In Pakistan, businesses set aside social responsibility

Indulge in deceptive marketing practices to maximise their profits

ISLAMABAD: Promotion is one of the four “Ps” of marketing – the other three are product, price and place.

According to Professor Philip Kotler, the author of arguably the most widely read textbook on marketing in English language, promotion includes all the activities that a firm undertakes to communicate and sell its products to the target market. Thus, promotion ranges from disseminating information about the features that a good or service avowedly possesses, such as quality, durability, and price, to persuade the customer to buy it.

While an enterprise is entitled to inform and persuade potential customers that its products offer the best value for their money, the claim should be based on facts rather than deception, and correct and complete information rather than misleading or incomplete information.

When by acts of omission or commission, an enterprise misleads customers into buying its products, it resorts to deceptive marketing practices. In Pakistan, the two major laws prohibiting deceptive marketing are the Competition Act 2010 and the Consumer Protection Act. The Competition Act is a federal law and applies to the entire country. On the other hand, consumer protection is a provincial subject and every province has its own Consumer Protection Act.

There is also the Consumer Protection Act for the Islamabad Capital Territory. However, all five Consumer Protection Acts are substantially the same.

Section 10 of the Competition Act states: “No undertaking shall enter into deceptive marketing practices.”

Such practices are defined in a comprehensive way to cover either of the following: (a) false or misleading information, which may harm the business interest of another enterprise; (b) false or misleading information to consumers, including information that lacks a reasonable basis, relating to price, character, method, place of production, properties, suitability for use, or quality of goods; (c) false or misleading comparison of goods in advertising; and (d) fraudulent use of trademark of another business, firm’s name, product labelling or packaging.

Likewise, Section 21 of the Punjab Consumer Protection Act 2005 states: “No person shall make a false, deceptive or misleading representation,” which covers at least 12 practices, such as those pertaining to the quality, standard or composition of a product or service; skills or qualification necessary for providing a service; performance, characteristics, benefits or use of a product or service; sponsorship or endorsement of a product or service; the claim that a product or service is essential for someone’s wellbeing; and the place of origin of a product.

Both the Competition Act and the Consumer Protection Acts provide legal remedies against deceptive marketing. From time to time, the Competition Commission of Pakistan (CCP) imposes penalties on companies for having indulged in unfair marketing practices.

The Consumer Protection Acts provide for the establishment of consumer courts to try any contravention of the law including deceptive marketing or misleading advertising.

Price competition

Legal remedies notwithstanding, deceptive marketing practices, particularly misleading advertising, are a common phenomenon. As a rule, the stiffer the price competition in an industry, the more aggressive is the marketing and the higher is the probability that the firms will resort to deceptive marketing. The purpose is to entice potential customers into buying a product, or doing so in such a quantity and number or frequency, which they will not do otherwise. Here are some examples:

One common unfair practice is unauthorised use of a well-known trademark or copying it in such a way as to cheat the customer. A trademark is used to distinguish the product manufactured or sold by an enterprise from those of others.

A well-known trademark signifies product quality or safety and thus brand loyalty and consumer confidence. Recently, the CCP found that a local online forum dedicated to the sale of automobiles made unauthorised use of the trademark of a well-known global online business portal.

Likewise, nearly a year ago, the CCP imposed a fine of Rs4.25 million on some companies for fraudulently using the trademark of a local fabric manufacturer. In several industries, the producers claim their brand to be No 1 without specifying on which basis they make such a claim. Obviously, a brand is No 1 if it has the largest share in the market, not in the perception of the buyer or seller but in reality.

A couple of years ago, the CCP fined a famous international consumer brand to the tune of Rs10 million for advertising, without any reasonable basis, that one of its products was Pakistan’s top anti-bacterial soap.

In the same way, every media house claims that it is more credible than the competitors. However, it is not clear on which basis such a claim rests.

Is there an organisation in Pakistan that awards a certificate of credibility to a media outlet? Does the claim in question rest on a survey of readers or viewers? If such a survey was conducted, who was the surveyor, what was the questionnaire and how the sample was selected? Questions such as these are seldom answered.

Deceptive packages

The tremendous growth of mobile phone internet has prompted cellular service providers to come up with attractive packages including “absolutely free” 4G services. However, contrary to the claims, the internet is generally free of cost only up to a limit (say 50 or 100 MB data usage). Thereafter, the subscriber is charged, often without his knowledge.

A related claim is that such services are available all over the country, which literally means in every city and town as well as every part thereof. In practice, such services are available in a limited number of cities as well as at specific places in those cities.

Banks and other financial institutions while encouraging consumers to open savings accounts do not adequately disclose certain crucial facts, such as whether the promised interest is simple or compound, whether the interest rate varies with payment period (monthly, six-monthly or annual) and whether there are any compulsory deductions, such as wealth tax and Zakat from the promised payment.

Even where important information is provided, it is carried in small print or flashed on the screen only for the fraction of a second.

The basis of such a bold claim is never explained. In many cases, consumers are not warned against the possible harmful effects of using the product in question.

Goods packaging

Product packaging plays a very important role in product promotion. In principle, packaging should convey complete and correct information about the product.

In April this year, the CCP slapped Rs18-million penalty on several electric cable suppliers for hiding cash coupons lying inside the package from consumers, who were made to pay not only for the cables but the coupons as well without knowing it.

Owing to the consumers’ ignorance, the electricians who cut open the packaging walk away with the coupons. The erring companies were directed to clearly print the value of the coupon on the package.

Deceptive marketing practices ultimately boil down to corporate social responsibility. Guided by profit maximisation, businesses are responsible to answer their shareholders. But they also owe an obligation to their customers and the rest of society.

In developing countries like Pakistan, where consumers lack both consciousness of their rights as well as the ability to get them enforced, the manufacturers and service providers are always apt at setting aside corporate social responsibility and indulge in deceptive marketing.

The role of the government is important but more than that the public needs to be on the guard to curb such practices.

The writer is an Islamabad-based columnist

 

Published in The Express Tribune, October 21^st, 2019.

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