CONSUMER BEHAVIOUR

LECTURE 10
CONSUMER WELL BEING & MISBEHAVIOUR

BUSINESS ETHICS

 Ethical business is good business

 Ethics - standards or moral codes of conduct to which
a person, group, or organisation holds
 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
 There are various universal values and many culture- specific ones
 Some marketers violate consumer trust
 Some marketers engage in practices that are not explicitly illegal but are
detrimental to society

 Ethics – personal moral principles and values

 Law – societies enforceable principles and standards
 Marketing Ethics

1950s advertising…

- Things change
over time
- E.g. coke to a
baby

CONSUMER NEEDS AND WANTS

The need is already there - marketers simply recommend ways to satisfy it Consumer
space – people are empowered to choose how, when or if they interact with brands /
organisations

Marketers face judgement from both ends of the political spectrum – right wing hate the
promotion of hedonistic pleasures; left wing suggests its deceitful nature

 Products are designed to meet existing needs

 Economics of information – advertising is an important source of
consumer learning
 Advertising helps communicate their availability, which is important because:
 The failure rate for new products ranges from 40-80%
 The industry is successful when it tries to sell good products and unsuccessful
when it sells poor ones

CONSUMERS’ RIGHTS

Actions if consumers are dissatisfied with a product:

1. 1) Voice response
2. 2) Private response
3. 3) Third-party response – marketplace sentiments

Organisations should encourage people to complain:

 Get the chance to correct the situation
 Avoid an escalating problem
 Collect valuable insights about customers’ experiences
 If consumers do not believe that the store will respond to their complaint, they will be
more likely to simply switch than fight
CONSUMER PROTECTION LEGISLATION

 Legislation is an attempt to even up the relationship between individual consumers

and large corporations
 Describes the increased importance / power of consumers
 Includes increasingly organised consumer groups who look to government and
industry regulators to provide guidance
 Recognition by producers that consumer satisfaction is key

Legislation ensures:
 Consumers are protected
 The image of the industry is high
 Messages are credible
 Decency codes are upheld
 Vulnerable groups are protected

 Consumer Rights Act (2015)

 Consumer Protection Act (1987)
 Consumer Protection from Unfair Trading Regulations (2008)
 Misrepresentation Act (1967)
 Trade Description Act (1968)
 Data Protection Act (2018)
 Communications Act (2003)

*Two key UK legislation acts towards marketing

ADVERTISING STANDARDS AUTHORITY – CODES

Advertising should be:

 Legal, decent, honest and truthful
 Must not cause widespread offence
 Should respect the principles of fair competition generally accepted in business
practice
 Responsible to society
 Should not bring advertising into disrepute
 Statutory law
 Special codes for certain categories

CONSUMER MISBEHAVIOUR

 Violates norms and disrupts the flow of consumption activities

 Some behaviours are clearly illegal, while others are simply immoral
  Value is the focal motivation – consumers seek to maximise the benefits they receive
from an action whilst minimising (or eliminating) their own cost

MATERIALISM

‘The importance a consumer attaches to worldly possessions’ (Belk, 1984, p. 291).

Highly Materialistic people:

• Tend to be less happy (Burroughs & Rindfleisch, 2009).
• Tend to use their relationships with possessions to compensate for loneliness and a lack of
affiliation with social networks (Lastovicka & Sirianni, 2014).
 Link more of their self-identity to products and thus form very stronger connections
to brands (Rindfleisch, Burroughs & Wong, 2009).
 Exhibit an especially strong fear of death (Rindfleisch, Burroughs & Wong, 2009).

CONSUMER TERRORISM

• Consumer Terrorism - consumers may suffer from attacks from others

• Bioterrorism - target the nation’s food supply
• Cyberterrorism - use of computers and information technology to cause
severe disruption or widespread fear in society

• Consumer Addiction – a physiological or psychological dependency on products or

services (social media, gambling)
• Cyberbullying – willful and repeated harm inflicted through the use of computers,
smart phones and other electronic devices

COMPULSIVE
CONSUMPTION

 Compulsive consumption refers to repetitive and often excessive shopping

performed to relieve tension or anxiety, depression, or boredom - Shopaholics

 Three common elements characterise negative or destructive consumer behaviours:

1. The behaviour is not done by choice

2. The gratification of the behaviour is short-lived
3. The person experiences strong feelings of regret or guilt
  In the U.S. between 5.9% - 10% of consumers are estimated to exhibit
compulsive shopping behaviour (e.g. Faber & O’ Guinn, 1992; Trachtenberg, 1988)
 There has been a substantial increase in compulsive consumption in Germany since
1991 (Neuner, Raab, & Reisch, 2005)
 Approximately half a million people in the UK suffer from compulsive buying
behaviour (Black, 1996)
 Highly narcissistic individuals are especially likely to engage in compulsive
consumption (Rose, 2007) due to their desire to be admired by others (Campbell &
Foster, 2007). There is also an established link between low self-esteem and
compulsive consumption (e.g. Richins & Dawson, 1992)

CONSUMED CONSUMERS

 Consumed consumers are those used or exploited, willingly or not, for commercial
gain in the marketplace.
 Prostitutes
 Organ, blood and hair donors
 Babies for sale
 Consumer theft and fraud
 Shrinkage - inventory and cash losses caused by shoplifting and employee
theft
 Counterfeiting - companies or individuals sell fake versions of real products
to consumers
CORPORATE SOCIAL RESPONSIBILTY AND SOCIAL MARKETING

CORPORATE SOCIAL RESPONSIBILITY

- Csr
has
been

considered a point of differentiation from its competitors

 Brand Vision ‘To play our part in building a sustainable

future and making a positive impact on the
planet our children will inherit’
 Launch of LEGO® Replay – help enhance circular economy - giving consumers
opportunities to
pass on their LEGO bricks to other children
 LEGO launched #Build the Change PR campaign in 2014, a global initiative inspired
in part by customer feedback
 Sustainable Materials - make all core LEGO products from sustainable materials by
2030
 Sustainable Packing - all LEGO packaging will be made from renewable / recycled
materials by
2025
 Corporate Social Responsibility – part of the Climate Savers Programme, WWF’s
global platform outlining commitments to:
 Reduce CO2 emissions by 10% per brick compared to 2016
 Reduce waste by 10% per brick compared to 2016
 Maintain 100% renewable energy
 Support suppliers
  Establish an environmental engagement program for Lego employees

(Lego/Sustainability, 2022)

CORPORATE SOCIAL RESPONSIBILITY

CSR is a link between the world of business & the community in which it operates. This is
often demonstrated via the following activities:

 Making donations to causes

 Supporting minority programmes
 Ensuring responsible manufacturing processes and environmental protectionism
 Acting quickly when product defects are detected
 Focusing on employee safety
 Encouraging employees to volunteer for
local causes
 Commitment to diversity, equity and inclusion

 Helps to increase market share and sales

 Generates a more positive attitude in the minds of its stakeholders
 Create a positive image
 Improve brand positioning
 Can help to gain positive coverage in the media
 Can boost employee morale and so employee retention
 Employee will feel pride in being associated with firms that engage in CSR activities

CORPORATE SOCIAL RESPONNSIBILITY

 ‘The ethical principle that an organisation

should be accountable for how its behaviour
might affect society and the environment’
(Jobber & Ellis-Chadwick 2013. p196)

 ‘Corporate social responsibility encompasses

the economic, legal, ethical, and philanthropic
 expectations placed on organizations by society at a given point in time’ (Carroll and
Buchholtz 2000, p.35 – in text book)
DIMENSIONS OF CORPORATE SOCIAL RESPONSIBILITY

Societal marketing, the response a company has to the consumer

SUSTAINABLE CONSUMPTION

 Large food retailers

have a key role to play in
delivering more
sustainable patterns of
consumption
 The dominant thrust of
marketing
communication within
supermarkets is designed
to encourage
consumption Jones et al
(2009)
 These are the most
obvious signs of
sustainability used in the
food industry

Research found three general themes emerged in

respect to sustainability in supermarkets:
1. Dominant sets of messages were concerned with encouraging customers to consume
rather than to restrain from consumption or to promote sustainable consumption. All of
the top ten food retailers used sales promotions extensively

2. Whilst supermarkets do promote sustainable consumption themes - these tend to be less

prominent and there are more limited messages

3. Lack of messages and information about sustainable consumption were available at

the point of sale within stores. Dominant messages concerned money saving offers and
bargains

UNILEVER,

• “In the future, every Unilever brand will be a brand with purpose.” Alan Jope, CEO
Unilever

• 28 Sustainable living brands, which include Dove, Knorr, Persil, Rexona, Lipton,
Hellmann’s and Walls grew 69% faster than other brands in 2018 and delivered 75% of the
Unilever’s overall profit
• 91%ofmillennialswouldswitchbrandsforone which champions a cause and 64% of global
consumers say they choose brands because of their stand on social issues
• Committed to all brands delivering purpose

*Mention Shakti program

GREEN MARKETING & GREENWASHING

 Green marketing describes a strategy that involves the development and promotion
of environmentally friendly products and stressing this attribute when the
manufacturer communicates with customers

 Even though consumers largely support green products, many people don’t actually
buy green.

 Greenwashing occurs when companies make false or exaggerated claims about how
environmentally friendly their products are.

*Innocent smoothies had a 2022 advert complained about due to greenwashing

Talk about how the brand is fixing the planet when they sell single use plastic bottles

What are the biggest barriers to buying sustainable brands?

1. It's too expensive - 28%
2. I'm not interested - 22%
3. It's too difficult / complicated - 18%
4.I don't believe it makes a difference - 16%
5. It's too inconvenient - 15%
6. It's time consuming - 11%
7. It's not available in my local area - 6%
8. Not aware of that particular issue -5%

Deloitte (2022)

ASA, SPECIAL CATEGORY

1. The basis of environmental claims must be clear.

2. The meaning of all terms used in marketing communications must be clear to
consumers.
3. Absolute claims must be supported by a high level of substantiation
4. Marketers must base environmental claims on the full life cycle of the advertised
product
5. Marketers must not suggest that their claims are universally accepted
6. Marketing communications must not mislead consumers about the environmental
benefit that a product offers

SOCIAL MARKETING

• Kotler and Zaltman (1971)first developed the term social marketing to describe an
expanded role for marketing practice in the business of idea and behavioural change

• Social marketing definition “process that applies marketing principles and techniques to
create, communicate, and deliver value in order to influence target audience behaviours that
benefit society (public health, safety, the environment and communities) as well as the target
audience” Kotler and Lee (2008)

• Social marketing is “the systematic application of marketing concepts and techniques to

achieve specific behavioural goals relevant to a social good” French and Blair-Stevens
(2006)

 Increasing social and environmental problems encourage people to care more about
our sustainability in the future
 Social marketing questions whether the concept of commercial marketing is the right
philosophy when we face various problems such as:
 Environmental damage
 Depletion of natural resources
 Hunger and poverty
 Obesity and other health problems
 Low access to education, health and other social services
 Social marketing is used to influence an audience to change their behaviour for the
sake of social benefits - improving health, preventing injuries, protecting the
environment, or contributing to the community (Kotler and Lee, 2008).

There are five main components of social marketing

1. It focuses on behavioural change
2. It is undertaken on a voluntary basis
3. Uses marketing principles and techniques
4. Identifies and influences a target audience
5. The marketing benefits the intended audience in some way

The 4Ps used in Social Marketing:

 Product - key benefits, service or behaviour change
 Price - the cost of stopping an unhealthy behaviour or adopting a
healthy one
 Place - the opportunities and access to products, services and
places to engage in the behaviours being promoted
 Promotion - communicating all this to the target audience through
the right channels

Source - Kotler, Roberto, & Lee (2002)

AD NET ZERO

1. Advertising businesses’ own operations: all companies commit to curtail their carbon
emissions, principally by reducing travel, fossil energy use and waste.
2. Advertising production: advertisers, agencies and production companies commit to
adopt tools and training to curb production emissions, such as AdGreen.
3. Media choice: media agencies commit to the IPA Media Futures Group Climate
Charter, working with their clients to develop lower carbon media plans.
4. Awards and events: organisers build sustainability criteria into awards, and plan
events to minimise their carbon footprints, especially from travel.
5. Using advertising’s positive influence: agencies and clients harness the power of their
advertising to promote more sustainable consumer choices and behaviours

Source - Advertising Association Annual Review (2020) and Ad-NetZero

LECTURE RECAP

 Ethical business is good business – what is considered ethical is not fixed

 Marketers have an obligation to provide safe and functional products which
benefit consumers and society (and are promoted in such a way)
 Consumer misbehaviour impacts directly on major public policy issues that confront
our society - consumer behaviour can be harmful to individuals and to society
 Corporate Social Responsibility encompasses economic, legal, ethical and
philanthropic expectations of organisations, whilst Social Marketing is about using
marketing tools to change socially unacceptable attitudes / behaviours