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Marketing, Advertising
and Product Safety
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Marketing and ConsumerMovement
Marketingbusiness activitydirecting flow of goods and services
Product development Distribution
Pricing
Promotion and sales
Marketing Concept consumersatisfaction
Consumerism balance rights
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Manufacturer Rights
Product Decisions
Pricing
Promotion
Method of Distribution/Availability
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Consumer Rights
Product Information
Choice
Protection from Harm
Voice
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Consumer Information NeedsPackaging and Labeling Purpose
provide information so that consumers canmake rational choices
Fair Packaging and Labeling Act
Nutrition Labeling and Education ActPricing provide true cost information
Using standard measures, uniformity
Other information
Tradition - truthful, fulfill warranties
Alternative is there an obligation toprovide info consumers cant reasonably
obtain themselves
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Deception and Manipulation
Deception
creating and taking advantageof false perceptions interfering with ability to
make rational choices
E.g., bogus clearance sales
Manipulation non-coercive shaping of
alternatives results in depriving of choice
E.g., bait and switch - FTC prohibits
advertising cheaper product then gettingcustomers to buy more expensive product
Impairs ability to make rational choices;
leads to choices not otherwise made
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Advertising Criticisms
Exaggerated claims Irritating repetition
Objectionable products
Creation of consumerism cultureWasteful and inefficient
Stifles competition
Leads to monopoly conditionsCreates wants
Behavior control
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Persuasion and Behavior Control Traditional Economic Argument &
Principle of Consumer Sovereignty Process of production is to satisfy needs and
wants
Consumers are best judges of this
Dependence Effect (Galbraith) Wants are created by production
Concern is how advertising subverts ability towant the right things
Imbalance results (private goods v. public)
Advertising is effective with those whodont really know what they want; they areopen to persuasion
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Marketing in Kidspace
Children/youth have greater
purchasing power and influence
Do advertisements create the wants
for children, or do they inform the
children about products filling wants
children already have?
Utilitarian
Deontology/Kant
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Advertising that ExploitsStereotypes
Utilitarian
Consumption is worth distortions
Deontology
Truth telling is a duty
Milton Friedman
If its legal, its ethical
Virtue Ethics What type of community is created?
What type of life is being held up as
virtuous?
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Market Research
Collecting data about
consumers
Is it unethical??
If so, when?
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Anticompetitive MarketingPractices
Practices that can lead to monopolies,reduce competition, distort markets
and lead to price increases
Price fixingPrice discrimination
Resale price maintenance
Reciprocal dealing
Tying arrangements
Exclusive dealing
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Product Liability
Caveat Emptor
Let the Buyer Beware
Strict Tort Liability -Manufacturers and sellers liable
for injuries resulting from their
products regardless of whetherthey knew of the danger that
cause the injury
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Product Liability
Contract Theories
Express Warranties
Implied Warranties
Merchantability
Fitness for Particular Purpose
Tort Theories
Negligence
Strict Liability
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Express Warranties
Express promise by seller as toquality, abilities or performance
Statements are made by seller before
the sale and are the basis or part ofthe basis of the sale
Can arise from a description, sample,model, words
Sellers intent to warrant is notnecessary
Opinions are not warranties
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Implied Warranty ofMerchantability
Promise that the goods are fit for
their ordinary purposes and are of
average quality with adequate
packaging
Given in every sale by a merchant
seller
those sellers engage in thebusiness of selling the goods that
are the subject of the contract
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Implied Warranty of Fitnessfor a Particular Purpose
Where the seller at the time of
contracting has reason to know any
particular purpose for which the goodsare required and that the buyer is
relying on the sellers skill or judgment
to select or furnish suitable goods,there is ... an implied warranty that the
goods shall be fit for such purpose.
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Implied Warranty of Fitness fora Particular Purpose
Seller has skill or judgment inuse of the goods,
Buyer relies on the skill orjudgment,
Seller makes a recommendation,
andSeller knew or had reason to
know of buyers reliance, use &purpose
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Strict Liability
Give consumers maximum protectionfrom defects
Only manufacturer can preventdefective and dangerous products
Allow plaintiff direct access tomanufacturer without going throughthe retailer, wholesaler, etc..
Manuf. derives profit and should bearthe burdens
Manuf. is in best financial position tocover injury costs
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Strict Liability
Duty to manufacture a reasonablysafe product (& in the business ofselling or manufacturing the product)
Duty was breached - show a defect
Breach caused plaintiffs injury &foreseeable that defect will causeinjury
Physical or property damages
Product reaches the user orconsumer without substantial change,(no liability if product has beenmodified or changed)
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Unreasonably Dangerous Defect
Condition of danger such that areasonable ordinary person would notcontemplate using the product
Most common types of defects(breaches):
Design defects
Improper warnings or insufficientinstructions
Negligent packaging, manufacturingor handling
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Defects - How to Avoid
Design Defects:
Design with all foreseeable usesin mind
Comply with all federal and stateregulations
Use latest technology and
designs available in the industryand meet or exceed industrystandards
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Defects - How to Avoid
Warnings and Instructions:
Warn if foreseeable use is dangerousand not likely to be realized by
buyer/user Supplement warnings where needed
Adequate instructions on proper use
Packaging, Manufacturing, Handling: Protect against foreseeable dangers,such as tampering
Very difficult to prove these defects
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Negligence
Same as Strict Liability except:
Knowledge of the defect before
sale or sales were allowed tocontinue with knowledge theproduct had a defect
Punitive damages if plaintiff canshow manufacturer/seller knewof defect