© 2005 by Nelson, a division of Thomson Canada Limited. 1 Consumer Stakeholders: Issues and Responses Product and Service Issues 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 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

© 2005 by Nelson, a division of Thomson Canada Limited. 6 3 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. 7 Quality and Safety Two Central Issues The Issue of Quality Driven by an increase in family income and intense global competition The 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 View From: Caveat Emptor (Let the buyer beware) To: Caveat Vendor (Let the seller take care)

© 2005 by Nelson, a division of Thomson Canada Limited. 10 Product Liability Reasons 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 Consumer Affairs Offices Establishing Consumer Affairs Offices Product Safety Offices Establishing Product Safety Offices Total Quality Management Programs (TQM) Instituting Total Quality Management Programs (TQM)