Consumer Vulnerability and its Exploitation - Essay Example

BUSINESS ETHICS Grade Instuctor’s Table of Contents CONSUMER VULNERBILITY 3 DETERMINING CONSUMER VULNERBILITY 4 PREVENTING EXPLOITATION OF VULNERABLE CONSUMERS 6 CONCLUSION 11 REFERENCES 12 This paper is about business ethics, which will focus on the ethical concepts based on consumer vulnerability and its exploitation. The various ways they are exploited and how to prevent them. In addition, the current business issues will be taken under consideration under the context of their ethical dimensions. CONSUMER VULNERBILITY Before determining the consumer vulnerability, we need to understand what it is. Consumer vulnerability is taking advantage of the consumers’ naivety, problems in normal life, financial situations, and lack of understanding or giving false hope or claims. Some important factors that come under the consumer vulnerability are as follows: Constitutional vulnerabilities: These may include the physical or mental disabilities which affect the consumers being unable to grasp or understand the information which may be in contracts, labels, advertisements etc and the ability to use or obtain services or products. Developmental vulnerabilities: Cognitive limitations play a bit role in this type of vulnerability. These are related to comprehending what is being told, knowledge level, which includes judging, reasoning and mental development. Another factor that is part of this is motivational factor. This concerns the adequacy concerns, security or health concerns and discovering ones individuality (Kaufman-Scarborough and Baker, 2005). These above mentioned factors are mostly found in children, adolescent (Martin and Gentry, 1997) or elder consumers (Moschis, 1992). Situational vulnerabilities: These may be internal or external factors affecting the consumer’s ability to interpret things and be taken advantage off. Some of these factors include personal crisis, which may involve stress related circumstances like finance, health, injury, etc, (Gentry et al., 1995) and sometimes language barrier or inability to understand legal wordings. External factors tend to include the surrounding economy or living conditions (Lee, Ozanne, and Hill, 1999) and even the barriers preventing from access. In other words, consumer vulnerability can also be defined as a powerless state, which may arise from the discrepancies in the interactions via media or face-to-face marketing or utilizing of marketed products or services without comprehending the complete information. It can be said that the actual vulnerability always arises from the consumers’ personal state, characteristic, or conditions he/she is in during the utilization of products or services which may get stuck or slow down and may affect perceptions of one-self. To summarize it, consumer vulnerability is entirely dependent on the individual’s state of mind and the situation he/she is in or coming from. It does not have a definitive definition because each individual has a different perception whether it fits the bill or not. Any time a consumer feels powerless to do something regarding the situation he/she tends to feel vulnerable and more often than not it does not come under the consumer vulnerability heading. DETERMINING CONSUMER VULNERBILITY Above I explained what consumer vulnerability is and the possible factors which causes it. Here I will discuss how we determine consumer vulnerability. Consumer vulnerability is an issue which has become very common in present times. The main reason behind it is the media. There are now more media outlets available than ever before in the form of television advertisements, magazines, newspapers and internet. With the increase of these, the boundaries between them have also become more blurry and imprecise (Chan-Olmsted, 2006). Due to the increase in media, the competition between all these mediums has become fierce in regards to grabbing and holding consumers’ attention. The choices for getting news, information, entertainments etc have increased from just books, newspapers etc and these growths and developments in media have inevitably affected the consumers’ and the advertisers behaviours (Picard, 2003). In the media industry, trust is now a main factor for the success of anything, which includes advertisements and company reputations. Once it is built, it becomes an asset and the consumers blindly follow it (Tungate, 2004). This is the point where consumer vulnerability starts. Not only this, Martin and Gentry (1997) and Moschis (1992) noticed that even on face-to-face basis, it is very easy to manipulate the elder and very young consumer’s mind towards the marketed product or service as compared to working people or students. Then again, this topic is widely debated upon what exactly is consumer vulnerability. Gentry et al. 1995 stated that, vulnerability is entirely dependent on the view of someone who is experiencing it rather than a defined concept. According to him, it may be temporarily a vulnerability brought on by an injury, death, nature’s act, health issue etc. However, as we discussed earlier, this is just a part of consumer vulnerability factors. Taking advantage of them at any point by any person is breaking the ethical rights of consumers. One thing needs to be clear is that consumer vulnerability is not the same as discrimination, stigmatization, protected consumer (i.e. people with disabilities, gays or lesbians, racial and ethnic minorities etc.) or unmet needs though at one time or another, these factors may lead to vulnerability therefore exploitation. The overall definition of consumer vulnerability does not in any way confirm or point to who is vulnerable but instead points to the fact that any one at any point in life may face vulnerability, which may be because of anything ranging from personal state of mind or conditions surrounding them. While these things may not be actually what is considered to be vulnerability, it may be in the eyes of the consumer who is suffering. PREVENTING EXPLOITATION OF VULNERABLE CONSUMERS While consumer vulnerability cannot be avoided, it is the responsibility of the providers and the government to make sure the exploitation is to the minimum. In the case of providers, their actions or lack of code of conduct in the market and media (from both the public and private sectors) can lead to anyone to be at a disadvantage, therefore open to exploitation. These consequences may include wasting of energy, effort, confusion, stress, time, risks to health and safety, extra costs spent in accessing goods etc. Depending on the consumers’ general or personal situations, these consequences can be very severe for them. In one of the surveys done by an Office of Fair Trading on consumer loss, stated that the consumers had at one time or another during the duration of a year faced some sort of problem related to exploitation by providers. These problems ranged from defective goods, prices, poor quality service, misleading or incorrect information, problems with retailers or in delivery/collection or repairs etc. The above mentioned problems also included psychological effects which include stress, anger and worry etc and the fact that further costs were made to resolve the issues faced because of these exploitations. To further explain these issues, the following are some possible examples of problems faced by consumers due to providers taking advantage: Consumers with low income: These consumers do not have enough income to afford a mobile or a land line have to make do with pay-as-you go mobile phones which has them waste a lot of time stuck in the automated telephone system. While the call centers are following a rigid set of rules and regulations, this situation can be severe or dangerous for someone who may is in a sudden crisis or vulnerable situation. Since, these consumers cannot afford the alternative, they have to abide by this service, which, if looked into closely is taking advantage of their shortcomings. There should be measures taken to provide everyone equal service and satisfaction by the providers. Some consumers due to various reasons may require a face-to-face interaction but are unable to do so because it is not provided and they have to go through a lengthy automated call centre process. Again, though this is just following a procedure, someone with learning difficulties or any psychological disorder may suffer serious consequences all because of lack of service providing. The reason being, one of the first thing that comes to mind in cases where we rarely get to speak to the people in-charge of helping of resolving the issues is that, is this company legit or did we get ripped off? Then comes another part of what are simple marketing mistakes and unethical marketing. Sometimes some products or services are introduced to the consumers for their use and later withdrawn or pulled back. This may be due to some issue in the product that was launched and the provider needs to rectify it. Here comes the actual distinction. If the product or service was marketed with prior knowledge of the issues in it to create sales, it was unethical marketing and taking advantage of consumers’ vulnerability though on the other hand if the issues were discovered later on through feedback etc, then it is just a case of simple marketing mistakes. For unethical marketing, the providers would already know the issues with their products but launch it still just to get the initial profits from sales before pulling it out. Majority of the issues faced by various consumers depends on their experiences and own perceptions of exploitation lead to mistrust of all or majority of the new providers. In such cases consumers tend to lean towards already well-established players of the market based on trust even if their costs are higher than what is affordable to them, leading the others to either diminish or suffer huge losses. Such cases create a huge gap in the market and the consumer mind set especially the psychological factors. If they are unable to trust the marketed product, then who can they trust? In addition, this leads to a psychological factor that they automatically say that if something sounds too good to be true, it probably is. The already well-established players tend to take advantage of the situation and take less care of quality control and assurance. An example of this can be taken from a very recent case of KFC in Australia. It is a very well established brand but after being sued by one of the customers, whose kid suffered salmonella poisoning and is in a wheelchair. Further investigation lead to the fact that the employees failed to comply with the national standards for food storage, cooking, temperature, shelf life and cleanliness. This is a clear advantage of consumer vulnerability and ethical misconduct. They knew they were wrong but they continued to serve unhygienic and expired stuff to consumers, knowingly betraying their trust. How many of us can stop our children from avoiding such places? Honestly, we only can to a limit. These places tend to target children because they know the children are best at persuading elders to something which may be harmful to them. Though not everyone thinks junk food is harmful but in this case it turned out to be true and mainly because they let their standards and quality control slip. Another example of unethical marketing in my opinion is of the telecom companies who provide mobile and internet services. I have noticed that majority of them tend to market to college and university going students with loads of packages and exciting offers. While the marketing strategy is good, it should be realized how harmful it is for the youth who are being offered packages to stay up all night talking to friends, unlimited messaging throughout the day even during classes and encouraging cheating on partners by keeping multiple numbers etc. It is unethical and harmful for the future generations who in turn are tempted by all the offers and less interested in studies as portrayed by the advertisements. I mean which youth would not be tempted by the chance to have it all as shown rather than through hard work and studies? Frauds on the other hand, also play a big hand in exploitation of consumers especially those who are naive or elders who are easier to manipulate (Langenderfer, J. and T. Shimp, 2001). Such people or firms needs to be kept in check firmly by the government by making regular inspections etc. Most countries fail to protect their consumers when they are faced with fraud due to corrupt personnel or companies who were not evaluated properly. The consumers suffer not only financially but also psychologically leaving deeply embedded fear of trusting and it may for some lead to drastic outcomes. Many countries governments have taken into account the possible consumer vulnerabilities and taken measures to prevent them but not explicitly except in certain case like in the case of Danish law. They have taken measures that make any company take under consideration the fact that specifically targeting and marketing to children and younger kids’ lack of experience, natural trust and lack of comprehending the negatives of things targeted towards them therefore easier to manipulate and gain trust. Furthermore, they have implemented guardianship for children, underage kids and anyone who is unable to make critical and intelligent decisions on their own which may include people with learning disabilities. Another clause present is that of contractual invalidity which protects consumers from exploitation. Their main focus remains on children and young people who they found during market research to be more prone to exploitation compared to others. The Danish law has also taken measures to ensure their consumers are less prone to exploitation in E-commerce, telecommunication, trades and even in utilities. Though their law is based, on a large extent, on the EU and international laws, the extra measures they have taken makes them among the few countries who protect their consumers to a wider extent and they have also mentioned situations where a certain type of consumer as well as special protection for children and young people. Other countries have also taken many measures in their laws for protection of consumer vulnerability but the reason I chose to briefly discuss Danish law is because they served to protect them at a wider extent compared to others. The products and services qualities are reducing day by day all over the world. The only people offering great quality stuff ask for unaffordable prices. Competition has gone so high that everyone is in a race to win not considering who gets trampled in between. Majority are now resorting to exploitation and unethical behaviours to get sales. Consumers are becoming more vulnerable in today’s times than ever before because of the present recession and in search of cheap affordable products, which leads them to be drawn into frauds and other issues we discussed above. It is entirely up to the governments and the providers themselves to keep a check on what is being offered, how it is offered and to whom. Until this check and balance situation is not maintained, the consumer vulnerability will continue to spike, unconstrained. Consumer vulnerability can only be prevented if the concerned providers take relevant steps to avoid taking advantage of vulnerable consumers and the governments step up to take responsibility to protect them from such providers or frauds and spread awareness among the consumers in how to recognize and avoid such exploiters from taking advantage of the situation.   CONCLUSION The topic is still open to many debates but all of them lead to two things. One is the government and providers keeping a self-check on marketing strategies, target market and ways of getting consumers attention. Second is entirely dependent on one’s perception which at times may not lead to consumer vulnerability at all except in owns’ eyes. Since this is still a vastly defined area it cannot be a close ended debate or topic and each result will in the end be based on personal opinion. In my opinion this is what I feel and have accordingly discussed this in the report above. One thing I would like to focus in the conclusion is that any good business is that which has strong ethical values whether it may be in the media, telecommunication, utilities, toys etc. Eventually these businesses will come into profit and that is mostly by word of mouth. If the consumer is satisfied and feels not to have been taken advantage of, they will spread the word and others will be drawn to it from the praises. Such providers will be able to endure the reputations and suffer less in legal costs of exploiting consumer vulnerabilities. I guess the last example can be of APPLE, a company which was on the verge of failing is now on its way to becoming the richest brand not only due to its unique innovations but tapping into a market without taking advantage of consumer vulnerabilities. Ultimately, it can be strongly concluded that consumer vulnerable situations should be avoided by all organisations and all the organisations should ensure that they conduct ethical business practices in their organisation. This would result in the well being of the consumer as well as the well being of the organisation. REFERENCES Bohnet.I, and Zeckhauser, R., 2004. Trust, Risk and Betrayal. Journal of Economic Behaviour and Organisation, 55 (4): 447-494. Chan-Olmsted, S., 2006. Competitive strategy for media firms. Strategic and brand management in changing media markets. New Jersey: Lawrence Erlbaum Associates. Chioveanu, I., and J. Zhou, 2009. Price Competition with Consumer Confusion, Mimeo, UCL. Gentry, J. and P. Kennedy, et. al. 1995. Family transitions during grief: Discontinuities in household consumption patterns. Journal of Business Research 34:55-84. Jones, J. and Middleton, K., 2006. 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