Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

4. Evaluating Opportunities
   in the Changing Marketing
   Environment

Text © The McGraw−Hill

Companies, 2002

Evaluating Opportunities in the Changing Marketing Environment 111

consumer protections are also built into the English and U.S. common law systems.

A seller has to tell the truth (if asked a direct question), meet contracts, and stand

behind the firm’s product (to some reasonable extent). Beyond this, it is expected

that vigorous competition in the marketplace will protect consumers—so long as

they are careful.

Yet focusing only on competition didn’t protect consumers very well in some areas.

So the government found it necessary to pass other laws. For example, various laws

regulate packaging and labels, credit practices, and environmental issues. Usually,

however, the laws focus on specific types of products.

Consumer protection laws in the United States go back to 1906 when Congress

passed the Pure Food and Drug Act. Unsanitary meat-packing practices in the

Chicago stockyards stirred consumer support for this act. This was a major victory

for consumer protection. Before the law, it was assumed that common law and the

old warning “let the buyer beware” would take care of consumers.

Later acts corrected some loopholes in the law. The law now bans the shipment

of unsanitary and poisonous products and requires much testing of drugs. The Food

and Drug Administration (FDA) attempts to control manufacturers of these prod-

ucts. It can seize products that violate its rules—including regulations on branding

and labeling.

Exhibit 4-3 Focus (mostly prohibitions) of Federal Antimonopoly Laws on the Four Ps

Law Product Place Promotion Price

Sherman Act (1890) Monopoly or Monopoly or Monopoly or

Monopoly or conspiracy to conspiracy to conspiracy to fix

conspiracy in control a product control distribution or control prices

restraint of trade channels

Clayton Act (1914) Forcing sale of Exclusive dealing Price discrimination

Substantially lessens some products contracts (limiting by manufacturers

competition with others— buyers’ sources of

tying contracts supply)

Federal Trade Unfair policies Deceptive ads or Deceptive pricing

Commission selling practices

Act (1914)

Unfair methods of

competition

Robinson-Patman Prohibits paying Prohibits “fake” Prohibits price

Act (1936) allowances to advertising discrimination on

Tends to injure “direct” buyers in allowances or goods of “like

competition lieu of middlemen discrimination grade and quality”

costs (brokerage in help offered without cost

charges) justification, and

limits quantity

discounts

Wheeler-Lea Deceptive Deceptive ads or Deceptive pricing

Amendment (1938) packaging or selling claims

Unfair or deceptive branding

practices

Antimerger Act (1950) Buying competitors Buying producers

Lessens competition or distributors

Magnuson-Moss Product warranties

Act (1975)

Unreasonable

practices

Foods and drugs are

controlled