New Products Management- CHAPTER 20 PUBLIC POLICY ISSUES potx

Four Legal Bases for Product Liability continued  Strict Liability defective product on the market unforeseeable misuse; not defective  Misrepresentation defective Other Legislation C

CHAPTER 20

PUBLIC POLICY ISSUES

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc All right reserved

Life Cycle of a Public Concern

 Stirring

 Trial Support

 Political Arena

 Regulatory Adjustment

Figure 20.1

Product Liability: Typology of Injury Sources

Four Legal Bases for Product

Liability

 Manufacturer let the product be injurious

 A promise

 Express warranty: a statement of fact

about a product

 Implied warranty: arises when product is made available for a given use

Four Legal Bases for Product

Liability (continued)

 Strict Liability

defective product on the market

unforeseeable misuse; not defective

 Misrepresentation

defective

Other Legislation

Consumer Product Safety Act/Safety Commission

Which Are the Real Product

Warning Labels?

1 On a disposable razor: “Do not use this product during an earthquake.”

2 On a rock garden: “Eating rocks may lead to broken teeth.”

3 On a roll of Life Savers: “Not for use as a flotation device.”

4 On a hair dryer: “Do not use while sleeping.”

5 On a piano: “Harmful or fatal if swallowed.”

6 On a cardboard windshield sun shade: “Warning: Do not drive with sun

shield in place.”

7 On shin guards: “Shin guards cannot protect any part of the body they do

not cover.”

8 On syrup of ipecac: “Caution: may induce vomiting.”

9 On an iron: “Do not iron clothes while being worn.”

10 On a plastic sled: “Not to be eaten or burned.”

11 On work gloves: “For best results, do not leave at crime scene.”

12 On a jet ski: “Riders may suffer injury due to forceful entry of water into

body cavities while falling off this craft.”

13 On a carpenter’s router: “This product not intended for use as a dentist’s

drill.”

14 On a blender: “Not for use as an aquarium.”

15 On a stroller: "Always remove child from stroller before folding."

Figure 20.4

Which Are the Real Product

Warning Labels?

1 NO

2 On a rock garden: “Eating rocks may lead to broken teeth.”

3 NO

4 On a hair dryer: “Do not use while sleeping.”

5 NO

6 On a cardboard windshield sun shade: “Warning: Do not drive with sun shield in place.”

7 On shin guards: “Shin guards cannot protect any part of the body they do not cover.”

8 NO

9 On an iron: “Do not iron clothes while being worn.”

10 On a plastic sled: “Not to be eaten or burned.”

11 NO

12 On a jet ski: “Riders may suffer injury due to forceful entry of water into body cavities while falling off this craft.”

13 On a carpenter’s router: “This product not intended for use as a dentist’s drill.”

14 NO

15 On a stroller: "Always remove child from stroller before folding.“

Figure 20.4

Preparing For the Product Recall

 Prior to the Recall

 Designate the recall program coordinator

(spokesperson)

 Develop channels for communicating with

customers directly

 During the Recall

 Assess safety risk and take corrective action

 Inform customers as well as intermediaries of the risks

 After the Recall

 Strive to restore company reputation

 Monitor recall effectiveness

Public Policy Problems and the

New Products Process Figure 20.6

Other Areas of Public Policy Debate

 Environmental Needs

 Product Piracy

 Worthy Products

 Morality

 Personal Ethics (what would you

do?)

Environmental Needs

if:

 Its raw materials are scarce or hard to get to.

 Its design or manufacture causes pollution or excess power usage.

 Its use causes pollution.

 Its disposal cannot be handled by recycling.

Germany and Scandinavia, because of the strict greenness tests there.

Product Piracy

 Threatens brand equity and intellectual

property of firms.

 Categories of product piracy:

 Counterfeiting: unauthorized production of goods

 Brand Piracy: unauthorized use of copyrights or

patented brands (the “$20 Rolex”)

 Near Brand Usage: slightly different brand names (“Tonny Hilfiger” clothes)

 Intellectual Property Copying: Unauthorized copying

of CDs and DVDs, for example

Protection Against Product Piracy

 Legal recourse

 Direct contact

 Labeling

 Strong proactive marketing

 Piracy as Promotion

Figure 20.7

Source: Laurence Jacobs, A Coksun Samli, and Tom Jedlik, “The Nightmare of International Product Piracy,”

Industrial Marketing Management 30, 2001, pp 499-509

Worthy Products

 Coffee manufacturers agreed to produce some brands containing no beans from El Salvador.

 Manufacturers have been asked to produce

special exercise equipment for the

handicapped or modified products for the

elderly.

 Orphan drugs supported by the federal

government; otherwise would not be

commercially feasible due to few users.

Personal Ethics – What Would You Do?

your sales force know it is only temporary and will soon be replaced.

investment counseling, but you don’t know they will really learn how to counsel

calculate gross margin at about 80% The price could be cut in half and your company margin would still be 60%.

new service of information for pharmaceutical firms, including patients’ name, age, sex, and so on, as well as illnesses and treatments.

sophisticated parents: there are several far better games on the market.

hemp seeds, mostly as a gimmick Nevertheless, your advertising

contains obvious drug imagery.

What Can the New Product

Manager Do?

miscommunications)