Chapter
2:
CONSUMER AND SOCIAL WELL-BEING
CHAPTER OBJECTIVES
When students finish this chapter, students should understand why:
1. Ethical business is good business.
2. Marketers have an obligation to provide safe and functional products as part of their
business activities.
3. Consumer behavior impacts directly on major public policy issues that confront our society.
4. Consumer behavior can be harmful to individuals and to society.
CHAPTER SUMMARY
Ethical business is good business.
Business ethics are rules of conduct that guide actions in the marketplace; these are the
standards against which most people in a culture judge what is right and what is wrong, good
or bad.
Marketers must confront many ethical issues, especially ones that relate to how much they
make consumers “want” things they don’t need or are not good for them. A related issue is
materialism, which refers to the importance people attach to worldly possessions, and the role
of business in encouraging this outlook.
Marketers have an obligation to provide safe and functional products as part of their business
activities.
It is both ethically and financially smart to maximize customer satisfaction. In some cases,
external bodies such as the government or industry associations regulate businesses to ensure
that their products and advertising are safe, clear, and accurate. Consumer behavior
researchers may play a role in this process and those who do transformative consumer
research (TCR) may even work to bring about social change. Companies also play a
significant role in addressing social conditions through their corporate social responsibility
(CSR) practices and social marketing campaigns that promote positive behaviors.
Consumer behavior impacts directly on major public policy issues that confront our society.
Our relationships with companies and other organizations are complex and many issues that
impact quality-of-life relate directly to marketing practices. These include the tradeoff
between our privacy and the ability of companies to tailor their offerings to our individual
needs. Other issues revolve around market access as many people are unable to navigate the
marketplace due to disabilities, illiteracy, or other conditions. In addition, our fragile
environment requires a commitment to sustainable business practices that attempt to
maximize the triple bottom-line that emphasizes financial, social, and environmental
benefits.
Consumer behavior can be harmful to individuals and to society.
Although textbooks often paint a picture of the consumer as a rational, informed
decision-maker, in reality many consumer activities are harmful to individuals or to society.
The “dark side” of consumer behavior includes terrorism, addiction, the use of people as
products (consumed consumers), and theft or vandalism (anticonsumption).
CHAPTER OUTLINE
I. Business Ethics and Consumer Rights
A. Business ethics are rules of conduct that guide actions in the marketplace—the
standards against which most people in a culture judge what is right and what is
wrong, good, or bad.
1. There are various universal values and many culture-specific ones (which
influence whether business practices like bribery are acceptable).
2. Some marketers violate consumer trust (using illegal mislabels on packages or
using bait-and-switch selling).
3. Some marketers engage in practices that are legal but have detrimental
effects on society.
B. Needs and Wants: Do Marketers Manipulate Consumers?
1. Consumer space is an environment where individuals dictate to companies the
types of products they want and how, when, and where, or even if, they want to
learn about them (a shift from marketer space where companies called the
shots).
2. Do marketers create artificial needs? There are arguments to support both sides of
this question.
a. A need is a basic biological motive; a want represents one way that society
has taught us to satisfy that need.
b. A basic objective of marketing is to create awareness that needs exist,
not to create needs.
C. Are Advertising and Marketing Necessary?
1. Products are designed to meet existing needs; advertising helps communicate
their availability.
***** Use Consumer Behavior Challenge #11 Here *****
2. The economics of information perspective suggests advertising provides an
important source of consumer information which consumers are willing to
accept because it reduces the economic cost associated with searching for
products.
D. Do Marketers Promise Miracles?
1. Advertisers do not know enough about people to manipulate them.
2. The failure rate for new products ranges from 40 to 80 percent
E. Materialism: Are You What You Own?
1. Materialism refers to the importance people attach to worldly possessions.
2. Materialists are more likely to value possessions for their status and
appearance- related meanings.
3. Materialists value the inherent qualities of what they buy. One related dimension
is provenance. Provenance means shoppers are willing to pay more for an item
when they know exactly where it comes from. Curation refers to the use of an
expert who carefully chooses pieces to include in a collection of consumer
products. Table 4.1 summarizes some of the similarities and differences between
“old” and “new” materialism.
II. . Consumers’ Rights and Product Satisfaction
Consumers have three options to pursue when they are dissatisfied with a product: 1) voice
response, 2) private response, and 3) third-party response. Several factors influence which
route we choose.
A. Market Regulation
1. Several federal agencies oversee consumer-related activities in the U.S. These
include the Department of Agriculture, the Federal Trade Commission, the Food
and Drug Administration, the Securities and Exchange Commission, and the
Environmental Protection Agency. Table 4.2 presents consumer legislation that is
designed to protect consumers and Table 4.3 lists major U.S. regulatory agencies.
2. Congress passed the Pure Food and Drug Act in 1906 and the Federal Meat
Inspection act in 1907 in response to Upton Sinclair’s 1906 book The Jungle,
which exposed awful conditions in the Chicago meatpacking industry.
3. The Obama Administration issued voluntary guidelines that food products
targeted to children ages 2-17 would have to provide a meaningful contribution to
***** Use Consumer Behavior Challenge #1 Here *****
Discussion Opportunity—Ask: What is your opinion on materialism? Is it good or bad? Be
careful how you answer this. How do marketers use materialism to their advantage? What is
the alternative to materialism? Would this be good for our economy?
a healthy diet and would have to meet limits for harmful ingredients.
4. Corrective advertising refers to the use of advertising by a company to
inform consumers of messages it previously published that were wrong or
misleading.
B. Consumerism
1. Adbusters is a nonprofit organization that discourages rampant commercialism
and advocates for social activism. These organizations use culture jamming, a
strategy aimed to disrupt efforts by the corporate world to dominate our cultural
landscape.
2. John F. Kennedy declared a “Declaration of Consumer Rights” in 1962. These
include the right to safety, the right to be informed, the right to redress, and the
right to choice.
3. Some consumer researchers are not only seeking to study consumer responses but
to rectify what they see as pressing social problems in the marketplace. This is
known as participatory action research (PAR) or Transformative Consumer
Research (TCR).
C. Social Marketing and Corporate Social Responsibility (CSR)
Social marketing uses marketing techniques normally employed to sell beer or
detergent to encourage positive behaviors such as increased literacy and to discourage
negative activities such as drunk driving. Many firms today try to integrate corporate
social responsibility (CSR) into their business models. CSR describes processes that
encourage the organization to make a positive impact on the various stakeholders in its
community. Cause marketing is a popular strategy that aligns a company or brand with
a cause to generate business and societal benefits.
III. Major Policy Issues Relevant to Consumer Behavior
A. Data Privacy and Identity Theft
1. One of the biggest issues marketers face relates to how much they can or should
know about their customers. Technologies record much of our activities including
our location if we carry a smart phone with GPS. Our digital actions may even
Discussion Opportunity—Ask students whether they feel advertising for foods that are high
in sodium, saturated fat and added sugars contributes to child obesity. Do they believe the
guidelines should be voluntary? Why or why not?
Discussion Opportunity—Ask: Has cultural jamming ever affected you and your
consumption behavior? Any of your friends? If so, why do you think the behavior occurred?
have financial value because of an industry called real-time bidding, an
electronic trading system that sells ad space on the Web pages people click on the
moment they visit.
2. Identity theft occurs when someone steals your personal information and uses it
without your permission. It is the most common consumer complaint according to
the FTC. Phishing occurs when people receive fraudulent emails that ask them to
supply account information. Consumers are also suspect to botnets that hijack
computers without a trace.
3. Locational privacy is a related issue as GPS tracking technology identifies
and records consumer locations.
B. Market Access
For many, market access is limited due to physical, mental, economic, or social
barriers.
1. Disabilities affect access to stores both physical and online.
2. Food deserts are Census tracts where 33% or 500 people live more than a mile
from a grocery store in an urban area or more than 10 miles away in a rural area.
3. Media literacy refers to a consumer’s ability to access, analyze, evaluate,
and communicate information in a variety of forms, including print and
non-print messages. Functional literacy refers to the ability to read
sufficiently to carry out everyday tasks.
C. Sustainability and Environmental Stewardship
1. Sustainability is not just about “do-gooder” efforts that reduce a company’s
carbon footprint; it also benefits companies financially. A triple bottom-line
orientation refers to business strategies that strive to maximize return in three
ways:
Financial
Social
Environmental
2. Cradle to cradle means that the organization aims for its products to be made
from natural materials that are fully reusable or recyclable so that the
company actually uses zero resources to make it.
3. Conscientious consumerism means that consumers are paying
attention to sustainability efforts by companies.
D. Green Marketing and Greenwashing
1. As a response to consumer efforts, many firms have chosen to protect or enhance
the natural environment as they go about their business activities. This practice is
known as green marketing.
2. Even though consumers largely support green products, many people don’t
actually buy green. This is in part due to the higher price of green products. It is
also due to distrust because of greenwashing. Greenwashing occurs when
companies make false or exaggerated claims about how environmentally friendly
their products are.
3. Marketers point to a segment of consumers they call LOHAS – an acronym
for “lifestyles of health and sustainability.” Table 4.4 shows that the LOHAS
market divides into five different sectors.
E. Product Disposal
How we get rid of stuff is also an important element of consumer behavior. Later cycling
means that one consumer exchanges something she owns for something another person owns.
There is an underground economy of products that are sold person to person rather than
through traditional market systems. Trading or reselling products is called recommerce.
IV. . The Dark Side of Consumer Behavior
A. Consumer Terrorism
Disruptions to our financial, electronic, and supply networks are possible through
attacks such as bioterrorism and cyberterrorism.
B. Addictive Consumption
Consumer addition is a physiological or psychological dependency on products or
services.
1. Addiction to Technology. Consumers can also be addicted to technology.
Social media addiction can be compared to a chemical dependency.
2. Technology Issues. Some other issues with technology include cyberbullying
and phantom vibration syndrome.
C. Compulsive Consumption
Compulsive consumption refers to repetitive and often excessive shopping
performed to relieve tension or anxiety. Three common elements characterize
negative or destructive consumer behaviors: 1) the behavior is not by choice, 2) the
Discussion Opportunity— Many consumers mistrust green marketing claims because of a
history of companies “greenwashing,” (positioning a product or service as environmentally
friendly when it does not reduce harm to the environment, diverting attention from a
company’s environmental wrongdoings, or overstating a product’s green benefits). Ask:
Which companies do students associate with green marketing? Which companies are they
skeptical of green marketing claims? Why?
gratification of the behavior is short-lived, and 3) the person experiences strong
feelings of regret or guilt.
D. Consumed Consumers
Consumed consumers are people who are used or exploited for commercial gain.
Examples include prostitutes and organ, blood, and hair donors.
E. Illegal Acquisition and Product Use
Analysts estimate that the cost of crimes that consumers commit against business
totals more than $40 billion per year. Shrinkage is one such crime which refers to
inventory and cash losses caused by shoplifting and employee theft. Counterfeiting
is where companies or individuals sell fake versions of real products to customers.
F. Anticonsumption
Anticonsumption ranges from relatively mild acts like spray-painting graffiti on
buildings to serious incidences of product tampering.
End-of-Chapter Support Material
SUMMARY OF SPECIAL FEATURE BOXES
2-1. CB As I See It: Ronald Hill, Villanova University
Being “poor” has different implications in different nations, in terms of what is taken for
granted, especially in developed Western nations. One study found that in developed
national, the level of material yearning increased in middle and high school, but there
were also opportunity for self-esteem development. Impoverished neighborhoods do not
offer this development. Another study showed that those with more have more positive
social comparisons than those with less. A third study showed that the ability to save
resulted in greater feeling of well-being for those in poorer nations.
2-2. The Tangled Web
Gripe sites enable consumers to complain about companies online.
2-3. Marketing Pitfall
Brands must ensure their messages are not harmful or inaccurate.
2-4 Marketing Pitfall
Slacktivism supports the idea that there are too many small and meaningless expressions of
support for important causes, do to overexposure via technology.
2-5 CB As I See It: Stacey Menzel Baker, Creighton University
Consumer behavior researchers study the relationships among people possessions, places,
brands, experiences, and other people. Relationships are important in creating,
maintaining, and reconstructing our identities. The relationships with stores and
marketplaces that bring us pain when they are gone also bring us a sense normalcy when
they return.
2-6 The Tangled Web
Because of the ability to use facial recognition and track keystrokes, technology has created
serious privacy risks. Markets use access to personal information to created
viewer-relevant advertising.
2-7 Marketing Opportunity
When consumer make the decision to practice sustainability, they are much more likely to
follow through on that decision.
2-8 The Tangled Web
Yik Yak allows cyberbullying on college campuses when users can post a profile and
remain anonymous. The site has encouraged violence and gang rape by posting “yaks.”