COMM101 Lecture Notes - Lecture 9: Marlboro Man, Root Mean Square, Consumer Protection
Week 9
Comm101
The Ethics of Consumption
Objectives
-Consider business approaches to product safety and quality
-Consider business approaches to product pricing
-Consider business approaches to packaging and labelling
-Consider business approaches to advertising
-Consider the proposition that, Western societies in particular, over consume, and if so,
why?
Marlboro Man - a very successful advertising campaign over decades
-a number of ‘Marlboro Men’ have died due to smoke related illnesses
-governments have used many policies to reduce the harm of tobacco such as high
taxes
-restrictions on marketing of tobacco products
-smoking rates in developing countries has decreased by 50% in the last 30 years
-tobacco companies have been focusing more on countries/districts with weaker
regulations and places with bigger populations
-tobacco highlights tension between profit (tax and revenue), free speech and product
quality/safety
Product Quality and Safety
-consumers have increasingly come to depend on firms to satisfy material needs
-what is the responsibility of firms for product quality and safety?
-Increasing product recalls suggest that the profit motives is at times more important
than product quality and safety
-Federal and state legislation tries to minimise this problem
•ACCC aims to promote competition, fair trading and consumer protection
!1
find more resources at oneclass.com
find more resources at oneclass.com
Week 9
•offices of fair trading provide advice to consumers regarding their rights and can
prosecute firms
-Loopholes in these regulations remain
•Why should government interact between firms and consumers and how much
action should they take if any?
•One opinion —> market approach to product quality and safety
•Assumes superiority of markets —> consumers are able to make persona’ decisions
regarding product quality and safety
•Also assumes that firms will respond accordingly (those that do not will lose their
sales)
•market provides the level of quality and safety that consumers want and are
prepared to pay for
•hostile to regulations that restrict freedom of individuals and firms — legal
paternalism
•Criticisms of market approach?
-many markets are dominated by large firms that are not responsive to consumer
complaints
-many consumers are sometimes not entirely rational, especially in advertising
-Information is asymmetric —> the firm knows much more about product quality
and safety than the customer
-last point is magnified by increased product complexity due to new technology
•Product differentiation —> there are too many products for one to feasibly become
informed about - the internet has simply multiplied this information overload
-Second opinion —> contract approach to product quality and safety
•relationship between firms and consumer is legal and contractual —> if your product
does not work properly you can take it back and the firms should be able to replace
it
•assumes two sides are equal participants in transaction and full disclosure of
relevant information
•firms claim about product performance, reliability and safety become the terms of
the contract —> as a minimal, warranties are a form of contract assuring basic
quality and safety
!2
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Consider business approaches to product safety and quality. Consider business approaches to packaging and labelling. Marlboro man - a very successful advertising campaign over decades. A number of marlboro men" have died due to smoke related illnesses. Governments have used many policies to reduce the harm of tobacco such as high taxes. Smoking rates in developing countries has decreased by 50% in the last 30 years. Tobacco companies have been focusing more on countries/districts with weaker regulations and places with bigger populations. Tobacco highlights tension between pro t (tax and revenue), free speech and product quality/safety. Consumers have increasingly come to depend on rms to satisfy material needs. Increasing product recalls suggest that the pro t motives is at times more important than product quality and safety. Federal and state legislation tries to minimise this problem: accc aims to promote competition, fair trading and consumer protection.
