Chapter 16The Dark Side of Consumer Behavior

Consumer Behavior - A FrameworkJohn C. Mowen

Michael S. Minor

Key Concepts Deceptive

advertising Children’s ability to

distinguish programs and ads

Improving children’s advertising

Negligent consumer behavior

Product misuse

Drivers of compulsive consumption

Corporate social responsibility

Why firms want to seem responsible

Consumer reactions to product recalls

Corporate rumors

Introduction Firms may engage in unscrupulous

behavior. Consumers also engage in

negligent behavior. Governments regulate buying and

selling goods and services to reduce the harmful effects of these behaviors.

Major Public Policy Issues Deceptive advertising Advertising to children Telemarketing fraud

Deceptive Advertising

An advertisement which is potentially misleading or literally false is deceptive.

Potentially misleading ads are difficult to evaluate because miscomprehension may often occur. Miscomprehension is a problem for firms

because the audience does not understand the message being delivered.

The FTC regulates deceptive advertising, but not miscomprehension.

Advertising to Children Both policy makers and marketing

managers have reacted to criticism of advertising directed at children.

Some countries have banned advertising to children under 12.

Telemarketing Fraud

The elderly are vulnerable to fraud by telemarketers.

A program to combat this fraud is the Know Fraud Program.

Organizations that fight telemarketing fraud are the AARP, the FBI, the Post Office, and others.

Negligent Consumer Behavior Negligent behavior is composed of

actions and inactions that may negatively affect the long-term quality of life of individuals and society.

This type of behavior can occur in two different contexts: Product Misuse Consumption of Hazardous Products

Product Misuse Many injuries result from

misuse of a safe product - not from product defects.

Using a cell phone while driving is being outlawed in some areas.

“The most dangerous component is the consumer, and there’s no way to recall him.”

Consuming Hazardous Products Between 1988 and 1998 alcohol related

accidents have declined. The methods used to increase consumer awareness are: Informing and Education Social Controls Economic Incentives Economic Disincentives

Compulsive Behavior

Some products are hazardous and consumption can become compulsive or addictive over time.

Other behaviors are not harmful in moderation but become addictive when they become compulsive. Smoking Compulsive Drinking Gambling Compulsive Shopping Other Compulsions

Smoking Consumers until the late 1960s were

exposed to nearly 3000 cigarette commercials per week of 38 different brands.

In 1950 there was already concern over the health hazards of cigarette smoking.

Smoking declined from the 1960s to 1992 but has held steady since then.

Compulsive Drinking As mentioned earlier, there has been a

decline in alcohol-related deaths on the road. This suggests a decline in alcohol consumption.

Despite the decrease in sales of hard liquor, there is an increase in alcoholic soft drinks. These taste like colas or fruit juices but may

contain more alcohol than beer does.

Gambling Gambling affects an estimated 8 to 12

million people. Gambling takes place in casinos in Las

Vegas, New Jersey, on river boats and elsewhere.

State-run lotteries make it easy to gamble by visiting a convenience store.

Compulsive Shopping

Some consumers “shop till they drop” because shopping can become an addiction similar to alcohol or drugs.

There are drugs available to help relieve this compulsion.

Compulsive shopping may be hereditary.

Other Compulsions

Overworking and overeating are some other compulsions.

Research has stressed sociological and psychological influences. Chemical imbalances may also be important.

Multiple compulsions may occur together.

Corporate Social Responsibility

Firms have become viewed as responsible for more than generating profits.

“Corporate social responsibility” refers to the idea that firms have an obligation to help the larger society by offering some of their resources.

Succeeding in the Long Run A business’s self-interest could be

advanced if the business embraced a long-run view.

This position would permit expenditures in support of socially responsible activities and provide future benefits in the form of consumer approval and loyalty.

Acquiring a Positive Public Image One way of showing that companies are

socially responsible is by creating a positive public image.

Another way that firms can show they are socially responsible is by making speedy product recalls.

The Diffusion of Rumors Public peace of mind can be corrupted

by diffusion of rumors. Rumors often plague both large and

small companies.

Types of Rumors Pipe dream rumors represent wishful thinking

on the part of the circulators. The bogie rumor is a fear rumor that spooks

the market place. Self-fulfilling rumors are based on a

perception of what could happen in the future if something else were to occur.

In premeditated rumors individuals spread rumors that may help them financially or otherwise.

Spontaneous rumors arise when people seek explanations for unusual events.

Avoiding Regulation A final reason to act in a socially

responsible manner is to avoid government regulation.

Most of the burden of social responsibility is on marketers. They can do best by following the strategies suggested, and maintaining a positive initial corporate image and responding quickly when difficulties arise.

Managerial Implications Positioning. The concept of corporate social

responsibility has direct implications for the positioning of a company. Efforts to create a “good-citizen” image help to position a firm as one that puts customers first.

Environmental Analysis. A company’s actions must be in compliance with laws and regulation. A firm should be in a position to respond

promptly if a response is warranted: An “early-warning system” needs to be in place and functioning continuously.

Implications continued… Research. Market research should be used to

determine how consumers view the company. Market research may also help determine whether

customers are using a firm’s product in a novel manner that may be unsafe.

Marketing Mix. Pricing, promotion, product development, and distribution should be socially responsible.

Segmentation. Some population segments are more concerned with issues of corporate social responsibility than are other segments.