Social Responsibility of Business with reference

to Marketing of Consumer Goods

Dr. N. Rokendro Singh

Reader
Department of Commerce
Mizoram University
 Introduction
• All the business enterprises in a country whether
incorporated or not, whether engaged in manufacturing or
service and under private or public ownership are referred
to the business entity of the country.
• Business enterprises are the systems in the society that
deals in human aspects as well as technical aspects. The
activities of business relates to buying, selling and trade of
consumers goods needed in the society. It also creates
utility to their customers and society.
• Consumer goods marketing are one of the major activities
of the society. It is the business enterprise who deals the
main activities of selling the needed goods.
• The business enterprises, in this process, are providing the
essential items/goods which we may refer as ‘needs of the
people’.
 Social Responsibility of Business (SRB):
An overview
• Social responsibility is a doctrine that claims that an
entity whether it is state, government, corporation,
organization or individual has a responsibility to the
society.
• Business enterprises have responsibility towards the
society, to its customer and to its employees.
• Social Responsibility of Business (SRB) is about how
business enterprises manage their business activities to
create an overall positive impact on the society.
• One of the most important responsibilities of a
business enterprise is not to waste the resources of the
society.
 Responsibility towards various Stakeholders

• Business enterprises have responsibilities towards various

stakeholders such as – Shareholders, Employees, Suppliers,
Customers/Consumers, Government, and Society & Community.
• Shareholders: Shareholders and investors have a financial stake in
the organization/enterprises, in the form of investment in stocks,
bonds, etc.
The enterprise should provide fair dividend, solvent and efficient
business, optimum use of resources, planned growth effective
communication towards shareholders.
• Employees: Employees including the management people are hired
based on their skills and expertise.
Therefore, in return for their contribution, they demand wages or
salaries, benefits, meaningful work and job security.
The enterprise should provide meaningful work, job satisfaction,
fair salaries & benefits, best quality of work life, succession planning
and development towards employees.
 Contd….
• Suppliers: As a stakeholder, there is good relationship between the
suppliers and the enterprise.
They provide products and services to the enterprise to facilitate
their operations and in return, the enterprise rewards them by
giving suppliers business and they get benefits from doing their
business.
The suppliers gain if the enterprise is successful because they get
more orders and vice versa.
Modern business is moving towards partnership based approach
emphasizing a long term relationship based on mutual trust and
collaboration with core supply firms.
• Customers/Consumers: Customers are the core people in business.
A customer is even referred as ‘King’ of business.
The modern businesses consider the success of business
enterprises depend upon how closely the customer relationship is
monitored.
The enterprise should provide fair price, superior service, superior
product design, quick and complete information towards
customers.
 Contd…
• Government: Government and business have a strong nexus and often work to
benefit each other at the cost of other stakeholders.
The relationship of government in business relates to two distinct activities of
government.
First, the government as a representative of the community and society trying to
regulate business, usually through rules, laws, and taxes and facilitate business
through providing infrastructure, subsidies, tax holidays, licensing and protecting
from competitors.
Second, government is dependent on the economic prosperity of the nation and
the economy is run by business, therefore, there is a covert dependence of
government on business for it to retain its own power.
The enterprise should be able regular payment of taxes; custom duties etc. and
should abide by the laws, observe the policies and maintain law & security
towards government.
• Society and Community: Society and community includes all the players in the
community and society, such as non-profit organizations, non-government
organizations, charity groups, religious groups, pressure groups related to human
rights, environment, welfare, etc.
The civil society, through its social organizations, actually represents the voice and
needs of the individual stakeholders.
Business enterprises should able to provide employment, welfare services, and
maintaining pollution free environment towards society and community.
 Concept of Corporate Social Responsibility (CSR)
• Business has to align their profitable opportunities with
their social identities and underline values of corporate
responsibility.
• Corporate Social Responsibility (CSR) is modern concept
under the Social responsibility of business.
• The larger companies are using this term CSR for
performing their various social activities.
• Corporations today have actively defined their agenda of
what constitutes socially responsible corporate behavior.
• They involve various social development activities like
giving education and training to the poor, heath care
services, plantation of trees to keep environment green,
Conservation of water, AIDS control and prevention
awareness programmes, Care of differently able people,
Sports, Rural development and so on.
 Some Cases of CSR: In brief
• i. CSR in Hindustan Unilever Limited (HUL): HUL is a subsidiary of
Unilever, one of the world’s leading suppliers of fast-moving
consumer goods (FMCG) with strong local roots in more than 100
countries across the globe.
• Unilever has 52% shareholding in HUL.
• HUL believes that an organization’s worth is also in the service it
renders to the community.
• It also involved in education and rehabilitation of special or
underprivileged children, care for destitute and HIV-positive people,
and rural development.
• HUL also responded in cases of national calamities/adversities and
contribute through various welfare measures.
• HUL also runs a rural health programme and as of 2010, it has
already touched 120 million people in approximately 50,676 villages
across India.
 Contd..
• ii. CSR in Steel Authority of India Limited (SAIL): SAIL was set up as a
holding company of Steel plants and associated input units on 24 January,
1973.
• SAIL has two subsidiaries, namely Indian Iron and Steel Company (IISCO)
at Burnpur in West Bengal and Maharastra Elecktrosmelt Limited (MEL) at
Chandrapur in Maharastra.
• SAIL has done various activities under CSR programme. Some of its CSR
activities includes:
• i) Educational facilities to poor meritorious students belonging to
schedule tribe at Bhilai. Started an English medium school there at Bhilai.
• ii) Women self help group, ‘Mahila Karmodyoya Co-operative Industrial
Society (MKCIS) was formed with initiative of employees of Durgapur
steel plant.
• iii) Sail has done various other CSR activities such as- AIDS control and
prevention awareness programmes, checking of infant mortality,
conservation of water, amla plantation, floriculture, care of the differently
able children, heath care facilities etc.
• In the year 2003-04, SAIL’s expenditure on CSR activities amounted to
Rs.1.77 crores.
 Contd…
• iii. CSR in Tata Iron and Steel Company Limited (TISCO): TISCO was
established in 1907, registered in Bombay (Mumbai) on 26th August 1907.
TISCO has good commitment to CSR.
• TISCO has separate CSR policy. Various CSR activities include –
• i) Rural development: for rural development activities TISCO set up Tata
Steel Rural Development Society in 1979 as an NGO under the Societies
Registration Act 1860 with an objective of improving the quality of life of
villages living near the Plant units of the company.
• ii) Assisting the families living in the periphery of its Plant and units.
• iii) A wide range of activities varying from running educational and
research institution, sponsoring sports to provision of relief and
rehabilitation of families affected by calamities have been supported.
• In sum, TISCO’s CSR activities cover – Health care service, education
service, sports, family initiatives and plantations, etc.
• During 2002-03 TISCO expended a total of Rs.399.89 lakhs for activities of
rural development, consultancy services and family initiatives under
TSRDS, TCS & TSFIF. For education TISCO expended a sum of Rs.1,127 lakhs
in 2002-03.
 Marketing of consumer goods
• Marketing of consumer goods refer to the various activities involved
by a business enterprise while dealing in buying and selling of
consumer goods with other necessary activities in delivering the
goods to the respective customers.
• Such activities are related to product and its pricing, promotion and
distribution of the goods. Consumer goods can be classified
according to consumer shopping habits and the nature of the
product.
• Convenience goods are those that the customer purchases
frequently, immediately, and with minimum effort. Soaps and
newspapers are considered convenience goods, as they are
common and for daily uses.
• shopping good, which usually requires a more involved selection
process than convenience goods. A consumer usually compares a
variety of attributes, including suitability, quality, price, and style.
• These products might include automobiles or a stereo or television
system. Homogeneous shopping goods are often sold strongly on
price. With heterogeneous shopping goods, product features
become more important to the consumer than price.
 Contd…
• Specialty goods have particularly unique characteristics and brand
identifications for which a significant group of buyers is willing to make a
special purchasing effort. Examples include specific brands of fancy
products, luxury cars, professional photographic equipment, and high-
fashion clothing.

• Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG)

are products that are sold quickly and at relatively low cost. Examples
include non-durable goods such as soft drinks, toiletries, and grocery
items.
• Fast-moving consumer electronics are a type of FMCG and are typically
low priced generic or easily substitutable consumer electronics, including
lower end mobile phones, MP3 players, game players, and digital cameras.
• Low-quality electronic FMCG goods can be highly profitable for the
vendors.
• Global leaders in the FMCG segment are Nestlé, ITC, Hindustan Unilever
Limited, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Pepsi, Gillette
etc.
 Consumer rights and the Consumer Protection Act:
• For the protection of consumer rights, the Government of India enacted
Consumer Protection Act in 1986. The act applies to all goods and services
unless specially exempted by the Central Government. The main objective
of the act is to provide better protection of consumers and for
establishment of the consumer protection councils and other authorities.
• The rights of the consumers as per section 6 of the act are as follows:
• Right to Safety: This is the right to be protected against the marketing of
goods and services which are hazardous to life and property.
• Right to be informed: It means right to be informed about the quality,
quantity, potency, purity, standard and price of the goods and services.
• Right to choose: This means the consumer, wherever possible, can access
to a variety of goods and services at competitive prices.
• Right to be Heard: This right means the consumers’ interest will receive
due consideration at appropriate forums and right to be represented in
various forums formed for the welfare of consumers.
• Right to Seek Redressal: This means the right to seek redressal against
unfair practices or restrictive trade practices or unscrupulous exploitation
of consumers.
• Right to Consumer Education: This means right to aquire the knowledge
and skill to be an inform consumer.
 Consumer Redressal Agencies and Cases file
• There are three tier consumer disputes redressal agencies in India established for
the protection of the rights of the consumers.
• One at national level named as National Consumer Disputes Redressal Commission
(NCDRC), in short National Commission;
• 34 State Consumer Disputes Redressal Commissions (SCDRC) in short State
Commission and
• 597 District Consumer Disputes Redressal Forum (DCDRF) shortly as District forum.
• In Mizoram there one state commission and 8 district forums.
Table No. 1: Cases file to Consumer Disputes Redressal Agencies in India as on 06-03-
2013 .
Sl. Name of Agency Cases Filed Cases Disposed Cases % of
No. since of since Pending Total
inception inception Disposal
1 National 80,014 69,258 10,761 86.55%
Commission
2 State Commission 6,00,097 5,04,834 95,263 84.14%
3 District Forum 32,42,324 29,94,256 2,48,068 92.35%
TOTAL 39,22,345 35,68,343 3,54,092 90.97%
 Unfair trade practices: A brief note
• An unfair trade practice refers to uses of various deceptive,
fraudulent or unethical methods to obtain business.
• Some of the unfair or false or misleading trade practices are as
follows:
(i) False representations that goods or services have certain
characteristics, ingredients, uses, benefits, or quantities;
(ii) False representations that goods or services are new or original;
(iii) False representations that goods or services are of a particular
grade, standard, or quality;
(iv) Tie-in Arrangement.
(v) Exclusive Supply Agreement.
(vi) Exclusive Distribution Agreement.
(vii) Refusal to Deal.
(viii) Resale Price Maintenance.
(ix) Discrimination in Dealing.
 The Competition Act: A brief note

• The Competition Act, 2002 was passed by the Parliament in the

year 2002, to which the President accorded assent in January, 2003.
It was subsequently amended by the Competition (Amendment)
Act, 2007.
• The broad objectives of the Competition Act, as laid down in its
preamble are: "to prevent practices having adverse effect on
competition, to promote and sustain competition in markets, to
protect the interest of the consumers and to ensure freedom of
trade carried on by other participants in markets in India".

• The main provisions of the act deals in the areas given below:
• Prohibition of Anti competition Agreement.
• Abuse of Dominance.
• Provision of Combination.
• Provision on Competition Advocacy / Competition Commission of
India (CCI)
 Conclusion
• SRB is becoming one of the most important concerns for both the
business enterprises and the and the consumer society.
• Modern business enterprises show their social responsibility by building
hospitals, schools and parks which contribute to better quality of life.
• The Government has enacted laws for the prevention of unfair trade
practices, for fair business and for the protection of consumer rights, but
still we have witness a good number of complaints. This show that there
still exist some unfair trade practices by the business community.
Therefore, it is require to relook into the mater again and finding out the
reasons and means for maintaining a sound relationship between the
business and society.
• A modern society expects that business enterprises should perform as
responsible citizens, trustworthy and reliable.
• They should provide goods the society needs at reasonable prices at the
right time and place.
• Society should not welcome artificial scarcity and rising of prices
frequently.
• For creating a sound business environment in an economy, the society
and business enterprises should have a good understanding fair in all
activities.
Thanks