BA 385: Consumer Stakeholders: Product and Service Issues

1. BA 385: Consumer Stakeholders: Product and Service Issues Chapter Thirteen: Read that Ladder!

2. Are you more worried about quality or safety in the products you buy?

3. 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 risk-free products—and business’s responsibility to address this concern Quality and Safety: Two Central Issues

4. Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality Quality Issues Critical Dimensions of Product Quality

5. Quality Issues • Ethical Dimensions of Quality • Contractual theory • Firms must comply with terms of the sale, inform customer, avoid misrepresentation and coercion • Due care theory • Customer is vulnerable and lacks info that the firm has, therefore, customers depend upon ethical behavior of firm. Firm must “think for customer” to some extent regarding use of its products. • Social costs view • A firm is always responsible for harm caused by its product. Firms benefit from profits and must therefore be prepared beyond contracts and due care to accept responsibility.

6. Safety Issues • Historical View • Caveat Emptor – Buyer Beware • Caveat Vendor – Seller Take Care

7. Top 10 List of Safety Principles

8. 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 the amount of the financial award. SECOND . . . We have become an increasingly litigious society. THIRD…Rise in the strict liability doctrine

9. Product Liability • Extensions of the Strict Liability • Absolute liability • Market share liability • - Delayed manifestation cases

10. Consumer Product Safety Commission Protect the public against unreasonable risks of injury associated with consumer products. Assist consumers in evaluating product safety. Develop uniform safety standards. Promote research into preventing product-related deaths, illnesses, and injuries.

11. Develop voluntary standards with industry Issue and enforce mandatory standards Ban a consumer product if public cannot be protected Recall a product or arrange for its repair Research potential product hazards Inform, educate and respond to consumers Consumer Product Safety Commission CPSC Risk Management

12. Consumer Product Safety Commission • Challenges Facing the CPSC • Lack of corporate compliance • Limited public access to key information • Inadequate consumer notification • Insufficient funding

13. Food and Drug Administration

14. EstablishingConsumer Affairs Offices EstablishingProduct Safety Offices InstitutingTotal Quality Management Programs UndertakingConsumer Satisfaction Measurement Business’s Response to Consumers

15. Business’s Response to Consumers • Consumer Affairs Offices (CAO) • Basic mission is to heighten management’s responsibilities to consumer stakeholders • Essential functions • Establish a database • Audit programs • Recommend programs, policies and practices • Establish effective communications

16. Business’s Response to Consumers • CAO Factors for Success or Failure Proximity to CEO’s office Clear access to all information about the company’s customers and authority to create the information Availability of quantified information about consumers Accessibility to effective performance measures to evaluate all employees in the company

17. Business’s Response to Consumers • Other Functions of Product Safety Offices Set the tone for the product safety effort Structure and enforce penalties Develop links to other quality and safety initiatives Assist with product safety litigation Assist the regulatory liaison Set up product safety committees Perform safety audits and tests Design contingency plans for product recalls

18. Total Quality Management