6 4 Product integrity
Summary
TLDRThis transcript delves into the ethical considerations of consumer rights, emphasizing the importance of product integrity. It discusses the balance between persuasion and coercion in communication, the avoidance of exploitative relationships, and the manufacturer's responsibility to ensure product safety and honesty. The narrative uses examples, such as the consequences of compromising on product quality for cost reduction, to illustrate the impact on consumer trust. It also touches on pricing ethics, including the dangers of price gouging and the long-term effects of undercutting competition. The summary concludes with the necessity of ethical leadership from the top down to maintain product integrity and responsible business practices.
Takeaways
- đ§ The discussion emphasizes the importance of understanding consumer psychology, particularly the 'pleasure principle', which influences their purchasing decisions.
- đ« It warns against the misuse of psychological insights, such as the pleasure principle, in unethical ways to manipulate consumers.
- đŁïž Communication with customers should be a balance between persuasion and coercion, with a focus on transparency and clarity.
- đ€ The nature of the relationship between consumers and manufacturers/sellers should avoid extreme views like the contract view or the social cost view, opting for a middle-ground approach.
- đĄïž Product integrity is crucial, and manufacturers have a responsibility to ensure the safety and accuracy of their products' claims.
- đ The perspective of a business, like Stu Leonard's, is highlighted, emphasizing customer expectations and experiences as the foundation of product definition.
- â A case study of a small appliance business illustrates the consequences of compromising on product safety for cost reduction, leading to significant recalls and brand damage.
- đ The integrity of a product is affected by how a company manages its workforce, as unhappy employees can lead to product defects and recalls, as seen with Johnson & Johnson's recalls.
- đž Pricing strategies should maintain integrity, avoiding unethical practices like price gouging during crises or predatory pricing to eliminate competition.
- đ The impact of large retailers on local markets is discussed, with concerns about the potential for market disruption and subsequent price increases after eliminating competition.
- đ Ethical decision-making in product integrity starts at the top of an organization and should permeate through all operational levels to ensure responsible business practices.
Q & A
What is the 'pleasure principle' discussed in the script in relation to consumer behavior?
-The 'pleasure principle' refers to the deep psychological motivation that consumers bring when purchasing a product, which is based on the idea that they seek pleasure and avoid pain in their buying decisions.
How can the pleasure principle be misused in marketing?
-The pleasure principle can be misused by marketers who exploit consumers' desires for pleasure, potentially leading to deceptive or manipulative advertising practices that prioritize profit over consumer well-being.
What is the importance of maintaining transparency in communication between a seller and a buyer?
-Maintaining transparency is crucial because it ensures that the communication is clear and honest, which helps build trust and prevents misunderstandings or deceptive practices that could harm the relationship between the seller and the buyer.
What are the two prejudicial natures of relationships between consumers and manufacturers mentioned in the script?
-The two prejudicial natures of relationships are the contract view and the social cost view. The contract view is slanted towards the manufacturer's interests, while the social cost view is slanted towards the consumer's interests, both potentially neglecting the needs of the other party.
Why is product integrity important for manufacturers?
-Product integrity is important because it ensures that the product is safe, meets the claims made by the manufacturer, and respects the consumer's autonomy. It is a reflection of the manufacturer's ethical standards and has a direct impact on consumer trust and the company's reputation.
What is the example given in the script to illustrate a lack of product integrity?
-The example given is of a small appliance business that was asked to produce a toaster with reduced steel casing to meet a lower cost, which would result in the product being unsafe and likely to burn users.
How did the script describe the consequences of the unsafe toaster example?
-The unsafe toasters led to customer injuries and mass returns, causing the retailer to lose confidence in the product and the manufacturer, resulting in a significant financial loss for the manufacturer who compromised on safety.
What is the significance of the Johnson & Johnson recall mentioned in the script?
-The Johnson & Johnson recall signifies a major breach in product integrity, where millions of units had to be recalled due to quality issues, leading to a loss of consumer trust and potential legal consequences.
How does the treatment of employees by a company like Malden Mills relate to product integrity?
-The treatment of employees can significantly impact product integrity. A happy and well-treated workforce, as in the case of Malden Mills, can lead to higher quality products with fewer defects, demonstrating a positive correlation between employee satisfaction and product integrity.
What is the role of pricing in maintaining product integrity according to the script?
-Pricing plays a critical role in product integrity as it can reflect the true value and quality of a product. Unethical practices such as price gouging or predatory pricing can undermine product integrity and consumer trust.
Why is it important for companies to adopt a warrior perspective when dealing with product integrity?
-Adopting a warrior perspective, which emphasizes ethical behavior and long-term customer relationships, is important because it ensures that companies prioritize product safety, quality, and ethical business practices, leading to sustainable success and a positive brand reputation.
Outlines
đ Ethical Considerations in Consumer Relations
The discussion begins with an exploration of consumer rights and the psychological motivations that drive purchasing decisions, known as the pleasure principle. It emphasizes the importance of ethical communication with consumers, avoiding manipulation and ensuring transparency. The relationship between consumers and manufacturers is examined, highlighting the pitfalls of extreme contract views or social cost views, advocating for a balanced approach. The integrity of the product is introduced as a critical aspect of this relationship, with the manufacturer's responsibility to ensure the product's safety and adherence to claims being paramount.
đ The Consequences of Compromised Product Integrity
This section delves into the importance of product integrity through the lens of a small appliance business owner who faced a moral dilemma when asked to produce a cheaper toaster that compromised safety. The narrative illustrates the consequences of prioritizing cost over safety, leading to product recalls and damaged reputations. It contrasts the decision-making process with that of a responsible manufacturer who values customer safety and product quality, underscoring the long-term benefits of ethical production.
đ« The Impact of Human Error and Recalls on Product Integrity
The focus shifts to the widespread issue of product recalls, exemplified by Johnson & Johnson's massive recall of 300 million units due to various product defects. The discussion suggests that these issues stem from systemic problems within the company, including poor working conditions and employee dissatisfaction. It contrasts this with Malden Mills, which maintained a high standard of product integrity through a committed and satisfied workforce, highlighting the correlation between employee treatment and product quality.
đž Ethical Pricing and Market Dominance in Product Integrity
The final section addresses ethical concerns in product pricing, including price gouging during emergencies and predatory pricing strategies that disrupt markets and eliminate competition. It discusses the role of retailers like Walmart and Amazon in market dominance and the subsequent ethical implications of their pricing strategies. The summary emphasizes the importance of ethical business practices in maintaining product integrity, customer trust, and fair competition, advocating for a top-down approach to ethical decision-making.
Mindmap
Keywords
đĄPleasure Principle
đĄPersuasion vs. Coercion
đĄProduct Integrity
đĄContract View
đĄSocial Cost View
đĄEthical Communication
đĄPrice Gouging
đĄPrice Fixing
đĄMarket Disruption
đĄWarrior Perspective
đĄHuman Error
Highlights
The importance of understanding the psychological motivation of consumers, known as the pleasure principle.
The potential for the pleasure principle to be misused in marketing and sales strategies.
The balance between persuasion and coercion in customer communication.
The significance of transparency and clarity in the relationship between consumer and manufacturer.
The avoidance of extreme contract views and social cost views in favor of a balanced perspective.
The manufacturer's responsibility for product safety and integrity.
The perspective that manufacturers have a deeper understanding of the product than consumers.
Stu Leonard's viewpoint on creating products that meet customer expectations.
The ethical considerations of product claims and truthful advertising.
A case study of a small appliance business and the ethical dilemma of product safety versus cost.
The consequences of prioritizing cost over safety in product manufacturing.
The impact of product integrity on customer relationships and brand reputation.
Johnson & Johnson's recall crisis and its implications for product integrity.
The role of human error in product failures and its connection to workplace satisfaction.
The example of Malden Mills and the correlation between employee treatment and product quality.
Ethical considerations in product pricing, including price gouging and price fixing.
The impact of retailer practices on market disruption and the ethics of gaining market dominance through pricing.
The concept of power pricing and its unethical aspects in the context of market competition.
The necessity of ethical leadership from the top down to ensure product integrity.
The benefits of adopting a partnership approach for the greatest benefit to all stakeholders.
Transcripts
we have spoken so far
about
the nature of the rights
and the relationship
that we have with the consumer
we started off talking about the
pleasure principle
which essentially was an insight
into the deep psychological motivation
that consumers bring to the table when
they come to buy a product
and we discussed about how
that
pleasure principle can be abused and
used incorrectly
then we talked about
different
means of communication that we have with
the customer and again
on a continuum
between
persuasion and coercion we wanted to be
sure that the communication and the
transparency of what we said was
clear
and finally we had just looked at the
nature of the relationship itself
between the consumer
and the manufacturer or the buyer and
the seller and there again we realized
that
there are
two
highly prejudicial
natures of relationship that we can have
the contract view and the social cost
view
each one slanted to one side of the
equation and therefore certainly it
makes the most sense
to adopt the middle of the road
perspective that allowed us to um
that allowed us to engage with our
customers
in a positive way
and in a responsible way
i'd like to look at now
the integrity of the product
that we provide for
the
for the buyer
because just as we have a responsibility
to be ethical in our communication
just as we have a responsibility to be
ethical
in our
relationship
similarly when we provide a product to
the
to the buyer
we have a responsibility to make sure
that the product is safe
we have a responsibility to make sure
that it is
what we have claimed it to be
uh and and
we come to that responsibility from the
perspective but as the manufacturer we
know more about the product
than obviously the consumer does who is
uh generally
who is um purchasing it
i think uh the integrity of a product
is explored like from two perspectives
first of all we can take a look at it
from stu leonard
viewpoint
his viewpoint was
nobody comes into the store to tell me
what they can do for me
they want to know what i can do for them
and so in creating the products that i
create for them which in the case of stu
lemar leonard was a
food service store
i am trying to understand
what my customers
expect when they walk through those
doors
so they expect a fun experience they
expect low prices they expect
proper stock levels they expect
cleanliness
they expect
courteous staff
they expect
something
different
than the experience that they would get
at any other
um
food store
so
that therefore becomes the beginning
definition of the product that stu
leonard is going to be giving
his customers
clearly
at the same time
he wants to be sure that he doesn't
interfere
with their free will choice or their
autonomy so he's not going to advertise
something that is uh
claims to be let's say i don't know
a tuna sandwich and there's really no
tuna in the tuna sandwich
that
that again would be inappropriate
an example of how
we can kind of get off the rails
on product integrity i'll just tell you
happened with a friend of mine who was
in the small appliance business
so he had one of his clients was walmart
in the us
and
they came to him and said look we need
to get a toaster
that
we can retail for 6.99
which means we can pay around
four to five dollars for it
my friend said to them
after looking into what they wanted he
said well
you know the only way that i can make a
toaster like that is to
maybe use the
casing the steel around the casing
maybe if i just cut it in half if it's
12 gauge i can make it 24 gauge
and they say well that's okay
we can do that and then we can hit our
price point he said yeah but the problem
with doing that is by reducing the
thickness of the steel cage
by
50
anybody who touches the toaster while
it's toasting will immediately be burned
because there won't be enough uh
protection between the uh the elements
and the customer
they didn't care
he said well i can't make that for you
so
i have to decline the order they
declined the order
and or he declined the order and they
went to another vendor who was
desperate for that account
and of course they made the toasters
shipped approximately
i think it was something like ten
thousand toasters
into uh their warehouse
uh then the toasters were distributed to
the stores and within two weeks
the store started calling up the buying
office and and telling them of these
horrible stories
of people who who've come back they were
turning the toasters their fingers were
burned their children's fingers were
burned all kinds of
issues they're returning all the
toasters
stores packed up the toaster sent them
back to the head office
distribution center and of course the
distribution center promptly called the
manufacturer and said sorry uh we don't
want the toasters anymore
the new vendors said what do you mean i
made them exactly the way you wanted yes
but you know what they're burning the
customers
so like
you knew that
the previous vendor didn't want to make
them
for you because of that reason and you
came to me specifically because i would
make it for you for that reason
yes yes we realized that but we didn't
think it would really
uh make a difference but apparently it
does
so now this vendor has an interesting
choice
if he doesn't take the stuff back from
them
and absorb the uh what ten thousand
four dollars a piece forty or fifty
thousand dollar loss
if he doesn't absorb that
then uh they're never going to do
business with him
so
when you're playing with the customer
integrity
of a product
he should have known
that if this was unsafe and the other
vendor chose not to do it why did he do
it
what made him feel that that made sense
now he's got to either absorb the return
or absorb the loss of one of the largest
retailers on the planet
what do you do
well if you had been thinking from a
warrior perspective
never would have made the product in the
first place
the way my friend
concluded
he says i know i'm gonna make it or have
it made
it'll get to the stores the customers
will react and we'll just get it back
there's no point i'm better off to say
no to start with
and then be there
if and when they decide to repurchase
the product
with the proper amount of steel in the
casings on the side
product integrity
is a critical component of the
relationship
that a seller has with his buyer
and also another company called johnson
and johnson
um
i'm sure you've heard of them they make
tylenol they make
st john's
and they have a number of
very popular brand names and in all
honesty johnson johnson is
a brand
uh promoter that's their essential
business
they create they take the product and
then they
uh market and distribute it in an
effective way
the only problem with them
it was a big write-up actually in
the new york times
is that
in the year
2014 i believe
they had
close to 300
million
recalls
whether it was tylenol or something from
st john's or
or their baby shampoo like a baby powder
line
whatever it was
300 million units have to be recalled
and the
the problems with the with the product
covered the entire spectrum of factories
that they have and they have if i'm not
mistaken close to 300 factories
worldwide and these problems were coming
from all of them
what's going on here
how do you have 300 million in recalls
it got so bad
that the new york times
article quoted the fact
that cvs pharmacies in the united states
told johnson and johnson
that if they continued on this pace of
recalls they would drop
this their brands from their stores
because the customers themselves are
losing faith
in a brand that has to keep getting
recalls
that means you never know what you might
be eating or ingesting
from this company because clearly
their standards
are
not able to properly
safeguard the customer
that's a question of product integrity
now it's a very interesting issue
because at the end of the day all of the
failures with the products that they had
could all be traced to human error
so you have to wonder
to yourself
what
what would cause so many people
to make so many mistakes
and i can tell you without ever going to
any of the factories there's only one
answer for that
and that is people hate working there
whatever their hr policies are however
those hr policies are implemented
whatever the working conditions are
across the board for them
it is creating a workforce
that is
um
unhappy in the work they're doing
contrast that with malden mills
malden mills had a workforce
that was creating one percent defects
in their in their uh production which is
unheard of since the north was 10
how you treat your employees will
ultimately obviously impact
what and how they produce and when you
have a company that's making
pharmaceuticals and you discover
that 300 million pieces have to be
recalled
well it's great that they're recalling
it but i'm presuming that the recalls
are on the basis of the fact that they
understand the lawsuits would be far
worse than the
they're not doing the recall
so you can see
that in product integrity
there is uh of many different aspects
that you have to consider how you manage
your workforce is going to affect the
type of product you make how you
determine the relationship with your
customer is going to determine whether
you make the toasters thick or thin
all of those things you can see how they
begin to mesh
and play together
similarly we have issues with product
pricing
you know they're also open to abuse in
some cases
companies when there is a desperate
situation a natural disaster a flood
whatever
they'll turn around and they'll uh
and they'll price gouge now the laws
have come in
to stop that from happening
but those things do happen
price fixing
another issue
all of those are involved in the
integrity of the product
now today
because of instant information we can
tell you what the price of oil is pretty
well anywhere
so
companies that would normally perhaps
have been able to get away with
gouging 5 very
excuse me
very very difficult
now also
in the issue of pricing again we're just
talking all about product also the issue
of pricing are sometimes
retailers
who come in and they disrupt markets
in order to gain dominance in those
markets
and then once they've disrupted the
market and essentially forced the
competition in
then the prices go up beyond what they
normally would have been and that again
is unethical behavior
it's something that walmart has been
accused of numerous times
of going into small towns
undercutting the mom-and-pop pricing
until the mom and pop stores
can't survive because ultimately the
customer's going to go to the lowest
price and then
once the mom and pop stores are gone
once the downtown core is eradicated
then the suburban walmart stores upped
their prices and nobody had any choice
in terms of what to do
you had the same thing happen actually
to walmart you know you're not immune
amazon came along and undercut so many
of the prices
and has grown immensely at the expense
of
walmart
and other retailers as well that have
suddenly found themselves
uh in a non-competitive competitive
situation
um with a company like amazon that's
doing the same thing attempting to
corner the market on certain product
categories
by pricing the competition
out of existence and again that's not
ethical
because first of all it reduces
the selection and the variety that
people have
and second of all it's called unfair
business practices and we have laws
against that in canada
you can't collude in price fix and they
have laws against that as well in the
united states
so i think these are called like power
pricing is the is the term
so how do you deal with all these issues
that that becomes the final question
how do we deal with these issues
if we're trying to have product
integrity and we agree yes we want to do
it but now you know we want the order
from walmart
we want the market share
we want the sales volume and we say well
you know we're going to have to
compromise in what we do in order to
accomplish that
so
what
allows you to make all the wrong
decisions
is nobody determines
and takes responsibility
for acting in an ethical way and that's
why as i mentioned to you before
the strategy to be ethical
starts at the top
and it works its way down
into
the operational decisions
so here again with product integrity as
with advertising
as with marketing
um we realize that the warrior approach
the the partnership approach
produces the greatest benefit
for the customer
for the employees
ultimately for the shareholders
and and certainly for the environment
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