Chapter 16

The Dark Side of Consumer

Behavior

Consumer Behavior - A Framework

John C. Mowen
Michael S. Minor
Key Concepts
 Deceptive advertising  Drivers of compulsive
 Children’s ability to consumption
distinguish programs  Corporate social
and ads responsibility
 Improving children’s
 Why firms want to
seem responsible
advertising
 Consumer reactions to
 Negligent consumer product recalls
behavior
 Corporate rumors
 Product misuse
Introduction
 Firms may engage in unscrupulous
behavior.
 Consumers also engage in negligent
behavior.
 Governments regulate buying and
selling goods and services to reduce
the harmful effects of these
behaviors.
Major Public Policy Issues
 Deceptive advertising
 Advertising to children
 Telemarketing fraud
Deceptive Advertising
 An advertisement which is potentially
misleading or literally false is deceptive.
 Potentially misleading ads are difficult to
evaluate because miscomprehension may
often occur.
 Miscomprehension is a problem for firms
because the audience does not understand the
message being delivered.
 The FTC regulates deceptive advertising, but
not miscomprehension.
Advertising to Children
 Both policy makers and marketing
managers have reacted to criticism of
advertising directed at children.
 Some countries have banned
advertising to children under 12.
 Telemarketing Fraud
 The elderly are vulnerable
to fraud by telemarketers.
 A program to combat this
fraud is the Know Fraud
Program.
 Organizations that fight
telemarketing fraud are
the AARP, the FBI, the
Post Office, and others.
Negligent Consumer
Behavior
 Negligent behavior is composed of actions
and inactions that may negatively affect
the long-term quality of life of individuals
and society.
 This type of behavior can occur in two
different contexts:
 Product Misuse
 Consumption of Hazardous Products
Product Misuse
 Many injuries result from
misuse of a safe product -
not from product defects.
 Using a cell phone while
driving is being outlawed
in some areas.
 “The most dangerous
component is the
consumer, and there’s no
way to recall him.”
Consuming Hazardous
Products
 Between 1988 and 1998 alcohol related
accidents have declined. The methods used
to increase consumer awareness are:
 Informing and Education
 Social Controls
 Economic Incentives
 Economic Disincentives
 Compulsive Behavior
 Some products are hazardous and consumption can
become compulsive or addictive over time.
 Other behaviors are not harmful in moderation but
become addictive when they become compulsive.
 Smoking
 Compulsive Drinking
 Gambling
 Compulsive Shopping
 Other Compulsions
Smoking
 Consumers until the late 1960s were
exposed to nearly 3000 cigarette
commercials per week of 38 different
brands.
 In 1950 there was already concern over
the health hazards of cigarette smoking.
 Smoking declined from the 1960s to
1992 but has held steady since then.
Compulsive Drinking
 As mentioned earlier, there has been a
decline in alcohol-related deaths on the
road. This suggests a decline in alcohol
consumption.
 Despite the decrease in sales of hard
liquor, there is an increase in alcoholic soft
drinks.
 These taste like colas or fruit juices but may
contain more alcohol than beer does.
Gambling
 Gambling affects an estimated 8 to 12
million people.
 Gambling takes place in casinos in Las
Vegas, New Jersey, on river boats and
elsewhere.
 State-run lotteries make it easy to
gamble by visiting a convenience store.
Compulsive Shopping
 Some consumers “shop till
they drop” because shopping
can become an addiction
similar to alcohol or drugs.
 There are drugs available to
help relieve this compulsion.
 Compulsive shopping may be
hereditary.
Other Compulsions
 Overworking and
overeating are some
other compulsions.
 Research has stressed
sociological and
psychological
influences. Chemical
imbalances may also
be important.
 Multiple compulsions
may occur together.
 Corporate Social
Responsibility
 Firms have become viewed as
responsible for more than generating
profits.
 “Corporate social responsibility” refers
to the idea that firms have an obligation
to help the larger society by offering
some of their resources.
Succeeding in the Long
Run
 A business’s self-interest could be
advanced if the business embraced a
long-run view.
 This position would permit expenditures
in support of socially responsible
activities and provide future benefits in
the form of consumer approval and
loyalty.
Acquiring a Positive Public
Image
 One way of showing that companies are
socially responsible is by creating a
positive public image.
 Another way that firms can show they
are socially responsible is by making
speedy product recalls.
The Diffusion of Rumors
 Public peace of mind can be corrupted
by diffusion of rumors.
 Rumors often plague both large and
small companies.
Types of Rumors
 Pipe dream rumors represent wishful thinking on
the part of the circulators.
 The bogie rumor is a fear rumor that spooks the
market place.
 Self-fulfilling rumors are based on a perception
of what could happen in the future if something
else were to occur.
 In premeditated rumors individuals spread
rumors that may help them financially or
otherwise.
 Spontaneous rumors arise when people seek
explanations for unusual events.
Avoiding Regulation
 A final reason to act in a socially responsible
manner is to avoid government regulation.
 Most of the burden of social responsibility is on
marketers. They can do best by following the
strategies suggested, and maintaining a positive
initial corporate image and responding quickly
when difficulties arise.
Managerial Implications
 Positioning. The concept of corporate social
responsibility has direct implications for the
positioning of a company. Efforts to create a
“good-citizen” image help to position a firm as
one that puts customers first.
 Environmental Analysis. A company’s actions
must be in compliance with laws and regulation.
 A firm should be in a position to respond promptly if a
response is warranted: An “early-warning system”
needs to be in place and functioning continuously.
Implications continued…
 Research. Market research should be used to determine
how consumers view the company.
 Market research may also help determine whether customers are
using a firm’s product in a novel manner that may be unsafe.
 Marketing Mix. Pricing, promotion, product development,
and distribution should be socially responsible.
 Segmentation. Some population segments are more
concerned with issues of corporate social responsibility
than are other segments.