Presentation Transcript

1. Chapter 8

   Consumer Relations
2. Consumer Stakeholders Individuals who purchase, use, and dispose of products for themselves and their homes. Consumers are primary stakeholders because their awareness, purchase, use and repurchase of products is vital to a company’s existence. Consumers and business are connected by an economic relationship.
3. Consumer Stakeholders (con’t) Protecting consumers while continuing to supply them with goods and services at the prices that they want is the primary social responsibility of business. Companies today face challenging and often conflicting demands of the customers. Customer want high quality products but keep prices down! Satisfied customer will bring positive impacts such as enhanced reputation (through word-of-mouth advertising) to the company.
4. Consumer Economic Issues Consumers exchange money for goods or services. Consumers expect the products they purchase to perform as guaranteed by the sellers. In the early 1900s “let the buyer beware” or “caveat emptor”typified the power that business- not consumers- wielded in exchange relationships. This is still true in less developed parts of the world.
5. Consumer Economic Issues Consumers do not always act as a fair participant in the exchange. Consumer fraud results from intentional deception to derive unfair economic advantage from an organization. Shoplifting Collusion Duplicity Guile Buyer/seller disagreement can result in fraudulent activities. Inventory shrinkage is estimated to cost U.S. businesses more than $40 billion per year
6. Motivations forIllegitimate Consumer Complaints
7. Company Use of OnlineFraud Prevention Tools
8. Question: What can a consumer do if he/she believes that a firm has not fulfilled its basic responsibility?
9. Reasons for Consumer Movement Complex products have enormously complicated the choices consumers need to make when they go shopping Services, as well as products, have become more specialized and difficult to judge When businesses try to sell both products and services through advertising, claims may be inflated or they may appeal to emotions Some businesses have ignored product safety
10. Case in Point In October 2004, air stewardess Jannie Lew died outside a clinic in Jalan Raja Laut, Kuala Lumpur after a check-up following a nose job done at the clinic that specialises in ear, nose and throat plastic surgery. The 35-year-old had gone back for a post-surgery check-up when she collapsed. A check with the Health Ministry’s online records showed her doctor is a ear, nose, throat specialist who is not licensed to perform plastic surgery. Dr Surendranathan, a plastic surgeon, said: ‘Some beauty centres owned by ‘rich people’ bring in nurses from Taiwan who pass off as plastic surgeons. ‘These nurses learnt how to do plastic surgery from watching their doctors back home.’
11. Raw chicken placed side by side with ice (on top of a gunny sack) on top of a ice box (The Star, Monday September 22, 2008)
12. Filthy: Workers preparing food at the backlane of a restaurant in Jalan SS2/75, Petaling Jaya. (The Star, Monday September 22, 2008)
13. Legal Issues Governments have implemented laws and regulations to protect consumers. Malaysian currently has 30 laws for the protection of consumer interests which regulate activities of certain enterprises and which protects consumer interests. Some of these laws include Control of Supplies Act 1961, Trade Descriptions Act 1972, the Food Act 1983, the Hire Purchase Act 1967, the Direct Sales Act 1993 and the Consumer Protection Act 1999. Under these laws, consumers may seek redress through the appropriate Ministry, public agency or via the civil courts. The development of these laws meant that consumers now could turn to the government for protection.
14. How Government Protects Consumers Consumer protection in Malaysia is regulated by the Consumer Protection Act 1999 (CPA) The CPA applies to areas of consumer protection that are not already covered by other statutes, such as the Contracts Act 1950, the Sale of Goods Act 1957, the Sale of Drugs Act 1952, etc. Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) - Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan
15. Tribunal For Consumer Claims Established under the Consumer Protection Act 1999. The Tribunal For Consumer Claims Malaysia was established under the Ministry of Domestic Trade and Consumer Affairs. The Tribunal came into operations on 15 November 1999. A consumer may lodge any disputes or claim of less then RM25,000 to the Tribunal for Consumer Claims.
16. Additional Legal Issuesand Relevant Laws (cont.) Product liability- a business’s legal responsibility for the performance of its products Strict liability Manufacturers responsible for injuries resulting from use of their products, whether or not they were negligent or breached a warranty Well-publicized case of McDonald’s and coffee spill where jury award was $2.9M, McDonald’s was held liable even though it provided warning and customer’s actions contributed to her burns
17. Ethical Issues Consumerism The movement to protect consumers from an imbalance of power with business and to maximize consumer welfare in the marketplace.
18. Ethical Issues Consumer Bill of Rights Right to choose Right to safety Right to be informed Right to be heard Right to seek redress Right to privacy
19. Right to Choose To the extent possible, consumers have the opportunity to select from a variety of productsat competitive prices. This right is based on the philosophy of the competitive nature of markets, which should lead to high-quality products at reasonable prices
20. Right to Safety This means that businesses have an obligation not to knowingly market a product that could harm consumers. Some consumers believe this means that the manufacture and sale of firearms should be outlawed. This right also implies that all products should be safe for their intended use, include instructions for proper and safe use, and be sufficiently tested to ensure reliability.
21. Right to be Informed Any information, whether communicated in written or verbal format, should be accurate, adequate, and free of deception so that consumers can make a sound decision. This includes protection against fraudulent, deceitful, or grossly misleading information, advertising and labeling.
22. Right to be Heard Relates to opportunities for consumers to communicate or voice their concerns in the public policy process. This implies that governments have the responsibility to listen and take consumer issues into account when formulating public policies, laws and regulations.
23. Right to Seek Redress Consumers have the right to express dissatisfaction and seek restitution from a business when a good or service does notmeet their expectations. Consumers need to be educated in the process for seeking redress. Organizations need to have some formal processes for dealing with customer dissatisfaction.
24. Right to Privacy Relates to consumers’ awareness of how personal data are collected and used, and it places a burden on firms to protect this information. Consumers have the assurance that information disclosed in the course of a commercial transaction is not shared with others unless authorized.
25. Goals of Consumer Laws To provide consumers with better information when making purchases To protect consumers against possible hazards To promote competitive pricing To promote consumer choice To protect privacy.
26. One-hundred-percent juice blends are often made with apple or grape juice as the first ingredient and the featured juice lower on the list. Source: http://www.iateapie.net/foodblog/archives/food_labels/juicy_juice_lab.php I picked up the grape juice but after drinking a glass of it, I noticed that it didn't really taste like any grape juice I've had before. Grape juice is usually sweet with an underlying tartness, but the Juicy Juice grape was just sweet. So I looked at the label - 100% juice it said. I looked at the ingredients and surprise, surprise - APPLE juice is listed before grape juice, which means there is more of it. If a product says 100% juice and then has grape below it - I would not think that it is actually a blend of apple and grape juice. AND I certainly wouldn't imagine that there would be more apple than grape juice. But alas, I was fooled by the label. It doesn't say 100% GRAPE JUICE - instead, it says 100% JUICE.
27. Goals of Consumer Laws (1/4) 1).To provide consumers with better information when making purchases. Consumers can make more rational choices when they have accurate information about the product. e.g. under the Malaysian Consumer Protection Act (1999), consumershave the right to accurate information of the goods purchased i.e. its use, expiry date, contents, manufacturer, warranties (full or limited) and the proper way of use. As consumers, we have the right to clear instructions on the proper use of the product. Such information should be available on the product label.
28. 2). To protect consumers against possible hazards from products they may purchase. Sellers must ensure that goods/services offered must safe to be used. Preservatives used in food products must not pose a threat to the consumers’ health; food products must have labels containing the expiry date; toys should not be dangerous to children when in use. E.g: the government recently banneda popular seaweed delicacy called sarer as tests revealed that it can damage the nervous system. Tests have showed that sarer has a high level of lead. Goals of Consumer Laws (2/4)
29. Goals of Consumer Laws (3/4) 3). To promote competitive pricing and consumer choice. When competitors secretly agree to divide up the market among themselves, or when a single company dominates a market, this will push up prices and limits consumer choice. Therefore government laws must forbid such practices.
30. Goals of Consumer Laws (4/4) 4). To protect privacy. Laws should protect individuals from having their personal data being misused. In Malaysia , the Personal Data Protection Act has been proposed. The proposed law sets out nine data protection principles govern the collection, use, disclosure, accuracy, retention, access to and security of personal data.
31. Philanthropic Issues Consumers are increasingly concerned with organizations’ social responsibility. Organizations are increasingly linking philanthropic efforts with consumer interestsin order to strengthen ties to consumers. Avon—breast cancer fundraising Home Depot—Habitat for Humanity Eastman Kodak—World Wildlife Fund
32. Strategic Implementation Include consumer’s views in corporate planning. Manage, nurture, and continuously assess consumer relations and needs. Educate and listen to consumers; run surveys to discover strengths and weaknesses in stakeholder relations; hire consumer affairs professionals; and develop a consumer relations office.