Advertising and the Rights of Consumers

Advertising Advertising – business whose main purpose is to persuade people to buy certain products or avail certain services. Advertisement – process or a way of communicating to the consumer the benefits or advantages of using a particular product. Advertisements increase profit because they create demand for a certain product; increase in demand increases profits.

How Advertisements Create Demand Four Ways to Sell a Product: – Personal Selling or direct selling – advertiser or agent tries to sell his product face to face with a consumer (e.g. real estate, insurance). – Advertising through mass media – radio, television, newspaper, billboards. – Advertising through the internet – company product web sites, and others. – Attractive packaging – passive way of advertising product.

How advertisements Create Demand: – Appealing to Consumer’s Emotion – emotional need such as love is used to woo buyers. – Bandwagon Effect – people buy because others buy. – Brand Names – when brand names are well known; brand loyalty – when consumers patronize a certain product carrying a particular brand because they believe it is a good product.

Positive Effects Gives important information about a product – know more about the product (labels and nutritional facts). Saves time – consumers can just choose based on advertisements. Increases product demand – consumers continue to buy the product. Facilitates competition – more products become available giving consumer’s option.

Negative Effects Could Mislead the Public – some give false information. Gets people to buy things they do not need – convince products that are not needed. Increases the price of the product – advertising cost is part of the price of the product.

Consumer Rights Safeguards that protect Consumer Rights: Companies / Producers can set rules to protect consumers. Government sets rules – Bureau of Trade Regulation and Consumer Protection (BTRCP), Bureau of Food and Drug (BFAD), Bureau of Product Standards (BPS) and DTI. Private sector groups.

Laws that protect Consumer Rights Republic Act No or Consumer Act of the Philippines – emphasizes protection and safety of consumers from false advertising and faulty production. Republic Act No or the Foreign Investment Act of 1991 – safeguard welfare of consumers and improve the quality of agricultural products. Republic Act No or the Revised Penal Code, Article 187 – punishment for selling products made of gold, silver and other previous metals. Republic Act No. 386 or the Civil code of the Philippines, Article 2187 – responsibility of producers in the case of death, poisoning, or illness of a consumer caused by the use or intake of their products.

Consumer Responsibilities Primary responsibility of the consumers to be honest in their dealings with vendors of products they patronize. Shoplifting – stealing products from a store. False Claim – returning products that are already used and asking for a replacement or a refund on the pretenses that the product is defective or of low quality.

Application of the Concept of Consumer Behavior Traffic Problems Traffic becomes a problem because of the use of private vehicles rather than taking public transportation. Employment Problems Contractualization – practice of employment where the capital or business owners hire workers on a labor-only contractual basis (i.e. their contract is subject to renewal on a regular basis). Reasons for Contractualization: – Decreases their cost because no regular benefits are provided to the contractuals. – Employees seldom practice their right to organization and freedom of expression.

Application of the Concept of Consumer Behavior Crime Problems Fewer legitimate means of livelihood means more people engaging in illegal professions. Solving Social Problems (Mainline) Traffic – increase parking and registration fees and increase number of public vehicles. Employment Problem – law for benefits for contractual employees, air grievances from contractual employees. Crime – wage law review; education and employment opportunities.