CONSUMER ADVOCACY IN BUSINESS

In the early 1990s, the widespread use of home computers
advanced consumer advocacy by making it easier for
citizens to gather information and make their views
known. By the early twenty-first century, the Internet had
become one of the primary weapons of consumer advocates,
with untold thousands of “so-called global ‘gripe
sites’ established by campaigners or disgruntled customers
with the aim of harassing and haranguing large companies,”
according to Simon Reeve in the European.
Before the advent of the World Wide Web, it was difficult
for individuals or small groups, which lacked the
resources of major corporations, to make their voices
heard over their targets’ advertising messages. “But the
Internet has created a level playing field for advocacy,”
Reeve wrote. “With little more than a personal computer
and a subscription to an Internet service provider, anyone
can open a site on the World Wide Web and say more or
less whatever they like.” Current and potential customers
of major corporations typically use common Internet
search engines to access the companies’ carefully prepared
home pages. Yet these search engines also lead the customers
to sites created by protesters—sites that are filled
with complaints and allegations against the companies,
ranging from the use of child labor to the exploitation of
resources in less-developed countries. Thus, for consumer
advocates, “the Internet means a new freedom to take on
the mightiest corporations, in an environment where massive
advertising budgets count for little,” Reeve stated.
For businesses, on the other hand, Internet gripe sites
pose a difficult problem. Although the material posted on
such sites might be distorted, false, or even outright
libelous, it can still prove damaging to a company’s image.
Moreover, few legal remedies exist as the law struggles to
keep up with technology. It is often difficult for companies
to trace the operators of gripe sites, for example, and
suing the Internet service providers that provide a forum
for protesters has not proved successful. In addition, turning
to the law for help can turn into a public relations disaster
for companies, making a small problem into a much
bigger one. “The Internet is an uncontrollable beast,”
attorney Simon Halberstam told Reeve. “While legally the
firm may have recourse to law, the reality is that they may
just have to accept the problem and carry on with their
business.”
TECHNOLOGY OFFERS MIXED BAG
FOR CONSUMERS
The Internet age has provided consumers with unprecedented
access to information and an often-overwhelming
abundance of choices, but it has also exposed them to
new types of fraud. “The deregulation and technological
revolution that gave us all these new responsibilities and
choices were also supposed to release the genius of the
free market, which would drive down prices and create
innovative comparison-shopping tools,” Kim Clark
wrote in U.S. News and World Report. “But the anticipated
information explosion hasn’t kept up with consumers’
needs.”
According to the National Consumers League, consumer
losses to telemarketing and Internet scams during
the first six months of 2005 were more than double the
average from 2004. Telemarketing fraud victims lost an
average of $4,107 during the first half of 2005, compared
to $1,974 in 2004. This increase came despite efforts by
the FTC to reduce consumers’ exposure to unwanted telemarketing
calls through registry on the National Do Not
Call List, which received widespread praise from consumer
advocacy groups. Similarly, Internet fraud victims
lost an average of $2,579 in 2005, compared to $895 in
2004. Federal efforts to reduce spam and other sources of
Internet fraud have not been particularly successful.
SEE ALSO Consumer Bill of Rights; Consumer Protest
BIBLIOGRAPHY
Clark, Kim (2003, August 18). Customer disservice. U.S. news
and world report, 29.
Mayer, Robert N. (1989). The consumer movement: Guardians of
the marketplace. Boston: Twayne.
National Consumers League. (2005, June). Mid-year fraud stats
reveal alarming trends in telemarketing, Internet scams. NCL
news. Retrived August 11, 2005, from
http://nclnet.org/news/2005/fraud_trends_june2005.htm
Reeve, Simon (1998, January 26). Web attack. European, 20.
Unsafe at any megahertz: Ralph Nader is taking on Bill Gates. Is
consumerism still a force in America? (1997, October 11).
Economist, 80.
Laurie Collier Hillstrom

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 139
Consumer and Business Products
CONSUMER AND
BUSINESS PRODUCTS
The classification of products and services is essential to
business because it provides one of the factors for determining
the strategies needed to move them through the
marketing system. The two major classes are consumer
products and business products.
CONSUMER PRODUCTS
Consumer products are products purchased for personal,
family, or household use. They are often grouped into
four subcategories on the basis of consumer buying habits:
convenience products, shopping products, specialty products
and unsought products.
Consumer products can also be differentiated on the
basis of durability. Durable products are products that
have a long life, such as furniture and garden tools. Nondurable
products are those that are quickly used up or
worn out, or that become outdated, such as food, school
supplies, and disposable cameras.
Convenience Products. Convenience products are items
that buyers want to purchase with the least amount of
effort, that is, as conveniently as possible. Most are nondurable
products of low value that are frequently purchased
in small quantities. These products can be further
divided into three subcategories: staple, impulse, and
emergency items.
Staple convenience products are basic items that buyers
plan to buy before they enter a store, and include milk,
bread, and toilet paper. Impulse items are other convenience
products that are purchased without prior planning,
such as candy bars, soft drinks, and tabloid newspapers.
Emergency products are those that are purchased in
response to an immediate, unexpected need such as
ambulance service or a fuel pump for the car.
Since convenience products are not actually sought
out by consumers, producers attempt to get as wide a distribution
as possible through various marketing channels—
which may include different types of wholesale and
retail vendors. Convenience stores, vending machines,
and fast food are examples of retailer focus on convenience
products. Within stores, they are placed at checkout
stands and other high-traffic areas.
Shopping Products. Shopping products are purchased
only after the buyer compares the various products and
brands available through different retailers before making
a deliberate buying decision. These products are usually of
higher value than convenience goods, bought less frequently,
and are durable. Price, quality, style, and color are
typically factors in the buying decision. Televisions, computers,
lawn mowers, bedding, and appliances are all
examples of shopping products.
Because customers are going to shop for these products,
a fundamental strategy in establishing stores that
specialize in shopping products is to locate near similar
stores in active shopping areas. Promotion for shopping
products is often done cooperatively with the manufacturers
and frequently includes the heavy use of advertising in
local media, including newspapers, radio, and television.
Specialty Products. Specialty products are items that consumers
seek out because of their unique characteristics or
brand identification. Buyers know exactly what they want
and are willing to exert considerable effort to obtain it.
These products are usually, but not necessarily, of high
value. This category includes both durable and nondurable
products. Specialty products differ from shopping
products primarily because price is not the chief consideration.
Often the attributes that make them unique are
brand preference (e.g., a certain make of automobile) or
personal preference (e.g., a food dish prepared in a specific
way). Other items that fall into this category are wedding
dresses, antiques, fine jewelry, and golf clubs.
Producers and distributors of specialty products prefer
to place their products only in selected retail outlets.
These outlets are chosen on the basis of their willingness
and ability to provide an image of status, targeted advertising,
and personal selling for the product. Consistency of
image between the product and the store is also important.
Unsought Products. Unsought products are those products
that consumers are either unaware of or have little
interest in actively pursuing. Examples are new innovations,
life insurance, and preplanned funeral services.
Because of the lack of awareness of these products or the
need for them, heavy promotion is often required.
The distinction among convenience, shopping, specialty,
and unsought products is not always clear. As noted
earlier, these classifications are based on consumers’ buying
habits. Consequently, a given item may be a convenience
good for one person, a shopping good for another,
and a specialty good for a third, depending on the situation
and the demographics and attitudes of the consumer.
BUSINESS PRODUCTS
Business products are products and services that companies
purchase to produce their own products or to operate
their business. Unlike consumer products, business products
are classified on the basis of their use rather than customer
buying habits. These products are divided into six
subcategories: installations; accessory equipment; raw

140 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION
Consumer and Business Products
materials; component parts and processed materials;
maintenance, repair, and operating supplies; and business
services.
Business products also carry designations related to
their durability. Durable business products that cost large
sums of money are referred to as capital items. Nondurable
products that are used up within a year are called
expense items.
Installations. Installations are major capital items that are
typically used directly in the production process of products.
Some installations, such as conveyor systems, robotics
equipment, and machine tools, are designed and built
for specialized situations. Other installations, such as
stamping machines, large commercial ovens, and computerized
axial tomography scan machines, are built to a standard
design but can be modified to meet individual
requirements.
The purchase of installations requires extensive
research and careful decision making on the part of the
buyer. Manufacturers of installations can make their availability
known through advertising. Actual sale of installations,
however, requires the technical knowledge and
assistance that can best be provided by personal selling.
Accessory Equipment. Products that fall into the subcategory
of accessory equipment are less expensive and have
shorter lives than installations. Examples include hand
tools, computers, desk calculators, and forklifts. While
some types of accessory equipment, such as hand tools,
are involved directly in the production process, most are
only indirectly involved.
The relatively low unit value of accessory equipment,
combined with a market made up of buyers from several
different types of businesses, dictates a broad marketing
strategy. Sellers rely heavily on advertisements in trade
publications and mailings to purchasing agents and other
business buyers. When personal selling is needed, it is usually
done by intermediaries, such as wholesalers.
Raw Materials. Raw materials are products that are purchased
in their raw state for the purpose of processing
them into consumer or business products. Examples are
iron ore, crude oil, diamonds, copper, timber, wheat, and
leather. Some (e.g., wheat) may be converted directly into
another consumer product (cereal). Others (e.g., timber)
may be converted into an intermediate product (lumber)
to be resold for use in another industry (construction).
Most raw materials are graded according to quality so
that there is some assurance of consistency within each
grade. There is, however, little difference between offerings
within a grade. Consequently, sales negotiations focus
on price, delivery, and credit terms. This negotiation, and
because raw materials are ordinarily sold in large quantities,
makes personal selling the principal marketing
approach for these goods.
Component Parts and Processed Materials. Component
parts are items that are purchased to be placed in the final
product without further processing. Processed materials,
on the other hand, require additional processing before
being placed in the end product. Many industries, including
the auto industry, rely heavily on component parts.
Automakers use such component parts as batteries, sunroofs,
windshields, and spark plugs. They also use several
processed materials, including steel and upholstery fabric.
Buyers of component parts and processed materials
have well-defined specifications for their needs. They may
work closely with a company in designing the components
or materials they require, or they may invite bids
from several companies. In either case, in order to be in a
position to get the business, personal contact must be
maintained with the buyers over time. Here again, personal
selling is a key component in the marketing strategy.
Maintenance, Repair, and Operating Supplies. Maintenance,
repair, and operating (MRO) supplies are frequently
purchased expense items. They contribute
indirectly to the production of the end product or to the
operations of the business. MRO supplies include computer
paper, light bulbs, lubrication oil, cleaning supplies,
and office supplies.
Buyers of MRO supplies do not spend a great deal of
time on their purchasing decisions unless they are ordering
large quantities. As a result, companies marketing supplies
place their emphasis on advertising, particularly in
the form of catalogs, to business buyers. When large
orders are at stake, sales representatives may be used.
Business Services. Business services refer to the services
purchased by companies to assist in the operation of the
firm. They include financial, marketing research, promotional,
legal, lawn care, and janitorial services. The decision
to hire an outside business to perform needed services
is often predicated on how frequently the service is
needed, the specialized knowledge required, and the relative
costs of providing the service internally versus contracting
with an outside firm.
It is not always clear whether a product is a consumer
product or a business product. The key to differentiating
them is to identify the use the buyer intends to make of
the product. Products that are in their final form and are
ready to be purchased and consumed by individuals or
households for their personal satisfaction are classified as
consumer products. On the other hand, if they are bought

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 141
Consumer Behavior
by a business for its own use, they are considered business
products. Some items, such as flour and pickup trucks,
can fall into either classification, depending on how they
are used. Flour purchased by a supermarket for resale is
classified as a consumer good, but flour purchased by a
bakery to make pastries is classified as a business product.
A pickup truck bought for personal use is a consumer
product; if purchased to transport lawn mowers for a lawn
service, it is a business product.
SEE ALSO Business Marketing
BIBLIOGRAPHY
Boone, Louis E., and Kurtz, David L. (2005). Contemporary
marketing 2006. Eagan, MN: Thomson South-Western.
Hoffman, K. Douglass (2006). Marketing principles and best
practices (3rd ed.). Mason, OH: Thomson South-Western.
Kotler, Philip, and Armstrong, Gary (2006). Principles of marketing
(11th ed.). Upper Saddle River, NJ: Pearson Prentice-
Hall.
Pride, William M., and Ferrell, O. C. (2006). Marketing concepts
and strategies. Boston: Houghton Mifflin.
Solomon, Michael R., Marshall, Greg W., and Stuart, Elnora W.
(2006). Marketing: Real people, real choices (4th ed.). Upper
Saddle River, NJ: Pearson Prentice-Hall.
Thomas R. Baird
Earl C. Meyer
Sharon K. Slick
CONSUMER BEHAVIOR
While in medical school, Laura Trice’s one major complaint
about living a vegan lifestyle and following an
animal-product-free diet was the lack of “great tasting
sweets.” Rather than sublimating her craving for junk
food, she came up with a cookie recipe that she found satisfied
her sweet tooth. After graduation from medical
school, Trice found a business partner who had been a
self-trained vegetarian chef for over twenty years and
together they started Laura’s Wholesome Junk Food in
2001 (http://www.LaurasWholesomeJunkFood.com).
The concept was to provide snacks that tasted as great as
junk food—something most people, especially the two
founders, secretly loved—that also used ingredients which
were more wholesome than those used in regular products.
In July 2002 Laura’s Wholesome Junk Food released
their first line of energy bars priced and sized to compete
with the energy bars then on the market. Their first orders
were from two small stores, a vending machine company
and a coffee chain. To provide samples to convince consumers
that something with healthful ingredients could
taste good, Laura’s Wholesome Junk Foods handed out
bite-sized samples packed in plastic resealable tubs, which
they subsequently named and trademarked Bite-lettes.
What happened next surprised both Trice and Howard
Weinthal, director of product development. “Consumers
loved the Bite-lettes and kept asking how they might buy
them. So we stopped making bars after 4 months and shut
down for 6 months to find a place that could make the
Bite-lettes for us. We didn’t know if it was going to work.
We thought we might be out of business” (Trice, 2005).
Figuring out not only what they wanted, but who
would buy it, why they would buy it, where they would
buy it, and how often they would buy it, is the cornerstone
of understanding consumer behavior. Consumer
behavior is the study of people: how we buy, consume and
dispose of products. There were approximately 295 million
people in the United States alone in 2004. Each of us
is a consumer of hundreds of products every day. As consumers,
we can benefit from a better understanding of
how we make our decisions so that we can make wiser
ones. Marketers can benefit from an understanding of
consumer behavior so that they can better predict what
consumers want and how best to offer it to them. Trice
and Weinthal listened to consumer requests, created a new
portion-controlled concept, and scrapped the full-sized
energy bar. In 2005 Laura’s Wholesome Junk Food sold
Bite-lettes to more than 180 stores nationwide.
There are two major forces that shape who we are
and what we buy. Our personal motives, attitudes, and
decision-making abilities guide our consumption behavior.
At the same time, our families, cultural background,
the ads we see on television, and the sites we visit on the
Internet influence our thoughts and actions (see Figure 1).
UNDERSTANDING CONSUMERS:
INTERNAL FACTORS
Our consumption behavior is a function of who we are as
individuals. Our thoughts, feelings, attitudes, and patterns
of behavior determine what we buy, when we buy it,
and how we use it. Internal factors have a major impact on
consumer behavior.
Consumer Motivation. A marketer’s job is to figure out
what needs and wants the consumer has, and what motivates
the consumer to purchase. Motivation is the drive
that initiates all our consumption behaviors, and consumers
have multiple motives, or goals. Some of these are
overt, such as a physiological thirst that motivates a consumer
to purchase a soft drink or the need to purchase a
new suit for an interview. Other motives are more
obscure, such as a student’s need to plug in to an iPod or
wear designer clothes to gain social approval.