MANUFACTURING :

CONS UMER T HE ULT IMATE

STAKEHOLDER
WHO IS A CONSUMER?
 Consumers are those who buy goods from the manufacturers
through several middle men such as distributors, dealers and
retailers
 Consumers dominate the world, where consumers demand and
manufacturers work to supply and satisfy the demands
 Marketers and advertisers sharpen the desire of consumers to
buy more and more, the things that they do not even need
 Needs are created, wants generated and desires satisfied, this is
consumerism
 Consumption predetermines production, while demand creates
the supply
 Thus the consumer who has the money is the ultimate
stakeholder
 Too many products and services are competing in the market for
the customer’s attention
CUSTOMER THE ULTIMATE STAKEHOLDER
 Buyer sees the seller as someone who can give value for money
 Seller sees the buyer as someone from whom money or profit
can be made
 It is value for money versus profit, unique situation where the two
subjects have stakes in each other
 Interdependence of interest build close relationship which is
based on trust
 Seller builds the relationship through quality of goods and
services offered, and the buyer reciprocates it with loyalty, or
even pride
 Without the customer there is no business
 Customer is thus the ultimate stakeholder without whom the
business has no existence
 Customer alone holds the stakes
 Moral issues in a seller and customer relationship are
very serious
 Moral onus is always on the seller for the quality,
quantity, safety, health and services of the product vis-
à-vis the customer
 Operational moral principles at stake are the rights of
the customer and the duties of the manufacturer
DUTIES OF THE MANUFACTURER
Product to Suit a Human Need
o The moral question in manufacturing, marketing and selling a
product is to ask whether the product in question fulfils a
genuine human need or not
o Today firms are blamed for creating a need rather than
recognizing a real need
o Various ads suggest that if you do not have the product that is
being advertised, then you are out of sync with the fashionable
world
o Through repeated and relentless stressing upon its need, it
creates a pressure in your subconscious mind and compels you
to buy it
o Detergents and cosmetics take a lead in creating a compulsion
out of a basic human need
o E.g. the popular brand of shampoo that magically clears all
dandruff, where the scientific truth is that whether one has
dandruff is dependent on one’s health
Product Development
 Enormous technological changes in product development
 Technical developments is most obvious in electronic and
computing devices
 All modern gadgets and consumer goods win a market niche due
to their cutting edge technology
 Service sector like banking and insurance is a good example of
this type of development especially in India
 Earlier banking was used only to dpeosit and withdraw money
and insurance were mandatory for vehicle owners and salaried
people only
 New financial agencies have developed more attractive products
for its customers, like credit cards, housing loans, loans for small
and medium enterprises, demat services, online and offline
broking, mutual funds and insurance services
 E.g. An NBFC is a one stop shop for all financial services
 Morality of product development lies in the principle of duty
towards the customer, where the customer could hope for an
updated product that is qualitatively better than before
 In a free economy, the entrepreneur constantly thinks of ways to
woo the customer, by marketing a better product and reaching
out to a larger base
 Principle of utility also plays a role, where technologically better
and cheaper goods ensure a greater benefit to a larger number
of people
 This allows a larger customer base and lower prices of product or
service
 This allows greater return on investment which motivates the
entrepreneur to develop and innovate as per the needs of the
customers
RESEARCH AND DEVELOPMENT
 Two kinds of Research - Basic and Applied
 Applied Research (R&D) in an industry is used to develop highly
sophisticated machinery to build new products and test them
 In a business knowledge is accumulated for the development of
products and services through market research
 R&D is imperative for manufacturers to supply products and
services that are more developed to stay ahead in the
competitive market
 E.g. The Pre filled syringe devices develop by the R&D dept of
biopharmaceutical company called Biocon in 2008
 Morally controversial subjects are being researched and
developed, e.g. wide range of genetically modified agricultural
products like grain, cotton and vegetables
 Experts fear that this may cause serious harm to the organs of
the body and cause diseases
 Animal testing in labs is also challenged, with organizations like
(PETA) – People for Ethical treatment of Animals
INNOVATION
 Manufacturers have good and inexpensive technology at their
disposal and they need to apply it to give value to their customers
 E.g. ITCs innovative programme for farmers of rural area called e-
Chaupal where farming communities are build around computer
generated information in the villages, through which farmers are
able to determine the prices of their grains
 This has enabled them to eliminate the middleman
 E.g. (HLL) innovative marketing programme for soap usage in
rural areas, conducting workshops, demonstrations for personal
hygiene
 Manufacturers and marketers are committed in their social duty
and come up with innovative ideas to use in business
 Benefit to customer gives satisfaction to the manufacturers and
the entire chain of business is motivated
PRODUCT SAFETY
 Product safety is the supreme duty of the manufacturers
 Failure to conform to safety standards is harmful to customers
 E.g. In India researchers believe that 40% of the drugs sold are
spurious
 Food grown in chemical fertilizers contain toxins
 Use of mobile phones is tied with controversies like cancers and
tumours, it also interferes with the functioning of other
equipment's inside the operation theatre or an aircraft
 Quality of baby foods and toys have been a great concern for
parents
 Usage of tobacco alcohol are inherently harmful, with health
hazards and family destruction
 Certain products like Arms proliferation can destroy entire
humanity is morally unjustifiable
 Duty of the manufacturer lie in the rights of the customer
CONSUMER RIGHTS
 Steady improvement in the consciousness of the growing number
of customers about their rights
 Consumer protection laws have been instituted in most of the
developed countries
 India enacted the Consumer Protection Act (COPRA) in 1986 and
enshrined the following six rights
1. Safety
 Goods and services must ensure safety and security of the
consumer
 Information of any hazard or risk must be documented and given
to the customer
 Consumer should insist on the quality of the product and the
guarantee of the products and services before purchases, e.g.
quality marked products like ISI, AGMARK etc
2. Information
 Advertising, labelling and other information about the product or
service has to be unambiguous and clear
 Right to information means right to be informed about the quality,
quantity, potency, purity, standard and price of goods so as to
protect the consumer against unfair trade practices
 Consumer should insist on getting all information about the
product or service before making a choice, this will ensure one to
not fall prey to high pressure selling techniques

3. Choice
 Commerce is done under free and fair trade
 Monopolies and price regulation are against the law
 The right to choose can better be exercised in a competitive
market, where a variety of goods and services are available at
competitive prices
4. Representation
 Consumer has the right to have his or her grievances heard
 Indian consumer courts provide speedy and free legal advice and
deliver justice
 Right to represent means the consumers interest will receive due
consideration at the appropriate forums
 Consumers should form non-political and non-commercial
consumer organizations, which can be given representation in
various committees formed by the government and other bodies
in matters relating to consumers
5. Redress
 The right to redress means the right to seek a redress against
unfair trade practices or unscrupulous exploitation of the
consumers
 It also includes a right to a fair settlement of the genuine
grievances of the consumer
 Consumers must file a complaint of their genuine grievances,
many times a complaint may be of small value, but the impact on
the society as a whole may be very large
6. Consumer Education
 Customers have the right to demand transparency from
manufacturers
 Right to consumer education means the right to acquire the
knowledge and skill to be an informed consumer throughout life
 Ignorance of consumers, particularly the rural consumers is the
main cause of their exploitation
 They should know their rights and must exercise them
 Law has been able to change the judicial reforms to offer speedy
justice within limited period of 90 to 150 days through the
special consumer redressal courts
 Shortcoming of this act consist of the exclusion of two important
consumer rights – basic necessities and a healthy environment,
which are fundamental human rights
INFORMED CONSUMER
 Booklets, manuals, instruction leaflets and labels on the packing
contain information
 Two kinds of information – product advertisement and statutory
information
 Statutory information is often in fine print and is merely to fulfil
an obligation
 This information should consist of contents, manufacture and
expiry dates, risks, and several other aspects regarding the safe
use of the product
 The maximum retail price, the bar codes etc. must be in the
stipulated size and prominently displayed
ETHICAL CONSUMPTION