© 2005 by Nelson, a division of Thomson Canada Limited. 1 Consumer Stakeholders: Issues and Responses Search the Web The Better Business Bureau maintains a web site useful to both business and individual consumers:

© 2005 by Nelson, a division of Thomson Canada Limited. 2 Chapter Eleven Objectives Identify the fundamental expectations of consumers Identify the major abuses of advertising and discuss specific controversial advertising issues Enumerate and discuss other product information issues that present problems for consumer stakeholders Describe the role and functions of the Competition Bureau Discuss the strengths and weaknesses of regulation and self-regulation of advertising

© 2005 by Nelson, a division of Thomson Canada Limited. 3 Chapter Eleven Outline The Paradox of the Consumer Revolution The Consumer Movement Product Information Issues The Competition Bureau Self-Regulation in Advertising Summary

© 2005 by Nelson, a division of Thomson Canada Limited. 4 Introduction to Chapter Eleven Customer relationship management, the chapter focuses on the evolution and maturity of the consumer movement and product information issues, such as advertising.

© 2005 by Nelson, a division of Thomson Canada Limited. 5 The Paradox of the Customer Revolution Historical evolution of marketing –Focus shifts from problems of production to problem of marketing. Current issues in marketing –Do consumers think business cares about their needs?

© 2005 by Nelson, a division of Thomson Canada Limited. 6 The Consumer Movement The Right to Safety The Right to Be Informed The Right to Choose The Right to Be Heard Four Basic Consumer Rights

© 2005 by Nelson, a division of Thomson Canada Limited. 7 The Consumer Movement Ralph Nader’s Consumerism Unsafe At Any Speed Nader’s Raiders Groups –Public Interest Research Group –Center for the Study of Responsive Law –Public Citizen

© 2005 by Nelson, a division of Thomson Canada Limited. 8 The Consumer Movement Consumer Problems with Business The high prices and poor quality and after-sales service The failure to live up to advertising claims A basic distrust of business Misleading packaging The feeling that it is a waste of time to complain Inadequate guarantees and warranties Failure of companies to handle complaints properly Too many products that are dangerous The absence of reliable information Not knowing what to do to protect oneself

© 2005 by Nelson, a division of Thomson Canada Limited. 9 The Consumer Movement Consumerism in the 21 st Century Grassroots Unorganized Internet

© 2005 by Nelson, a division of Thomson Canada Limited. 10 Product Information Issues Pros Increases standard of living Increases satisfaction Efficient ways to distribute information Cons Lowers standard of living Decreases satisfaction Inefficient means of distributing information Advertising Arguments

© 2005 by Nelson, a division of Thomson Canada Limited. 11 Product Information Issues Need for Information That is clear That is accurate That is adequate

© 2005 by Nelson, a division of Thomson Canada Limited. 12 Product Information Issues Abuses of Advertising Ambiguous advertising --Weasel words Concealed facts Exaggerated claims --Puffery Psychological appeals -- Emotional

© 2005 by Nelson, a division of Thomson Canada Limited. 13 Product Information Issues Specific Controversial Advertising Issues Comparative Advertising Exploitive Advertising Advertising to Children Advertising of Alcoholic Beverages Cigarette Advertising Health and Environmental Claims Ad Creep

© 2005 by Nelson, a division of Thomson Canada Limited. 14 Product Information Issues Children’s Advertising 1 Advertising should take into account the audience level. 2 Realize that children are imaginative. 3 Recognize advertisings important part in a child’s education level. 4 Use advertising to nurture positive and beneficial behaviours. 5 Incorporate minority and other groups as positive role models. 6 Contribute to the parent-child relationship.

© 2005 by Nelson, a division of Thomson Canada Limited. 15 Product Information Issues Warranties Express warranties –Promise or affirmation of fact that the seller makes Implied warranties –Creates implied warranties when goods are sold or leased

© 2005 by Nelson, a division of Thomson Canada Limited. 16 The Competition Bureau Two Major Activities To maintain free and fair competition in the economy To protect consumers from unfair or misleading practices

© 2005 by Nelson, a division of Thomson Canada Limited. 17 The Role of the Competition Bureau Fair Competition: Makes the economy work more efficiently Strengthens businesses’ ability to adapt and compete in global markets Gives all businesses an equitable chance to compete/participate in the economy Provides consumers with competitive prices, product choices, and information Balances the interests of consumers and producers, wholesalers and retailers, public interest and private interest

© 2005 by Nelson, a division of Thomson Canada Limited. 18 Self-Regulation in Advertising Types of Self-Regulation Self-discipline Pure self-regulation Co-opted self-regulation Negotiated self-regulation Mandated self-regulation

© 2005 by Nelson, a division of Thomson Canada Limited Moral Management Models Immoral Management: Immoral Management: Customers viewed as opportunities to be exploited Amoral Management: Amoral Management: Does not focus on what is fair for customers Moral Management: Moral Management: Customers viewed as equal partners

© 2005 by Nelson, a division of Thomson Canada Limited. 20 Selected Key Terms Ambiguous advertising Ad creep Adequate information Ambiguous advertising Clear information Comparative advertising Concealed facts Consumerism Consumer’s Magna Carta Co-opted self-regulation Customer relationship management Exaggerated claims Express warranty Full warranty Implied warranty

© 2005 by Nelson, a division of Thomson Canada Limited. 21 Selected Key Terms (cont’d) Limited warranty Mandated self- regulation Product information Psychological appeals Puffery Pure self-regulation Right to be heard Right to be informed Right to choose Right to safety Self-discipline Self-regulation Warranties Weasel words