Marketing & product safety

1. Presented By:
Anika Babar & Hassan Raza
MARKETING & PRODUCT SAFETY

2. PRESENTATION SCHEME
• Introduction
• Consumerism and Marketing Concept

3. • With the sale of goods to the public comes responsibility on
the part of the manufacturer and advertiser.
• Government has some responsibility to protect the public
from hazardous or mislabeled goods.
• What responsibilities do companies have toward their
consumers?
• How can goods be promoted while respecting the choices of
individuals?
INTRODUCTION

4. The complexity of an advanced economy and the
necessary dependence of consumers on business to
satisfy their many wants increase business’s
responsibility for product safety.
BUSINESSES & PRODUCT SAFETY

5. CONSUMERISM AND MARKETING CONCEPT
• Concept of consumerism
• Marketing concept
• Effort of satisfying consumer
• Concept of defenders about marketing

6. SELLER RIGHTS
• Right to decide the design and style of product
• Right to set the price and other terms of sale of the products
• Right to make decisions about distribution
• Right to promote products

7. CONSUMER RIGHTS
• Right to be protected from harmful products
• Adequate information about products
• Right to be offered a choice
• Right to have a voice

8. PACKAGING & LABELING
• Business is responsible to provide accurate, clear, and
understandable product information that meets consumer
needs.
• Product labels often fail to do this.
• Package shape, terms, and quantity surcharges may also
mislead shoppers.

9. • Improper packaging and labeling can put a health conscious
consumer at a disadvantage
• Manufacturers offer a number reasons for not providing more
information
• Moral conduct begins by providing consumers with what they
need to know to make informed product choices.
PACKAGING & LABELING

10. PRICING
• Consumer concerns about pricing
• Raised consumer concern on the introduction of UPC
• Problem of hidden costs
• Problems with price fixing
• Problems with price Discrimination

11. The “Classic” theory – The company owes the consumer a
product that lives up to the explicitly stated safety claims, plus
warnings about known hazards that are not obvious.
The “Due Care” theory – The company owes the consumer a
product that is designed and manufactured to be as safe as
possible, plus warnings about hazards that cannot be avoided.
The “Social Costs” theory – The company should meet the “Due
Care” theory requirements, plus pay for any harm that may
occur.
OBLIGATION OF INFORMING

12. • Deceptive techniques:
• Advertisers are sometimes tempted to misrepresent and
deceive by:
– Exploiting ambiguity
– Concealing facts
– Exaggerating
– Using psychological appeals
DECEPTIVE & MANIPULATIVE MARKETING
PRACTICES

13. Price fixing
Resale price
maintenance
Price
discrimination
Reciprocal
Dealing
Anticompetitive
Marketing Practices

14. PRICE FIXING
• The effort to control a given market and conspire to force
consumers to pay artificially high prices.
• There are two kinds of price fixing:
– Horizontal
– Vertical

15. • Horizontal: Occurs when competitors agree to adhere to a
set price schedule (not to cut prices below a certain
minimum, or to restrict price advertising or the terms of
sales or discounts).
• Vertical: Takes place when manufactures and retailers, as
opposed to direct competitors, agree to set prices.
PRICE FIXING

16. • Agreement
• Manufacturer and Seller
• Regarding Price (limits)
• Sold to final consumer
RESALE PRICE MAINTENANCE
Manufacturer
Seller
Consumer

17. • Price discrimination occurs when a firm charges different
prices to different customers for reasons other than
differences in costs
• Price-discriminating monopoly does not discriminate based
on prejudice, stereotypes, or ill-will toward any person or
group
• Rather, it divides its customers into different categories
based on their willingness to pay for good
PRICE DISCRIMINATION

18. RECIPROCAL DEALING, TYING
ARRANGEMENTS & EXCLUSIVE DEALING
An agreement to sell a product on the condition that a
buyer also purchases another, usually less desirable,
product

19. THE FORD PINTO
CASE

20. • Wrong placement of the gas tank
• Ford failed to provide the customers with necessary
information
• Their product caused suffering and death
• Ford faced a lawsuit for infringing consumer’s rights
FORD PINTO

21. • The due care theory
• The contractual theory
• Strict liability
THEORIES OF PRODUCT LIABILITY

22. • Take all reasonable precautions to ensure product safety
• Manufacturers are responsible for damages if they fail to
ensure safety
• If damage is done then manufacturer must compensate
• Aristotle’s corrective justice
THE DUE CARE THEORY

23. PROBLEM OF MISUSE

24. A violation of the responsibility to protect others from
unreasonable risk. In determining whether an act was
negligent, courts look at whether an ordinary person would
have committed the same act.
NEGLIGENCE RULE

25. • The rule focuses on three factors:
– The probability of harm
– The severity of harm
– The burden of protecting against the harm
• A manufacturer has three main duties:
– Inspect and test
– Anticipate the target market
– Provide adequate warning labels
NEGLIGENCE RULE

26. • The harm resulting from defective product is specified in the
contract
• The relation between buyer and seller is a contractual
relation
• The explicit written and verbal contract is enforceable in the
court of law
THE CONTRACTUAL THEORY

27. • Presumed expectations
about a product’s function,
safety, and/or quality.
– For example, because
consumers tend to associate
high-quality with safety, ads
touting a high-quality product
might be implying that the
product is safe.
Implied Warranties
• Statements that cause
consumers to form
expectations about a
product’s function, safety,
and/or quality.
– When ads convey promises
about a product that becomes
the basis of a bargain
between buyer and seller, it is
an express warranty.
Express Warranties
WARRANTIES

28. • This occurs when a company sells a product considered to be
unreasonably dangerous even though the seller took all
possible care in selling and preparing the product.
• Focused on the product rather than the behavior
• Foreseeability and adequate warning labels
STRICT LIABILITY

29. ETHICAL ARGUMENTS

30. THANK YOU