Core Concepts of Marketing

EXTERNALFACTORSTHATAFFECTPLANNING 107

thethreeareasreceivingthemo~tnoticeinmarketing:productliaJility,deregulation,and
consumer protection.

ProductLiability
The courts are increasinglyholdingsr~l1ersresponsibleforthesafetyoftheirproducts.The
courtsgeneral1y hold thattheproducerofa productislia:,leforanyproduc~defectthat
causes injuryinthecourseofnormal use.Liabilitycanevenresultifa courtora jurydecides
th at aproduct'sdesign,construction,oroperatinginstructionsandsafetywarningsr:1ake
theproduct unreasonablydangeroustouse.^2

TwoMarylandmendecidedtodrythei r hotairballooninacommerciallaundry

dryer.Thedryerexploded,injuringthem.Theysuedthemanufacturerandwon.

A two-yea.;·-oldchildbeingtreakdforbronchialspasmssufferedbraindamage

from adrugoverdose.Thehospitalstaffhadclearlyexceededthedosage levelpre-

scribedbythedrugmanufacturer.Thechild'sparen.tssuccessfullysuedthe

manufacturer.

InAustralia,about 20 ,000kangaroosarekilledorinjuredbymotorvehicles

eachyear.Vehiclesareequippedwi th bullbarstolimit damagetokangaroos. The

problemisthatthebullbarsoftenconfusecomputer sensors,causingai rbagsto

deployunnecessarily.Tosolvetheproblem,GeneralMotors-Holden'sAutomotiveis

experimenting withRobo-roo, a crashdummy thatismadeilltheimageofu60-kg.

kangaroo.Robo-rooisusedtotestvariousbullbarsin.aneffo(tto findonethatpre-

ventsinjurytothekangaroosandisoftensafewithregardtoairbags.^3

While examples suchastheseare devastating,manyfeelthatproductliabilitylawis

nowasit shouldbe-infavoroftheinjured productuser.ConsumeradvocateslikeRalph

Nader arguethatfor toolong, product liabilityfavoredproducersat theexpenseoftheprod-
uctuser.Theyclaimthatthethreatoflawsuitsandhugesettlementsaadrestitutionsforce
companiestomakesafe products. Whilea discussionofallaspectsof')roductsliabilityis
beyond thescopeofthistext,it is clearthatliabilityhasandwil1continuetohavetremen-
dousimpact onconsumersandmanufacturersalike.Andthesetwogroupsarenottheonly
onesaffected. Retailers,franchises, wholesalers, sel1ersofmass-producedhomes,and build-
ingsitedevelopers andengineersareallsubjecttoliabilitylegislation.

Deregulation
Deregulationmeanstherelaxationorremovalofgovernmentcontrolsoverindustriesthat
werethoughttobeeither" naturalmonopolies,"suchastelephones,oressentialpublicserv-
iceslikeairlines andtrucking.Whenregulated,industriesgotprotectionagainstrenegade
competition. For 40 years,theCivilAeronaufcsBoardbarredthecreationofanymajor
newairline.And carriers couldflyonlyoverroutes awardedthembytheCAB.
Withtime,thebargaingrewincreasinglyoad.Insulatedfromcompetition,regulated
industrieshadlittlereason to lower costs.Theyconcentratedoninfluencingtheregulators
to makefavorabledecisions.There wasanunhealthytensionandcostsrose,industriessought
priceincreases,andregulatorsresisted, oftendepressingindustryprofits. That,inturn,reduced
newinvestmentandperpetuated highcosts andpoorservice.
Industriessuchastheairlines,bankingrailroads,communications,andtruckinghave
longbeensubjecttogovernmentregulation. Amarketplaceshockwavehittheseindustries
astheywerederegulated.Each of these industries sawthebirthofmanynewcompetitors
<.:.ttempllngtotakeadvantageofmarket opportunitiesuncoveredbyderegulation.Forexam-
ple, USAirways,Midway,PeopleExpress,AirCal,GoldenWest,Muse AirandTexas Air
al1started aftertheairlineindustrywasderegulated. Notallofthemsurvived.Theresull