Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Evaluating Opportunities
in the Changing Marketing
Environment
Text © The McGraw−Hill
Companies, 2002112 Chapter 4
The Consumer Product Safety Act (of 1972),
another important consumer protection law, set up
the Consumer Product Safety Commission. This
group has broad power to set safety standards and
can impose penalties for failure to meet these stan-
dards. There is some question as to how much
safety consumers really want—the commission
found the bicycle the most hazardous product
under its control!
But given that the commission has the power to
forcea product off the market—or require expen-
sive recalls to correct problems—it is obvious that
safety must be considered in product design. And safety must be treated seriously
by marketing managers. There is no more tragic example of this than the recent
recalls of Firestone tires used as original equipment on Ford’s Explorer SUV. Hun-
dreds of consumers were killed or seriously injured in accidents. Consumer faith in
the Firestone brand is so low that it may not survive—even if the company isn’t
bankrupted by the costs of the recalls and lawsuit damages.^23Product safety is
controlled
Besides federal legislation—which affects interstate commerce—marketers must be
aware of state and local laws. There are state and city laws regulating minimum prices
and the setting of prices, regulations for starting up a business (licenses, examinations,
and even tax payments), and in some communities, regulations prohibiting certain
activities—such as telephone selling or selling on Sundays or during evenings.Often laws are vaguely phrased—to convey intent but not specific detail. Then
it’s up to the courts and government agencies to spell out the details. As a result,
a law may be interpreted and enforced differently over time. For example, during
the late 1970s and 1980s, many U.S. government agencies regulated businesses less
zealously and instead focused more on encouraging competition. Attention to reg-
ulation was swinging the other way in the 1990s—in part to correct abuses such as
those that occurred in the savings and loan industry.
It was in this sort of political environment that the U.S. Justice Department,
and the attorney generals in a number of states, brought charges against Microsoft.
Many government officials, competitors, and consumer interest groups felt that
Microsoft violated the antimonopoly laws, and at one point a judge declared
that Microsoft would be broken up into two or more competing companies. How-
ever, the court case dragged out for over five years, and by the time of the national
elections in 2000 the political climate was swinging toward less aggressive enforce-
ment of the laws. As this very visible and important case shows, how the laws are
interpreted and enforced can be even more important than the wording of the law
when it was originally written.^24
Because legislation must be interpreted by federal agencies and the courts, mar-
keting managers need to study both legislative developments and the thinking of
the courts and agencies. See Exhibit 4-4 for a description of some important fed-
eral regulatory agencies that should be considered in marketing strategy planning.State and local laws
vary
Know the laws—follow
the courts and federal
agencies
Internet
Internet Exercise The Consumer Product Safety Commission sometimes
requires auto makers to issue recalls. However, not all consumers learn about
the recalls. Go to the Consumer Reportswebsite (www.consumerreports.org)
and select the link for recalls. Then check to see if there has been a recall on
a year and model of car or truck that is of interest to you (say, one owned by
your family).