© 2005 by Nelson, a division of Thomson Canada Limited. 1

Consumer Consumer Stakeholders: Stakeholders:

Issues and Issues and ResponsesResponses

Product and Product and Service IssuesService IssuesSearch the Web

The Better Business Bureau maintains a web site useful to both business and individual consumers: www.bbb.org

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© 2005 by Nelson, a division of Thomson Canada Limited. 2

The Consumer Movement

• The Right to Safety (drugs, cars, appliances)

• The Right to Be Informed (advertising, labels)

• The Right to Choose (options, competition works)

• The Right to Be Heard (communicate grievances)

Four Basic Consumer Rights

© 2005 by Nelson, a division of Thomson Canada Limited. 3

Product Information Issues

Abuses of Advertising• Ambiguous advertising --Weasel words (helps…; up to…)

• Concealed facts --(OK, so most other products also do this…)

• Exaggerated claims --Puffery (King of Beers)

• Psychological appeals --Emotional (9/11 tie-ins)

© 2005 by Nelson, a division of Thomson Canada Limited. 4

Product Information Issues

Specific Controversial Advertising Issues

• Comparative Advertising (Whopper vs. Big Mac)

• Exploitive Advertising (shock sells – soft porn ads)

• Advertising to Children (hook them early, vulnerable)

• Advertising of Alcoholic Beverages (age/access, Web)

• Cigarette Advertising (age/access, sponsorship)

• Health and Environmental Claims (truth in advertising)

• Ad Creep (concept of No Space from NoLogo)

© 2005 by Nelson, a division of Thomson Canada Limited. 5

The Competition Bureau

Two Major Activities • To maintain free and fair

competition in the economy• To protect consumers from unfair

or misleading practices

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3 Moral Management Models

Immoral Immoral Management:Management: Customers viewed as opportunities to be exploited

Amoral Amoral Management:Management: Does not focus on what is fair for customers

Moral Moral Management:Management: Customers viewed as equal partners

© 2005 by Nelson, a division of Thomson Canada Limited. 7

Quality and Safety Two Central Issues

The Issue of QualityThe Issue of Quality

Driven by an increase in family income and intense global competition

The Issue of SafetyThe Issue of Safety

Driven by the public’s increasing concern with safety and business’s responsibility to address this concern

© 2005 by Nelson, a division of Thomson Canada Limited. 8

Quality & Safety Issues

Ethical Dimensions• Contractual theory (‘Here’s the deal’,

minimal level)

• Due care theory (Vulnerable customer, do better)

• Social costs view (We lived up to our contract and exercised due care that product was OK, but still caused a problem / injury. No worries… we’re good for it.)

© 2005 by Nelson, a division of Thomson Canada Limited. 9

Quality & Safety Issues

Changing ViewFrom:

• Caveat Emptor (Let the buyer beware)

To:• Caveat Vendor (Let the

seller take care)

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Product LiabilityReasons for the Growing

Concern . .

FIRST . . . Product liability has become a major issue because of the sheer number of cases where products resulted in injury, illness, or death and of financial awards.

SECOND . . . We have become an increasingly litigious society.

THIRD…Rise in the strict liability doctrine

© 2005 by Nelson, a division of Thomson Canada Limited. 11

Business’s Response to Consumers

Establishing Consumer Consumer Affairs OfficesAffairs Offices

Establishing Product SafetyProduct Safety OfficesOffices

InstitutingTotal Quality Total Quality Management Management Programs Programs (TQM)(TQM)