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36 Cards in this Set

  • Front
  • Back

Caveat Emptor

Buyer Beware

Caveat Venditor

Sellers Beware

The Law

- explicit


- black and white


- enforceable


- standards of conduct


- following rules


- punishment by government

Codes of Ethics

- complicated, depends on morals, shades of grey


- distinction between right and wrong


- acting honourably


- punishment by consumers

Fair Trading Act 1986

Before Purchase:


Applies to all consumers in a trade


Protects consumers against false and misleading information


It promotes fair competition


It prohibits certain conduct in trade, provides for the disclosure of consumer information relating to the supply of goods and services and promotes product safety.

Packaging & Labelling

Packaging should not suggest that the contents of the pack are larger than they really are

The product should not try to pass itself off as a competitive advantage


Labelling needs to be accurate and not misleading


Information contained on product packaging and labelling is used by consumers in their purchase decisions and must be accurate or may breach provisions of the FTA


The Commerce Commission

Power to enforce:


They can...


Grant injunctions


Order disclosure of information


Require corrective advertising


Fines of ip to $200,000



Breaches of the FTA : 1

Door-to-Door Selling


- Subject to quite a number of conditions, regarding misleading claims, high pressure selling tactics, and selling unfit products


e.g., Love spring water filters

Breaches of the FTA : 2

Bait Advertising


- Refers to advertising goods at a special price only to tell customers goods have been sold but higher priced options available - illegal practice


e.g., Roger Sutherland's "Train" Journey

Breaches of the FTA : 3

Contests & Sweepstakes


- Consumers can't be required to pay a higher price of face additional charges and the outcome must be random (chance or skill.chance)


e.g., Panasonic Million Dollar Summer Competition, 2012

Breaches of the FTA : 4

Ambush Marketing


- The marketing of products in a manner that gives the appearance of officially being associated with an event when it is not.


- It can significantly damage the value of sponsorships.


e.g., During the 2005 Lions tour of NZ, Gillette ran an ad campaign in the UK featuring prominent Lions players. Competitor Sure Men was an official Lions sponsor.


- Ads withdrawn after legal action

Breaches of the FTA : 5

Comparative Advertising


- Claims must be true, make accurate comparisons and be supported by independent research


e.g., Duracell, Batteries, Specsaver

New Zealand Consumer Protection Laws

Purchase:


applies to...


- sellers in trade


- new and secondhand goods and services


- purchase for personal, domestic or household use


After Purchase:


- guarantees that a seller automatically makes when any consumer makes a purchase ("NO REFUNDS")

Manufacturer's Guarantee

- Spare parts and repairs will be available for a reasonable time


- Written warranties honoured


- Goods of acceptable quality and match description

Retailers Guarantee

- Be of acceptable quality


- Fit for purpose


- Match descriptions


- Match samples or demonstrations models


- Be owned by consumer once purchased


- Be delivered on time

Reasonable & Acceptable :

The interpretation of these words depends on what a customer would think was acceptable


It is based on the type of good, price

If something goes wrong...

- It is the responsibility of the retailer or service provider to fix the problem


- Retailers can choose to refund the purchase price, or repair/replace the product.


- If the product can't be fixed within a reasonable time, consumers can choose a replacement of the same type and similar value or ask for a full refund


- If traders refuse to honour their obligations, consumers have options such as the Disputes Tribunal

Ethics : Consumer Activism

Negative Activism : Punishing Companies


Positive Activism : Rewarding Companies

Examples of Industry Codes : 1


(Self Regulation)

Code of Practice for Direct Marketing in NZ


- 'Testimonials used in any form of advertising must be current, typical and genuine and it must be possible to verify any claims made'

Examples of Industry Codes : 2


(Self Regulation)

Code of Practice for Telemarketing


- 'At the commencement of call, telemarketers must clearly disclose their identity & state the general purpose of call.'

Examples of Industry Codes : 3


(Self Regulation)

Free-to-Air Codes of Broadcasting Practice


- 'News, current affairs & other factual programming must be truthful and accurate...'

Examples of Industry Codes : 4


(Self Regulation)

ISP Spam Code of Practice


- 'Spam filters must be offered either directly to consumers or information provided in a reasonably prominent position...'

Self Regulation of Advertising

- A system of voluntary self regulation


- In advertising, to maintain at all times in all media a proper and acceptable standard


- Anyone can complain about any advertisement in any media to the Advertising Standards Complaint Board

Benefits of Self Regulation

- Costs of administration and enforcement are borne by the industry rather than government (taxpayers)


- More flexible to change then legislation


- Responds to both industry needs and public opinion


- Limited government interference


- Faster Process

Deisadvantages of Self Regulation

- No enforcement, following ASA is voluntary


- Short campaigns may be over by the time complaint has been deliberated over

Sources of distaste

- Objections to advertising of certain products


- Use of sexual appeals and/or nudity


- Use of shock appeals

Business Ethics

Unethical business practices often reflect the values and beliefs of the corporation's culture

A conflict of interest

When an individual is involved in a decision where they represent the interests of two or more parties

Organisational Intergrity

Based on self regulation of an organisation, in accordance with the formal set of guiding principles



These guiding principles

May include a stated code of ethics, compliance training, and the control and reporting of potential breaches

Free gifts are sometimes received in business

Usually a relationship building situation, but in some cases they may not be ethical

Marketing mix Ethics

Product, Price, Place, Promotion


Legal, but ethical?

Product : Product Safety

Ensuring adequate safety testing, proper design, and not over rushing to markets

Price : Fair Price

Price Guiding - an opportunistic technique that exploits changes in market circumstances as an excuse for increasing the price even when the cost of the product stayed the same

Place : Fair Availability

Supermarket chains have power to negotiate better deals from suppliers


e.g., slotting fees, a fee paid to the retailers for agreeing to allocate shelf space

Promotion : Ethical Advertising

Often concerns ways of promoting to children or uneducated segments of the market