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Chapter 8

Chapter 8. Consumer Relations. 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.

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Chapter 8

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  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 Economic Issues • 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

  4. Motivations forIllegitimate Consumer Complaints

  5. Company Use of OnlineFraud Prevention Tools

  6. 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” typified the powerthat business- not consumers- wielded inexchange relationships. This is still truein less developed parts of the world.

  7. 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

  8. 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

  9. 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

  10. Ethical Issues (cont.) • Consumerism • The movement to protect consumers from an imbalance of power with business and to maximize consumer welfare in the marketplace.

  11. 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

  12. 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

  13. 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.

  14. 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.

  15. 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.

  16. 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.

  17. 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.

  18. 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.

  19. 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

  20. 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.

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