layout: true background-image: url(figs/tcb-logo.png) background-position: bottom right background-attachment: fixed; background-origin: content-box; background-size: 10% --- class: title-slide .row[ .col-7[ .title[ # Consumer Behavior ] .subtitle[ ## Consumer and ## Social Well-Being ] .author[ ### Dennis A.V. Dittrich ] .affiliation[ ] ] .col-5[ ] ] --- .row[.col-5[ ![](img07/021.png) ] .col-7[ # Ethical business is good business. ] ] --- # Marketing Ethics and Public Policy .col-7[ **Business ethics** are **rules of conduct** that guide actions in the marketplace There are **cultural differences** in what is considered ethical. * difficult to avoid ethical conflicts because our thoughts of what is right and wrong vary among people, organizations, and cultures. These cultural differences influence, e.g., whether business practices such as bribery are acceptable. * Bribing foreigners to gain business has been against the law in the United States since 1977, under the Foreign Corrupt Practices Act. * The Organization for Economic Cooperation and Development (OECD), to which most industrialized countries belong, also outlaws bribery. * Still, these practices are common in many countries. ] --- class: practice-slide .row[ .col-7[ Internet addiction has been a big headache in South Korea for several years, where 90 percent of homes connect to cheap, high-speed broadband. A government study estimates that up to 30% of South Koreans younger than 18 are at risk of internet addiction. Many already exhibit signs of actual addiction, including an inability to stop themselves from using computers, rising levels of tolerance that drive them to seek ever-longer sessions online, and withdrawal symptoms such as anger and craving when they can’t log on. Some users have literally dropped dead from exhaustion after playing online games for days on end. ] .col-5[ How big a problem is internet addiction here? Should parents and educators actively police how much time kids spend online, or if they do so are they preventing young people from interacting with their peers in the ways they want? ]] --- # Do Marketers Manipulate Consumers? .col-7[ Advertisers often do not know enough about people to manipulate them * The failure rate for new products ranges from 40-80%. * Marketers are only successful when they promote good products. **Consumerspace** 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 those products. ] --- # Do Marketers Create Artificial Needs? .row[ .col-7[ Objective of marketing: create **awareness** that needs exist, __not__ to create needs ] .col-5[ **Need**: a basic biological motive **Want**: one way that society has taught us that the need can be satisfied ]] ??? Marketing is commonly criticized as trying to convince consumers that they need something when they really don’t. This is an ethical issue. Marketers respond to this question by pointing out that the need already exists in the consumer, but marketers recommend ways to satisfy the need. --- class: practice-slide .col-8[ The micro-economic approach to advertising argues that advertising can be important. Why? ] --- ## Are Advertising and Marketing Necessary? .row[.col-7[ Advertising and marketing are necessary * consumers may not know that solutions to problems exist without the **information** provided by advertising and marketing. ] .col-5[ **Economics of information** There is an economic cost to **searching** for information. * Advertising helps consumers by reducing search time. ]] .row[.col-7[ Does advertising foster **materialism**? * Products are designed to meet existing needs * Advertising helps to communicate their availability ]] --- class: practice-slide # For Reflection .col-8[ Advertisers are often blamed for promoting a materialistic society by making their products as desirable as possible. Do you agree with this? * If yes, is materialism a bad thing? * If no, what are your reasons? ] --- class: practice-slide # For Reflection .col-8[ Today many consumers pursue a 'decluttering lifestyle.' Should marketers encourage this trend toward simplicity even though it stresses buying less stuff that marketers sell? What marketing opportunities do you foresee if this trend spreads? ] ??? Keep in mind that the goal of marketing should not simply revolve around trying to sell consumers ‘more stuff.’ Marketing is about providing consumers with what they need and want, while considering the larger societal needs. Decluttering fits well within the framework of marketing. Marketing opportunities include creating and providing the products/services that fit this new paradigm. --- .row[.col-5[ ![](img07/022.jpg) ] .col-7[ ### Marketers have an obligation to provide safe and functional products as part of their business activities. When brands fail to satisfy, consumers have three options: 1. a **voice** response, * complaining 2. .row[.col-6[a **private** response, and * sharing your dissatisfaction with friends] .col-6[ ![](img07/023.jpg)]] 3. a **third-party** response. * taking legal action or going through an consumer protection organization ] ] --- ## Consumers’ Rights and Product Satisfaction .col-7[ Market Regulation **Corrective advertising**: the company must inform consumers that previous messages were wrong or misleading. Consumerism **Culture jamming**: a strategy to disrupt efforts by the corporate world to dominate our cultural landscape. ] --- ### Social Marketing and Corporate Social Responsibility (CSR) .row[ .col-7[ **Social Marketing** encourages positive behavior and discourages negative activities. **CSR** is the process of encouraging organizations to make a positive impact on stakeholders **Cause marketing** is a strategy that aligns businesses with a cause. **Transformative Consumer Research** promotes research projects that include the goal of helping people or bringing about social change ] .col-5[ **Social marketing strategies** use the techniques that marketers normally employ to sell beer or detergent * to encourage positive behaviors such as * increased literacy and * to discourage negative activities such as drunk driving. ] ] --- ## Cause Marketing .row[ .col-4[ ![](img07/red-nose-day.jpg) In 2016, the campaign raised $18 million through the sale of over 12 million red noses at Walgreen’s stores. Proceeds from the red nose sales and additional **fundraising** events will go toward helping **lift children out of poverty** in the United States. ] .col-4[ ![](img07/100-for-the-planet.jpg) Patagonia has two different missions: 1% for the Planet and 100% for the Planet. Their 1% for the Planet is ongoing — since 1985, they have been pledging 1% of all sales to nonprofit **environmental** groups as a member of 1% for the Planet. That has added up to $74 million in cash donations! On Black Friday in 2016, Patagonia donated 100% of sales to grassroots organizations working to create positive change for the planet in their own backyards. ] .col-4[ ![](img07/dove.jpg) Dove has been on an ongoing mission to help women look and feel beautiful through their **Real Beauty** campaign. They accomplish this through offering care products and educational workshops that focus on the **value of body image** and **self-worth**. ] ] --- class: practice-slide # For Reflection .col-8[ Do you purchase a certain product because of their cause? Why? Do you think organizations support a cause for profits or because they want to be active in their community? ] --- .row[ .col-7[ ![](img07/024.jpg) ] .col-5[ ### Consumer behavior impacts directly on major public policy issues that confront our society. * data privacy * identity theft * market access * sustainability. ] ] --- # Data Privacy and Identity Theft .row[ .col-6[ **Identity theft** occurs when someone steals your personal information and uses it without your permission. **Data breaches** at major companies such as Target, Sony and Home Depot continue to worry many people. **Real time bidding** an electronic trading system that sells ad space on the Web pages people click on at the moment they visit them. **Phishing scams**: people receive fraudulent emails that ask them to supply account information **Botnets** (a set of computers that are penetrated by malicious software known as malware that allows an external agent to control their actions) that hijack millions of computers without any trace **Locational Privacy**: related to consumers that have GPS on their cell phones. ] .col-6[ ### Goverment initiatives The Personal Data Notification & Protection Act of 2015 * would strengthen the obligations companies have to notify customers when their personal information has been exposed The Student Digital Privacy and Parental Rights Act of 2015 * would prevent companies from selling K-12 students’ online data to third parties or otherwise sharing information unless it is for a school-related purpose ]] --- class: practice-slide # For Reflection .col-8[ Will consumers trade lower prices for less privacy? Do you already know any examples for this? ] --- # Market Access .col-7[ ...relates to the ability to find and purchase goods and services. **Disabilities** Disabled people are the largest minority market in the United States. One in 5 U.S. adults lives with a disability that interferes with daily life. **Food desert** is a Census tract where 33 percent of the population or 500 people, whichever is less, live more than a mile from a grocery store in an urban area or more than 10 miles away in a rural area. **Media literacy** refers to a consumer’s ability to access, analyze, evaluate, and communicate information in a variety of forms, including print and nonprint messages. **Functionally illiterate** describes a person whose reading skills are not adequate to carry out everyday tasks, such as reading the newspaper or the instructions on a pill bottle. ] --- ## Sustainability and Environmental Stewardship .row[ .col-4[ A __triple bottom-line orientation__ refers to business strategies that strive to maximize return in three ways: 1. Financial 2. Social 3. Environmental ] .col-4[ ![](img07/025.jpg) ] .col-4[ **Sustainability** **Conscientious consumerism**: when a consumer’s focus on personal health is merging with a growing interest in global health. ] ] --- # For Discussion .col-8[ Nonprofit organizations routinely rely on generous corporate donations, and it is common to name facilities after benefactors. The Nationwide Children’s Hospital in Ohio is no exception; its name recognizes the insurance company’s $50 million donation. Now the hospital is adding the Abercrombie & Fitch Emergency Department and Trauma Center and there is the Limited Too & Justice Main Lobby. The Campaign for a Commercial-Free Childhood opposes this partnership. The group’s director commented, “Abercrombie & Fitch is really among the worst of corporate predators. A company with such cynical disregard for children’s well-being shouldn’t be able to claim the mantle of healing. ...And, personally, I find it very concerning that they named their hospital after an insurance company.” What do you think? Is this over the line, or does it matter where the money comes from so long as the result is beneficial? ] ??? Students will vary in their response to this challenge as both sides present important points. Abercrombie recognizes the positive publicity, which will be generated from such a donation, and charities need funding. At the same time, the center may feel that it is selling out to accept money from an organization, which behaves at times as though it lacks concern for children. --- # Green Marketing and Greenwashing .row[.col-7[ ![](img07/026.jpg) ] .col-5[ **Green marketing**: a strategy that involves the development and promotion of environmentally friendly products and stressing this attribute when the manufacturer communicates with customers. **Greenwashing** occurs when companies make false or exaggerated claims about how environmentally friendly their products are. ]] --- class: practice-slide # For Reflection .col-8[ Would you prefer to purchase from a restaurant that composts? What are some sustainable methods used in your workplace? ] --- # Lifestyles of Health and Sustainability .col-7[ **LOHAS**: refers to people who worry about the **environment**, want products to be produced in a **sustainable** way, and spend money to advance what they see as their personal development and potential. ] --- ## Consumer behavior can be harmful to individuals and to society. .row[ .col-4[ **Consumer Terrorism**: Consumers may suffer from attacks from others **Cyberterrorism** is the politically motivated use of computers and information technology to cause severe disruption or widespread fear in society. **Guerrilla marketing** is an innovative, unconventional, and low-cost marketing techniques aimed at obtaining maximum exposure for a product. ] .col-8[ ![](img07/027.jpg) ]] --- # Addictive Consumption .col-7[ Consumers may become addicted to products. **Social media** consumption is compared to **chemical dependency**. **Cyberbullying** refers to the “willful and repeated harm inflicted through the use of computer, cell phones, and other electronic devices. **Phantom Vibration Syndrome** describes the tendency to habitually reach for your cell phone because you feel it vibrating, even if it is off or you are not even wearing it at the time. **Compulsive Consumption** refers to repetitive and often **excessive shopping** performed as an antidote to tension, anxiety, depression, or boredom. ] --- class: practice-slide # For Reflection .col-8[ Do you know someone who is addicted to social media? In what way? If you work in retail, have you experienced consumers habitually returning items? ] --- # Dark Side of Consumer Behavior .row[ .col-6[ **Consumed consumers** may even become products themselves. People who are used or exploited, willingly or not, for commercial gain in the marketplace. Examples * prostitutes, * selling babies, blood, organ and hair donors, * surrogate mothers being paid to carry other people’s children. ] .col-6[ Illegal acquisition and product use * Consumer theft and fraud **Shrinkage** is the industry term for inventory and cash losses from shoplifting and employee theft. **Serial wardrobers** “who buy an outfit, wear it once, and return it”; customers who change price tags on items, then return one item for the higher amount; and shoppers who use fake or old receipts when they return a product. **Counterfeiting**: when companies or individuals sell fake versions of real products to customers. **Anticonsumption** relates to events in which people deliberately deface or mutilate products and services. ]] --- class: practice-slide # For Reflection .col-8[ From time to time advertisers use dark humor to get their messages across, as when a lonely calorie, repairman, or robot considers suicide. Or, an ad may imply that shoppers are “mentally ill” if they pay retail prices. Are these appeals a legitimate way to communicate a message, and if so under what circumstances? ] ??? Such appeals are meant to be humorous rather than fear or guilt based. Humor appeals are legitimate. The issue is whether this form of humor is in good taste and a good choice for the brand in question. --- # Review .col-7[ Ethical business is good business. Marketers have an obligation to provide safe and functional products as part of their business activities. Consumer behavior impacts directly on major public policy issues that confront our society. Consumer behavior can be harmful to individuals and to society. ]