of compulsive consumption
Compulsive consumption:
Is not done by choice, but by addiction
Yields very short-lived gratification
Results in feelings of regret or guilt afterwards
Consumer behaviors can be harmful, both to the consumer and to those around them
The cultural value placed on money encourages unethical or illegal activity to reach otherwise unattainable ideals of success
The dark side of consumer behavior
Consumed consumers are individuals who are exploited, willingly or not, for commercial gain in the marketplace
Prostitutes -- $20 billion annual industry
Organ, blood, and hair donors – “red market” for body parts
Babies for sale – surrogacy, egg/sperm selling
Consumers also illegally acquire and use products
Consumer theft and fraud leads to serious issues for businesses
Shrinkage
Serial wardrobers
Counterfeiting
Anticonsumption
Consumer behaviors can be harmful, both to the consumer and to those around them
The cultural value placed on money encourages unethical or illegal activity to reach otherwise unattainable ideals of success