Business Ethics

1. Consumerism
Prepared by:
Hamdoon Hussain
B.Sc (Economics), MBA HRM
Karachi University Business School (K.U.B.S)

2. Key Objectives
These are the main elements that will be
covered in this this lecture.
• Consumerism
• Origin of Consumerism
• Scope of Consumerism
• Benefits of Consumerism
• Rights of Consumers
• Advantages and Disadvantages of
Consumerism
• Consumer Movement
• Consumer Advocates
• Concept of Consumer Law
• Role of Advertising
• Consumerism and Pakistan

3. Consumerism
• Consumerism refers to wide range of activities of government , business and
independent organizations designed to protect rights of the consumers.
• Consumerism is a process through which the consumers seek redress(to set
right) , restitution and remedy for their dissatisfaction and frustration with the
help of their all organized or unorganized efforts and activities.

4. Definition
Consumerism is concerned with protecting consumers from all organizations with which
there is exchanged relationship. It encompasses the set of activities of government,
business, independent organizations and concerned consumers that are designed to
protect the rights of consumers.
McMillan Dictionary (1985)
Consumerism is the Social Movement seeking to argument the rights and power of buyers
in relation to sellers.
Philips Kotler (1972)

5. Why Consumerism
• In the existing markets of products run in shortage , adulteration & black market
prices.
• The profit making attitude of the business failed to discharge social
responsibilities of maintaining fair price, quality of goods & providing services etc.
This all leads to need of Consumerism.

6. History of Consumerism
• John Bugas, who used to work in Ford Motors coined the term consumerism in
1955.
• The Industrial Revolution acts as catalyst in the wide-spread of consumerism. It
all started from England during 17th Century and quickly spread in other parts of
Europe.
• Era after 1950 is considered Golden era of consumerism due to induction of
Marketing concept which enable business to scale up production.

7. Scope of Consumerism
• Right to safety: Good available meet safety standards of consumption or use, not
harmful for health, not expired or near to expiry, Store are not allowed to keep
substandard products.
• Right to choose: Choosing product or services at best price. Role of regulatory
bodies are also important to protect right of both consumer and businesses to
safeguard interest of small business to provide equal opportunity for all size of
business. Consumer can only expect competitive pricing and good quality products
in a competitive market.

8. Scope of Consumerism
• Right to be informed: Business need to provide useful information about the
value product or service will deliver. Information should not be persuasive as
commonly shown in advertisement.
• Consumer Education: Government, Business and Civil Society need to conduct
seminars, conferences, and public hearing for welfare of consumers. This can
prevent malpractices and exploitation of consumers.

9. Consumer Purchase Decision
Consumer purchase decision are usually based on one of the following
elements. There can be some additional factors as well
• Addiction
• Identity
• Life Style
• Discounts/Sale

10. Impact of Sell Volume
• Economies of Scale: Increased sell result in increase in production of goods or
services. Ultimately this decreases the cost of operating a business.
• Customer Retention: Customer retention and selling more goods or services to a
single customer cost less as compared to searching for new customer.

11. Characteristics of Wise Consumers
• A wise customer can distinguish between needs and wants and buy accordingly.
• A few questions that one should ask him/herself to take a wise purchase decision.
1. Do I really need it?
2. Is it worth the price
3. What other similar alternative option I have?
4. Is it of good quality?

12. Responsibility of Consumers
• Take informed decisions before purchasing any product or service.
• Read and follow provided instructions by the manufacturer or service provider.
• Use product or services according to provided guidelines.
• Speak up at appropriate platforms against malpractices of business.
• Know your obligations.

13. Marketing Concept
• Marketing was need of time since during production era stocks started piling up.
• Businesses realizes that they can be able to sell quickly if they know needs and
wants of their consumers.
• Marketing concept enable businesses to project the needs and wants of their
target audience.

14. Advantages of Consumerism
• Consumerism result in increase in economic growth.
• Consumerism compels businesses to deliver product or services at best possible
pricing to consumers.
• Consumers have the choices and businesses need to be innovative and customer
oriented to remain in business.
• Consumerism encourages entrepreneurs and start-up to take business initiatives.

15. Disadvantages of Consumerism
• Consumerism leads to neglecting other elements of Environment. For instance, a
Residential Apartment Project at Hill station results in De-forestation.
• Consumerism and race to achieve their wants and desire compel consumers to
take debts. Debts are good for economic progress but spending on wants and
desire creates and artificial bubble in society.

16. Disadvantages of Consumerism
• Consumerism does not have anything to offer to poor and less privileged people
of society. This result in inferiority complex as well.
• Desire to purchase never ends, consumers are compelled every product and
service available to use. This is usually societal trends. This in turns leads to stress
and depression.

17. Consumerism and Quality of Life
• Quality of life is measured by Happiness level of Particular group of audience.
• Consumerism and quality of life can be controlled.
• Wise decision by differentiating between needs and wants enable consumer to
raise standard of life.
• For Instance: Getting Education from a reputable institute can help an individual
to land a decent job which will increase standard of living.

18. Example of Consumerism
• Education: You pay for education and in future Education will enable you to get a better job.
• Purchasing Multiple Cars: Buying a car for each one of your kids when they all can share one.
• Investment: Investing can be another example, since you inest/collaborate in a business that you
choose that is developing; and after that if the company does well you earn a profit from the
business you collaborated.
• Private Medical Facility: Consumer opt to go to Private hospitals. They pay to receive better
health care.
• Gated Living Community: People willing to pay more to feel safe and secure at their homes.

19. Consumer Movement
• The Consumer movement is an effort to promote consumer protection through
an organized social movement which is in many places led by consumer
organizations.
• Consumer Movements advocates for the rights of consumers, especially when
those rights are actively breached by the actions of corporations, governments,
and other organizations which provide products and services to consumers

20. Consumer Advocates and Advocacy
• Consumer advocates: have assumed a somewhat adversarial role in exposing
unfair business practices or unsafe products that threaten the welfare of the
general public.
• Consumer advocacy: refers to actions taken by individuals or groups to promote
and protect the interests of the buying public.

21. Concept of Consumer Law
• Consumer protection law or consumer law is considered as an area of law that
regulates private law relationships between individual consumers and the
businesses that sell those goods and services.
• Consumer protection covers a wide range of topics, including but not necessarily
limited to product liability, privacy rights, unfair business practices, fraud,
misrepresentation, and other consumers/business interactions.

22. Concept of Consumer Law
• Consumer Law is a way of preventing frauds and scams from service and sales
contracts, eligible fraud, bill collector regulation, pricing, utility turnoffs,
consolidation, personal loans that may lead to bankruptcy.

23. Role of Advertising
• Advertising plays a role in this need creation.
• Business need to consider needs of consumer instead of fabricating them by
igniting desires to purchase a product or service.
• Advertisements that creates desire raises concerns about ethical responsibility
of business.
• Children need to be considered while creating an advertisement campaign
specially for when it is created to be on air during specific programs that are
shared by all age groups.

24. Deceptive Advertising
• Deceptive advertising, or false advertising, is any type of advertising that
is false, misleading, or has the effect of deceiving consumers.
• An ad can be deceptive in many aspects. It includes but not limited to Price of a
product, False facts regarding deals or sales, Confusion over interest rates or
other factors

25. Unethical Practices in Advertising
• Advertising that promotes a service or product in a deceptive manner
is unethical because it doesn't provide consumers with all the information they
need to make a good decision.
• Advertisement that are persuasive instead of informative result in monetary
losses since customer buy that they don’t need nor want.

26. Example of Deceptive Advertising
A common form of false advertising involves deceptive or misleading product descriptions,
particularly claims that a product has certain features or benefits that it does not, or that it is of a
higher quality than it actually is. Examples include:
• Use of misleading terms, such as “organic,” “natural,” or “light”;
• False claims of scientific support, or endorsement by scientific or medical authorities;
• Misleading illustrations or photographs;
• Use of coloring or other modifications to make a product appear to be of a different quality; or
• Falsely claiming that a product contains certain ingredients, or misrepresenting the quantity of
an ingredient.

27. Consumerism and Pakistan

28. Local Perspective
• Pakistan is a developing Economy.
• As per UNESCO, Literacy rate stands near 60%.
• Lack of Education is one of the reason of ignorance of rights.
• Consumers are exploited due to lack of Education and awareness about their
rights.
• Deceptive Advertisement, Poor After-Sale Services ,and Price Collusion are
some of the major issues faced by Pakistani Consumers.

29. Measures taken by Government
• The idea of consumer protection laws was firstly adopted in Pakistan by the
Federal Government in 1995 when the Islamabad Consumer Protection Act,
1995 was passed.
• Later Khyber Pakhtunkhwa, Baluchistan, and Sindh approved similar bills in year
1997, 2003, and 2015 respectively for their Jurisdiction.
• District consumer courts are established under this act to protect the right of
consumers.

30. Key Example of Implementation of Law
• A consumer court imposed fines on a leading online retailer for providing a
faulty product to a customer in Dec,2019- Daraz
• Competition Commission of Pakistan suggested that Engro Foods had been
involved in deceptive marketing practices and, in the interest of the general
public and other market players, recommended that proceedings be initiated
against it.