INFLUENCE OF GOVERNMENT ON MARKETING Unit 5 - Slide 6

Reasoning behind regulation of Marketing Subject to government legislation which needs to be taken into consideration when decisions are being made. Consumers would be unhappy if they purchased products that didn’t work or didn’t do what it was supposed to. Feeling of being conned by advertising. Need to protect consumers against rogue businesses. Unit 5 - Slide 6

TRADE DESCRIPTIONS ACT Goods or services which consumers buy must do what the advertisement claims. E.g. Cosmetics and medicines must be clinically proven to achieve what is claimed. Anti-cellulite cream must be clinically proved to reduce cellulite in order to be advertised and sold. Unit 5 - Slide 6

MONOPOLIES AND MERGERS ACT A monopoly market is a market where in theory only one firm exists. This would give the firm total market power to charge what it liked and provide only services it would like. Consumers need to be protected against pricing and service provision. Unit 5 - Slide 6

Example BT was the only business in the national telephone industry. It had complete monopoly power. The government put in legislation in place to make sure that BT was controlled in terms of pricing and services until competitors arrived. Unit 5 - Slide 6

TODAY Very few monopolies left. Although some businesses are so big that they do dominate the market. These firms will have an element of monopoly power in terms of pricing and what is sold. Monopolies and Mergers Act will limit the power of these businesses for the benefit of consumers choice. Unit 5 - Slide 6

FAIR TRADING AND COMPETITION ACTS This act tries to ensure that no businesses work to prevent competition in the market by restricting competitors from entering. This can be done by creating barriers to entry: Pricing by either keeping it to low or to high. Illegally controlling prices. Buying out suppliers so that other companies can’t get access to produce. Unit 5 - Slide 6

FAIR TRADING AND COMPETITION ACTS Competition is thought of being healthy for the markets and consumers by: Driving down prices Giving consumers a wider choice Unit 5 - Slide 6

CONSUMER PROTECTION LAW Ensures that the products that we buy are safe. They set minimum standards of safety for things like car types and furniture. Ensures that a business is liable for any damage which its defective goods may cause to a consumer. Unit 5 - Slide 6

CODE OF ADVERTISING PRACTICE Any business undertaking advertising must conform to the British Code of Advertising Practice. Adverts must be legal, honest and truthful and not cause offence. The Independent Television Commission controls advertising on television and radio. Unit 5 - Slide 6