1. Ethical Issues
• Deceptive selling practices- Eg. Paste 100 gms free
• Shoddy (Inferior) product Construction
• Product Breakdown
• Warranties not honoured
• Advertisements- Misrepresentation and Exaggeration
• Lack of information about the product

2. Unethical Issues and Marketing
 More than 5 lakhs injuries requiring Hospital treatment using toys,
nursery equipments and Playground equipments
 3 lakhs people injured using workshop equipments
 2 lakhs people injured using home furnishing equipments
 3 lakhs people injured using construction materials
 117 deaths per day due to auto related accidents

3. In most of the cases
 government will not take the responsibility
 Company will not take the responsibility

4. Major Issue
Businessmen look at Profit
Consumers look at Satisfaction
So they buy and sell cheaper and unsafe
products

5. Consumers should insist for only safer
products
If no demand for unsafe products-
Automatically production of unsafe products
stops

6. ETHICAL PRACTICES IN MARKET PLACE
Three Theories of ethical duties towards consumers
•The Contract Theory
•The Due Care Theory
•The Social Costs Theory

7. I. THE CONTRACT THEORY
( Business Firms’ duties to consumers)
“ The relationship between a business firm and its consumers
is essentially a contractual relationship and the firms moral
duties to the customer are those created by this contractual
relationship”

8. Contractual Responsibilities
Firm has the responsibility to deliver the goods according to
the characteristics
Customer has the responsibility to pay the money

9. According to this veiw, the duties of the firms to consumers
are--------
•Complying with the terms of sales contract
•Disclosing the nature of the product
•Avoiding misrepresentation
•Avoiding the use of undue influence

10. OTHER DUTIES OF FIRMS TO CONSUMERS
•The duty to comply
Provide consumers with a product that lives upto those claims
expressed by the company.
Eg. Winthrop Laboratories marketed a painkiller that it
advertised as “Non addictive”. But a patient got addicted and
died.

11. •Reliability
Refers to the probability that the product will function as the
consumer is led to expect that it will function
•Service Life
Refers to the period of time during which the product will
function as effectively as the consumer is led to expect it to
function

12. • Maintainability
The ease with which the product can be repaired and
kept in operating condition.
Eg. Whirlpool Corporation.
First year– All parts of the appliance found defective in
materials or workmanship, Repairs and
replacement free of charge including labor
Second year- Pay only labor.

13. • Product Safety
The degree of risk associated with using a product.
Eg. OK Tested.
Sometimes reasonable risk expected by buyers-----
Container with label: Highly Toxic
Danger- Poison
Keep away from children

14. • The duty of Disclosure
The seller who intends to enter into a contract with a
customer has a duty to disclose exactly what the
customer is buying and what the terms of the sales
are

15. • The duty not to misrepresent
(False Representation)
Eg. Writing wool or silk for cotton material
Writing regular price on article sold for higher price
• The duty not to coerce
Getting the consent creating stress, fear or emotions.
Eg. Stove and LPG connections.

16. II DUE CARE THEORY
(Business firms duty to consumers)
Based on---
Consumers and sellers are not equal.
Sellers are knowledgeable and experts
Consumers lack knowledge and expertise
Caveat emptor is replaced by caveat venditor
Eg. Power steering in a vehicle
User does not know how it operates.

17. Due care must be taken in-
• Design of the product
• Choice of reliable materials for the product
• Manufacturing process
• Quality control tests
• Warning
• Labelling

18. Duties
• The duty to exercise due care
• Design– free from danger
• Production- eliminate any defects
• Information- Fix labels, notices, instructions.

19. III Social Costs Theory
(Business firms duty to consumers)
The view that a manufacturer should pay the costs of
any injuries sustained through any defects in the
product, even when the manufacturer exercised all
due care in the design and manufacturer of the
product and has taken all reasonable precautions to
warn users of every foreseen danger.