Consumer Stakeholders: Information Issues and Responses

1. 1 Consumer Stakeholders:Information Issues and Responses

2. 2

3. 3 The Consumer Movement Product Information Issues The Federal Trade Commission Self-Regulation in Advertising Summary Key Terms Discussion Questions Chapter 13 Outline The Paradox of the Consumer Orientation The Consumer Movement Ralph Nader’s Consumerism Consumerism in the 1990s Product Information Issues Advertising Issues Warranties Packaging and Labeling Other Product Information Issues The Federal Trade Commission Early Activism of the FTC Less Active Years of the FTC The FTC Reasserts Itself Self-Regulation in Advertising Types of Self-Regulation The National Advertising Division’s Program Summary The Paradox of the Consumer Orientation The Consumer Movement Ralph Nader’s Consumerism Consumerism in the 1990s Product Information Issues Advertising Issues Warranties Packaging and Labeling Other Product Information Issues The Federal Trade Commission Early Activism of the FTC Less Active Years of the FTC The FTC Reasserts Itself Self-Regulation in Advertising Types of Self-Regulation The National Advertising Division’s Program Summary

4. 4 Introduction to Chapter 13 Within the context of customer relationship management, the chapter focuses on the evolution and maturity of the consumer movement and product information issues, such as advertising.

5. 5 The Consumer’s Magna Carta

6. 6 The Consumer Movement “Fair value” for money spent Product that meets “reasonable” expectations Full disclosure of product specifications Truthful advertising Safe products Removal of dangerous products

7. 7 The Consumer Movement

8. 8 Lessons from the Consumers Movement Achieve a fair and just marketplace for all consumers Provide public oversite where: Corporations lack the incentives to regulate their own behavior Issue of health, safety and other special concerns Provide resources, authority, and support for public watchdogs Intensify the fight for affordable goods and services, fair financial practices, and a chance at a decent standard of living Curb wasteful overconsumption that threatens the environment

9. 9 Ralph Nader’s Consumerism Ralph Nader is considered the father of the consumer movement Unsafe At Any Speed criticized the auto industry and General Motors 40 years ago Nader and the consumer movement were the impetus for consumer legislation in the 1970s Nader made consumer complaints respectable

10. 10 Consumer Problems with Business

11. 11 Product Information Issues

12. 12 Advertising Benefits The lifeblood of the free-enterprise system Stimulates competition Provides information for comparison buying Provides competitive information to competition Sales response provides a mechanism for immediate feedback Provides social and economic benefits

13. 13 The Need for Information

14. 14 Advertising Abuses

15. 15 Weasel Words Help Like Virtually Up to

16. 16 Concealed Facts Selective use of facts to create a false belief Hidden Fees Product placement Plot placement

17. 17 Exaggerated Product Claims Induce people to buy things that do them no good Result in loss of advertising efficiency as companies match puffery with puffery Drive out good advertising Result in consumer loss of faith in product claims

18. 18 Controversial Advertising Issues Comparative Advertising Use of Sex in Advertising Advertising to children Marketing to the poor Advertising of alcoholic beverages Cigarette advertising Health and environmental claims Ad Creep

19. 19 Principles of Advertising to Children

20. 20 Warranties

21. 21 Product Information Issues Full warranty Limited warranty

22. 22 Product Information Issues Federal Packaging and Labeling Act of 1967 Prohibits deceptive labeling on consumer products Requires disclosure of certain important information on consumer products FTC administers the Act

23. 23 Product Information Issues

24. 24 The Federal Trade Commission

25. 25 The Role of the FTC Enforce federal antitrust and consumer protection laws Ensure markets function competitively Enhance the smooth operation of the marketplace Stop actions that threaten consumers’ opportunities Undertake economic analysis to support enforcement Carry out policies of Congressional mandates, such as consumer education Advance policies through cost-effective, non-enforcement activities

26. 26 The Divisions of the FTC

27. 27 The Federal Trade Commission Early activism of the FTC Less active years of the FTC Reassertion of the FTC in the 1990s The FTC in the Twenty-First Century

28. 28 Self-Regulation in Advertising

29. 29 Self-Regulation in Advertising Initiates investigations Determines issues Collects and evaluates data Makes initial decision regarding substantiated claims

30. 30 Three Moral Management Models

31. 31 Key Terms Customer Relationship Management Consumer’s magna carta Right to safety Right to be informed Right to choose Ambiguous advertising Weasel words Concealed facts Fees Right to be heard Consumerism Product information Clear information Accurate information Adequate information Warranties Implied warranty Express warranty Full warranty

32. 32 Key Terms Product placement Plot placement Exaggerated claims Puffery Psychological appeal Comparative advertising Age compression Ad creep Ambient Limited warranty Extended warranties Self-regulation Self-discipline Pure self-regulation Co-opted self-regulation Negotiated self-regulation Mandated self-regulation