Marketing, Advertising and Product Safety.ppt

7/29/2019 Marketing, Advertising and Product Safety.ppt

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De Vee E. Dykstra, J.D. 2005 1

Marketing, Advertising

and Product Safety


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Marketing and ConsumerMovement

Marketingbusiness activitydirecting flow of goods and services

Product development Distribution

Pricing

Promotion and sales

Marketing Concept consumersatisfaction

Consumerism balance rights


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Manufacturer Rights

Product Decisions

Pricing

Promotion

Method of Distribution/Availability


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Consumer Rights

Product Information

Choice

Protection from Harm

Voice


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Consumer Information NeedsPackaging and Labeling Purpose

provide information so that consumers canmake rational choices

Fair Packaging and Labeling Act

Nutrition Labeling and Education ActPricing provide true cost information

Using standard measures, uniformity

Other information

Tradition - truthful, fulfill warranties

Alternative is there an obligation toprovide info consumers cant reasonably

obtain themselves


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Deception and Manipulation

Deception

creating and taking advantageof false perceptions interfering with ability to

make rational choices

E.g., bogus clearance sales

Manipulation non-coercive shaping of

alternatives results in depriving of choice

E.g., bait and switch - FTC prohibits

advertising cheaper product then gettingcustomers to buy more expensive product

Impairs ability to make rational choices;

leads to choices not otherwise made


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Advertising Criticisms

Exaggerated claims Irritating repetition

Objectionable products

Creation of consumerism cultureWasteful and inefficient

Stifles competition

Leads to monopoly conditionsCreates wants

Behavior control


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Persuasion and Behavior Control Traditional Economic Argument &

Principle of Consumer Sovereignty Process of production is to satisfy needs and

wants

Consumers are best judges of this

Dependence Effect (Galbraith) Wants are created by production

Concern is how advertising subverts ability towant the right things

Imbalance results (private goods v. public)

Advertising is effective with those whodont really know what they want; they areopen to persuasion


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Marketing in Kidspace

Children/youth have greater

purchasing power and influence

Do advertisements create the wants

for children, or do they inform the

children about products filling wants

children already have?

Utilitarian

Deontology/Kant


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Advertising that ExploitsStereotypes

Utilitarian

Consumption is worth distortions

Deontology

Truth telling is a duty

Milton Friedman

If its legal, its ethical

Virtue Ethics What type of community is created?

What type of life is being held up as

virtuous?


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Market Research

Collecting data about

consumers

Is it unethical??

If so, when?


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Anticompetitive MarketingPractices

Practices that can lead to monopolies,reduce competition, distort markets

and lead to price increases

Price fixingPrice discrimination

Resale price maintenance

Reciprocal dealing

Tying arrangements

Exclusive dealing


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Product Liability

Caveat Emptor

Let the Buyer Beware

Strict Tort Liability -Manufacturers and sellers liable

for injuries resulting from their

products regardless of whetherthey knew of the danger that

cause the injury


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Product Liability

Contract Theories

Express Warranties

Implied Warranties

Merchantability

Fitness for Particular Purpose

Tort Theories

Negligence

Strict Liability


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Express Warranties

Express promise by seller as toquality, abilities or performance

Statements are made by seller before

the sale and are the basis or part ofthe basis of the sale

Can arise from a description, sample,model, words

Sellers intent to warrant is notnecessary

Opinions are not warranties


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Implied Warranty ofMerchantability

Promise that the goods are fit for

their ordinary purposes and are of

average quality with adequate

packaging

Given in every sale by a merchant

seller

those sellers engage in thebusiness of selling the goods that

are the subject of the contract


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Implied Warranty of Fitnessfor a Particular Purpose

Where the seller at the time of

contracting has reason to know any

particular purpose for which the goodsare required and that the buyer is

relying on the sellers skill or judgment

to select or furnish suitable goods,there is ... an implied warranty that the

goods shall be fit for such purpose.


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Implied Warranty of Fitness fora Particular Purpose

Seller has skill or judgment inuse of the goods,

Buyer relies on the skill orjudgment,

Seller makes a recommendation,

andSeller knew or had reason to

know of buyers reliance, use &purpose


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Strict Liability

Give consumers maximum protectionfrom defects

Only manufacturer can preventdefective and dangerous products

Allow plaintiff direct access tomanufacturer without going throughthe retailer, wholesaler, etc..

Manuf. derives profit and should bearthe burdens

Manuf. is in best financial position tocover injury costs


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Strict Liability

Duty to manufacture a reasonablysafe product (& in the business ofselling or manufacturing the product)

Duty was breached - show a defect

Breach caused plaintiffs injury &foreseeable that defect will causeinjury

Physical or property damages

Product reaches the user orconsumer without substantial change,(no liability if product has beenmodified or changed)


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Unreasonably Dangerous Defect

Condition of danger such that areasonable ordinary person would notcontemplate using the product

Most common types of defects(breaches):

Design defects

Improper warnings or insufficientinstructions

Negligent packaging, manufacturingor handling


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Defects - How to Avoid

Design Defects:

Design with all foreseeable usesin mind

Comply with all federal and stateregulations

Use latest technology and

designs available in the industryand meet or exceed industrystandards


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Defects - How to Avoid

Warnings and Instructions:

Warn if foreseeable use is dangerousand not likely to be realized by

buyer/user Supplement warnings where needed

Adequate instructions on proper use

Packaging, Manufacturing, Handling: Protect against foreseeable dangers,such as tampering

Very difficult to prove these defects


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Negligence

Same as Strict Liability except:

Knowledge of the defect before

sale or sales were allowed tocontinue with knowledge theproduct had a defect

Punitive damages if plaintiff canshow manufacturer/seller knewof defect

Marketing, Advertising and Product Safety.ppt

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