Deceptive Practices • Deceptive pricing, untrue statements in ads, false promotions, and deceptive packaging are illegal in Canada according to the Competition Act. • Deceptive Pricing: ‘Reduced’ pricing, which is in fact the regular retail price. • Example: Sears Canada was fined $487 000 in 2005 for misleading consumers about how much they would save on certain tires.
Untrue statements in ads: retailers cannot advertise a product at a certain price and then refuse to sell to you at that price, or not carry that item. • Deceptive Packaging: Canadian law has strict regulations and requirements about what information must be included in packaging. • Example: Dietary supplements must disclose all ingredients, ‘May Contain Nuts’ warnings.
Unsafe Products • Unsafe or shoddy products can result from manufacturer indifference, increased production complexity, poorly trained labour, or poor quality control. • Example: Merck, a drug company, manufactured VIOXX an arthritis drug. The drug also increased the risk of heart attacks and strokes. Merck had to pay the cost of recall, PLUS lawsuits. The company stock lost more than 25% of its value the day the recall was announced. • http://www.youtube.com/watch?v=gaMBt1z3Bj8
Planned Obsolescence • Marketers are accused of holding back features, then introducing them later to make older models obsolete, or intentionally limiting a products life span. • “The marvels of modern technology include the development of a soda can which, when discarded, will last forever – and a car, which, when properly cared for, will rust out in two to three years”. • An additional concern related to planned obsolescence are the environmental impacts that come from the need to consistently replace goods. • http://www.youtube.com/watch?v=9VLQmN01-5Y&feature=fvst
Review Questions • Think about your experiences as a consumer over the past months (ads you’ve seen, stores you’ve shopped in, etc.) What complaints or concerns do you have about the marketing activities you’ve been exposed to? • ‘The high cost of distribution, advertising and promotion, and excessive markups lead to higher than necessary costs for the consumer’. Agree or disagree with the statement and in point form list your reasons why.