Consumer Behavior: Buying,

Having, and Being

Twelfth Edition

Chapter 2
Consumer and
Social Well-Being
 Learning Objectives

2.1 Ethical business is good business.

2.2 Marketers have an obligation to provide safe and
functional products as part of their business activities.
2.3 Consumer behavior impacts directly on major public
policy issues that confront our society.
2.4 Consumer behavior can be harmful to individuals and to
society.
 Learning Objective 2.1

Ethical business is good

business.
 Marketing Ethics and
Public Policy

• Business ethics are rules of conduct that guide actions in

the marketplace
• There are cultural differences in what is considered ethical.
 Needs and Wants

• Consumerspace
• Materialism
• Provenance
• Curation
 Do Marketers Manipulate
Consumers?

Advertisers simply do not know enough about people to

manipulate them
 Do Marketers Create
Artificial Needs?

Objective of marketing: create awareness that needs exist,

not to create needs

• Need: a basic versus • Want: one way that

biological motive society has taught
us that the need
can be satisfied
 Sample of Federal Legislation Intended
to Enhance Consumers’ Welfare (1 of 2)

Table 2.1 Sample of Federal Legislation Intended to Enhance Consumers’ Welfare

Year Act Purpose

1953 Flammable Fabrics Act Prohibits the transportation of flammable fabrics across state lines.

1958 National Traffic and Safety Act Creates safety standards for cars and tires.

1958 Automobile Information Requires automobile manufacturers to post suggested retail prices on
Disclosure Act new cars.
1966 Fair Packaging and Labeling Act Regulates packaging and labeling of consumer products. (Manufacturers
must provide information about package contents and origin.)
1966 Child Protection Act Prohibits sale of dangerous toys and other items.

1967 Federal Cigarette Labeling and Requires cigarette packages to carry a warning label from the Surgeon
Advertising Act General.
1968 Truth-in-Lending Act Requires lenders to divulge the true costs of a credit transaction.

1969 National Environmental Policy Established a national environmental policy and created the Council on
Act Environmental Quality to monitor the effects of products on the
environment.
1972 Consumer Products Safety Act Established the Consumer Product Safety Commission to identify unsafe
products, establish safety standards, recall defective products, and ban
dangerous products.
 Sample of Federal Legislation Intended
to Enhance Consumers’ Welfare (2 of 2)

[Table 2.1 continued]

Year Act Purpose

1975 Consumer Goods Pricing Act Bans the use of price maintenance agreements among manufacturers and
resellers.
1975 Magnuson-Moss Warranty Creates disclosure standards for consumer product warranties and allows
Improvement Act the Federal Trade Commission to set policy regarding unfair or deceptive
practices.
1990 The Nutrition Labeling and Reaffirms the legal basis for the Food and Drug Administration’s new rules
Education Act on food labelling and establishes a timetable for the implementation of
those rules.
1998 Internet Tax Freedom Act Established a moratorium on special taxation of the Internet, including
taxation of access fees paid to America Online and other Internet Service
Providers.
2010 Dodd-Frank Wall Street Prompted by the recession that began in 2008, intends to promote the
Reform and Consumer financial stability of the United States by improving accountability and
Protection Act transparency in the financial system, to end “too big to fail,” to protect the
American taxpayer by ending bailouts, and to protect consumers from
abusive financial services practices.
 Are Advertising and
Marketing Necessary?

Does advertising foster materialism?

• Products are designed to meet existing needs
• Advertising only helps to communicate their availability
 For Reflection (1 of 4)

Advertisers are often blamed for promoting a materialistic

society by making their products as desirable as possible.
Do you agree with this?
• Do you agree with this?
– If yes, is materialism a bad thing?
– If no, what are your reasons?
 Learning Objective 2.2

Marketers have an obligation to

provide safe and functional
products as part of their business
activities.
 Courses of Action

• Voice
• Private
• Third-Party Response
 Consumers’ Rights and
Product Satisfaction

• Market Regulation
– Corrective advertising
• Consumerism
– Culture jamming
 U.S. Regulatory Agencies
and Responsibilities

Table 2.1 U.S. Regulatory Agencies and Responsibilities

Regulatory agency Responsibilities

Consumer Product Protects the public from potentially hazardous products. Through regulation and testing
Safety Commission programs, the CPSC helps firms make sure their products won’t harm customers.
(CPSC)

Environmental Develops and enforces regulations aimed at protecting the environment. Such regulations
Protection Agency have a major impact on the materials and processes that manufacturers use in their products
(EPA) and thus on the ability of companies to develop products.

Federal Regulates telephone, radio, and television. FCC regulations directly affect the marketing
Communications activities of companies in the communications industries, and they have an indirect effect on
Commission (FCC) all firms that use broadcast media for marketing communications.

Federal Trade Enforces laws against deceptive advertising and product labeling regulations. Marketers must
Commission (FTC) constantly keep abreast of changes in FTC regulations to avoid costly fines.

Food and Drug Enforces laws and regulations on foods, drugs, cosmetics, and veterinary products.
Administration (FDA) Marketers of pharmaceuticals, over-the-counter medicines, and a variety of other products
must get FDA approval before they can introduce products to the market.

Interstate Commerce Regulates interstate bus, truck, rail, and water operations. The ability of a firm to efficiently
Commission (ICC) move products to its customers depends on ICC policies and regulation.
 Transformative Consumer
Research

• TCR promotes research projects that include the goal of

helping people or bringing about social change
• Social marketing strategies use marketing techniques to
encourage positive behaviors such as increased literacy
and to discourage negative activities such as drunk driving
 Social Marketing and Corporate
Social Responsibility (CSR)

• Social Marketing encourages positive behavior and

discourages negative activities.
• CSR is the process of encourage organizations to make a
positive impact on stakeholders
• Cause marketing is a strategy that aligns businesses with
a cause.
 Top Cause Marketers

• Yoplait • Boxtops for Education

• Susan G Komen • Kellogg’s
• General Mills • Campbell’s
• P&G • Girl Scouts
• RED • Dawn
 For Reflection (2 of 4)

• Do you purchase a certain product because of their

cause? Why?
• Do you think organizations support a cause for profits or
because they want to be active in their community?
 Learning Objective 2.3

Consumer behavior impacts directly on major public policy

issues that confront our society.
 Data Privacy and
Identity Theft (1 of 2)

• Identity theft occurs when someone steals your personal

information and uses it without your permission.
• The Personal Data Notification & Protection Act of 2015
• The Student Digital Privacy and Parental Rights Act of
2015
 Data Privacy and Identity Theft
(2 of 2)

• Real time bidding

• Phishing
• Botnets
• Locational Privacy
 Market Access

• Disabilities
• Food deserts
• Media literacy
• Functionally illiterate
 Sustainability and
Environmental Stewardship (1 of 2)

A triple bottom-line orientation refers to business

strategies that strive to maximize return in three ways:
• Financial
• Social
• Environmental
 Sustainability and Environmental
Stewardship (2 of 2)

• Sustainability
• Conscientious consumerism
Green Marketing and
Greenwashing
 Table 2.4 LOHAS Market
Sectors (1 of 3)

Table 2.4 LOHAS Market Sectors

Personal Health Green Building

$117 billion $100 billion
Natural, organic products Home certification
Nutritional products Energy Star appliances
Integrative health care Sustainable flooring
Dietary supplements Renewable energy systems
Mind body spirit products Wood alternatives
 Table 2.4 LOHAS Market
Sectors (2 of 3)

[Table 2.4 continued]

Eco Tourism Natural Lifestyles

$42 billion $10 billion
Eco-tourism travel Indoor & outdoor furnishings
Eco-adventure travel Organic cleaning supplies
Blank Compact fluorescent lights
Blank Social change philanthropy
Blank Apparel
 Table 2.4 LOHAS Market
Sectors (3 of 3)

[Table 2.4 continued]

Alternative Transportation Alternative Energy

$20 billion $1 billion
Hybrid vehicles Renewable energy credits
Biodiesel fuel Green pricing
Car sharing programs Blank

Source: lohas.com accessed March 2, 2013.

 For Reflection (3 of 4)

• Would you prefer to purchase from a restaurant that

composts?
• What are some sustainable methods used in your
workplace?
 Learning Objective 2.4

Consumer behavior can be harmful to individuals and to

society.
 Consumer Terrorism

• Cyberterrorism
• Guerrilla marketing
 Addictive Consumption

• Consumer addiction
• Social media addiction
• Cyberbullying
• Phantom Vibration Syndrome
• Compulsive consumption
 Dark Side of CB

Consumed consumers
• Illegal acquisition and product use
– Consumer theft and fraud
▪ Shrinkage
▪ Serial wardrobers
▪ Counterfeiting
• Anticonsumption
 For Reflection (4 of 4)

• Do you know someone who is addicted to social media?

In what way?
• If you work in retail, have you experienced consumers
habitually returning items?
 For Review

1. Ethical business is good business.

2. Marketers have an obligation to provide safe and
functional products as part of their business activities.
3. Consumer behavior impacts directly on major public
policy issues that confront our society.
4. Consumer behavior can be harmful to individuals and to
society.