Marketing - Influences

[Juliesokha]

Hi everyone,

Can anyone please help me with one of the influences on marketing which is the CONSUMER LAWS?
It consists of 4 little dash points include: deceptive and misleading advertising, price discrimination, implied conditions and warranties.

I need explanations on that dot point as my teacher was ... not really going through it as much  and also I want to know how does it influence the marketing function Thank you so much!

[_____]

Hi everyone,

Can anyone please help me with one of the influences on marketing which is the CONSUMER LAWS?
It consists of 4 little dash points include: deceptive and misleading advertising, price discrimination, implied conditions and warranties.

I need explanations on that dot point as my teacher was ... not really going through it as much  and also I want to know how does it influence the marketing function Thank you so much!

Consumer laws in Australia are implemented by the Competition and Consumer Act (CCA) of 2010 at the Commonwealth level. A subsection of this Act known as Australian Consumer Law (ACL) provides for what the syllabus is talking about.

The syllabus points:

Deceptive and misleading advertising: Adverts must be truthful and cannot unfairly exaggerate. Of course some are allowed to (Red Bull doesn't really give you wings but they can still say it) but it has to be within reason. Practices that would be banned include:

• False country of origin labelling
• Fake tests/surveys
• Altered before/after shots
• "Special" offers that are actually always available

Price discrimination: setting different prices for different markets (often geographic) for no good reason. For example, McDonalds can't charge $5 more for the exact same burger in Melbourne than in Adelaide unless it can prove that this is reasonable due to transport costs or something like that. Marketers may use Google Adwords channels to change product prices for certain customers when shopping online - this may be considered price discrimination too (haven't heard of a case in Australia yet though).

Implied conditions: this ensures that businesses can't sell dodgy products and say "well it wasn't mentioned in the ad that the product was working!" Basically products must be fit for purpose. Consumers are entitled to refunds or replacements if they aren't. It also relates to price, as a more expensive item is implied to be of a higher quality. For example the implied condition of buying a Mercedes AMG is that it will be highly reliable and will retain its horsepower over the years, but buying a second hand $300 car does not have such implied conditions.

Warranties: Terms of the warranty must be stated clearly and simply - no unfair fine print. They must also be honoured when the conditions are met. Furthermore, companies can't say "no refunds" because under the CCA consumers have a right to a refund if the good is faulty or does not match implied conditions or the item description. They are not, however, entitled to a refund for changing their mind.

Why it matters:

1.  The Australian Competition and Consumer Commission (ACCC) is responsible for upholding the CCA. Businesses that fall foul of this department may face:

• On the spot fines - financial loss for the business
• Larger fines through the courts - (Virgin Australia faced this for "drip pricing" online this year)
• Public infringement notices - loss of reputation and sales

Furthermore businesses may face lawsuits for breaking the CCA.

2. To avoid these impacts, businesses must abide by the CCA. Often this involves compliance costs associated with updating business practices. Larger businesses will hire lawyers to inspect the Act and recommend changes to marketing managers. You could also say that the Act must be considered when creating a new marketing plan.

[Juliesokha]

Hey,
Thank youuu soo much!
But..Um I still don't get the price discrimination. My teacher uses this case study of the sydney trains charge different prices on child, adult, student etc., but I still don't get how does it influence the marketing function.

[_____]

Hey,
Thank youuu soo much!
But..Um I still don't get the price discrimination. My teacher uses this case study of the sydney trains charge different prices on child, adult, student etc., but I still don't get how does it influence the marketing function.

Hmm. What I've been taught is that this section of the syllabus relates to practices that are outright illegal under the CCA - not pricing strategies per say. Obviously what movie theatres and train stations do isn't illegal. It's the same in that insurance companies can charge a half-dead person more for a life insurance policy - this is completely reasonable as the business is facing a higher risk. Like the rest of the legal influences, because it's in the CCA businesses have to avoid doing it which involves compliance costs. If they break the law, they face fines, infringement notices and a loss of reputation.

Here's a few case studies where the ACCC as the regulatory body is/may be looking into businesses found guilty of the practice:

AGL is charging existing customers more than new ones which may be price discrimination: http://www.abc.net.au/news/2017-07-16/power-prices3a-it-pays-to-shop-around/8709876

Airport carparking is cheaper online which again may be price discrimination: http://www.news.com.au/finance/business/travel/watchdog-slams-airport-parking-ripoff/news-story/09a2bb10aacf4b894710729702d7794c

"He [ACCC chairman] said while savvy motorists were taking advantage of discount rates available by booking car parking online, this might amount to price discrimination as less price-sensitive consumers would pay higher drive-up prices."

That's a better example of why the ACCC exists - investigating market practices which reduce competition hence raising prices for consumers. Essentially businesses must avoid breaking the ACL.

Lmk if I didn't explain that very well lol

[Juliesokha]

Hey _____ (Idk your name sorry ) and MisterNeo,

Thank you soooo much, you two! You guys have just helped me so much with the dot point!