Download INFLUENCE OF GOVERNMENT ON MARKETING

INFLUENCE OF
GOVERNMENT ON
MARKETING
Unit 5 - Slide 6
1
Reasoning behind regulation of
Marketing
Subject to government legislation which
needs to be taken into consideration when
decisions are being made.
Consumers would be unhappy if they
purchased products that didn’t work or didn’t
do what it was supposed to.
Feeling of being conned by advertising.
Need to protect consumers against rogue
businesses.
Unit 5 - Slide 6
2
TRADE DESCRIPTIONS
ACT
Goods or services which consumers buy
must do what the advertisement claims.
E.g. Cosmetics and medicines must be
clinically proven to achieve what is
claimed.
Anti-cellulite cream must be clinically
proved to reduce cellulite in order to be
advertised and sold.
Unit 5 - Slide 6
3
MONOPOLIES AND
MERGERS ACT
A monopoly market is a market where
in theory only one firm exists.
This would give the firm total market
power to charge what it liked and
provide only services it would like.
Consumers need to be protected
against pricing and service provision.
Unit 5 - Slide 6
4
Example
BT was the only business in the
national telephone industry.
It had complete monopoly power.
The government put in legislation in
place to make sure that BT was
controlled in terms of pricing and
services until competitors arrived.
Unit 5 - Slide 6
5
TODAY
Very few monopolies left.
Although some businesses are so big that
they do dominate the market.
These firms will have an element of monopoly
power in terms of pricing and what is sold.
Monopolies and Mergers Act will limit the
power of these businesses for the benefit of
consumers choice.
Unit 5 - Slide 6
6
FAIR TRADING AND
COMPETITION ACTS
This act tries to ensure that no businesses work
to prevent competition in the market by
restricting competitors from entering.
This can be done by creating barriers to entry:
Pricing by either keeping it to low or to high.
Illegally controlling prices.
Buying out suppliers so that other companies
can’t get access to produce.
Unit 5 - Slide 6
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FAIR TRADING AND
COMPETITION ACTS
Competition is thought of being healthy
for the markets and consumers by:
Driving down prices
Giving consumers a wider choice
Unit 5 - Slide 6
8
CONSUMER PROTECTION
LAW
Ensures that the products that we buy
are safe.
They set minimum standards of safety
for things like car types and furniture.
Ensures that a business is liable for any
damage which its defective goods may
cause to a consumer.
Unit 5 - Slide 6
9
CODE OF ADVERTISING
PRACTICE
Any business undertaking advertising
must conform to the British Code of
Advertising Practice.
Adverts must be legal, honest and
truthful and not cause offence.
The Independent Television Commission
controls advertising on television and
radio.
Unit 5 - Slide 6
10