CH-16 Consumer and Marketing Misbehavior – CB Consumer Behaviour : Chapter Notes

Chapter 16 Consumer and Marketing Misbehavior What Do You Think Polling Question Consumers are generally more ethical than the typical businessperson. _____ Strongly Disagree _____ Disagree _____ Somewhat Disagree _____ Neither Agree nor Disagree _____ Somewhat Agree _____ Agree _____ Strongly Agree Have students access Course Mate at www.cengagebrain.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with other students taking a consumer behavior course across the country. Then turn to the last page of the chapter to find the “What Others Have Thought” box feature. This graph is a snapshot of how other consumer behavior students have answered this polling question so far. Learning Objectives After studying this chapter, the student should be able to: 16-1 Understand the consumer misbehavior phenomenon and how it affects the exchange process. 16-2 Distinguish between consumer misbehavior and consumer problem behavior. 16-3 Discuss marketing ethics and how marketing ethics guide the development of marketing programs. 16-4 Comprehend the role of corporate social responsibility in the field of marketing. 16-5 Understand the various forms of regulation that affect marketing practice. 16-6 Comprehend the major areas of criticism to which marketers are subjected. Lecture Example Many legal provisions are instituted to protect consumers from marketing misbehavior. Such legislation is aimed at maintaining or improving the general welfare of consumers in a free marketplace and also mutually benefiting marketers. For example, in Connecticut, consumers as well as farmers are pushing for a legislation that will make labeling of genetically modified food compulsory. Organic farmers say they stand to benefit from better informed consumers who may reject genetically modified products and instead choose organic food. Preliminary findings in an academic study found that consumers would pay more for food labeled as free of genetically modified ingredients. The farmers feel that Connecticut's legislation is specifically intended to help organic food producers while at the same time being a wonderful way to raise the consciousness of consumers. Source: Stephen Singer, “Organic Farmers Hope for Boost with Rival’s Labels,” Bloomberg BusinessWeek, April 15, 2012, http://www.businessweek.com/ap/2012-04/D9U5EKVG0.htm Lecture Outline with PowerPoint^® Slides The term misbehavior is used cautiously because opinions regarding what is acceptable or normal depends on one’s ethical beliefs, ideologies, and even culture of people. Marketers sometimes engage in unethical activities as well. They mislead consumers through deceptive advertising, state that regular prices are “sale” prices, and artificially limit the availability of products in order to increase prices. When the marketplace is disrupted by misbehavior, both consumers and marketers eventually lose. LO 16-1: Understand the consumer misbehavior phenomenon and how it affects the exchange process. Q: Ask students to list out examples of what they consider as consumer misbehavior(s). A: Students’ answers will vary. In a classroom discussion, the different answers will be a good starting point for differences in moral beliefs and values. Some of the examples that can be cited include shoplifting, downloading music illegally, drinking and driving, engaging in fraud, and bullying one another on the Internet. The students can also address the concern over what is considered immoral and that which is illegal. [Instructor PPT Slide 4] I. Consumer Misbehavior and Exchange Consumer misbehavior may be viewed as a subset of the human deviance topic. Sometimes consumers can deviate from norms with the intention of doing good. Consumer misbehavior can be defined in numerous ways. Here, it is defined as behaviors that are in some way unethical and that potentially harm the self or others. Misbehavior violates norms and also disrupts the flow of consumption activities. Consumer misbehavior is sometimes called the “dark side” of CB, and words such as aberrant, illicit, dysfunctional, and deviant have been used to describe it. Some behaviors are clearly illegal, while others are simply immoral. There’s a difference. For example, not returning excess change that is mistakenly given at a store is immoral but not illegal. In order for exchanges to occur in an orderly fashion, the expectations of the consumer, the marketer, and even other consumers must coincide with one another. When consumers become abusive, the exchange process is disrupted. A. The Focus of Misbehavior: Value A central component for understanding consumer behavior is value. It shouldn’t be surprising then that the focal motivation for consumer misbehavior is value. However, how consumers obtain value is the key issue. Consumers seek to maximize the benefits they receive from an action while minimizing, or eliminating, their own costs. B. Consumer Misbehavior and Ethics Moral beliefs and evaluations influence decisions pertaining to marketplace misbehaviors. The effect of moral beliefs on ethical decision-making and consumer misbehavior is shown in Exhibit 16.1. Moral Beliefs Moral beliefs, or beliefs about the perceived ethicality or morality of behaviors, play a very important role in misbehavior. A consumer’s moral beliefs are made up of three components: moral equity, contractualism, and relativism. Moral equity represents beliefs regarding an act’s fairness or justness. Contractualism refers to beliefs about the violation of written (or unwritten) laws. Relativism represents beliefs about the social acceptability of an act. Ethical Evaluations Consumers bring their moral beliefs into all decision-making settings. Once a consumer enters into a situation that calls for an ethical decision, she considers the various alternative courses of action. Here, two sets of ethical evaluations occur: deontological evaluations and teleological evaluations. Deontological evaluations focus on specific actions. As such, deontology focuses on how people accomplish their goals. The deontological perspective is, in large part, attributed to the work of Immanuel Kant. Kant’s categorical imperative suggests that one should act in a way that would be considered a universal law for all people facing the same situation. Teleological evaluations focus on the consequences of the behaviors and the individual’s assessment of those consequences. With teleological evaluations, consumers consider the perceived consequences of the actions for various stakeholders, the probability that the consequence will occur, the desirability of the consequences for the stakeholders, and the importance of the stakeholder groups to the consumer. [Instructor PPT Slide 5] C. Motivations of Misbehavior Moral beliefs and behavioral evaluations indeed play important roles in consumer misbehavior. Researchers Ronald Fullerton and Girish Punj offer the following motivations of consumer misbehavior: Unfulfilled aspirations—many consumers have unfulfilled aspirations that influence their misbehavior. An important concept is anomie. Anomie has been conceptualized as both a response to rapid cultural change and an explanation for deviance. To understand anomie as an explanation for deviance, consider the goals that are generally accepted in a culture. However, not all members of the society have the necessary resources to be able to get ahead and enjoy the things that society deems important. As a result, some consumers turn to deviant actions in order to acquire these things. It’s when societal goals are out of reach given the accepted means of achieving them that deviance occurs. Thrill seeking—the thrill of the action may lead consumers to misbehave. Lack of moral constraints—some consumers simply don’t have a set of moral beliefs that are in agreement with society’s expectations and see no problem with their behavior. Differential association—differential association explains why groups of people replace one set of acceptable norms with another set that others view as unacceptable. By acting in opposition to acceptable standards, group members forge their own identities and strengthen group cohesion. Pathological socialization—consumers may view misbehavior as a way of getting revenge against companies. Stealing from large corporations may seem less severe than stealing from a family-owned retailer, and consumers may believe that big companies somehow deserve what they get. Provocative situational factors—factors like crowding, wait times, excessive heat, and noise can contribute to consumer misbehavior. Opportunism—misbehavior can also be the outcome of a deliberate decision-making process that weighs the risks and rewards of the behavior. LO 16-2: Distinguish between consumer misbehavior and consumer problem behavior. Q: Ask students for their opinions on the relevance of product misuse in the student population. How many in class text while they drive? A: Students’ answers will vary. Some of the typical product misuse examples include aggressive driving, drunk driving, cell phone use, sexting, and texting while driving. While some students may endorse the above behaviors, others may find them inappropriate. [Instructor PPT Slide 6] II. Distinguish Consumer Behavior from Problem Behavior Consumer misbehavior can be distinguished from what is referred to as consumer “problem behavior.” The misbehavior term is used to describe behavior deliberately harmful to the self or another party during an exchange. Consumer problem behavior refers to behaviors that are seemingly outside of a consumer’s control. Although the line between consumer misbehavior and problem behaviors can be blurred, they are distinguished by considering the issue of self-control. Exhibit 16.2 presents examples of consumer misbehaviors and problem behaviors, but again the line is blurry. A. Consumer Misbehavior Many of the behaviors that are listed in Exhibit 16.2 are discussed frequently in the popular press. Shoplifting Consumers’ motivations for shoplifting are similar to motivations for other forms of misbehavior. Specifically, consumers shoplift because the temptation can be very strong, they believe that retailers can afford the monetary loss, they believe they probably won’t get caught, they seek acceptance into a group, and the act can be exciting. Shoplifting can sometimes be diagnosed as kleptomania. Kleptomania is generally triggered by a strong compulsion and the inability of the consumer to fight the urge. Emotions and Shoplifting Emotions play a large role in shoplifting. Fear of being caught plays a role in predicting shoplifting intentions, especially among young consumers. Research also shows that consumers who shoplift are sometimes motivated by repressed feelings of stress and anger. Age and Shoplifting Shoplifting behavior appears to peak during the adolescent years. Adolescents also tend to consider shoplifting as being more ethical than do adult shoppers. Computer-Mediated Behaviors: Illegal Sharing of Software and Music Due to improvements in technology, consumers often have the ability to illicitly download electronic material from a number of sources. Interestingly, research reveals that how consumers view illegal downloading depends on the motivation for the behavior. That is, if the motivation is primarily based on utilitarian value (that is, for personal gain), then the act is viewed as less morally ethical and socially acceptable than if the behavior occurs based on hedonic value (that is, for “fun”). Computer-Mediated Behaviors: Attacks Computers present other opportunities for misbehavior. Computer viruses are a major problem. By far the most common form of computer-aided attacks is the spreading of malicious URL links. Another form of computer misbehavior is cyberbullying. Cyberbullying, the attack of innocent people on the Internet, is especially a problem for young consumers. Teens can experience lower self-esteem, depression, anxiety, and suicidal thoughts when victimized by cyberbullying. Consumer Fraud There are many types of consumer fraud. Although it is difficult to estimate exactly how much consumer fraud ends up costing consumers, the Coalition Against Insurance Fraud estimates that insurance fraud alone costs Americans at least $80 billion per year. Identity theft is another major public concern. The Identity Theft and Assumption Deterrence Act of 1998 and the Identity Theft Penalty Enhancement Act of 2004 were passed in order to curb the crime, but the increased reliance on computers for transactions has contributed to its spread. Abusive Consumer Behavior Consumers who are aggressive or rude to employees and other consumers are considered to be abusive. One early study in the area of problem customers suggested that four categories of customers can be identified: verbally or physically abusive customers, uncooperative customers, drunken customers, and customers who break company policy. Needless to say, employees don’t like to deal with customers who act this way, and abusive behaviors can have negative effects on other consumers as well. One area of abusive behavior that has gained attention is dysfunctional fan behavior. Dysfunctional fan behavior is abnormal functioning relating to sporting event consumption. While there are many explanations for such behavior, some think that dysfunctional fan behavior is simply a result of an increasingly violent society. Another controversial issue today is culture jamming. Culture jamming refers to attempts to disrupt marketing campaigns by altering the messages in some meaningful way. Of course, calling culture jamming an abusive behavior depends on one’s own perspective. Proponents believe that their behaviors are a matter of free speech and good for society. Illegitimate Complaining Consumers also complain about products and services even when there really isn’t a problem. To date, the research on illegitimate complaining remains relatively scarce. However, one study did find that illegitimate complaining is motivated by a desire for monetary gain, a desire to evade personal responsibility for product misuse, a desire to enhance the consumer’s ego and look good to others, or a desire to harm a service provider or company. Product Misuse Consumers use products in ways that are not intended. In some cases, consumers simply misuse products by accident. In others, they knowingly misuse them. Marketers therefore work hard to ensure that consumers understand the ways in which products should be used. However, even when warnings and instructions are provided, consumers still misuse products. Injuries that result can be very costly. Why do consumers use products in unsafe ways? A number of explanations have been offered. Consumers may simply not pay attention to what they are doing, may feel as though they generally get away with risky behaviors, may have a tendency to be error prone, or may focus more on the thrill of misuse rather than the actual risk of the behavior. Aggressive Driving Aggressive driving may range from mild displays of anger to seriously violent acts while driving. Although aggressive driving is often thought of as an act by a solitary consumer, aggressive driving problems often involve multiple drivers, as victims retaliate with their own aggression. Younger, less-educated males have been shown to be more likely to engage in aggressive driving behavior. Situational factors, such as intense traffic congestion and driver stress, as well as personality traits play a part. Drunk Driving Statistics reveal that as many as 13,000 people die from alcohol-related traffic accidents in the United States each year and that nearly three out of every ten Americans will be involved in an alcohol-related crash at some point in their lives. Drunk driving and binge drinking are often related. In fact, one study indicated that over 80% of respondents who reported alcohol-impaired driving also reported engaging in binge drinking behaviors. Cell Phone Use and Driving While not everyone will agree that using a cell phone while driving is misbehavior, the behavior does put others at risk and it is against the law in several U.S. states and in numerous countries worldwide. Studies reveal that consumers who use cell phones while driving are four times as likely to get into serious accidents, and the problem is particularly serious for teens. A 2012 study also revealed that teen girls are twice as likely as teen boys to use cell phones while driving. As of mid-2014, thirteen U.S. states prohibit all drivers from using handheld cell phones while driving, and while no state completely bans cell phone use, 37 states ban all use by novice drivers. Sexting One growing form of misbehavior is “sexting.” Sexting is taking nude photos of oneself and sending them to another person via cell phone. It seems to occurs most frequently among teenaged consumers, and the app Snapchat has been criticized by some as making sexting easy and secure. Multiple media reports indicate that many teens feel like sexting isn’t harmful. Parents and school administrators do not feel the same way. Sexting also raises moral, ethical, and legal issues. The behavior can result in severe psychological and social problems. The effects of sexting range from minor psychological distress to intense emotional trauma. B. Consumer Problem Behavior Consumer problem behaviors include other acts that do not necessarily break any specific laws or societal norms. Psychological problems can cause or influence these behaviors. Compulsive Consumption Compulsive consumption refers to repetitive, excessive, and purposeful consumer behaviors that are performed as a response to tension, anxiety, or obtrusive thoughts. The term compulsive consumption is often used broadly and consists of a number of specific behaviors related to the purchase and use of consumer products and services. Compulsive consumption should not be confused with addictive consumption. Addictive consumption refers to a physiological dependency on the consumption of a product. The word dependency is important, and in the strictest sense, addictions are characterized by the physical inability to discontinue a behavior, or a physical reliance. Compulsive consumption often takes two forms: compulsive buying and compulsive shopping. Compulsive Buying Compulsive buying may be defined as chronic, repetitive purchasing behaviors that are a response to negative events or feelings. The behavior has harmful effects such as the accumulation of debt, domestic problems, and feelings of frustration. Influencers of the behavior include feelings of low self-esteem, obsessive-compulsive tendencies, fantasy-seeking motivations, and materialism, as well as a focus on the short term. The same negative feelings that influence compulsive buying can also result from the behavior itself. Compulsive Shopping Compulsive shopping refers to repetitive shopping behaviors. The word oniomania is sometimes used to describe this behavior. The key difference between compulsive shopping and buying is the buying process itself. Compulsive shoppers tend to focus on the mental highs associated with “the hunt,” whereas compulsive buyers feel the need to buy. Eating Disorders Binge eating refers to the consumption of large amounts of food while feeling a general loss of control over intake. Binge eating may result in medical complications, including high cholesterol, high blood pressure, and heart disease. Exhibit 16.3 presents a description of the binge eating disorder. Binge eating has been shown to be associated with compulsive buying and impulsivity, and it is often related to obesity. Unfortunately, many consumers who binge-eat fail to seek treatment. Binge eating is also often associated with bulimia, a disorder that includes binge eating episodes followed by self-induced vomiting. Anorexia, or the starving of one’s body in the pursuit of thinness, is another consumer eating disorder. Binge Drinking Binge drinking is defined as the consumption of five or more drinks in a single drinking session for men and four or more drinks for women, and the behavior is particularly prevalent among full-time college students. Binge drinking has been linked to suicide attempts, unsafe sexual practices, legal problems, academic disruptions, and even death. College students who have higher self-actualization values generally have lower attitudes toward binge drinking, whereas students who value social affiliation tend to have more positive attitudes toward the behavior. Problem Gambling Problem gambling is another serious issue. This behavior may be described as an obsession with gambling and the loss of control over gambling behavior and its consequences. Consumers who are problem gamblers frequently gamble longer than planned, borrow money to finance their gambling, and feel major depression due to their gambling behaviors. Problem gamblers exhibit at least some of the criteria for pathological gambling. Drug Abuse Both illegal and prescription drugs are problem areas for some consumers. The problem is especially alarming among teens. A 2012 study revealed that 15% of high school seniors reported using prescription medication to get high. Recreational use of marijuana was legalized in the states of Washington and Colorado during 2012, a move which proponents argue signals a changing attitude toward the drug. A relatively new trend is also the use of “synthetic” marijuana, which many consumers view as being safer than the actual drug. Other drugs, such as cocaine and methamphetamine, are also often abused at alarmingly high rates. LO 16-3: Discuss marketing ethics and how marketing ethics guide the development of marketing programs. Q: Has anyone in class been a victim of “unfair” marketing practices? Do they think marketers act in unethical ways to maximize profit? How do they think consumers can combat marketing misbehavior? A: Students’ answers will vary. When students discuss what they consider as “unfair” marketing practices, it will also include a reflection on marketing ethics. The marketing concept proposes that all the functions of the organization should work together in satisfying its customers’ wants and needs. Various consumer movements work toward protecting basic consumer rights. [Instructor PPT Slide 7] III. Marketing Ethics and Misbehavior A fair marketplace depends on each party in an exchange acting fairly and with due respect for each other. Whenever anyone acts unethically, inefficiencies result and chances are that somebody will suffer. Marketers, like consumers, can act unethically. When a company misrepresents a product, consumers are led to expect more than is actually delivered. Not everyone will agree on what behaviors should be considered marketing “misbehaviors.” The term ethics refers to standards or moral codes of conduct to which a person, group, or organization adheres. Marketing ethics refers to societal and professional standards of right and fair practices that are expected of marketing managers as they develop and implement marketing strategies. Many organizations have explicitly stated rules or codes of conduct for their employees. Exhibit 16.4 lists out the Code of Ethics for the American Marketing Association. Like consumer misbehavior, marketer misbehavior can be viewed as a subset of deviance. For marketers to misbehave, they must be aware that an action will be considered unethical and act with deviance to cover intent. Sometimes, marketers don’t intend to misbehave but mistakes are made in marketing execution. A. Consumerism The marketing concept proposes that all the functions of the organization should work together in satisfying its customers’ wants and needs. When businesses begin taking advantage of consumers, consumers lose, businesses lose, and society as a whole eventually loses. In fact, it can be said that the ethical treatment of consumers is a cornerstone of a fair marketplace. Much of the pressure that has been placed on marketers comes directly from consumer groups. Consumerism is used to describe the activities of various groups to protect basic consumer rights. [Instructor PPT Slide 8] The Consumer Bill of Rights, which today stands as a foundation of the consumerism movement, was introduced in 1962, and included: The right to safety The right to be informed The right to redress and to be heard The right to choice B. The Marketing Concept and the Consumer The marketing concept developed greatly in the 1960s. It was early in this time period that Theodore Levitt published the article “Marketing Myopia.” Among other things, Levitt’s work brought about a new perspective that argued that businesses should define themselves in terms of the consumer needs that they satisfy rather than in terms of the products they make. While many companies today adhere to the marketing concept, numerous questions arise regarding actual marketing practice. Even though freedom of choice is a central tenet of the U.S. economic system, these products are among the many that society often considers harmful. The Marketing Mix and the Consumer Marketers use the tools found in the marketing mix carefully as they target consumers. When consumers question the way in which they are treated, they are likely to spread negative information through word of mouth and seek some form of remedy. One of the most visible elements of the marketing mix is pricing. When consumers believe that a firm’s prices are unfair, they are likely to leave the firm and spread negative information about it. Consumers also complain that marketing efforts lead to higher overall prices. Marketers counter by explaining that marketing expenditures allow for increased economies of scale that contribute to lower overall production costs. Pricing issues are certainly debatable. Exhibit 16.5 presents the four P’s of marketing, as well as their ethical and unethical uses. Consumers question the extent to which products are actually harmful to them or society in the long run. Many products can lead to short-term satisfaction, but they can also lead to long-term consumer and/or societal problems. Consider the following categories of products, as originally discussed by Philip Kotler: Deficient products are products that have little to no potential to create value of any type (for example, faulty appliances). Salutary products are products that are good for both consumers and society in the long run (for example, air bags). These products offer high utilitarian value, but do not provide hedonic value. Pleasing products are products that provide hedonic value to consumers but may be harmful in the long run (for example, energy drinks). Desirable products are products that deliver high utilitarian and hedonic value and that benefit both consumers and society in the long run (for example, pleasant-tasting weight-loss products). Marketers clearly want to avoid offering deficient products. The difficult issue comes with the marketing of pleasing products. Many consumers know that the products they enjoy are harmful, but they buy them anyway! Individual responsibility and freedom are important factors in consumer decisions to use these products. Most of the time, these companies deliver both customer satisfaction and value. Consumer Vulnerability and Product Harmfulness Two important issues to consider when discussing marketing ethics are product harmfulness and consumer vulnerability. A classification of product harmfulness versus consumer vulnerability applied to marketing decision making is presented in Exhibit 16.6. Public criticism of marketing strategies tends to be most intense when a marketer targets vulnerable consumer groups with harmful products. Of course, what constitutes a “harmful” product is a question of interpretation, as is the definition of a “vulnerable” consumer. Employee Behavior Individual employees play an important part in the execution of marketing programs. Although consumers hope that a firm’s employees are acting in good faith, this is not always the case. Individual behavior is guided largely by morals. Morals are personal standards and beliefs that are used to guide individual action. Certainly, individuals must answer to their own belief systems. LO 16-4: Comprehend the role of corporate social responsibility in the field of marketing. Q: Ask students on how some of the firms they know of practice corporate social responsibility. A: Students’ answers will vary. There are many activities through which companies can discharge their social responsibilities. However, these activities can fall into one of the following three categories—altruistic duties, ethical duties, and strategic initiatives. [Instructor PPT Slide 9] IV. Corporate Social Responsibility Corporate social responsibility (CSR) may be defined as an organization’s activities and status related to its societal obligations. Due to increased pressure from consumer groups, companies are finding that they must be socially responsible. There are many activities in which companies can be responsible. Activities such as making donations to causes, supporting minority programs, ensuring responsible manufacturing processes and environmental protectionism, acting quickly when product defects are detected, focusing on employee safety, and encouraging employees to volunteer for local causes are some of the many ways in which companies can exhibit their social responsibility. Basically, these actions described can fall into one of three categories: Ethical duties include acting within expected ethical boundaries. Altruistic duties include giving back to communities through philanthropic activities. Strategic initiatives include strategically engaging in socially responsible activities in order to increase the value of the firm. Socially responsible marketing is associated with favorable consumer evaluations, increased customer satisfaction, and the likelihood of increased sales. This is particularly the case when an individual consumer identifies with the company and the causes to which it contributes. A. The Societal Marketing Concept Part of being socially responsible is adopting the societal marketing concept. This concept considers the needs of society along with the wants and needs of individual consumers. All firms have many stakeholders, and the effects of marketing actions on all these stakeholder groups should be considered. All of the stakeholders of a firm should be considered when marketing programs are initiated. Exhibit 16.7 presents prescriptions for improved marketing ethics. LO 16-5: Understand the various forms of regulation that affect marketing practice. Q: Ask students to list out legislation that has helped protect consumer rights. A: The text mentions a number of legislation aimed at protecting the consumer—The Federal Food and Drug Act (1906), the Wheeler-Lea Act (1938), the Fair Packaging and Labeling Act (1966), the Child Protection Act (1966), the Consumer Product Safety Improvement Act (2008), the Helping Families Save Their Homes Act (2009), the Wall Street Reform and Consumer Protection Act (2010), and the Food Safety Modernization Act of 2010. V. Regulation of Marketing Activities Many federal, state, and local laws were established in order to protect consumers from marketer misbehavior. Federal regulatory bodies such as the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) monitor exchanges that take place between consumers and marketers. Although these groups attempt to bring fairness to the marketplace, it is ultimately up to managers to ensure that the actions of their firms fall within generally accepted business guidelines. [Instructor PPT Slides 10, 11] A. Marketing and the Law Exhibit 16.8 presents a legislation that has been enacted in an effort to regulate commerce and ensure free trade. Many of these acts are aimed at maintaining or improving the general welfare of consumers in a free marketplace. They also protect the value that consumers receive from exchanges by prohibiting acts such as deceptive advertising and the selling of defective or unreasonably dangerous products. Sometimes, however, legislation can have adverse effects. LO 16-6: Comprehend the major areas of criticism to which marketers are subjected. Q: Ask students how often do they think essential commodities are subject to price gouging? A: Students’ answers will vary. Price gouging is the act of charging a higher than reasonable price for a good that occurs following some kind of natural disaster or event. Price gouging is most often aimed at commodity goods like gasoline. However, it also occurs for other kinds of products and services. Most laws prohibit sellers from increasing prices more than 25 percent above average prices over a 30-day period after a disaster. [Instructor PPT Slides 12–15] VI. Public Criticism of Marketing Unethical marketers intend to do harm in some way, act negligently, and/or manipulate consumers. However, marketers can simply make innocent mistakes. Consumer perception is also important, as bad events can mean disaster for the firm in terms of lost business, customer boycotts, and bad publicity. Any number of different issues regarding public criticism of marketing could be discussed; however, the focus here is on only a handful of issues. A. Deceptive Advertising Deceptive advertising (sometimes called false or misleading advertising) is an important issue for marketers. Deceptive advertising is covered under the Wheeler-Lea Act (1938). This act amended the Federal Trade Commission Act to include false advertising issues. According to the FTC, deceptive advertising is advertising that (a) contains or omitting information that is important in influencing a consumer’s buying behavior and (b) is likely to mislead consumers acting reasonably. The extent to which advertisers intentionally misrepresent their products in crucial. Although the FTC defines what deceptive advertising is, actual deception can sometimes be difficult to prove in practice. An important distinction in practice is the difference between deceptive advertising and puffery. The term puffery describes making exaggerated claims about a product’s superiority. Puffery differs from deceptive advertising in that there is no overt attempt to deceive a targeted consumer. Consumers often complain that advertisers create unrealistic expectations in their advertisements. Although regulatory mechanisms are in place to protect consumers from deceptive advertising, most businesses prefer forms of self-regulation over governmental regulation. For this reason, self-regulatory bodies such as the National Advertising Review Council (NARC) work to ensure that advertisements are truthful. The NARC provides guidelines and sets standards for truth and accuracy for national advertisers. B. Marketing to Children Children typify a vulnerable group because they often lack the knowledge of how to behave as responsible consumers. Two important issues arise with marketing to children. First, there is the question of whether children can understand that some marketing messages do not offer literal interpretations of the real world. Second, the quantity of marketing messages to which children are exposed can be called into question. The Children’s Advertising Review Unit (CARU) of the Better Business Bureau is a self-regulatory body that examines marketing activities aimed at children. Among other things, the CARU guidelines state that advertisers should take into account the limited knowledge and comprehension that children have regarding marketing issues. Furthermore, the CARU maintains that advertisers should pay close attention to the educational role that advertising plays in a child’s development and that advertising should stress positive behaviors. Internet marketing is another issue. The Children’s Online Privacy Protection Act focuses on the online collection of personal information from children who are 13 years or younger. It specifies what marketers must include in privacy policies, when and how to seek consent from parents, and the responsibilities that marketers have to protect children’s privacy and safety online. Yet another issue is how violent advertisements affect children. C. Pollution Marketing a product can lead to pollution. Of course, consumption also leads to pollution, and both marketers and consumers play roles in environmental stewardship. Environmental protection continues to grow in importance, and popular movies and events highlight consumer pressure on businesses and government to increase their role. Although experts disagree on the effects of pollution, the issue remains important. D. Planned Obsolescence Marketers are also criticized for intentionally phasing out products before their usefulness wears out. The practice of managing and intentionally setting discontinue dates for products is known as planned obsolescence. Critics charge that it is both wasteful and greedy for marketers to engage in planned obsolescence. Marketers counter by arguing that by continually offering improved products, consumers are able to enjoy increased standards of living and innovation. E. Price Gouging Price gouging is the act of charging a higher than reasonable price for a good, following some kind of natural disaster or event. Following natural disasters it is common for state officials to warn potential violators to not engage in price gouging. Several businesses were found guilty of price gouging after Hurricane Sandy in the northeastern United States. While some argue that the laws amount to price controls, there is no doubt that gouging ultimately harms consumers. F. Manipulative Sales Tactics High-pressure and manipulative sales pitches are often the cause of consumer dissatisfaction. Salespeople who adhere to a sales orientation are often guilty of these types of high-pressure tactics. A more appropriate way to approach a sale is to adhere to what is referred to as a customer orientation. When using a customer orientation, the salesperson focuses on customer needs. Several studies have shown that having a customer orientation leads to favorable results for salespeople. Ingratiation tactics are sometimes used by salespeople in order to get a sale. These techniques are often viewed as being manipulative. Techniques such as the foot-in-the-door technique, the door-in-the-face technique, the even-a-penny-will-help technique, and the “I’m working for you!” technique can be called into question. These methods are considered unethical to the extent they are used for manipulation. A salesperson using the foot-in-the-door technique focuses on simply getting a “foot in the door.” When consumers realize that they have opened themselves up to a sales pitch they are more likely to listen to the pitch and are also more likely to buy a product. The foot-in-the-door technique is based on self-perception theory, which proposes that consumers use perceptions of their own actions when forming attitudes. With the door-in-the-face technique, a salesperson begins by making a very large request such as “Can I get you to buy this car today?” Realizing that very few, if any, customers would say “Yes!” the salesperson prepares for the dreaded “No!” This tactic relies on the reciprocity norm, which states that individuals are motivated to give back to those who have given them something. By feeling that he just rejected a salesperson, the customer feels that he at least owes the salesperson the courtesy of listening. Using the even-a-penny-will-help technique, cause-related marketers suggest to potential donors that even the smallest donation will go a long way toward reaching the desired goal, such as ending child abuse, feeding the hungry, or sheltering the homeless. The idea is to make the donor feel ashamed to give such a small amount. This technique is considered unethical to the extent that it relies on feelings of guilt. Using the “I’m working for you!” technique , salespeople attempt to lead customers into believing that they are working as hard as possible to give them the best deal when in reality they are following a script or a routine. Here, the consumer would think that the salesperson is working hard, thereby raising the denominator in the equity theory comparison equation and leading to higher levels of satisfaction, and potentially purchase likelihood. Of course, salespeople often do consult with managers and work as hard as possible to give their customers the best deal. G. Stealth Marketing One area of marketing that is currently receiving increased attention is the use of stealth marketing. With stealth marketing, consumers are completely unaware that they are being marketed to (hence, the term stealth). Again, WOMMA (Word of Mouth Marketing Association) is opposed to such tactics and considers their use to be unethical. H. Products Liability Big business is often criticized for marketing unsafe products. The Consumer Product Safety Commission is the main body that monitors product safety, and the right to be safe is a basic consumer right listed in the Consumer Bill of Rights. Product safety is governed in different ways around the world. The issue of products liability, which is the extent to which businesses are held responsible for product-related injuries, is determined through this process. The primary legal doctrine governing products liability in the United States today is strict liability. With strict liability, consumers can win a legal action against a firm if it can be demonstrated in court that an injury occurred and that the product associated with the injury was faulty in some way. This doctrine has become more prominent recently than the former guiding doctrine of negligence. With negligence, an injured consumer would have to show that the firm could foresee a potential injury that might occur and then decide not to act on that knowledge. The doctrine of strict liability means that firms face increased exposure to costs associated with product injury lawsuits. Generally, firms face higher liability costs in the United States than in most other countries. One reason is because liability lawsuits that actually reach a courtroom often involve jury trials. Juries tend to be more sympathetic and are much more likely to award substantial punitive damages as well as compensatory damages. Punitive damages are intended to punish a company for injuries; compensatory damages are intended to cover costs incurred by a consumer due to an injury. The issue of products liability is a good way to illustrate the importance of public policy to consumer behavior. But while tilting the balance of bearing the burden of product injuries toward firms may, at times, seem reasonable, such tilting actually restricts the market by driving businesses out of certain industries and restricting the choices of consumers. The key to effective public policy is finding the proper balance, offering consumers protection but still providing a high degree of freedom in the marketplace. Video material for this chapter is starting on page 29 of the IM Instructor Manual for CB Consumer Behaviour Barry J. Babin, Eric G. Harris 9781305403222, 9781305577244