what is the role of producers in protecting consumer's interest?

Answer 1

One view is as follows (quoted from Yahoo search results) :
In general the producers may not be in favour of protecting the consumer rights.The objective of producers is to maximize profits. That's it. Everything that a producer does, it does to maximize profits.

In order to maximize profits, the producer must entice the maximum number of consumers to purchase the product. These enticements include the quality of the product, itself, as well as advertising for the product and public relations for the producer as a company.

When consumers decide that they have "rights" that go beyond the right to refrain from purchasing the product, then a producer may decide to cater to this illusion in order to, again, entice the maximum number of consumers to purchase the product. Such actions might include the right
proper labeling, full information, health warnings, handling information, expiration date, etc. keep to requirements, norms, standards label products according requirements, providing true facts
They have to produce and deliver the goods/services of rght quality at right price at right time at right place at right quantity with right face

If they are providing a service they should carry it out with due skill and care. They must also make sure that any materials they provide as part of this service are fit for the purpose.
It is also illegal for a supplier to cut off, or threaten to cut off, supply to a reseller (wholesale or retail) because they have been discounting goods or advertising discounts below prices set by the supplier.
In long term perspective the producer will also be benefitted if he continues to provide the genuine products to the consumers. His totl sales may increase ultimately leading to incresed profits.
But the above view is not based on economic logic or empirical evidence.
What can be true is the following:
In civilized market economic systems, the consumer rights and the mechanism of their protectionare expected to beclearly defined (otherwise, this must be improved, as this part of the market-related infrastructure key to proper operation of the market system). The producers' obligations under that system are also cleray defined as a result. Beyond these, there is no special role that the producers need to have. However, many producers in the interest of protecting their own interest and goodwill, set up consumer complaints/ grievances cells, consumer relations sales so that they do not fail to meet their obligations to the custmers in terms of product quality assurance at trhe time of sale and after sale service including replacement of wrong quality of goods supplied as well as compensating consumers for loss. Some producers do not care: consumers should be careful in choosing producers they deal with. Those who care about consumers for their continued, viable existence, generally take consumer complaints seriously. The consumer courts and consumer associations and producers' associations/ chamber of commrce and industries need to be effective along with law enforcement agencies for protection of consumer rights. One cannot expect any positive role of a Military dictator ruling a country or extremists/terrorists operating anywhere or cheats doing business anywhere in ensuring that the right of human beings whom the former are oppressing or killing.
However, consumer has no rights that entitle him/ her to supply of good/services at prices low enough or stable enough for the consumer to buy. The rights relate to not being cheated on quaqlity, delivery on time, service standards agreed to/ promised at the time of sale, etc. There is no inherent contradiction between profit maximisation and protection of consumer rights by producers (rather they are most compatible and interdependent) unless we are talking about fly-by-night operators who play the game only for a night.

Answer 2

In monopolistic or oligopolistic markets consumer's interest is the least of the concerns of the producers... In the highly competitive concentrated markets producers produce products that serves the best for the consumer interest so that they sell more and profit more... But this has a limitation in production costs... They wouldn't go above and beyond duty for consumer's interest... They try to do the best thing within their financial constraints

Answer 3

The amount of consumer protection is equal to the amount of money a special interest group provides the producer and also to the entity watching over the producer to produce safe products.

Answer 4

I think it is part of the supply/demand principle. If you are going to buy a new phone, one of the things you would look for is customer service/warranty information. If you know that one company is very reliable and builds quality goods, you will be willing to spend more for that product.
A producer that keeps their customers' interests in mind will ultimatly sell more (either either by volume or cost).

Answer 5

The place of manufacturers is to maximise revenue. it quite is it. each thing that a producer does, it does to maximise revenue. with the intention to maximise revenue, the producer would desire to entice the utmost sort of shoppers to purchase the product. those enticements incorporate the customary of the product, itself, besides as promoting for the product and public kin for the producer as a employer. while shoppers settle on that they have got "rights" that bypass previous the impressive to refrain from buying the product, then a producer would settle directly to cater to this phantasm with the intention to, returned, entice the utmost sort of shoppers to purchase the product. Such rights could incorporate the impressive to return a product, and so on.

Answer 6

Importantly, by loading minimum profit to the price they fix for their products without sacrificing the quality of the products for consumption.

Answer 7

to follow fair trade practice

Answer 8

INTERFEAR IN DIRECTORS WORK TO PROTECT CONSUMER'S INTREST

Answer 9

The link between advertising and free markets is strong and multifaceted. Some might say that the very idea of regulation of advertising is incompatible with the concept of a free market. In fact, I believe, the opposite is true. One of the fundamentals of a market economy is the free flow of information about goods and services offered for sale. The underlying theory is that the more fully consumers are informed, the better equipped they will be to make purchase decisions appropriate to their own needs. The phrase "appropriate to their own needs" expresses an important point. The appropriateness of a purchasing choice in a free-market economy depends on consumer preference, not governmental fiat. It is the exercise of informed choice by consumers that ensures that unwanted goods and services eventually will disappear from the market, and that prices that are too high to induce purchase ultimately will be lowered as selling firms seek to attract buyers.

Most of the time, advertising enhances market performance by providing useful information to consumers and by enabling firms to promote the attributes of their products and services and, thereby, to compete better with each other. On the other hand, advertising may adversely affect market performance when businesses use it to transmit deceptive or fraudulent messages on which reasonable consumers are induced to rely to their detriment. When this happens, we tend to refer to the result as "market failure."

Even a well functioning market economy from time to time may suffer breakdowns, or limited failures, that require curative regulatory measures. Fraud or deception can inject into the market imperfect information that undermines consumers' ability to exercise appropriate purchasing choices. For curative measures to succeed in restoring market forces, these measures must focus as narrowly as possible on eliminating the causes of the market failure. Regulatory "cures" that extend beyond simply correcting the problem may upset the balance of forces in the rest of the market and, ultimately, may harm consumers.

In discussing the role of advertising regulation in a free market, I will, of necessity, be addressing primarily the darker side of advertising -- those promotional efforts by firms that do not convey truthful and nonmisleading information to consumers and that require some type of government intervention. Nevertheless, I see both advertising and the regulation of advertising in a more positive light, as a means of improving the ability of consumers to make informed purchasing choices. By recognizing that truthful and nondeceptive advertising is a powerful force for good in the market, government regulators can help ensure that the promotional efforts of firms increase the useful information available to consumers. At the very least, regulators should avoid discouraging firms from disseminating the kind of advertising that assists consumers.

It bears repeating that advertising in a free market is a principal means by which useful and material information is delivered to consumers. In considering the connection between advertising regulation and free markets, I would like to begin by going back to some of the fundamentals of a free market system. After setting the stage by discussing the relationship of information and markets, I will return to the process by which advertising influences consumer choices and how government regulation seeks to alter this process when the market fails. Here, I will focus particularly on the experience of the United States, with which I am most familiar.

I. THE ROLE OF INFORMATION IN THE FREE MARKET ECONOMY
The free enterprise system that exists in most western democracies is one in which individuals own the means of production and market decisions are made largely by individual businesses and consumers, all acting in their own self interest. This free market form of economic organization has convincingly demonstrated its superiority in satisfying consumer needs over alternative forms of economic organization. The most important of the competing systems is socialism, under which the government both owns the means of production and makes all definitive resource allocation decisions.(1)

A key element in the relative success of the free market system is its superior ability to generate and process the immense quantities of information that characterize the modern economy -- information, for example, about the tastes and incomes of consumers, about the outputs and costs of producers, and about their multitudinous interconnections.(2) As observed in a famous economics textbook often used in universities in the United States:

Without central intelligence or computation, [the market] solves a problem that the largest supercomputer could not solve today, involving millions of unknown variables and relations. Nobody designed the market; yet it functions remarkably well.(3)

The ability of a market economy to make use of information results from decentralized decisionmaking and from incentives stemming from private property rights. In contrast, so-called "command" or "managed" economies have proved far less capable of handling the huge information demands of a modern economic system. It is especially difficult for economies based on centralized decisionmaking to alter course in response to changing conditions of demand and supply. In particular, after the government in a command system has developed a plan to manage the economy based on certain assumptions about current market conditions, it often finds it difficult to respond to changed conditions that may arise from shifts in consumer preferences, or from improved production technologies, that may invalidate its initial assumptions. The result is a degree of rigidity in the planning process in which the constant and inevitable flow of new information is either ignored or processed incorrectly. As Janos Kornai has written: "Assembly and processing of that huge mass of information, and coordination based on this information, is too enormous and difficult a task to be undertaken efficiently through centralized planning and management."(4)

One example will illustrate how informed consumers can have an impact in the market: Some years ago, many producers in the United States conducted both their manufacturing and packaging processes without particular regard to their effect on the air, water and other aspects of the environment, and they sometimes made products that themselves were harmful to the environment. Spurred on by public interest groups and others, consumers became aware of the harm that some of these products and processes were inflicting on the environment. Their newly acquired knowledge fueled concern that, in turn, became reflected in their purchasing decisions. Within a relatively short time, products changed, production and packaging methods were altered, and today, markets throughout the United States and much of the rest of the world are filled with products touting their "environmentally friendly" attributes.(5)

These changes in products and methods of production and packaging occurred almost entirely because consumers began to demand products less likely to damage the environment, and market forces compelled manufacturers to respond to that demand. Such changes are likely to be rare and, at best, much slower to occur in a managed economy. Under that kind of system, decisions made, perhaps years ago, may have been based on assumptions that protecting the environment was not important, or was too costly, and neither consumers nor producers could exercise sufficient influence to compel the changes absent government fiat.(6)

It is difficult to overstate the importance and interrelationship of information and private incentives in the functioning of modern market economies. Information and private incentives also are closely related to advertising. Firms convey information to consumers, who, in turn, provide feedback through their reactions to advertising and other information and through their purchasing decisions.
Deception

Advertising claims offer to provide to the consumer a product that will perform as advertised. The FTC Act requires not only that advertising claims be truthful, but also, that they not mislead reasonable consumers about material and objective aspects of the product or service to which they relate. As the Commission's Policy Statement on Deception states: "[T]he Commission will find deception if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment."(19)

Although, in principle, the FTC may challenge any deceptive advertising claim, it is the Commission's long established practice not to challenge claims that are purely subjective (e.g., "best", "brightest", "great taste", "feels and looks great"). This type of claim generally is considered "puffery." Instead, the FTC concentrates on challenging false or misleading claims about objective facts (e.g., "fat-free," "proven effective by scientific tests"), especially if in particular instances, those claims are expensive for consumers to verify, or are beyond the competence or expertise of ordinary consumers to verify.

For most inexpensive products that consumers can evaluate themselves without unusual expertise, market forces will correct for consumer dissatisfaction. Once dissatisfied with an inexpensive product, the consumer need only choose not to buy it again and will suffer only the relatively insignificant cost of a single purchase. Because sellers of such products usually depend heavily on repeat purchase of their goods, serious misrepresentations about the attributes of those goods are unlikely to occur, and if they do occur, they likely will be short lived.

Other goods and services may be more difficult for consumers to evaluate. These are known as "credence" goods and services. Because of their lack of susceptibility to consumer assessment, they are subject to more intense scrutiny by the FTC. Examples of such products include such varied goods as fire safety warning systems and over-the-counter (nonprescription) drugs and medical devices. Ordinary consumers are unable to evaluate efficacy claims for such products, and the FTC has adopted a policy that efficacy claims must be supported by what it terms a "reasonable basis."

Briefly, if a seller claims that 50% of doctors surveyed agree that a particular drug product will eliminate the pain of arthritis for 12 hours, or that in 90% of all household fires, a particular fire-detection and warning system will sound early enough to provide at least 15 minutes for occupants of a building to escape safely, the seller must be able to produce survey or test data showing that those specific claims are true. If, on the other hand, an advertisement specifies no precise level of substantiation, for example, "Fat Master -- Eliminates unsightly fat from the body without exercise or starvation diets," the Commission will assume that the claim promises what experts in the particular field would consider appropriate. In such an instance, therefore, the seller must produce medical or scientific research of a caliber recognized as authoritative by the relevant scientific or medical community demonstrating that the product works as promised.

Earlier, I quoted a standard for identifying deception that relies on the perceptions of reasonable consumers "in the [relevant] circumstances." In cases where advertising is targeted to specific groups, the FTC considers characteristics of the target audience that make that audience more or less likely to be deceived by advertisements. On the one hand, for example, the FTC is likely to examine with special care advertising that appears to have particular appeal to children because children might be more susceptible than adults to being deceived by certain kinds of claims. Conversely, the FTC would be less likely to scrutinize nonprescription drug advertising aimed at doctors and published in medical journals, than advertising aimed at children or sick or elderly individuals, because the physicians are presumed to have the knowledge and ability necessary to evaluate such claims.

B. Unfairness
The Commission has referred to the unfairness doctrine as "the FTC's general law of consumer protection, for which deception is one specific but particularly important application."(20) The concept of unfairness potentially is so expansive that it could include virtually any practice that Commissioners do not like for one reason or another. Because of the potential breadth of unfairness, it is important that the Commission have a well-articulated standard for delineating this authority. Otherwise, the law could result in having the government make choices it thinks are good for consumers, instead of allowing consumers to make decisions for themselves.

The FTC's definition of unfairness has evolved over its history. Since its early days, the United States Supreme Court has upheld the authority of the FTC to challenge conduct that was not specifically deceptive or violative of the antitrust laws.(21) The Commission's first formal articulation of its unfairness standard was set forth in 1964 as one of the justifications for a rule that would have required cigarette manufacturers to include a warning of health risks in all cigarette advertising and on each cigarette pack.(22)

As noted by our Supreme Court in 1972,(23) the Commission had by then identified three elements of unfairness: whether the practice offends public policy; whether it is immoral, unethical, oppressive, or unscrupulous; and whether it causes substantial injury to consumers (or competitors or other businessmen)."(24)

In 1980, the FTC elaborated and shifted the emphasis in its unfairness analysis and set forth the standard that we still have today.(25) The Commission issued an unfairness policy statement in which it focuses primarily on the injury portions of the earlier standard. Under this policy statement, an act or practice is considered unfair if: (1) it causes substantial consumer injury; (2) the injury is not outweighed by offsetting benefits to consumers or to competition; and (3) the injury is not reasonably avoidable by consumers.

Congress apparently liked the Commission's policy statement because, in 1994, it codified the standards in the policy statement and made them part of the law. Congress cited with approval the Commission's unfairness policy statement and the reasoning articulated in that document. Therefore, it is now mandatory that the Commission adhere to these requirements in exercising its unfairness jurisdiction.

The first step of our unfairness analysis is to determine whether an apparently unfair practice causes substantial consumer injury: that is, causes distortion of consumer choice. Most often the Commission finds substantial injury in the form of monetary harm. Sales practices that impose health or safety risks, however, also can support a finding of unfairness. Injury may be "substantial" if the practice causes large injury to a small number of people, or a small injury to a great number of people. The Commission does not concern itself with trivial or merely speculative harms.

The second step of our unfairness analysis is to see if the practice provides benefits that offset the harm to consumers or to competition that offset the harm. The Commission recognizes that most business practices provide a mixture of costs and benefits for consumers. In considering whether a practice causes net injury, the Commission considers not only costs to the parties directly before the agency, but also the procompetitive aspects of a particular practice, which is a benefit that would be lost if the government takes regulatory action.

The third step in the Commission's unfairness analysis is to consider whether consumers reasonably could avoid the injury. This step acts as a check on regulatory action. For example, if a consumer is able to switch to another product without incurring substantial cost, there might be no need for the Commission to intervene.

In another sense, this third step recognizes that ensuring informed consumer choice is one of our primary goals. We look at whether a challenged practice unreasonably inhibits consumers from making independent and informed purchasing decisions, regardless of whether someone else might think that a so-called "better" choice might be available. In a very real sense, the best choice for a consumer is that consumer's informed and independent choice. The term "better" choice, in this sense, simply refers to the choice that someone else would make.

C. Fraud
The ultimate in market failure attributable to imperfect information flow is that resulting from fraud. Fraud by the producer or seller violates an implicit or explicit offer to provide for a price, goods or services with particular attributes that have been advertised to attract consumer interest. When a seller induces the purchase of products or services that, notwithstanding his or her claims to the contrary, he or she knows, or should know, are unlikely to perform as claimed or to meet the consumer's needs as promised, the seller perverts the system and causes consumer injury.

The FTC tries to rectify fraud by moving quickly to seek court injunctions against the fraudulent operator and by seeking to recover the seller's ill gotten gains for return to consumers as redress or to the United States Treasury as disgorgement. Most frauds are conducted by firms that have little or no reputation to protect and few fixed assets that are at risk should they be caught. Unfortunately, their operations are increasingly international.

Returning to the theme of the usefulness of information, one effective way to combat fraud is to inform consumers about the ways in which fraud can be practiced and about particular fraudulent schemes that have been identified. Armed with this information, consumers can protect themselves. To this end, the FTC has a consumer and business education office that produces publications and public service radio and television spots designed to provide information in an easily understandable format.

V. ADVERTISING REGULATION: THE CASE OF HEALTH CLAIMS
I would now like to discuss in a little more detail one important area of advertising in the United States that I mentioned earlier in passing -- deceptive health claims -- and to describe how the FTC approaches the task of monitoring such claims to ensure that they are truthful and not misleading. A key characteristic of advertisements for health-related products and services is that they may contain either informative or deceptive elements and, in some instances, both. The regulatory challenge is to develop policies that discourage the deceptive claims without restricting the truthful ones.

The FTC's "reasonable basis" standard or "advertising substantiation" doctrine, which the Commission announced in its 1972 decision in a case called Pfizer, Inc.,(26) comes close to achieving both these goals. Under this doctrine, advertisers need not have absolute proof that their objective claims are true before making those claims, but they must have a "reasonable basis" for believing the claims are true. Objective claims for which the advertiser can provide no reasonable basis are considered deceptive and are unlawful under Section 5 of the FTC Act.

Using the advertising substantiation doctrine, the Commission considers six factors before deciding whether an advertiser possesses a reasonable basis for an objective claim. The first factor is the type of product being advertised. If the product is a familiar item the use of which presents little risk of harm to consumers, a lower level of substantiation is required. The second factor is the type of claim. Claims that refer to specific facts or figures require a higher level of substantiation than claims that contain more generalized descriptions of performance or effectiveness. Claims that are difficult or impossible for consumers to evaluate by themselves -- such as a claim that eating a certain food will lower your risk of cancer or heart disease -- are also held to a higher standard.

The third factor to consider is how much consumers will benefit if the claim proves to be true. The likelihood that this factor would ever be important may seem counter-intuitive to people who consider advertising to be generally distasteful and of no redeeming social value. The study of cereal advertising by the Commission's Bureau of Economics, to which I alluded earlier, demonstrates that advertising can indeed contain information of real value to consumers.(27) The fourth factor considered in evaluating whether an advertising claim has been sufficiently substantiated is the seriousness of the harm that will result if the claim proves to be false. The economic consequences of a false claim are more serious for expensive products than for products for which the cost is cheap. In addition, health consequences of a false claim are more grave if the advertisement represents that a product will prevent or cure a serious disease, particularly if the advertised product is chosen instead of an alternative product or treatment that, in fact, would be effective.

The fifth factor is the cost of developing substantiation for the claim. All else being equal, the Commission requires a higher level of substantiation for claims that are less expensive to evaluate, particularly if the potential profits from sale of the product are relatively large. The sixth and final factor is how much substantiation is considered reasonable by experts in the field. This may vary from field to field. Although the FTC consults outside experts, it does not delegate to such experts its responsibility to decide the appropriate level of substantiation.

The crucial factors in evaluating health claims are often numbers three and four on the list of factors I have just described: that is, the potential benefit if the claim is true and the potential harm if a claim is false. It is especially important to give full consideration to both of these factors.

Insignificant, contradictory or poorly designed studies would not satisfy the "reasonable basis" standard, especially as applied to a health-related product, where the standard is applied with particular rigor. For example, in a case called Thompson Medical Co.,(28) the Commission prohibited, among other things, use of the product name "Aspercreme" for a pain-relief ointment on labels or in advertisements that did not have an accompanying clear and prominent disclosure that the product does not contain aspirin. The Commission found that the name of the ointment, Aspercreme, sounded like the name of another well known medication, aspirin. But aspirin was not contained in Aspercreme, and the Aspercreme name, therefore, could mislead consumers into assuming that the product would have the effectiveness of aspirin.

In the same case, the Commission also required substantiation for pain-relief claims in the form of "at least two adequate and well-controlled, double-blinded clinical studies which conform to acceptable designs and protocols and are conducted by different persons." The "reasonable basis" standard may even require an absolute consensus in some instances.(29)

In a famous dissenting opinion in the case of Abrams v. United States,(30) noted United States Supreme Court Justice, Oliver Wendell Holmes, observed that "[e]very year if not every day we have to wager our salvation upon some prophecy based upon imperfect knowledge." Many of the decisions government agencies are asked to make in the health claims area are "prophecies based upon imperfect knowledge." Scientists rarely know for certain that a particular nutrient or food component exerts a particular effect on a particular disease or condition. More commonly, the Commission is faced with a body of studies, each with its own limitations, that suggest certain relationships but do not prove causal links between diet and health. I would like to think that all the Commission's future decisions on health claims will be the right ones, but it would be foolish to choose a policy that works only when we are able to predict the future with complete certainty. Some of our "prophecies," no doubt, will turn out to be mistaken, but, given the analysis we use, any mistakes we make should not be too costly.

I have tried today to highlight the benefits of taking the positive approach toward advertising that I mentioned at the beginning of my remarks. Once we acknowledge the potential for advertising to provide useful information to consumers that they otherwise would not have, then it is incumbent on regulators to seek solutions that preserve the valuable information content of advertisements yet limit misleading impressions from being conveyed. To do this, we always need to keep in mind the incentives that drive firms to advertise in the first place.
. Generally speaking, producers are not in the role of protecting consumer rights. It is collective action, which is the basis of all egalitarianism, which forces producers to acknowledge this issue.
Remember that with corporate structure, the role of the company is to maximize profit. If you look at the overall role of a Board of Directors, they oversee policy in the shareholders' interest. They select executives based on the percieved ability to generate profit, one way or another.
Consumer protection generally cuts into profit. The ideal consumerist state requires consuming on a regular basis, and from a single monopolistic source. This is the same, of course, as a dictatorship or absolute monarchy.
For example, look at the documented manipulation of nicotine in tobacco to drive addiction to cigarettes. Look at the documented purchase of metropolitan transit systems in the 1910's and afterward by groups funded by oil consortiums and auto manufacturers for the intent of shutting them down and selling more cars and more oil.

What balances this are two principles: one is that of competing domains of power, hence we have the National Transportation Safety Board, the FDA, the ATF, and a host of other agencies both national and statewide to regulate businesses. The second is egalitarianism: when things get too hectic the people themselves revolt and things can get pretty ugly (Reign of Terror in France ring a bell?). Because no institution wants to see itself either regulated out of existance or dismantled by popular will, most limit themselves to manipulations which are not visible enough to draw the public's or the governments' ire. In other words, it is interest in survival which persuades producers to protect consumer rights. But it is coersion which does this.