You are here

Consumer Protection

13 May, 2016 - 16:19

Since the beginning of the twentieth century, there has been a concerted effort in the US to protect the consumer. For example, the US Food, Drug, and Cosmetic Act (1938) was aimed principally at preventing the adulteration or misbranding of the three categories of products. The various federal consumer protection laws include more than 30 amendments and separate laws relating to food, drugs, and cosmetics, such as the US Infant Formula Act (1980) and the US Nutritional Labeling and Education Act (1990). Perhaps the most significant period in consumer protection was the 1960s, with the emergence of consumerism. This was a grassroots movement intended to increase the influence, power, and rights of consumers in dealing with the institutions. The US Consumer Product Safety Act (1972) established the Consumer Product Safety Commission.

Ethics is generally referred to as the set of moral principles or values that guide behavior. There is a general recognition that many, if not most, business decisions involve some ethical judgement. Consider the following dilemma. An athletic shoe company is considering whether to manufacture shoes in a country with a very poor record on human rights. The new facility will improve the company's competitive position, but the host government will also make a considerable profit, a profit that will be enjoyed by the ruling elite, not by the people of the country who will be employed at meager wages. Will the firm support a corrupt government in order to make higher profits?

Firms hope that a consideration of ethical issues during the decision-making process will be helpful in preventing or at least decreasing the frequency of unethical behavior. Having a corporate ethics policy also seems to facilitate the process of recovery after an ethical scandal—although firms may wish otherwise, unethical acts do occur and do not often go unnoticed. The lack of respect many people feel towards business today, the press's propensity for investigative reporting, and the willingness of many insiders to blow the whistle on unethical corporate behavior increase the likelihood that such behaviors will eventually be discovered. See Figure 5.2.

Figure 5.2 How business rates: by the numbers. 

Ethical problems faced by marketing professionals stem from conflicts and disagreements. They tend to be relationship problems. Each party in a marketing transaction brings a set of expectations regarding how the business relationship will exist and how transactions should be conducted. For example, when you as a consumer wish to purchase something from a retailer, you bring the following expectations about the transaction: (a) you want to be treated fairly by the salesperson, (b) you want to pay a reasonable price, (c) you want the product to be available as advertising says it will and in the indicated condition, and (d) you want it to perform as promised. Unfortunately, your expectations might not be in agreement with those of the retailer. The retail salesperson may not "have time for you”, or the retailer's notion of a "reasonable" price may be higher than yours, or the advertising for the product may be misleading. A summary of ethical issues related to marketing is shown in Table 5.3.


Per cent of marketing professionals responding

Table 5.3 Ethical issues in marketing


Gifts from outside vendors, payment of questionable commissions, "money under the table"



Unfairly placing company interests over family obligations, taking credit for the work of others, inducing customers to use services not needed, manipulation of others



Lying to customers to obtain orders, misrepresenting services and capabilities



Differential pricing, charging higher prices than firms with similar products while claiming superiority, meeting competitive prices



Product safety, product and brand infringement, exaggerated performance claims, products that do not benefit consumers



Firing, hiring, employee evaluation



Temptations to use or obtain classified, secret, or competitive information



Crossing the line between exaggeration and misrepresentation, misleading customers


Manipulation of Data

Falsifying figures or misusing statistics or information, distortion



Reciprocity in the selection of suppliers


Marketing professionals were asked to describe the most difficult ethical issue they face.

Source: Lawrence B. Chonko and Shelby D. Hunt, “Ethics and Marketing Management: An Empirical Examination,” Journal of Business Research, Vol. 13, 1985, pp. 339-359.


While ethics deal with the relationship between buyer and seller, there are also instances when the activities of marketing influence society as a whole. For example, when you purchase a new refrigerator, there is a need to discard your old refrigerator. Thrown in a trash dump, the old refrigerator may pose a safety risk, or contaminate the soil, and certainly will contaminate the aesthetics of the countryside, thus requiring society to bear part of the cost of your purchase. This example illustrates the issue of social responsibility, the idea that organizations are part of a larger society and are accountable to society for their actions. The well-being of society at large should also be recognized in an organization's marketing decisions. In fact, some marketing experts stress the societal marketing concept, the view that an organization should discover and satisfy the needs of its consumers in a way that also provides for society's well-being. A definition for social marketing is provided by Alan Andreasen:

Social marketing is the adaptation of commercial marketing technologies to programs designed to influence the voluntary behavior of target audiences to improve their personal welfare and that of the society of which they are a part.5

There is little doubt that the importance of social marketing is growing, and that for many marketers, it will become part of their competitive advantage.