No one should start playing a new game without first understanding the rules, yet some businesses exhibit remarkably limited knowledge about marketing’s political-legal environment – the laws and their interpretations that require firms to operate under certain competitive conditions and to protect consumer rights.
No one should start playing a new
game without first understanding the rules, yet some businesses exhibit
remarkably limited knowledge about marketing’s political-legal environment –
the laws and their interpretations that require firms to operate under certain
competitive conditions and to protect consumer rights. Ignorance of laws,
ordinances and regulations or failure to comply with them can result in fines,
embarrassing negative publicity and possibly expensive civil damage suits.
Businesses need considerable
diligence to understand the legal framework for their marketing decisions.
Numerous laws and regulations affect those decisions, many of them vaguely
stated and inconsistently enforced by a multitude of different authorities.
Regulations affect marketing practices, as do the actions of independent
regulatory agencies. These requirement and prohibitions touch on all aspects of
marketing decision making – designing, labeling, packaging, distributing,
advertising and promoting goods and services. To cope with the vast, complex
and changing political-legal environment, many large firms have in-house legal
department; small firms often seek professional advice from legal experts. All
marketers, however, should be aware of the major regulations that affect their
activities. Consumer Protection Act(COPRA), Sale of Goods Act, Contract Act,
Copy Right Act, and others are to be kept in mind while taking decisions.
Some of potential issues from the
political-legal environment to affect businesses include:
Ø The national foreign policy can dominate the international business
decisions of the local firms. EXIM policy and FOREX policy restrict the flow of
goods and monies from India or into India.
Ø The political ideology of the Government can affect the international
brands wanting to enter a market. When Janata Party was in power during 1960s,
,Coco cola was asked to leave our country. After liberalization policy in
1990s, it reentered India. Today MNCs have free entry into our country.
Ø The competitors who work closely with the government can help erect
trade barriers for a firm. Reliance could lobby against TATAs when Rajiv Gandhi
was Prime Minister.
Ø Global trade organizations can enforce trade barriers when their
regulations and guidelines are not observed. WTO is now deciding the rules of
game for trade world over.
Ø A host nation may levy anti-dumping duties on a foreign firm and such a
decision may be dominated by the local businesses lobbying with the government.
Ø Copyright infringements, trademark and intellectual property rights
violations. Intellectual Property rights of basmati was contested by India when
USA made claim for it.
Ø Direct comparative advertisements may not be allowed in few countries
Ø Use of children is advertising and advertising to children are banned in
Ø Price regulations preempt any pricing strategy of a firm. Steel industry
is India is subject to price regulation.
Ø A detailed displaying of the ingredients in product labels is mandatory
in most countries. In India, Packaging Acts specify such conditions. The Infant
Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of production,
Supply and Distribution) Act, 1992, The Edible Oils Packaging (Regulation)
Order, 1998 etc govern the packaging decisions.
Ø Industry watch dogs and consumer groups are always on the prowl for any
unethical trade practices. In India consumer associations like Mumbai Grahak
Panchayat,Consumer Guidance Society of India, Common Cause and Voluntary
Organisation in Interest of Consumer Education are active. Also environmentalists
and animal lovers from time to time protest exploitation of nature and animals.
Each one of the above issues has serious
implications for the marketer in his marketing decision making. Ignorance of
the law is no excuse and breaking of the law is an offence.
Tags : MARKETING MANAGEMENT - Marketing Environment
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