Republic of the Philippines

Department of Education- Region X

Division of Valencia City
CENTRAL BUKIDNON INSTITUTE, INC.
S.Y. 2021-2022

Business Ethics and Social

Responsibilities 12
Learning Modules- 5 & 6
Final

_________________________
Learner’s Name

_________________________
Parent’s Name & Signature

Teacher:
James Enoveno
Cellphone Number: 09552747135
Email: [email protected]
Facebook: AL Munir
Weeks 12 and 13: Some Ethical
Issues in
Consumer
Relations
Memory Text: "Whoever oppresses the poor to increase his own wealth, or gives to the
rich, will only come to poverty.” Proverbs 22:16:

Enabling Outcomes: (MELC)

Based on the curriculum guide (CG), the student should be able to:
 Discuss some of the ethical issues in the relation to consumer relations
 Describe the different approaches to the consumer protection
 Explain the significant points on the issue of advertising ethics
 Analyze the ethical arguments for and againts marketing to children
 Trace the arguments on the ethics of pricing

Concepts (Generalization)
Ethics of Consumer Protection

Business ethicists consider four approaches to consumer protection: the market approach, the contract view
approach, the due care approach, and the social costs approach. At present, Manuel Velasquez’s discussion
can be considered as the most standard investigation of these approaches. Thus, in this discussion we will
continually return to his text (Velasquez 2006).
The Market Approach
In a free market economic system, buyers and sellers are free to interact Sellers are free to produce the goods
and services that buyers need and want
On the other hand, buyers are free to choose from the products offered by various sellers. Buyers are assured of
product safety, quality, and reasonable price because of this complete freedom to choose their seller.
For example

If a toy manufacturer produces toys that endanger the children who will buy them, then the manufacturer will
have a bad reputation. Toy buyers will look for another toy seller that assures quality, safety, and reasonable
price. If one pharmaceutical company raises its price unreasonably, then consumers will opt to buy another
brand of medicine that assures same effectiveness but at a reasonable price. If a television set starts to
malfunction after just a few months, then the unsatisfied buyer makes it a point not to buy products from that
brand or seller again.

The Contract Approach

This view claims that sellers and buyers always enter into a contractual agreement. Even if there is no written
contract, the agreement is implied. The seller is duty-bound to deliver safe and value-for-money products and
services by virtue of this contractual agreement. In other words, the buyer is protected because the seller makes
a promise. If the promise is broken, then there are consequences for the seller. For example, by buying a
cellphone from a seller, you also enter into a contract with him or her. You were informed about the details of
the cellphone. You agreed to buy it after relevant information was revealed to you. Now, the seller has the duty
to deliver what has been promised.
Due Care Theory
The main assumption of the ethics of due care is that in a business transaction, the buyer and the seller are not
on equal footing. The seller is always more knowledgeable about the details of the product. The buyer relies on
the expertise of the manufacturer and to a certain extent of the retailer. There will always be information
asymmetry or the situation when "two parties do not possess the same information or do not have the same
access to information" (Boatright 2008). Who knows whether a brand new car being sold is safe or unsafe under
certain conditions? Who knows whether a particular appliance must not be used under specific conditions? Who
knows whether the battery of a cellphone will be dangerous under certain instances? For sure, the manufacturer
and the seller would.

Social Costs View

One of the critics of the due care theory is business ethicist George Brenkert. For him, the manufacturer has full
responsibility for all the harms that the product may cause the buyer. He calls this the strict products liability or
the "doctrine that the seller of a product has legal responsibilities to compensate the user of that product for
injuries suffered because of a defective aspect of the product, even when the seller has not been negligent in
permitting that defect to occur" (Brenkert 2009).
Even if the manufacturer exercises extreme diligence and care in the production of the good being sold and even
if the harm is not foreseen, the manufacturer is still liable to the consumer. In this set-up, manufacturers will
really exhaust all means in order to come up with an excellent, reliable, and safe product. The social cost is part
of the cost to be shouldered by the manufacturer. In the end, it is not only the consumer who will benefit; even
manufacturers will be on the winning end-absolutely safe products are expected, consumers are totally protected
from harm, and manufacturers gain the full trust of the consumers.
Consumer Act of the Philippines
It is the policy of the State to protect the interests of the consumer, promote his general welfare and to establish
standards of conduct for business and industry. Towards this end, the State shall implement measures to achieve
the following objectives:
 Protection against hazards to health and safety;
 Protection against deceptive, unfair and unconscionable sales acts and practices;
 Provision of information and education to facilitate sound choice and the proper exercise of rights by the
consumer;
 Provision of adequate rights and means of redress; and
 Involvement of consumer representatives in the formulation of social and economic policies.

Ethics of Advertising
Ethics means a set of moral principles which govern a person’s behavior or how the activity is conducted. And
advertising means a mode of communication between a seller and a buyer.
Thus ethics in advertising means a set of well-defined principles which govern the ways of communication
taking place between the seller and the buyer. Ethics is the most important feature of the advertising industry.
Though there are many benefits of advertising but then there are some points which don’t match the ethical
norms of advertising.
An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in the limit of decency.
Nowadays, ads are more exaggerated and a lot of puffing is used. It seems like the advertisers lack knowledge
of ethical norms and principles. They just don’t understand and are unable to decide what is correct and what is
wrong.
Marketing to Children
Don’t Trick Kids
Kids are easy to trick. Hide a ball behind your back and you can convince them it mysteriously disappeared. A
good general rule is to not try to trick kids into getting something they don’t actually want. Don’t mislead, lie
to, distract, or confuse kids.
Don’t Target Adult Products to Kids
Back in 1991, a study was done to analyze the brand recognition with three- to six-year-olds. Twelve brand
logos were shown that included ones meant for both kids and adults, including logos for two cigarette
companies. The children were able to properly identify most brands, but the ones with the highest recognition
were for Disney and Camel cigarettes (who had a cartoon mascot and logo).
This study demonstrates that children can identify and remember marketing that they see as long as it resonates
with them. Theoretically, if a company wanted to start building brand recognition and loyalty early, they could
begin with kids around three years old.
Marketers, though, have a duty to help protect the youth and not expose them to adult themes with their
marketing. That’s why after the above mentioned study, governments everywhere created laws that prevented
tobacco companies from using cartoon mascots or airing ads on daytime television.
Protecting Children From Danger
Marketing to children is not a bad thing. It’s how toys get sold, games get played, and it’s a part of the
economy. If your target market is kids, though, it is your responsibility to keep them safe.
Similarly, if you market to kids, you need to make sure your product is safe for kids to use. You wouldn’t want
to market LEGOS to kids young enough to choke on the pieces or dangerous tools like electric drills to eight-
year-olds.
Help Children Become Informed Consumers
Children are the future. The future is also trending towards having more informed consumers, meaning content
marketing will continue to grow. Instead of encouraging children to make purchasing decisions based off of
emotions like advertising of old, help them become thoughtful buyers. Help them make comparisons between
products and do research. If you have a strong content marketing designed for kids, not only will you find better
higher sales, but you are helping improve the world.
Do your part to protect children. Be ethical in your marketing and not only will you stay legally safe, you’ll find
lifelong advocates for your business, both in children and their parents.

Ethical Issues with Pricing

Pricing a product ethically is a major decision for any business. Businesses who use ethical pricing strategies to
sell their products and earn a profit are far more respected than those that hurt and defraud competitors or even
consumers. To practice ethical pricing, you need to be able to spot the ethical issues that hinder fair pricing.

An ethical pricing strategy goes beyond simply following the law. Similarly, not all unethical pricing strategies
are fraudulent or illegal. Ethical decisions are difficult sometimes because there isn’t a defined line for morally
right and wrong decisions. As with many ethical problems in business, we need to take a step back, and view
our decisions as a greater part of the business community, and set ethical standards for ourselves.
 Be Active (Exercises/Activities)
Out of the four approaches to consumer protection, which do you think is the most reasonable for a
smooth market transaction? Explain your answer.
 Ignite (Evaluation)
Search for the top five television commercials in the Philippines that are considered to be the most effective and
influential.

Note: Analyze these commercials from the ethical point of view.

1.

2.

3.

4.

5.
 IFL (Integration of Faith & Learning)
“Honesty is a key characteristic of a business because it sets the tone for the kind of
work culture that you want to create, provides consistency in workplace behavior, and
builds loyalty and trust in customers and prospects.”

Reference/s

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q=The+Objective+purpose+of+Business&hl=fil&sxsrf=ALeKk016vuWjK0RgM_VqJW4ph0hLmNOCow:160
7493665883&source=lnms&tbm=isch&sa=X&ved=2ahUKEwixv7vHnMDtAhXLBKYKHdS2BpYQ_AUoAX
oECBAQAw&biw=1360&bih=657