Consumerism and Ethics in Retailing: Dr. Gopal Thapa

1. Consumerism and Ethics in
Retailing
Dr. Gopal Thapa
Tribhuvan University

2. Three Basic Issues
 Consumerism
 Corporate Social Responsibility
 Ethics
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3. Consumerism
 Consumerism is organized group pressure, by all
consumers, to protect and benefit consumer
groups and the environment.
 This means it is not solely those consumers buying
from a company, it is a broad movement to bring
about improved exchange relationships.
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4. Corporate Social Responsibility
 This is the decision of a firm to conduct its
business in the interest of society as a whole as
well as its own interests.
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5. Ethics
 Ethics involves personal decisions on the moral
principles of what would be the right or wrong
activity for individual employees.
 These decisions will be linked to the values and
culture of the organization.
 Ethical values are the core beliefs and standards
such as honesty and fairness that will dictate the
stance a company takes in relation to retail
marketing.
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6. The Different Pressures for a
Company to be Socially Responsible
 The concept on which to base the ensuring of
long-term satisfaction is not a straightforward one.
 Consumer satisfaction is linked to aspirations and
these may change in relation to political systems,
and the products and services other consumers
enjoy.
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7. The Different Pressures for a
Company to be Socially Responsible
 Satisfaction is based upon personal concepts of
acceptability of the type of products available, the
potential to purchase them, and how companies
act in the transaction process of creating and
supplying products or services.
 We often use relative standards when judging the
circumstances of a specific action.
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8. Corporate Social Responsibility &
Business Ethics
 Corporate social responsibility relates to the social
aspects of the responsibility a company may adopt for
its own business operation within the society it serves.
 To be corporately responsible, a company would
develop and operate economic, stakeholder, or
philanthropic policies which were beyond its required
legal duties.
 Business ethics is the code by which an organization
should behave based upon carefully developed rules
of moral philosophy.
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9. The Different Pressures for a
Company to be Socially Responsible
 Utilitarianism – which judges not the actions but the
consequences of those actions.
 If the result is that there is a net increase in the
happiness or welfare of society then the action can be
believed to be morally right;
 Intuitionism – the premise that a decision is right if
the individual’s intuition or conscience informs him or
her that it is right.
 If a person believes his or her motives are good and
honest and no other person is harmed by a decision
then that decision can be made.
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10. The Different Pressures for a
Company to be Socially Responsible
 Absolute standards are based upon rigid rules
which provide clear guidance as to the judgment
of whether any action is right or wrong.
 As such there is no ambiguity as to what
constitutes ethical behavior and no account is
taken of the circumstances which may surround
the situation.
 These standards are based upon religious
teachings such as ‘thou shall not lie’ or ‘thou shall
not steal’.
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11. The Different Pressures for a
Company to be Socially Responsible
 One major change in the acceptability of the
behavior of companies can be traced to the
widespread realization that the world needs to
have its environment protected
 Green issues are creating more awareness of the
environment in Western societies.
 Pollution due to acid rain, the motor car and
leaded petrol, nuclear waste, chemicals in farming
and untreated sewage is of topical concern.
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12. The Different Pressures for a
Company to be Socially Responsible
 This has led to the emergence of the ‘green’
consumer who will seek out and buy
environmentally friendly products.
 The same consumer will expect a retail company
to adopt responsible attitudes in terms of the way
it carries out its business.
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13. The Different Pressures for a
Company to be Socially Responsible
 This could be related to the organization of waste
recycling, energy conservation and some control
of the products it stocks or sells.
 There is the further concern that financial services
institutions should work with acceptable political
regimes and provide loans only for ethical
business ventures
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14. The Different Pressures for a
Company to be Socially Responsible
 In the late 1990s, various retailers were accused of
exploiting workers in developing countries.
 The recognition of the power of the consumer, based
upon emerging values which deem unethical processes
unacceptable, has led companies to adopt more
socially responsible policies.
 The recognition by different companies of the need to
be more aware of the personal values of those in
society is primarily due to consumerism.
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15. Consumerism
 This is organized group pressure which has
become a set of values held not only by the
consumers of a company’s products but also
within the wider society.
 Hence consumerism has the objective of
protecting all consumers from organizations with
which there may be an exchange relationship.
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16. Consumerism
 As a movement, it attempts to influence the
policies and behaviour of organizations and
groups to minimize the likelihood of detriments
being inflicted on individuals, society or the
environment.
 The values of the movement are based upon
scepticism of the motives of businesses
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17. Consumerism
 There is a belief that businesses are more likely to
maximize their profits than think about issues of
public interest.
 This leads to a large number of individuals
believing that retailers combine with producers to
ensure that they, the consumers, are ‘ripped off’.
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18. Consumerism
 In recent years the consumer has not been passive.
 Consumers have realized their economic power
and have used this to bring about change.
 Consumerism has been used for political ends
with purchasing power being applied to influence
the policies of different governments
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19. Consumerism
 There has been concern over the sale of fur
products, genetically modified foods, or the use of
cheap child labour in developing countries.
 In 1996 a boycott took place related to retailers
sourcing in Burma, a country where the military
regime abused human rights.
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20. Consumerism
 Rights of the consumer
 the right to safety – that there are no hidden
dangers;
 the right to be informed – that there should be
honest communications;
 the right to choose – that there should be real
competition among sellers;
 the right to be heard – that there should be
channels or bodies for complaints.
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21. Consumerism
 The protection of the consumer and supplier is
often represented by pressure groups.
 Consumerism as a movement is often based upon
the activities of a number of pressure groups who
influence government, the media and affect the
values within society
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22. Criticism of the exploitation of
workers
 Western retailers are accused of attempting to make
maximum profits through the exploitation and
manipulation of suppliers in Third World countries.
 Whether it be a fruit farm worker in South Africa, a
toy worker in China or a factory worker in
Bangladesh, Sri Lanka or Pakistan, many are on
subsistence wages;
 some are forced to work unpaid overtime, may be
fired or even beaten if they cannot keep up with the
production schedules
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23. Criticism of marketing activity
 The disregard of the effects of promotion
 An overemphasis on profitable products
 The invasion of privacy
 The waste of resources on retail marketing
 Need for more protection of children
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24. Product Misuse and Safety Issues
 The most dangerous aspect of any purchase
concerns the way the customer uses the product.
 In fact, the most dangerous aspect of any purchase
often relates to the type of consumer utilizing it.
 E.g. Electricappliances, tiles, marbles, gas and
heater , lift etc.
 Such dangers have prompted public policy makers
to urge or insist on safe designs and testing.
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25. Product Misuse and Safety Issues
 However, there is a limit to the precautionary
notes which can be presented on a label and a
manual or leaflet may often be discarded without
due notice to safety hints.
 Consumerism would like greater safety but
individuals may easily misuse products simply
because of the type of user
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26. Product Misuse and Safety Issues
 Types of User
 Enthusiastic users
 Desensitized users
 Hedonistic users
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27. Company should:
 require products to be marked with clear warnings
and instructions;
 issue mandatory standards that may force firms to
redesign products;
 require manufacturers and resellers to notify if
they find a product has a defect that would create a
substantial risk of injury;
 require manufacturers to conduct reasonable
testing programs to make sure the products
conform to established safety standards.
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28.  Green issues
 Finding merchandise which is environmentally
acceptable
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29.  The acceptability of a societal marketing
approach
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30. International Retailing
 International retailing is the management of retail
operations in markets which are different from each
other in their regulation, economic development,
social conditions, cultural environment, and retail
structures.
 Alexander (1997)
 International retailing is the process of a retailer
transferring its retail operations, concept, management
expertise, technology, and/or buying function across
national borders.
 David Gilbertt
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31. International Retailing
 Operations
 Concepts
 Management expertise
 Technology
 Buying
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32. Common market-entry strategies
 acquisition – taking over a retail company already
established in the market;
 joint venture – establishing a company with a partner, most
usually one which is indigenous to the market or has
experience of operating there.
 organic growth – opening new outlets using existing brand
or creating a new brand;
 shareholding – acquiring shares of a retailer already
operating in the chosen market;
 franchise – allowing entrepreneurs to open outlets under a
single brand which are operated under certain controlled
conditions.
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33. Factors determining market-entry
strategy
 retail sector
 market conditions/level of competition
 company size/capital
 management culture/philosophy/calibre of staff
 degree of control
 time scale
 capital available
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